China Auto Electronics Group Limitedlibapps2.nus.edu.sg/nus_hlc/annrep/cae12007.pdf · Annual...

215#, East Part of Qibin Road,

Qibin District, Hebi, Henan, P.R.C.

Tel: +86-392-3314522

Fax: +86-392-3362298

http://www.thb.com.cn

China Auto Electronics Group Limited

Annual Report 2007

TOP Gear

China Auto Electronics Group Limited

HITTING

We are a leading automobile electrical and electronics distribution system manufacturer in the PRC, the largest PRC

domestic manufacturer of automobile wire harnesses and connectors.

We supply to automakers in both PRC and overseas markets like US, Europe, Australia and Indonesia. We have 7 production

facilities across the PRC with our headquarters based in Hebi, Henan. We have also recently added a sales and production

facility in America.

We place significant emphasis on research and development (“R&D”), and have established 4 R&D institutes, with one

focusing on wire harnesses, the second focusing on connectors, fuse boxes, fuses and central junction boxes and the

third on automobile electronic products and engine management system. Recently in 2008, we set up our Shanghai R&D

centre focusing on automotive electrical system, new products, new technology and providing technological services and

consultation.

About CAEGL

ContentsOur Manufacturing Facilities

Our Product Range

Chairman’s Statement

Financial Highlights

Operations Review

Board of Directors

Key Management

Our Focus on R&D

Corporate Information

Corporate Governance

Attendance at Board

and Committee Meetings

Directors’ Report

Statement by Directors

Auditors’ Report

Financial Statements

Notes to the Financial Statements

Major Properties

Statistics of Shareholdings

Notice of Annual General Meeting

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HE BI

MANUFACTURING FACILITIES

OUR

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We are the largest PRC domestic manufacturer of automobile wire harnesses and connectors in the PRC, with 7

manufacturing facilities in Hebi, Wuhu, Jiangxi, Harbin, Shenyang, Shanghai and Chongqing. We have recently added

another manufacturing facility in Honduras, Central America.

Our manufacturing facilities are fully integrated. We use CAD/CAE and application softwares, such as Pro-Engineering and

Unigraphics, for the conceptualisation and design of moulds, CAM, wire-cutting machines, CNC machines and EDMs for

the fabrication of the tools and dies, plastic kneading and blending machines and plastic injection moulds for the production

of plastic housings, and precision metal stamping machines for the precision metal stamping process to form the desired

parts for the terminals. We also design and build our own assembly stations for the assembly of wire harnesses.

We have been qualified as OEM supplier by major automakers, including Dongfeng Motor Corporation, Shanghai

Volkswagen Automotive Co Ltd, FAW-Volkswagen Automobile Co Ltd, General Motors Corporation, Chery Automobile Co

Ltd, and Changan Automobile Group Ltd.

We were awarded the QS 9000 Quality Management System Certificate in 1998, the ISO/TS 16949 Quality Management

System Certificate in 2002 and the VDA 6.1 Quality Management System Certificate by TUV Rheinland. We were also

awarded the ISO 14004 Environment Management System Certificate in 2004.

China Auto Electronics Group Limited Annual Report 2007

Our Product Range

Wire Harnesses

A wire harness is an assembly of wires with connectors

attached to their ends that are bundled together and

transmits electricity between two or more points. Wire

harnesses link the power and signal distribution systems

within an automobile and are critical to the function and

performance of an automobile. An average automobile

will typically have lengths and lengths of wire harnesses.

Wire harnesses used by different automakers may differ.

We manufacture hundreds of varieties of wire harnesses,

which are used in different parts of an automobile and

supplied primarily to automakers.

Connectors

Connectors are devices that connect one or more wires

together or link the wire harness with other components

within the automobile. Connectors are designed to protect

the connection points from the external environment of

the automobile, which can be harsh and varies depending

on where in the automobile they are located.

The main components of a connector are the housing and

the terminal. The housing is the connector’s casing and is

usually made of moulded plastic. Its main functions are to

hold the terminals and protect them from shorting, dust,

dirt, moisture and electrical interference. The terminal is

the metal component in a connector that conducts electric

current and is inserted into the connector housing. The

terminals are usually either male or female and when

the connectors mate, the terminals meet and bridge the

electric circuit path.

Connectors installed in different parts of an automobile

differ from one another in various respects, including the

design and size of both the housings and the terminals.

In addition, the connectors used by different automakers

may also differ. We manufacture more than 10,000

varieties of housings and terminals, which are used in

different parts of an automobile.

We also manufacture fuse boxes and central junction

boxes. Fuse boxes are devices that serve to hold a

number of fuses. Central junction boxes are devices

which connect different wire harnesses to distribute the

flow of electricity between different compartments in an

automobile, through connection and protection devices

integrated into such central junction boxes.

Other products

Our other products include crimping machines and

moulds. Crimping machines are machines used to create

a crimp connection, which is a permanent electrical and

mechanical connection between a wire or wires and a

conductor, such as the connection between the wires

and the terminal of a connector. Crimping involves the

application of an external force, which deforms the

individual strands of a wire by stressing them to beyond

the yield point of the material to produce a reliable

connection.

Moulds are the foundation for the commercial production

of plastic injection moulding and metal stamped products

such as the plastic housings and metal terminals in

connectors. The mould is essentially a steel tool made

up of many operating mechanisms and parts assembled

together.

With the reverse acquisition of China Transcom

Technologies Ltd, we gained access to a whole host of

electronic products, including tire pressure monitoring

system, GPS vehicle tracking device and ECU. With our

emphasis on R&D, we have also developed the automobile

headlight adjusting device, which allows the driver to

adjust the direction of the headlights manually from inside

the automobile so as to provide better illumination.


Wiring Harness Battery Terminal Connector

China Auto Electronics Group Limited Annual Report 2007 03

Central Junction Box Mini Applicator Auto Electronics

Fuse Box Housing ECU

Chairman’s Statement

2007 was an exciting year for both Tianhai group of companies and China Transcom Technologies group of companies.

Tianhai went through months of audit in preparation to be listed, and months of documentation to produce the shareholders’ circular for the reverse acquisition of China Transcom Technologies Limited. All these came to fruition in September 2007 when the reverse acquisition was successfully completed, and China Transcom Technologies Limited was renamed as China Auto Electronics Group Limited, a name which better reflects the business of our new group.

China Transcom was operating in a stagnant telecommunication equipment industry in the PRC and ventured into the auto industry without success. The reverse acquisition transformed China Transcom into a new entity, which operates in a high growth auto industry with manufacturing facilities in 6 cities across the PRC.

This indeed defines a fresh beginning for the new group - China Auto Electronics Group Limited (“CAE”).

After the transition, CAE successfully completed a share placement exercise in October 2007, raising a net proceed of approximately S$63.8 million. 50% of the net proceed will be used to increase the production capacity of wire harnesses, 29% to be used to increase the production capacity of connectors and 21% to cater for R&D and production of automobile electronic products.

With respect to the financial performance, CAE reported record earnings in FY2007.

Group revenue for FY2007 was approximately RMB830.4 million, a phenomenon increase of 56.9% as compared with approximately RMB529.1 million in FY2006. This increase was mainly due to the fact that revenue for our wire harness products from various key customers increased across the board. Revenue for our wire harness products increased by 82.9% in FY2007 as compared with FY2006. Our strategy was to grow our wire harness sales, and utilise as many of our own connectors and electronic products as possible, so that revenue for all 3 products would increase. Moving forward, we will continue to implement this strategy in maintaining our growth.

Revenue for our connector products achieved a slight increase by 4.1% in FY2007 as compared with FY2006. This was mainly due to the increase in usage of our own connectors for our wire harness products.

Riding on the growth of the automobile industry in the PRC, our revenue for other products, which include crimping machines and moulds, has increased by 38.9% in FY2007 as compared with FY2006. According to industry sources, automobile industry in the PRC is estimated to grow by approximately 22% in FY2007.

As a result, profit after tax increased by 252.7% from approximately RMB33.2 million in FY2006 to approximately RMB117.2 million in FY2007.

In FY2007, we did an internal group rationalisation exercise to streamline our businesses and structure of the group. Two of our associated companies, engaged in the manufacture and sale of wireless communication products, were disposed. In addition, the subsidiaries

Group revenue for FY2007 was approximately

RMB830.4 million, a phenomenon increase of

56.9% compared with approximately RMB529.1

million for FY2006. This increase was mainly due to

the fact that revenue for our wire harness products

from various key customers increased across the

board.

04 China Auto Electronics Group Limited Annual Report 2007

of China Transcom, primarily engaged in the design and manufacture of a wide range of telecommunication, data network and transportation communication products in the PRC were also disposed. The disposal of these non-core businesses was essential for us to focus all our resources and energy on our core automobile parts and related businesses.

We also acquired the minority interests in 4 of our subsidiaries, 3 of these transactions were completed in November and December 2007 and the final transaction was completed in January 2008. We will continue to consolidate our equity interests in our subsidiaries in the future.

In December 2007, we entered into a joint-venture agreement with JK Yaming International Holdings Ltd (“JK Yaming”), a company listed on the SGX-ST, Fujian JK Yaming Electric Co Ltd, a subsidiary of JK Yaming and Virgin Islands Yong Yi Science & Technology Co Ltd , to acquire a 56% interest in Fujian Juan Kuang Wireharness Electric Ltd (“JKE”). JKE is mainly engaged in the business of manufacturing and selling automobile wire harnesses and measuring appliances for automobile uses.

Recently in February 2008, we acquired an 80% equity interest in a group of American companies (“American Group”), who is also engaged primarily in the manufacture and distribution of wire harnesses and battery cables. We believe that this acquisition is in the best interest of the Company for the following reasons:

The acquisition will enhance the implementation of the Company’s strategy to become an international company with 50% of its revenue from domestic sales and 50% from export sales. The acquisition will allow the Company to expand its customer base to include the existing customers of the American Group in North and South America, which are top auto manufacturers and Tier 1 suppliers such as Yazaki, Behr, Fauercia, Intier and Chrysler.

By acquiring an existing player in America, the time taken and the set up cost by the Company in penetrating into the North and South American markets will be significantly reduced than if the Company had set up its own operations in these markets. As the American Group’s customers include several top automobile manufacturers and Tier 1 suppliers in the United

States, this acquisition will provide the Company with the most efficient way to increase sales to these automobile players. Following the acquisition, the American Group will use the Company’s products in the production of its wire harnesses, which will reduce its material costs and thus enhance its competitiveness. The purchases by the American Group will also expand the revenue base of the Company.

With the American Group as a base in the United States, this will enable the Company to better service its existing US customers and offer a greater platform to increase sales to these customers.

We believe that these strategies implemented have helped strengthen our Company in building an even stronger platform to take us to the next level. We will continue to play a proactive role in identifying such business and acquisition opportunities to further strengthen our position in the global and PRC automobile industries.

Looking forward, we expect the automobile industry in the PRC to continue its robust growth. This is expected to have a favourable effect on the automobile parts industry in which we operate. With our streamlined and enhanced platform, we believe that the Company is well positioned to capitalise on this expected strong growth.

The Board recommends a first and final dividend of RMB0.0314 per share for the year ended 31 December 2007.

On behalf of the Board, I would like to express my sincere appreciation to our management and staff for their effort and commitment to the Company. I would also like to express the Board’s gratitude to all our shareholders, customers, suppliers, bankers and business associates for their steadfast support. I certainly look forward to another exciting year of success in building a stronger Company with you.

Thank you.

Wang LaishengChairman

05

(i)

(ii)

(iii)

(iv)


FY2007 FY2006

Financial Highlights

06

Group Income Statements (RMB’000)

Revenue 830,405 529,141

EBITDA 162,307 69,154

Net profit after tax 117,187 33,225

Net profit attributable to shareholders 107,101 30,046

Group Balance Sheets (RMB’000)

Shareholders’ equity 812,585 253,805

Minority interests 45,775 24,879

Property, plant and equipment 124,584 117,480

Current assets 1,346,965 498,001

Total assets 1,498,085 647,786

Current liabilities 635,768 365,145

Total liabilities 639,725 369,102

Total borrowings 344,000 89,537

Financial ratios

Earnings per average number of shares (RMB cents) 24.1 7.6

Net assets (exclude minority interests) per share (RMB cents) 119.2 63.9

Return on average shareholders’ equity (%) 20.1 12.9

Net gearing ratio (%) (8.0) 28.1


Revenue(RMB’000)

FY2006

FY2007

Net Profit(RMB’000)

FY2006

FY2007

Total Assets(RMB’000)

FY2006

FY2007

EBITDA Margin

2006 100

80

60

20

0

13.1%

2007 100

80

60

20

0

19.5%

07

830,405529,141

1,498,085647,786

117,18733,225


OperationsReview

In order to reduce costs and enhance profit margins, we have started to produce our own wires in FY2007. In addition, we have also replaced imported parts with local purchases. All these efforts coupled with the economies of scale from the increased revenue resulted in the profit from operations of wire harness, which increased from approximately RMB10.4 million in FY2006 to approximately RMB56.1 million in FY2007, an increase of approximately 439.4%.


Wire harnessWire harness revenue increased from approximately RMB344.3 million in FY2006 to approximately RMB629.9 million in FY2007, an increase of approximately 83.0%, riding on the increase in vehicle sales of almost 22% in FY2007 in the PRC. The main reason for our phenomenon increase was the corresponding growth in revenue from our various key customers across the board, including Chery Automobile Co Ltd and BYD Automobile Co Ltd.

In order to reduce costs and enhance profit margins, we have started to produce our own wires in FY2007. In addition, we have also replaced imported parts with local purchases. All these efforts coupled with the economies of scale from the increased revenue resulted in the profit from operations of wire harness, which increased from approximately RMB10.4 million in FY2006 to approximately RMB56.1 million in FY2007, an increase of approximately 439.4%. Profit from operations as a percentage of revenue increased from approximately 3.0% in FY2006 to approximately 8.9% in FY2007.

In FY2007, China Auto Electronics also successfully underwent quality audits by more than 10 customers, including established brands like Great Wall Automobile and Shanghai Leoni, giving us a stamp of approval of our quality control systems.

ConnectorsConnector revenue increased from approximately RMB161.4 million in FY2006 to approximately RMB168.1 million in FY2007, an increase of approximately 4.2%. Despite a double-digit growth in the automobile industry in the PRC, this slight growth was mainly due to the increased usage of our own connectors in our wire harness products.

With increased production, including our own consumption and focused production management, productivity increased significantly in FY2007. This resulted in an increase in profit from operations from approximately RMB41.4 million in FY2006 to approximately RMB68.7 million in FY2007, an increase of 65.9%. Profit from operations as a percentage of revenue increased from approximately 25.6% in FY2006 to approximately 40.8% in FY2007.

In FY2007, we restructured our sales sectors from the original 16 sectors to 3 main sectors, so that activity management and effectiveness can be further enhanced. We also set up 3 localised warehouses close to our customers in Zhengzhou, Guangzhou and Zhucheng to serve our customers better.

Other productsRevenue from our other products increased from approximately RMB23.4 million in FY2006 to approximately RMB32.5 million in FY2007, an increase of approximately 38.9%. Our revenue from other product for both FY2006 and 2007 were mainly from sale of crimping machines and moulds. These figures excluded our own consumption of these products. Our major customers of these products are other wire harness suppliers for middle and high-end passenger automakers. The high growth of the automobile industry in the PRC in FY2007 benefited our customers, which in turn translated into increased sales for us.

The increased revenue in FY2007 also resulted in profit from operations increasing from approximately RMB3.9 million in FY2006 to approximately RMB9.9 million in FY2007, an increase of approximately 153.8%. Profit from operations as a percentage of revenue increased from approximately 16.5% in FY2006 to approximately 30.6% in FY2007.

In order to elevate our service quality, we have established an engineering centre in Shanghai, capable of handling mould assembly and after-sale services, in September 2007. With the increased market acceptance of our new crimping machines, we have also successfully developed new high precision moulds.

Going forward, with the reverse acquisition of China Transcom Technologies Ltd and our focus on the R&D of automotive electronic products and engine management system, we will have more product offerings under our “Other products” segment, especially for the automotive electronic products.

09China Auto Electronics Group Limited Annual Report 2007

Wang Laisheng is the Executive Chairman of the Company. As the Executive Chairman, he is responsible for the direction and strategic expansion of the Group. He is also responsible for the working of the Board, reviewing the effectiveness of

the governance process of the Board, and representing the Board to Shareholders.

He joined Hebi Automotive Electric Appliances Factory (“Hebi Factory”), which was the precedessor of Henan Tianhai Electric Co Ltd (“Tianhai CL”), in 1979 and was made deputy factory manager in 1984. In 1986, Mr Wang spent about half a year in Japan for training on advanced engineering technology relating to the manufacture of connectors. In 1995, Mr Wang was appointed the deputy general manager of Hebi Packard Electric Company, a joint venture established by the Hebi Factory and Delphi Packard. In 1999, the Hebi Factory acquired the equity interest of Delphi Packard in the joint venture and Mr Wang remained as its deputy general manager. In 2001, Mr Wang returned to Henan Tianhai Electric (Group) Corporation (“Tianhai CE”) as its deputy general manager in charge of technology and product development and chief engineer and was subsequently made general manger in 2005. Pursuant to the conversion of Tianhai CE into Tianhai CL under a restructuring exercise, Mr Wang became the executive chairman of Tianhai CL and is responsible for the overall strategic direction and the management of the business operations and management of Tianhai Electric (Group) Corporation and its subsidiaries.

In 1988, Mr Wang graduated from the Party School of the Hebi Municipal Party Committee. Mr Wang was certified as a senior qualified engineer by the Henan Provincial Government in 1989. In 1991, the PRC State Council conferred on him an honorary certificate for his outstanding contribution to the development of China’s automobile engineering technologies. In 1993, he was appointed as deputy chairman of the China Automobile Electronics and Electric Development Center. In 1995, Mr Wang was named as an Outstanding Expert by the Henan Provincial Government. Since 1990, Mr Wang has been a committee member of the National Automobile Standardisation Technical Committee established by the National Bureau of Quality and Technical Supervision.

Rudolph A. Schlais Jr. is the President and Chief Executive Officer (“CEO”) of the Company. As President and CEO, he is responsible for the day-to-day management of the Group’s operations. His responsibilities include the charting and reviewing of corporate

directions and strategies, which cover areas of marketing and strategic alliances. He, together with the Executive Chairman, Mr Wang Laisheng, is responsible for providing the Company with strong leadership and vision.

Mr Schlais is currently the chairman of the board of directors of Information Technology United Corporation, an international company with offices in Beijing, Shanghai, Xi’an, Hong Kong, Toronto and San Francisco which provides software development and outsourcing services and holds directorships in a few other companies. He is also the principal owner, and chairman and CEO of Xiaochun L.L.C (Dawning of Spring), which is a consultancy firm through which he shares his experience and knowledge on acquisitions, sourcing and business enterprise management, especially in Asia.

In 2002, Mr Schlais retired from General Motors Corporation (“GM”) as president and CEO of GM Asia Pacific and Group Vice President of GM after 42 years of service. He had been the Group Vice President of GM since 1994. He started his career with GM in 1960 and held executive positions of increasing responsibility. He became president of GM China, supervising the establishment of GM’s state-of-the-art vehicle joint venture company and manufacturing plant in Shanghai. Amongst other achievements during his career with GM, Mr Schlais spearheaded the development of an Accelerated Strategy for Asia Pacific to increase GM’s participation in Asia Pacific, and this eventually led to a significant increase in GM’s investment in Asia Pacific, particularly the PRC.

Mr Schlais previously served as the chairman of the board of directors of Shanghai GM Corporation, Ltd. and was a director of Isuzu Motors Limited and Fuji Heavy Industries Ltd. (Subaru). He was the chairman of the board of governors of the National Center (US) for the Asia Pacific Economic Cooperation and was a board member of the US Pacific Basin Economic Council. He is a member of the Seoul Mayor’s Business Advisory Council and is invited to attend the Shanghai Mayor’s International Business Advisory Council. In April 2002, the Shanghai Municipality presented him with the

Board ofDirectors


prestigious Golden Magnolia Award for outstanding contributions by a foreigner to the commercial activities in Shanghai. He continues to be active in a number of initiatives to promote US-Asia and European Union-Asia relationships, including cultural, educational and technological programs.

Mr Schlais graduated from Youngstown State University with a Bachelor of Science degree in Electrical Engineering in 1963 and subsequently obtained a Masters of Science degree in Electrical Engineering from the Massachusetts Institute of Technology in 1965. He also attended the Executive Program at the Amos Tuck School of Business Administration at Dartmouth College in 1979. In 1994, he was conferred an honorary Doctor of Humane Letters degree by the Youngstown State University.

Shen Zhifu is the Executive Director, International Sales and Business Development, of the Company. He assumes overall responsibility for all sales and marketing of the Group’s products and for developing new business areas for the Group outside the PRC.

He joined the Hebi Factory in 1976 and has since held positions of increasing responsibility such as workshop director and deputy factory manager of the Hebi Factory. In 1994, he was appointed as the deputy general manager in charge of international sales and business development and general economist of Tianhai CE. Currently Mr Shen is also the general manager of Hebi Tianhai Huanqiu Electric Co Ltd, a wholly-owned subsidiary of the Group, and is responsible for the business operations of this company.

In 1992, Mr Shen graduated from the Party School of Henan Provincial Party Committee where he majored in economics. In 1999, he was named as a pioneer model worker by the Henan Provincial Government. In 2004, he was appointed as Deputy Director of Automobile Electronics Technology Branch of the Society of Automotive Engineers of China. In 2006, he was appointed as a member of the Petrol Machine and Kerosene Oil Engine Committee of the Chinese Society of Internal Combustion Engines.

Li Delin is the Executive Director, Domestic Sales and Business Development, of the Company. He assumes overall responsibility for all sales and marketing of the Group’s products and for developing new business areas for the Group in the PRC.

In 1978, Mr Li was the deputy factory manager of the Hebi Steel Window and Furniture Factory. In 1984, he was the factory manager of Hebi No. 1 Plastic Factory. Mr. Li joined the Hebi Factory in 1988 as head of the operations department and his areas of responsibilities included sales and procurement. From 1994, he held the position of deputy general manager of Tianhai CE in charge of domestic sales and business development and held other positions such as the director of the investment management committee, which is responsible for the investment activities of Tianhai CL.

In 1988, he graduated from the Party School of Hebi Municipal Party Committee. In 1992, he obtained the professional and technical qualification of economist conferred by the Hebi Municipal Government. In 2004, he was named as a pioneer model worker by the Henan Provincial Government.

Zheng Xueming is the Vice-President, Automobile Electronics Products and R&D, of the Company. He assumes overall responsibility for overseeing all the manufacturing activities of the Group relating to automobile electronics products, and for deployment of the

production line, machinery and manpower for such products. In addition, he also oversees the R&D facilities and activities of the Group’s products, as well as the R&D of new technologies and products.

He co-founded Henan Snowcity Science & Technology Co Ltd (“Henan Snowcity”) in 1994 and has been the executive chairman and managing director of Henan Snowcity since its incorporation. In October 2000, he stepped down as managing director but continues to be Henan Snowcity’s executive chairman. Prior to establishing Henan Snowcity, he served with Henan Provincial Mechanical Equipment Import and Export Company as an assistant manager in 1988. He graduated with a Bachelor of Engineering degree in wireless technology from Zhengzhou Information Technology University in 1987. He has been the vice-chairman of the Industrial and Commercial Union of Zhengzhou Municipal New and High-Tech Industrial Development Zone of Henan province since March 2002.


Zhang Hong is the Vice-President, Strategic Investments, of the Company. He is responsible for identifying and assessing opportunities for strategic investments (including mergers and acquisitions) for the Group, and for overseeing the implementation of any such strategic investments.

He joined the Group as Henan Snowcity’s managing director in September 1999 and was responsible for the day-to-day management of the Group’s operations as CEO of the Company. As the group sales and marketing director, he is responsible for the overall sales and marketing of the products and developing new business areas for the Group. From 1984 to 1994, he lectured on digital signal process at the People’s Liberation Army Electronic Technology College. Thereafter, he became the vice plant manager and general engineer of Beijing Haidian Jianxin Electronic Instrument and Equipment Plant from 1994 to 1996. From 1996 to 1999, he served as the general manager of Zhengzhou Tianjian Advanced Science and Technology Development Company. He graduated with a Bachelor of Wireless Communication Engineering degree in digital communication technology from the People’s Liberation Army Engineering Technology College (now known as the People’s Liberation Army Information Technology University) in 1994.

Liu Xiaozhi is the Non-Executive Director of the Company. She is currently also the President and CEO of the PRC operations of Neo-Tek International, a supplier of technology solutions.

Prior to joining Neo-Tek International in 2007, Dr Liu was the CEO and vice-chairman of Shanghai-listed Fuyao Glass Industry Group Co., Ltd., which is engaged in the production and marketing of automobile safety glass and other industrial glass products, from 2005 to 2006. From 1992 to 2004, Dr Liu held various senior positions in GM. Between 1992 and 1996, she was the sales and customer director of four of Delphi’s operations in the PRC, and between 1997 and 1998, she was the chief representative and managing director of Delphi Automotive Systems in Shanghai (when Delphi was still part of GM). Between 1999 and 2001, she was the chief technology officer and chief engineer of GM China. Between 2001 and 2003, she was the chairman and CEO of GM Taiwan, and between 2003 and 2005, she was the vehicle concept director and director for vehicle electronics, controls and software integration in GM North America.

Dr Liu graduated with a Bachelor of Science from the Xi’an Jiaotong University in 1982. She subsequently obtained a Masters of Science and Doctor of Philosophy degrees in Electrical Engineering from Friedrich-Alexander University of Erlangen-Nuremberg in Germany in 1988 and 1992, respectively. She also attended the Executive Program at the Amos Tuck School of Business Administration at the Dartmouth College in 1997.

Sim Hong Boon is the Lead Independent Director and Chairman of the Remuneration Committee of the Company. He is a Fellow of the Singapore Institute Architects, Fellow of the Royal Australian Institute of Architects, Fellow of The Society of Project Management

Singapore, Chartered Member of the British Institute of Architects, Member of the Singapore Institute of Planners and Member of the Malaysian Institute of Architects.

Mr Sim served on various local and international professional organisations. He was the President of the Singapore Institute of Architects (1974-1978), Member, Board of Architects (1973-1980) and Professional Engineers’ Board (1977-1980), Member, Commonwealth Board of Architects Education (1975-1987), Honorary Secretary, Architects Regional Council Asia (“Arcasia”) and Chairman, Arcasia Board of Architectural Education (1976-1987).

Mr Sim held several directorships in private and listed companies in Singapore, China and Holland. He was the Chairman of the Supervisory Board, Aabe Fabrieken B.V. and Aabe Holland (1983-1993). He held several foreign government appointments, as Advisor to the Commanding Office for the development of the Jinan Yao Qiang Airport (1989), Advisor for Trade & Economic Development to the Municipal Government of City of Jinan (1993), Advisor to the Committee for the development of Jinan High Technology Industrial Park (1993), and Senior Economic Advisor to the Municipal Government of Zao Zhuang City, Shandong Province. He was a Member of the Singapore Shandong Business Council (1993-1999) and (2004-2006), an Executive Committee Member of the Shandong Business Club (1995-1999) and Representative of the Indian Tourism Development Corporation for East and South East Asia (2005).

Mr Sim received the Public Service Medal National Day Award in 1981 and the Public Service Star (BBM) in 2003 given by the Singapore Government. In 2005, he was appointed a Justice of Peace by the President of Singapore.

Board ofDirectors


Mr Sim graduated from the Perth Technical College Western Australia with a Bachelor of Architecture degree in 1965. He also graduated with a Master of Arts (Urban Planning) degree in 1974 from the National University of Singapore.

Lim Kern is the Independent Director and Chairman of the Audit Committee of the Company. He is currently also the Vice President of Finance of The Venetian Macao-Resort-Hotel.

Mr Lim held finance related positions in Hewlett-Packard from 1994 to 1996. Between 1996 and 2003, Mr Lim was with General Electric Company (“GE”), where he held positions of finance leadership and managerial in different divisions in the company. He was based in Singapore from 1996 to 1998 and subsequently in the US from 1998 to 2003. Finance roles in GE included Energy Services, Global Supply Chain Management, Global Sourcing, Manufacturing, Mergers and Acquisitions and Integrations.

Mr Lim joined Eastman Kodak Company in 2003 as global acquisition leader and adviser to the chief financial officer in the US. He was appointed finance director and subsequently chief financial officer for the Greater Asia Pacific Region and was based in Shanghai. From beginning of 2006 till end of 2007, he was ASIMCO Technologies Limited’s Global Chief Financial Officer. He joined The Venetian Macao-Resort-Hotel as its Vice President of Finance in 2008.

Mr Lim graduated from the Nanyang Technological University in Singapore in 1994 with a Bachelor of Science in Financial & Management Accounting. He has attended executive programmes at the Stanford Graduate School of Business, Hong Kong, the International Institute of Management Development, Lausanne, Switzerland, the Kellogg Graduate School of Management (Northwestern University), US and the Harvard University – Graduate School of Business, US. He has also attended the General Electric Financial Management Leadership Training at the JF Welch University, US between 1998 and 2001.

Wong Gang is the Independent Director and Chairman of the Nominating Committee of the Company. A partner in law firm Shook Lin & Bok LLP since 2002, he has more than 10 years’ professional experience advising

on a wide range of corporate finance and securities transactions, including stock market flotations, rights issues, securities regulation for public listed companies, mergers and acquisitions, joint ventures, as well as general corporate advisory work. He is also a member of Shook Lin & Bok LLP’s China practice group and has advised multinational corporations and Singapore companies on cross border transactions in China, as well as on public offerings of securities in Singapore by companies from China. He is currently an independent director of Jishan Holdings Limited, Alantac Technology Ltd, China Animal Healthcare Limited and Fujian Zhenyun Plastics Industry Co., Ltd, all of which are listed on the SGX-ST.

Zhang Shulin is the Independent Director of the Company. He is currently also the chief consultant of China Automotive Technology and Research Centre.

Mr Zhang was an engineer with Hebei Xingtai Hongxing Automobile Factory from 1970 to 1983, and was an engineer with Jingjinji Automobile Industry Venture Corporation from 1983 to 1985. In 1985, he joined China National Automotive Industry Corporation, a government authority on enterprise administrations for the automobile industry, as deputy director of the planning department and was responsible for the automotive manufacture project planning. He was appointed as associate director of the Automobile Industry Department of Ministry of Mechanics Industry in 1993 and was later appointed as associate director and secretary-general of China Association of Automotive Manufacturers by the National Mechanics Industry Bureau in 1998.

Mr Zhang obtained a bachelor of automatic control from Tsing Hua University in 1965. He was certified as a Senior Qualified Engineer (Professor Level) by the Ministry of Mechanics Industry, PRC in 1996.


Zhang Jingtang is the Vice-President, Wire Harnesses and Connectors, of the Company. He assumes overall responsibility for overseeing all the manufacturing activities of the Group relating to wire harnesses and connectors, and for deployment of the production line, machinery and manpower for such products.

Mr Zhang was an engineer with the Hebi Machine Tool Factory from 1983 to 1985, and was the director of enterprise administration department at the Hebi Industry Bureau from 1986 to 1988. In 1988, he joined Tianhai CE as deputy factory manager. He was appointed as deputy general manager in charge of production in 1994 and remained in that position until 2006, when he was appointed director and general manager of Tianhai CL. Mr Zhang obtained a Bachelor of Physics from Henan Normal University in 1982. In 1988, he obtained the professional and technical qualification of economist conferred by the Hebi Municipal Government. He was awarded the senior professional manager qualification in 2006 by the PRC Ministry of Manpower National Center of Human Resource Mobility and PRC Research Center for Professional Managers.

Ng Tah Wee is the Chief Financial Officer of the Company. His areas of responsibilities include managing the financial and accounting matters of the Group.

Mr Ng holds a Degree in Accountancy from the National University of Singapore and is a certified public accountant. He has over 20 years of experience in audit and accounting work. He started his career as an audit graduate trainee with Peat, Marwick, Mitchell & Co (now known as KPMG) from April 1982 to June 1983. He then joined Great Pacific Finance Ltd as an assistant accountant from June 1983 to December 1985. In order to enhance his experience in audit, he joined Neptune Orient Lines Ltd (“NOL”) as an internal auditor in December 1985 and left NOL as senior internal auditor in May 1988. For the period between May 1988 to February 1991, he was an accountant with Times Publishing Ltd (“TPL”), heading the accounts department of one of TPL’s printing companies. He was the finance manager of Craft Print Pte Ltd (now known as Craft Print International Ltd) from March 1991 to November 1993.

For the period between December 1993 and March 2004, he was with Ho Bee Group, serving in one of its subsidiaries, HBM Print Ltd, as finance and administrative manager from December 1993 to March 1997 and financial controller from April 1997 to March 2000. He served in another of Ho Bee Group’s subsidiaries, Ho Bee Print Pte Ltd, as financial controller from April 2000 to June 2001 and general manager (operations) from July 2001 to March 2004.

Liang Jun is the Vice President of Sales/Marketing and Program Management of the Company. His areas of responsibilities include managing the sales function, identifying and leading market development initiatives, and developing and tracking program management process of the Group.

From 1993 to 1997, Mr Liang was the Division Manager and Project/Sales Manager with China North Industries Corporation (Group), a large state-owned group engaged in the automotive industry in China. From 1998 to 2005, he was with ASIMCO Technologies Limited, serving as Senior Marketing Analyst, Marketing Manager from 1998 to 2001 at the headquarter, Manager of Sales and Marketing Department from 2001 to 2003, and Commercial Director from 2003 to 2005 at its Guangzhou operating company, overseeing sales and marketing, new project development and management, purchasing and logistics. From 2006 to 2008, just before he joined the Group, he was the Sales and Marketing Manager of Tenneco’s ride control system division’s China business unit. Tenneco is one of the world’s largest designers, manufacturers and marketers of emission and ride control systems.

Mr Liang holds a Bachelor of Engineering degree from Central China University of Agriculture, and a Master of Management degree from Tianjin University.

KeyManagement


OURFOCUS ON R&DWe place significant emphasis on R&D, which we believe is one of our key competitive strengths. We have established a Provincial Enterprise Technical Centre, accredited by the Henan Province Economic and Trade Committee, Henan Province Financial Department, Henan Province Local Tax Bureau and Zhengzhou Customs. Such accreditation gives the technical centre access to certain funding grants and tax incentives.

We have also established 4 research institutes which focus on different areas. The wire harness research institute focuses on the R&D of wire harnesses. This institute is capable of designing a variety of vehicle harnesses. Over 100 types of new harnesses are developed every year.

The connector research institute focuses mainly on R&D of connectors, fuse boxes, fuses and central junction boxes for the automobile industry. It also focuses on the R&D of high precision, quality and efficient injection moulds which are used in the manufacture of connectors.

The electronic and electric research institute focuses on the R&D of automotive electronic products and engine management system. With strong development capability and wide range of advanced test equipment, the institute provides a solid foundation for new product development.

The Shanghai R&D centre, which was set up recently in 2008, focuses on automotive electrical system, new products, new technology, and provides technological services and consultation.


Board of Directors

Wang Laisheng (Chairman)

Rudolph A. Schlais Jr (Chief Executive Officer)

Shen Zhifu (Executive Director)

Li Delin (Executive Director)

Zheng Xueming (Executive Director)

Zhang Hong (Executive Director)

Liu Xiaozhi (Non-executive Director)

Sim Hong Boon (Lead Independent Director)

Lim Kern (Independent Director)

Wong Gang (Independent Director)

Zhang Shulin (Independent Director)

Audit Committee

Lim Kern (Chairman)

Wong Gang

Zhang Shulin

Nominating Committee

Wong Gang (Chairman)

Sim Hong Boon

Zhang Shulin

Remuneration Committee

Sim Hong Boon (Chairman)

Lim Kern

Zhang Shulin

Company Secretary

Ng Tah Wee

Bermuda Resident Representative

Appleby Services (Bermuda) Ltd

Canon’s Court

22 Victoria Street

Hamilton HM12

Bermuda

Registered Office

Canon’s Court

22 Victoria Street

Hamilton HM12

Bermuda

Singapore Share Registrar and

Share Transfer Agent

B.A.C.S Private Limited

63 Cantonment Road

Singapore 089758

Bermuda Share Registrar

Appleby Management (Bermuda) Limited

41a Cedar Avenue

Argyle House

Hamilton HM12

Bermuda

Auditors

Paul Wan & Co

10 Anson Road #35-07/08

International Plaza

Singapore 038987

Partner-in-charge: Wan Tong Chee, Paul

(Appointed on 18 September 2007)

Company Registration Number

34300

CorporateInformation


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