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苏威孚B(200581)公告正文

苏威孚B:2010年年度报告(英文版)

公告日期:2011-03-19

无锡威孚高科技集团股份有限公司
           2010 年年度报告
WEIFU HIGH-TECHNOLOGY GROUP CO., LTD.
         ANNUAL REPORT 2010




              19 March, 2011
                                                        Contents
Section I. Important Notes----------------------------------------------------------------------------------------------------3

Section II. Company Profile--------------------------------------------------------------------------------------------------4

Section III. Summary of Accounting and Business Data-----------------------------------------------------------------5

Section IV. Changes in Share Capital and Shareholders------------------------------------------------------------------8

Section V. Particulars about Directors, Supervisors, Senior Executives and Workers-------------------------------11

Section VI. Administration of the Company-------------------------------------------------------------------------------18

Section VII. Particulars about Shareholders’ General Meeting---------------------------------------------------------22

Section VIII. Report of the Board of Directors----------------------------------------------------------------------------23

Section IX. Report of the Supervisory Committee -----------------------------------------------------------------------35

Section X. Significant Events------------------------------------------------------------------------------------------------37

Section XI. Financial Report-------------------------------------------------------------------------------------------------44

Section XII. Documents for Reference -----------------------------------------------------------------------------------129




                                                               2
                 WEIFU HIGH-TECHNOLOGY GROUP CO., LTD.

                                  ANNUAL REPORT 2010

                                  Section I. Important Notes
Board of Directors and Supervisory of Committee of Weifu High-Technology Group Co., Ltd.
(hereinafter referred to as the Company) and its Directors, Supervisors and Senior Executives
hereby confirm that there are no any fictitious statements, misleading statements, or important
omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the
reality, accuracy and completion of the whole contents.

No Director, Supervisor and Senior Executive stated that they couldn’t ensure the correctness,
accuracy and completeness of the contents of the Annual Report or have objection for this report.

Other directors attended the meeting on discussing the annual report except for the following
directors:
          Absent director             Reason for absence               Entrusted
           Chen Xuejun           Absent due to be on business       Wang Weiliang
            Ge Songping          Absent due to be on business       Wang Weiliang


Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. issued the standard unqualified
Financial Report of 2010 for the Company.

Mr. Wang Weiliang, Legal Representative of the Company; Mr. Chen Xuejun, General Manager
of the Company; and Ms. Sun Qingxian, Deputy General Manager as well as Person in Charge of
Financing confirm that the Financial Report enclosed in the Annual Report 2010 is authentic and
complete.




                                                   3
                              Section II. Company Profile

I. Legal Name of the Company:

1. In Chinese:   无锡威孚高科技集团股份有限公司
Abbreviation: 威孚高科、苏威孚B

2. In English: WEIFU HIGH-TECHNOLOGY GROUP CO., LTD.
Abbreviation: WFHT
II. Legal Representative: Mr. Wang Weiliang

III. Secretary of Board of Directors: Mr. Zhou Weixing
Authorized Representative of Stock Affairs: Ms. Yan Guohong
Contact Address: No.107, Renmin (W) Road, Wuxi, Jiangsu Province, China
Tel: (86) 510-82719579
Fax: (86) 510-82751025
E-mail: wfjt@ public1.wx.js.cn

IV. Registered Address: No.5, Huashan Road, New District, Wuxi City, Jiangsu Province, China
Postal Code: 214028
Head Office: No.107, Renmin West Road, Wuxi City, Jiangsu Province, China
Postal Code: 214031
Homepage: http://www.weifu.com.cn
E-mail: web@weifu.com.cn
V. Information Disclosure Media: Securities Times, China Securities Journal and Hong Kong
Commercial Daily
Internet Web Site Designated by CSRC for Publishing the Annual Report:
http://www.cninfo.com.cn
The Place Where the Annual Report is Prepared and Placed: Office of the Board of Directors of
the Company
VI. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: Weifu High- Tech, Su Weifu-B
Stock Code: 000581, 200581
VII. Other Related Information of the Company
1. Initial registration date: October 22, 1988
Address: No.107, Renmin West Road, Wuxi City, Jiangsu Province, China
Registration Date after Change: December 9, 2008
Address: No.5, Huashan Road, New District, Wuxi City, Jiangsu Province, China
2. Registration Number of Enterprise Legal Person’s Business License: 32020000014926
3. Registration Number of taxation: 320208250456967
4. Certified Public Accountants engaged by the Company:
Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd.
Address: No.28, Liangxi Road, Wuxi City, Jiangsu Province, China


                                              4
               Section III. Summary of Accounting and Business Data
I. Major accounting data
1. Major accounting data of 2010
                                                                                          Unit: RMB
                                            Main index                                     Amount
      Operating profit                                                                    1,486,288,573.46
      Total profit                                                                        1,499,854,505.98
      Net profit attributable to the shareholders of the listed company                   1,340,291,115.79
      Net profit attributable to the shareholders of the listed company after
                                                                                          1,324,606,432.23
      deducting non-recurring gains and losses
      Net cash flow arising from operating activities                                       536,171,852.18
2. Items of non-recurring gains and losses
                                                                                          Unit: RMB
                             Items of non-recurring gains and losses                              Amount
      Gains and losses from the disposal of non-current asset                                    4,374,597.95
      Governmental subsidy calculated into current gains and losses, while closely
      related with the business of the Company, excluding the fixed-amount or                 15,440,800.00
      fixed-proportion governmental subsidy according to the unified national standard
      Net amount of other non-operating income and expenditure beside for the above
                                                                                                   244,116.34
      items
      Impact on income tax                                                                       -3,065,636.67
      Influenced amount of minority shareholders’ equity                                        -1,309,194.06
                                             Total                                            15,684,683.56
3 Differences of net profit calculated according to international and domestic accounting
standards and regulations, and explanations
Unit: RMB
                                           Net profit attributable to                Owners’ equity attributable to
                                         shareholders of listed company              shareholders of listed company
                                      Amount in the             Amount in last      Amount in             Amount in
                                      report period               period            period-end           period-begin
IAS                                   1,340,291,115.79           448,224,754.55    4,106,208,383.62     2,862,670,558.77
CAS                                   1,340,291,115.79           448,224,754.55    4,106,208,383.62     2,862,670,558.77
Sub-items and total adjusted based on IAS:
Total amount of differences
                                                     0.00                   0.00                 0.00                  0.00
between CAS and IAS
Explanations on differences
                                      No differences
between CAS and IAS



II. Key accounting data and financial indexes over the previous three years
1. Main accounting data
                                                                                             Unit: RMB

                                                            5
                                                                                           Increase/decreas
                                                                                             e in this year
                                                2010                       2009             compared with                   2008
                                                                                            that in last year
                                                                                                  (%)
Operating income                            5,371,213,196.45          3,080,616,313.77               74.36%          3,033,289,602.71
Total profit                                1,499,854,505.98            482,763,184.23               210.68%              215,685,390.19
Net profit attributable to shareholders
                                            1,340,291,115.79            448,224,754.55               199.02%              193,418,292.38
of the listed company
Net profit attributable to shareholders
of the listed company after deducting       1,324,606,432.23            420,190,188.75               215.24%              204,532,322.10
non-recurring gains and losses
Net cash flow arising from operating
                                              536,171,852.18            215,893,024.43               148.35%              808,493,643.23
activities
                                                                                      Increase/decreas
                                                                                       e at the end of
                                                                                           this year
                                          At the end of 2010       At the end of 2009                    At the end of 2008
                                                                                       compared with
                                                                                      that at the end of
                                                                                        last year (%)
Total assets                                6,761,622,809.90          5,035,871,583.02               34.27%          4,597,901,224.38
Owners’ equity attributable to
                                            4,106,208,383.62          2,862,670,558.77               43.44%          2,506,344,515.41
shareholders of the listed company
Share capital                                 567,275,995.00            567,275,995.00                 0.00%              567,275,995.00
    2. Main financial indexes
    Unit: RMB
                                                                                                     Increase/decreas
                                                                                                       e in this year
                                                                      2010             2009           compared with         2008
                                                                                                      that in last year
                                                                                                            (%)
    Basic earnings per share (RMB/Share)                                    2.36              0.79            198.73           0.34
    Diluted earnings per share (RMB/Share)                                   2.36             0.79            198.73           0.34
    Basic earnings per share after deducting non-recurring
                                                                             2.34             0.74            216.22           0.36
    gains and losses (RMB/Share)
    Weighted average return on equity (%)                                 38.32            16.74                21.58          7.88
    Weighted average return on equity after deducting
                                                                          37.87            15.70                22.17          8.34
    non-recurring gains and losses (%)
    Net cash flow arising from operating activities per
                                                                             0.95             0.38            150.00           1.43
    share (RMB/Share)
                                                                                                  Increase/decreas
                                                                   At the end of    At the end of e at the end of At the end
                                                                       2010             2009          this year    of 2008
                                                                                                   compared with
                                                               6
                                                                                                  that at the end of
                                                                                                    last year (%)
Net asset per share attributable to shareholders of listed
                                                                           7.24           5.05               43.37       4.42
company (RMB/Share)
3. Profit state calculated in accordance with the requirements of Compilation Rules for
Information Disclosure by Companies Offering Securities to the Public No.9 promulgated by
CSRC
                                                                                      2010

          Profit in the report period                  Return on equity (%)          Earnings per share (RMB/Share)
                                                                                  Basic earnings per       Diluted earnings
                                                         Weighted average
                                                                                        share                 per share
Net profit attributable to               ordinary
                                                                       38.32            2.36                      2.36
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after                                      37.87            2.34                      2.34
deducting non-recurring gains and losses
III. Changes in shareholders’ equity and relevant explanations
Unit: RMB

                              Amount at the             Increase in this       Decrease in this           Amount at the
           Items
                              period-begin                  period                 period                  Period-end
    Share capital               567,275,995.00                                                           567,275,995.00

    Capital reserve             907,580,308.28                                     11,661,891.69         895,918,416.59

    Surplus reserve             283,637,997.50                                                           283,637,997.50

    Retained profit           1,104,176,257.99          1,340,291,115.79           85,091,399.25        2,359,375,974.53
    Total
    shareholder’s            2,862,670,558.77          1,340,291,115.79           96,753,290.94        4,106,208,383.62
    equity
Reason for changes:
1. Equity acquisition (share capital premium) in the year offsetting capital reserve as RMB
116,618,916,900.
2. Dividend of common shares distributed in the year was RMB 850,913,992,500.




                                                               7
                          Section IV. Changes in Share Capital and Shareholders
      I. Change in shares
                                                                                      Unit: Share
                                       Before the change          Increase/Decrease of this time (+, -)     After the change
                                                                              Convers
                                                               New
                                                   Proporti            Bonus ion of                                     Proportio
                                       Amount                 shares                  Others Subtotal      Amount
                                                     on                shares public                                       n
                                                              issued
                                                                              reserve
I. Restricted shares                  100,075,226 17.64%                                                  100,075,226     17.64%
1. State-owned shares
2. State-owned legal person’s
                               100,021,999 17.63%                                                         100,021,999     17.63%
shares
3. Other domestic shares
Including:             Domestic
non-state-owned           legal
person’s shares
Domestic     natural      person’s
shares
4. Foreign shares
Including:     Foreign       legal
person’s shares
Foreign     natural       person’s
shares
5. Senior executives’ shares             53,227     0.01%                                                    53,227       0.01%
II. Unrestricted shares               467,200,769 82.36%                                                  467,200,769     82.36%
1. RMB Ordinary shares                352,280,769 62.10%                                                  352,280,769     62.10%
2. Domestically listed foreign
                               114,920,000 20.26%                                                         114,920,000     20.26%
shares
3. Overseas listed foreign
shares
4. Others
III. Total shares                     567,275,995 100.00%                                                 567,275,995 100.00%
      II. Statement on changes of restricted shares
      No changes of restricted shares in the report period.
      III. Particulars about issuance and listing of shares
      1. The previous three years ended as the report period; the Company issued neither new shares
      nor derived securities.
      2. In July 2010, the Company implemented the distribution plan (tax included) of offering RMB
      1.50 for each 10 shares.
      3. There existed no inner employees’ shares in the Company.



                                                                  8
IV. Particulars about shareholders
1. Total Number of Shareholders at the end of report period: 36,107.
2. Ended the report period, particulars about the top ten shareholders of the Company: (Unit:
share)
    Total shareholders                                                                                      36,107
                           Particulars about shares held by the top ten shareholders
                                                               Proportio                   Amount of     Shares
                                             Nature of                      Amount of
        Names of shareholders                                  n of share                   restricted pledged or
                                            shareholder                     share held
                                                                  held                     shares held   frozen
WUXI INDUSTRY DEVELOPMENT                   State-owned
                                                                 17.63% 100,021,999 100,021,999
CROUP CO., LTD.                          legal person
                                         Foreign       legal
ROBERT BOSCH GMBH                                                 3.24%      18,387,200
                                         person
                                         Domestic
China Construction Bank—Fullgoal
                                         non-state-owned          2.64%      15,000,000
Tianbo Innovation Theme Stock Fund
                                         legal person
GUOTAI JUNAN SECURITIES                  Foreign       legal
                                                                  2.60%      14,770,646
(HONGKONG) LIMITED                       person
DRAGON BILLION CHINA MASTER Foreign                    legal
                                                                  1.94%      11,000,527
FUND                        person
                                         Domestic
China Construction Bank—China
                                         non-state-owned          1.92%      10,879,508
Priority Growth Stock Fund
                                         legal person
                                         Domestic
ChinaAMC Growth Stock Fund               non-state-owned          1.72%       9,765,521
                                         legal person
                                    Domestic
China Construction Bank—China
                                    non-state-owned               1.68%       9,527,302
Commerce Shengshi Growth Stock Fund
                                    legal person
                                        Domestic
Agriculture Bank of China – Changsheng
                                        non-state-owned           1.48%       8,407,295
Tongde Theme Growth Stock Fund
                                        legal person
                                         Domestic
Bank of Communications – Hua’an
                                         non-state-owned          1.44%       8,180,000
Innovation Stock Fund
                                         legal person
                     Particulars about shares held by the top ten unrestricted shareholders
                                                                  Amount of unrestricted
                   Name of shareholder                                                            Type of share
                                                                      shares held
                                                                                              Domestically listed
ROBERT BOSCH GMBH                                                       18,387,200
                                                                                              foreign share
China Construction Bank—Fullgoal Tianbo Innovation
                                                                        15,000,000            RMB common share
Theme Stock Fund
                                                                                              Domestically listed
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED                               14,770,646
                                                                                              foreign share

                                                      9
                                                                                        Domestically listed
DRAGON BILLION CHINA MASTER FUND                                    11,000,527
                                                                                        foreign share
China Construction Bank—China Priority Growth Stock
                                                                    10,879,508          RMB common share
Fund
ChinaAMC Growth Stock Fund                                           9,765,521          RMB common share
China Construction Bank—China Commerce Shengshi
                                                                     9,527,302          RMB common share
Growth Stock Fund
Agriculture Bank of China – Changsheng Tongde Theme
                                                                     8,407,295          RMB common share
Growth Stock Fund
Communications – Hua’an Innovation Stock Fund                      8,180,000          RMB common share
                                                                                        Domestically listed
GAOLING FUND,L.P.                                                    6,493,766
                                                                                        foreign share
                           Among the top ten shareholders, the Company knew there exists no associated
Explanation on associated relationship between Wuxi Industry Development Croup Co., Ltd., the first largest
relationship or consistent shareholder of the Company, and other shareholders; and they do not belong to the
actions among the above consistent actionist regulated by the Management Measure of Information
       shareholders        Disclosure on Change of Shareholding for Listed Company. China Priority Growth
                           Stock Fund and ChinaAMC Growth Stock Fund belong to consistent actionist.
3. Particulars about the controlling shareholder and actual controller of the Company
A shareholder who has the actual holding right to the Company is Wuxi Industry Development
Croup Co., Ltd., as well as state-owned sole enterprise, whose legal representative is Mr. Jiang
Guoxiong. The said company was founded on October 5, 1995, its registered capital was RMB
3,239,201,941.46, and it was mainly engaged in operations of state-owned asset, investment
management of key projects, input and development of manufacturing and service industries,
venture investment in transformation of high-tech achievements, entrusted with enterprise and
management which are all within the mandate scope.
4. Block diagram for property right and controlling relationship among actual controllers and the
Company:


                       State-owned Assets Supervision & Administration
                         Commission of Wuxi Municipality of Jiangsu
                                          Province
                                              100%

                            Wuxi Industry Development Croup Co., Ltd.

                                                  17.63%

                               Weifu High-Technology Group Co., Ltd.


III. In the report period, there were changes in the controlling shareholder of the Company
Naught

                                                    10
                                Section V. Particulars about Directors, Supervisors,
                                          Senior Executives and Workers
        I. Directors, supervisors and senior executives
        1. Basic information
                                                                                                                              Total
                                                                                                                                            Drawing
                                                                                                                           remuneration
                                                                                                                                           remuneratio
                                                                                                                           drawn from
                                                                                    Shares        Shares                                      n from
                                            Begin date for   End date for office                                Reason for the Company
    Name        Title         Sex     Age                                           held at       held at                                  shareholders
                                             office term            term                                         change    in the report
                                                                                   year-begin year -end                                     ’ units or
                                                                                                                              period
                                                                                                                                           other related
                                                                                                                           (RMB’0000)(
                                                                                                                                           units or not
                                                                                                                            before tax)
Wang
             Chairman        Male     46       2008-6-12          2011-6-11           12,673        12,673                        55.00        No
Weiliang
                Vice
Chen
            Chairman &       Male     44       2008-6-12          2011-6-11            3,169         3,169                        55.00        No
Xuejun
                GM
Shi
              Director       Male     49       2008-6-12          2011-6-11            1,782         1,782                        45.00        No
Xingyuan
Gao         Director& vice
                             Male     57       2008-6-12          2011-6-11           10,297        10,297                        45.00        No
Guoyuan GM
Ge
              Director       Male     57       2008-6-12          2011-6-11           25,468        25,468                          0.00       Yes
Songping
Rudolf
            Director         Male     54       2008-6-12          2011-6-11                   0             0                       0.00       Yes
Maier
Du          Independent
                             Male     67       2008-6-12          2011-6-11                   0             0                       5.00       Yes
Fangci        Director
Ma          Independent
                             Female   60       2008-6-12          2011-6-11                   0             0                       5.00       Yes
Huilan        Director
            Independent
Yu Xiaoli                    Female   48       2008-6-12          2011-6-11                   0             0                       5.00       Yes
              Director
            Chairman of
Han
                 the
Jiangmin                     Male     60       2008-6-12          2011-6-11           15,208        11,405       Un-lock          45.00        No
            Supervisory
g
            Committee
Wang
             Supervisor      Male     45       2008-6-12          2011-6-11              521           521                          0.00       Yes
Xiaodong
Yang
             Supervisor      Male     59       2008-6-12          2011-6-11                   0             0                     15.60        No
Weiliang
              Deputy
Sun            GM&
                             Female   57       2008-6-12          2011-6-11                   0             0                     45.00        No
Qingxian     Financing
              Charger



                                                                       11
Miao
          Deputy GM      Male   48         2008-6-12           2011-6-11            0        0                  45.00       No
Yuming
Wang
          Deputy GM      Male   56         2008-6-12           2011-6-11            0        0                  45.00       No
Yawei
Zhou      Secretary of
                         Male   48         2008-6-12           2011-6-11         2,377    2,377                 29.00       No
Weixing     Board

 Total         -          -     -                -                 -            71,495   67,692     -         439.60        -

       Explanations: (1) In the report period, the Company did not implement equity encouragement
       plan.
       (2)Reason for changes of shares held by senior executives: Un-lock
       2. Changes of the personnel of Directors, Supervisors and Senior Executives
       No changes of the personnel of Directors, Supervisors and Senior Executives in the report period.
       3. Board attendance for the Directors
                                                                                                          Whether
                                                       Times that
                                                                             Times of                    absent the
                                                       should be Times of              Times of Times
                                                                             attend by                  meeting with
                    Name                 Title         attend the personal             entrusted   of
                                                                           communicati                        2
                                                         Board    presence             presence absence
                                                                                 on                     successively
                                                        meeting
                                                                                                            time
                                     Chairman
            Wang Weiliang                                  7                4      3                             No
                                     Of Board
                                     Vice
            Chen Xuejun                                    7                4      3                             No
                                     chairman
            Shi Xinyuan              Director              7                4      3                             No
            Gao Guoyuan              Director              7                4      3                             No
            Ge Songping              Director              7                4      3                             No
            Rudolf Maier             Director              7                4      3                             No
                                     Independent
            Du Fangci                                      7                4      2                      1      No
                                     director
                                     Independent
            Ma Huilan                                      7                4      3                             No
                                     director
                                     Independent
            Yu Xiaoli                                      7                3      3          1                  No
                                     director



            Times of Meeting of the Board holding in the year                                                           7
            Including: times of meeting with field                                                                      4
            Times of meeting with communication                                                                         3


       4. Directors, Supervisors and Executive Managers holding the position in Shareholders’
       Companies and other units
                                                                                          Position in
               Name                       Shareholders’ Companies                                            Office term
                                                                                         shareholders’

                                                                       12
                                                                     companies
                                                                Vice-chairman of the
   Wang Weiliang   Wuxi Industry Development Croup Co., Ltd.                           Till now
                                                                       Board
                                                                    Secretary of
   Ge Songping     Wuxi Industry Development Croup Co., Ltd.                           Till now
                                                                Discipline Committee
                   Underling company of Bosch Company
    Rudolf Maier                                                  General Manager      Till now
                   (Bosch Automotive Diesel System Co., Ltd.)
                                                                      Deputy
   Du Fangci       Chinese Auto Industry Association                                   Till now
                                                                 Secretary-General
                   Zhejiang University Power Machinery and         Director of the
   Yu Xiaoli                                                                           Till now
                   Vehicular Engineering Institute                    Institute
                                                                  Deputy General
   Wang Xiaodong   Bosch Automotive Diesel System Co., Ltd.                            Till now
                                                                    Manager
5. 3. Main work experiences of the directors, supervisors and senior administrative personnel in
the latest five years and position and part-time job in other organ excluding shareholder’s
company
(1) Main work experiences in the latest five years
Mr. Wang Weiliang: He has served successively as Director and concurrently Deputy General
Manager of Wuxi Weifu Group Co., Ltd.; now, he is the Chairman and Secretary of Party
Committee of the Company; Vice-chairman of the Board of Wuxi Industry Development Croup
Co., Ltd.
Mr. Chen Xuejun: he has served successively as Chairman of Supervisory Committee, Secretary
of CPC, and Secretary of the Commission for Disciplinary Inspection of the Company; now, he is
the Vice-chairman and concurrently General Manager of the Company.
Mr. Shi Xingyuan: he has served successively as Director and concurrently Deputy General
Manger of the Company; now, he is the Director and Vice-secretary of Party Committee of the
Company.
Mr. Gao Guoyuan: he has served successively as Deputy General Manager of the Company and
Director and concurrently Deputy General Manager of Wuxi Weifu Group Co., Ltd.; now, he is
Director and Deputy General Manager of the Company.
Mr. Ge Songping: he has served successively as Deputy General Manger of the Company and
Director & concurrently Deputy General Manager of Wuxi Weifu Group Co., Ltd.; now, he is the
Director of the Company; and Secretary of Discipline Committee of Wuxi Industry Development
Croup Co., Ltd.
Mr. Rudolf Maier, he ever acted as the President of Business Department of Commercial Vehicles
of Diesel Injection System of Bosch; now, he acts as the General Manager of Bosch Automotive
Diesel System Co., Ltd. and the Director of the Company.
Mr. Du Fangci: he successively was the Division Chief of former Automobile Section of Machine
Building Industry Ministry and Division Chief of State Bureau of Machine Building Industry.
Now, he is the Full-time Deputy Secretary-General of Chinese Auto Industry Association and the
Independent Director of the Company.
Ms. Ma Huilan: she successively acted as the Chairman of Jiangsu Gongzheng Certified Public
Accountants Co., Ltd. Now, she is the Consultant of Jiangsu Gongzheng Certified Public
Accountants Co., Ltd. and the Independent Director of the Company.

                                                 13
Ms. Yu Xiaoli: Now she is Director of the institute of Zhejiang University Power Machinery and
Vehicular Engineering Institute and the Independent Director of the Company.
Mr. Han Jiangming: he has successively as Vice Chairman of the Board and General Manager of
the Company; he is now in charge of Executive Director and General Manager of Wuxi Weifu
Chang’an Co., Ltd. and the Chairman of the Supervisory Committee of the Company.
Mr. Wang Xiaodong: he successively served as Division Chief of Products Development
Department of the Company, Marketing and Sales Director of Bosch Automotive Diesel System
Co., Ltd.; now, he is the Deputy General Manager of Bosch Automotive Diesel System Co., Ltd.
and Supervisor of the Company.
Mr. Yang Weiliang: he successively served as Work Department of Party Committee; now, he is
the Supervisor of the Company.
Ms. Sun Qingxian: she has served successively as Deputy General Manager and concurrently
Financial Charger of the Company; now she is Deputy General Manager and concurrently
Financial Charger of the Company.
Mr. Miao Yuming: he has served successively as the Deputy General Manager of the Company;
he now takes the post of Deputy General Manager of the Company.
Mr. Wang Yawei: he has served as the Deputy General Manager of the Company; now, he is the
Deputy General Manager and concurrently Vice Dean of Engineering Technology Institute of the
Company
Mr. Zhou Weixing: he has served as Chief Director of Securities Department of the Company;
now he is Secretary of the Board of the Company.

(2) Position and part-time job in other organ excluding shareholder’s company:
                                                                  Relationship with the
    Name              Position and part-time job organ                                          Title
                                                                        Company
              Wuxi Weifu Automotive Diesel System Co., Ltd.;      Wholly-funded            Chairman      of
              Wuxi ITM Information Machinery Development          subsidiary    of   the   the Board.
              Co., Ltd.;                                          Company;                 Executive
              Nanjing Weifu Jinning Co., Ltd.;                    Wholly-funded            Director
              Wuxi Weifu Leader Catalytic Converter Co., Ltd.;    subsidiary    of   the   Chairman      of
              Ningbo Weifu Tianli Supercharging Technique Co.,    Company;                 the Board.
              Ltd.;                                               Holding subsidiary of    Chairman      of
              Weifu Schmidt Power System Spare Parts Co., ltd.;   the Company;             the Board.
  Wang        Bosch Automotive Diesel System Co., Ltd.;           Holding subsidiary of    Chairman      of
  Weiliang    Zhonglian Automotive Electronic Systems Co., Ltd.   the Company;             the Board.
                                                                  Holding subsidiary of    Chairman      of
                                                                  the Company;             the Board.
                                                                  Holding subsidiary of    Vice Chairman
                                                                  the Company;             of the Board\
                                                                  Joint stock company of   Vice Chairman
                                                                  the Company;             of the Board
                                                                  Joint stock company of
                                                                  the Company.
  Chen        Wuxi Weifu Automotive Diesel System Co., Ltd.;      Wholly-funded            Director


                                                 14
Xuejun      Wuxi Weifu Leader Catalytic Converter Co., Ltd.;   subsidiary    of   the   Director
            Nanjing Weifu Jinning Co., Ltd.;                   Company;                 Director;
            Bosch Automotive Diesel System Co., Ltd.           Holding subsidiary of    Director
                                                               the Company;
                                                               Holding subsidiary of
                                                               the Company;
                                                               Joint stock company of
                                                               the Company
            Nanjing Weifu Jinning Co., Ltd.;                   Holding subsidiary of    Director
Shi         Wuxi Weifu Precision Machinery Manufacturing       the Company;             Director
Xingyuan    Co., Ltd.                                          Joint stock company of
                                                               the Company
            Weifu Mashan Pump Glib Co., Ltd.                   Wholly-funded
            Wuxi Weifu International Trade Co. Ltd.;           subsidiary    of   the
                                                                                        Executive
            Wuxi Weifu Precision Machinery Manufacturing       Company;
                                                                                        Director
            Co., Ltd.                                          Wholly-funded
                                                                                        Chairman       of
Gao         Wuxi Weifu-Autocam Precision Machinery Co. Ltd.    subsidiary    of   the
                                                                                        the Board.
Guoyuan                                                        Company;
                                                                                        Director
                                                               Joint stock company of
                                                                                        Chairman       of
                                                               the Company;
                                                                                        the Board.
                                                               Joint stock company of
                                                               the Company
                                                               Holding subsidiary of
Ge          Wuxi Weifu Leader Catalytic Converter Co., Ltd.;
                                                               the Company;             Director
Songping

Rudolf                                                         Joint stock company of
            Bosch Automotive Diesel System Co., Ltd.                                    Director, GM
Maier                                                          the Company
                                                               Wholly-funded
Han                                                            subsidiary  of     the   Executive
            Wuxi Weifu Chang’an Fuel Co., Ltd.
Jiangming                                                      Company;                 Director


Wang                                                           Joint stock company of
            Bosch Automotive Diesel System Co., Ltd.                                    Deputy GM
Xiaodong                                                       the Company
            Wuxi Weifu Automotive Diesel System Co., Ltd.;     Wholly-funded            Director
            Wuxi Weifu Leader Catalytic Converter Co., Ltd.;   subsidiary    of   the   Director
            Nanjing Weifu Jinning Co., Ltd.;                   Company;                 Supervisor
            Ningbo Weifu Tianli Supercharging Technique Co.,   Holding subsidiary of    Director
            Ltd.;                                              the Company;             Director
Sun
            Wuxi Weifu-Autocam Precision Machinery Co. Ltd.    Holding subsidiary of    Supervisor
Qingxian
            Bosch Automotive Diesel System Co., Ltd.           the Company;
                                                               Holding subsidiary of
                                                               the Company;
                                                               Joint stock company of
                                                               the Company;


                                                  15
                                                                   Joint stock company of
                                                                   the Company.
               Wuxi Weifu Automotive Diesel System Co., Ltd.;      Wholly-funded
               Wuxi Weifu International Trade Co. Ltd.;            subsidiary   of   the
               Nanjing Weifu Jinning Co., Ltd.;                    Company;
                                                                                            Director
               Ningbo Weifu Tianli Supercharging Technique Co.,    Holding subsidiary of
                                                                                            Director
               Ltd.;                                               the Company;
  Miao                                                                                      Director
               Chaoyang Weifu Jialin Machinery Manufacture Co.,    Holding subsidiary of
  Yuming                                                                                    Director
               Ltd.                                                the Company;
                                                                                            Chairman     of
                                                                   Holding subsidiary of
                                                                                            the Board.
                                                                   the Company;
                                                                   Holding subsidiary of
                                                                   the Company.
                                                                   Wholly-funded
                                                                   subsidiary    of   the
                                                                   Company;                 Director
               Wuxi Weifu Automotive Diesel System Co., Ltd.;
                                                                   Holding subsidiary of    Director
  Wang         Nanjing Weifu Jinning Co., Ltd.;
                                                                   the Company;             Director
  Yawei        Bosch Automotive Diesel System Co., Ltd.
                                                                   Joint stock company of   Director
               Zhonglian Automotive Electronic Systems Co., Ltd.
                                                                   the Company;
                                                                   Joint stock company of
                                                                   the Company.
6. Annual Remuneration for Directors, Supervisors and Senior Executives
(1) Procedure and reference of decision-making for directors, supervisors and senior executives:
Remunerations for senior executives of the Company depends on the policy Plan on
Remuneration and Incentive and Examination of Remuneration passed in Shareholders’ General
Meeting which was confirmed by Remuneration and Remuneration Examination Committee of
the Board of the Directors referring to performances on the accomplishment of annual main target
and indexes. Annual remuneration was divided into two parts of basic annual remuneration and
wages based on benefits. The former is confirmed by post title and the later is directly connected
to economic benefits of the Company and paying according to various benefit indexes
performance situations.
(2) In the report period, there were 13 Directors, Supervisors and Senior Executives drew
remunerations from the Company and totaled to RMB 4.396 million.
(3) In the report period annual allowance of Independent Directors amounted to RMB 50,000
(After tax), applying for reimbursement of traveling charges for attending Board meeting and
Shareholders’ General Meeting on fact.
II. Staff of the Company
1. Numbers of the staff
Ended as December 31, 2010, the total number of the registered workers of the Company was
5,297.

2. Classification of the staff                                     Unit: Person



                                                   16
           Classification              Number of the staff      Percentage (%)

Production personnel                         3,220                   60.79

Sales and marketing personnel                 186                    3.51

Technical personnel                           839                    15.84

Financing personnel                            74                    1.40

Administrative personnel                      491                    9.27

Others                                        487                    9.19

                 Total                       5,297                   100




3. Education degree of the staff
                             Unit: Person
           Education degree               Number of staff       Percentage (%)

Master and above                                 70                  1.32

Bachelor                                        489                  9.23

Junior college                                  964                 18.20

Technical secondary school                      463                  8.74

Height school                                   856                 16.16
Technical school & professional high
                                               2,455                46.35
school below
                   Total                       5,297                 100

4. Particulars about the retirees
The payments for the retirees are born by the society endowment insurance.




                                                    17
                          Section VI. Administration Structure
I. Administration of the Company
According to the regulations and laws as well as the regulated documents for listed company, the
Company perfected its administration structure of legal person and standardized the operation.
The administration structure and various requirements of governance standardization of listed
company with no differences, the Company has no horizontal competition between the largest
shareholders.
In 2010, the Company promotion the administration work continuously, the Company prepared
the Responsibility System on Significant Errors in Annual Information Disclosure, Management
System on Insider of Internal Information and Management System on the Submission and Usage
on External Information in the year. And performed them effectiveness. There was no trading on
stock of the Company by insiders of the Company till now.
II. Duty performance of independent directors
Conforming to the requirements by Administration Rules of Listed Companies and the Guideline
Opinion for Establishing Independent Director System among Listed Companies, the Company
has engaged 3 independent directors. In 2010, in accordance with the requirement of “the
Guideline Opinion”, the independent directors of the Company could consciously performed their
duties to express independent opinions with regarding to the significant policy decision and
examination on significant investment, external guarantee, acquisition and related transactions of
the Company when attending the board meetings and relevant meetings, which played active
functions in scientific decision-making of the board, and protected the interests of the Company
and shareholders.
1. Particulars about Independent Directors attending the meetings of the Board:
                        Times are          Present in    Entrusted
                                                                          Absence
         Name         supposed to be         person      presence                      Remark
                                                                          (Times)
                         attended           (Times)       (Times)
     Du Fangci              7                   6           0                 1
     Ma Huilan              7                   7           0                 0
     Yu Xiaoli              7                   6           1                 0
2. Particulars about objection on relevant issues presented by Independent Director:
                                                          Contents of the objection
            Name            Issues presented objection                                 Remark
                                                                 presented
     Du Fangci                         Naught                        Naught
     Ma Huilan                         Naught                        Naught
     Yu Xiaoli                         Naught                        Naught
III. Separation between the Company and principal shareholders in business, assets, personnel,
organizations, and finance
1. Business Independence
The Company has its own completed production system, supply chain and sales channels. It has
the ability to operate facing to the market. It’s not been restricted by principal shareholders.
2. Assets Independence
The assets of the Company were integrated and had explicit ownership relationships with largest
shareholder.

                                                    18
3. Financial Independence
With an integral financial department, the Company has installed and maintained a complete
accounting and financial system for internal control and subsidiaries management. The relevant
financial functions have been performed independently, including opening accounts with banks,
paying tax by law as well as making financial decisions.
4. Personnel Independence
The Company has its own independent operational and administrative departments (including
labor, personnel and wages management). Senior executives, including marketing manager,
principal treasurer and secretary of the board of directors, all hold full-time positions and
received payment accordingly from the Company. Appointments of directors have all been
conducted subject to the nomination by the board of directors and approved by the shareholders’
meeting, and there existed no Directors or General Manager nominated by government
institutions; there existed neither directors or general managers recommended by the
governmental department, nor the engagement and disengagement decision made by the Board of
Directors and Shareholders’ General Meeting with intervener from largest shareholder and
governmental institutions.

5. Organization Independence
The Company has its own integrated legal person’s administration structure and daily organized
running institutions.

IV. Establishment and implementation on internal control of the financial report
The Company established a serials system on internal control for financial report, and prepared
the Responsibility System on Significant Errors in Annual Information Disclosure and put into
effect strictly. During the implementation, the Company perfected the internal control system on
financial reports combined with the relevant regulations and actual situation of the Company,
make sure that the financial report were prepared in a truth-ness, accuracy and integrity way.
After self-inspection, there were no significant defects found in the internal control of financial
report of the Company in the year.
V. Opinions of the Board on self-evaluation of the internal control

In the report period, the Company complied with the basic principle of internal control, perfected
the internal control which meets the requirements from relevant regulations and laws of the State,
executives regulations and department regulations. The internal control covered every aspects of
production business for the Company with a scientific decision-making system, execution system
and supervise system. The internal control effectively controls the risk in and out the Company,
guarantees the normal implementation of the business activities and regulated operation, and
protects the assets in a safety and complete-ness way.
According to the Guide of Internal Control for Listed Company from Shenzhen Stock Exchange,
the Company meets the relevant requirements from CSRC and Shenzhen Stock Exchanges,
strictly, sufficiency and effective-ness on aspect of internal environment, target confirmation,
event reorganization, risk evaluation, risk strategy, control activities, information &
communication and verification & supervise. The Company will continuously perfect the internal
control system, make sure the effective-ness of internal control of the Company.
VI. Opinions of the Supervisory Committee on self-evaluation of the internal control

                                                19
In accordance with the Guide of Internal Control for Listed Company, Regulation Guide for
Listed Company in Main Board of Shenzhen Stock Exchange and Notice of Annual Report 2010
for Listed Company, the supervisory committee of the Board takes the opinion for self-evaluation
as:
In accordance with relevant regulations from CSRC and Shenzhen Stock Exchange, based on the
basic principle of internal control, the Company established a perfection internal control system
in the Company and every wholly-owned and controlling subsidiaries by self-situation
combination. Guarantee the normal works in business activities of the Company and protect the
safety and complete-ness of the assets. Internal control of the Company has a clearly structure, all
systems have effective connection, the internal auditing and personnel are in their own position
for duty which guarantee the effective-ness on supervise and implementation of key activities of
internal control. No violation of Guide of Internal Control for Listed Company and internal
control system of the Company occurred.
Supervisory committee takes the opinions that: the internal control system of the Company
reflected complete-ness, reasonable and efficiency in general; the self-evaluation shows the real
situation of the internal control fully, truth-ness and accuracy.
The supervisory committee reviewed the Self-evaluation Repot on Internal Control of the
Company, and considered that the report present a real situations on the internal control system of
the Company and takes no objection for that.
VII. Opinions of the Independent Directors on self-evaluation of the Company internal control

According to the relevant regulations of Guidance Opinion on Regarding Establishing
Independent Directors System of Listed Companies, Guidance to Internal Control for Listed
Companies, Regulation Guide for Listed Company in Main Board of Shenzhen Stock Exchange,
Rules Governing Listing of Stock On Shenzhen Stock Exchange and The Article of Association,
we carefully read self-evaluation of the Company internal control and realized the relevant
information specifically. With the independent standpoint and judgment, and the attitude of being
responsible for the Company and all the shareholders, we express independent opinion on
self-evaluation of the Company internal control after discussing as follows:

The Company had basically established perfect internal control system, and formed internal
control system with the base of the Company business control system, accounting system control
system, internal audit control system, information system control system and environment control
system. The internal control system could adapt the requirement of the Company management
and the demand of the Company development, provide reasonable assurance of compiling true
and fair financial statement, and provide assurance of normal operation of all business activities
and implementation of the relevant state laws and regulations and the Company internal rules and
regulations.
The Company internal control of subsidiary companies, related transaction, external guarantee,
the use of raised funds, important investment and information disclosure was strict, sufficient and
efficient, guaranteed the Company business management on the rails and had rationality,
integrality and validity.
The self-evaluation on internal control of the Company made by Board of Directors accorded
with the actual situation of the Company internal control.

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VII. Performance Assessment, Incentive Mechanism and implementation on senior executives by
the Company
The Company established Plan on Remuneration of Senior Executives and Incentive and
Examination of Remuneration, in which annual senior executives’ system was constituted by
basic annual remuneration and incentive remuneration, and annual income of senior executives
was judged by Remuneration and Remuneration Examination Committee of the Board of the
Directors. And should submit to the Board for approval.




                                             21
          Section VII. Particulars about Shareholders’ General Meeting

In the report period, the Company held three shareholders’ General Meeting and the details are as
follows:

1. On March 3, 2010, the Company held the First Extraordinary Shareholders’ General Meeting
2010. The public notice of resolutions of the meeting has been published on Securities Times,
China Securities Journal, Hong Kong Commercial Daily and Juchao website
(www.cninfo.com.cn) dated March 4, 2010.

2. On May 27, 2010, the Company held the Shareholders’ General Meeting 2009. The public
notice of resolutions of the meeting has been published on Securities Times, China Securities
Journal, Hong Kong Commercial Daily and Juchao website (www.cninfo.com.cn) dated May 28,
2010.
3. On December 24, 2010, the Company held the 2nd Extraordinary Shareholders’ General
Meeting 2010. The public notice of resolutions of the meeting has been published on Securities
Times, China Securities Journal, Hong Kong Commercial Daily and Juchao website
(www.cninfo.com.cn) dated December 25, 2010.




                                                22
                    Section VIII. Report of the Board of Directors

I. Discussion of the Board of Directors
(I) Review on operations in the report period

1. Affected by national economic stimulation policy along with Adjustment and Revitalization
Plan of Auto industry, Chinese auto industry developed rapidly in 2010. Due to prompt progress
of auto industry, business of the Company developed dramatically than the industry development,
various economic standards were exceeded goal of the beginning of the year.
(1) the products of fuel injection system, especially the growth of products that meet the
requirement of heavy-duty commercial vehicles; sales volume increased monthly due to the
expansion capacity of common-rail pump;
 (2) Products of tail processing system in a dramatically growth trend, owns more than 50%
market ration in comprehensive market on self-brand in domestic;
 (3) The intake system (supercharger) primary come into scale after acquisition, integration and
qualified personnel introduction, and have the ability to became the pillar industry of the
Company in future;
 (4) Self-operation ability of the Company rapidly promoted due to the cost control, efficiency,
central capital management and logistic perfection.

2. Main works from Board in the report period
 (1) Fine management; upgrade the quality of economy performance. Control the personnel scale,
implement the performance evaluation system and upgrade the labor effective-ness; lay-out the
production line reasonable, optimized the logistic, balance production and rapid the material
turnover; centralized the capital management, control the cash quantity strictly and higher the
efficiency on capital usage.
(2) Rapid the development of new products, created a R&D platform for products. Implemented
the construction of engineering research institution. The WAPS products and SCR products are in
a successful development.
 (3) Perfected the quality management and strength the quality control ability. Strength the
construction of quality system, and perfected the system document and evaluation standards;
strength the current management in process and intensified the approval in processing; strength
the classification management and quality control on purchase; strength the settlement on major
quality problems and reduced the losses in and out of the Company.
 (4) perfected the administration of the Company, lay-out the industries, make sure that the fully
promotion and implementation on the development strategy of the Company; purchased 30%
equity of Weifu Diesel System, 9.17% equity of Weifu International and Trade and 50% equity of
Kunming Xitong respectively held by Industry Group; enter the zone from urban; increased
capital in Ningbo Tianli Supercharger Co., Ltd.; target placement, raising capital for major
projects development.
3. Particulars about main business and operations of the Company
The Company was an industry of machinery manufacture. Mainly engaged in the manufactures
and sales of injection system products of diesel and fuel, products of tail processing system and
in-take system (supercharger) products.
The Company realized operation revenue and operation profit respectively amounting to RMB

                                                23
5,371,213,200 and RMB 1,486,288,600 in the full year, increased by 74.36% and 219.98%
respectively over the same period of last year, and realized net profit attributable to parent
company with RMB 1,340,291,100 and increased by 199.02% over the same period of last year.
(1) Main operations classified according to industry and products
                                                             Unit: RMB’0000
                                 Main operations classified according to industry
                                                                                               Increase/decre
                                                              Increase/decrea Increase/decreas
                                                                                                ase in gross
                                                    Gross      se in operation e in operation
                         Operation                                                               profit ratio
  Industry or products             Operation cost profit ratio income over     cost over same
                          income                                                               over the same
                                                     (%)       same period of period of last
                                                                                               period the last
                                                                last year (%)     year (%)
                                                                                                  year (%)
 Parts of automobile     484,199.77      340,837.72        29.61%        74.76%            58.54%           7.20%
                                 Main operations classified according to products
 Fuel injection system
                         417,213.60      284,027.20        31.92%          79.02%         59.49%            8.34%
 of automobile
 Auto Tail Processing
                          62,656.87       53,255.32        15.00%          47.63%         49.32%            -0.96%
 System
 In-take System             4,329.30       3,555.20        17.88%         177.22%        187.50%            -2.94%
 Total                   484,199.77      340,837.72        29.61%          74.76%         58.54%            7.20%
     (2) Main suppliers and clients                                                      Unit: RMB’0000
                                                                         Occupied % in total
    Amount of purchasing from top 5 suppliers          108,444.81                                   32.47
                                                                         purchasing amount
                                                                       Occupied % in total sales
    Amount of sales from top 5 clients                     218,865.2                                40.74
                                                                              amount
4. Explanation on material changes in assets composition and items of profit statement over the
same period of last year
(1) Monetary fund: the monetary fund end of 2010 was increased RMB 171.4636 million
compared to the end of 2009 with 40.30% up, mainly due to the increase of net cash flow from
operating in the year.
(2) Note receivable: the note receivable end of 2010 was increased RMB 381.6127 million
compared to the end of 2009 with 84.12% up, mainly due to the increase of operating income in
the year.
(3) Account receivable: the account receivable end of 2010 was increased RMB 254.4649 million
compared to the end of 2009 with 31.28% up, mainly due to the increase of operating income in
the year. (4) Account paid in advance: the account paid in advance end of 2010 was increased
RMB 64.4492 million compared to the end of 2009 with 158.24% up, mainly due to the account
paid in advance for materials purchased and equipment repaid account increased from the parent
company and Weifu Jinning that for reformation of reserve and fixed assets increased purpose.
(5) Dividend receivable: dividend receivable at end of 2009 have received in 2010.
(6) Inventory: inventory end of 2010 was increased RMB 293.7886 million compared to the end
of 2009 with 39.45% up, mainly due to the increased of sales scale that increased the materials
reserve.
(7) Long-term equity investment: long-term equity investment end of 2010 was increased RMB
                                                      24
544.3035 million compared to the end of 2009 with 40.38% up, mainly caused by the
dramatically soaring profit of investee company that benefit from the rapidly development in auto
industry.
(8) Construction in progress: construction in progress end of 2010 was increased RMB
114.6609 million compared to the end of 2009 with 355.37% up, mainly caused by the
incensement in technical reformation and R&D test center construction by parent company.
(9) Short-term loans: short-term loans end of 2010 was decreased RMB 262.9859 million
compared to the end of 2009 with 49.34% down, mainly caused by the increased of cash flow
from operating activities, and partial of the bank loans have paid.
(10) Note payable: note payable end of 2010 was increased RMB 210.0952 million compared to
the end of 2009 with 116.79% up, mainly caused by the expansion of business scale that
increased the materials purchasing which increased the note payable correspondingly.
(11) Account payable: At the end of 2010, account payable increased RMB 333.3389 million with
38.68% up as compared to the end of 2009, mainly due to the expansion of sales scale which
increased the materials purchase that increased the account payable.
(12) Wages payable: At the end of 2010, wages payable increased RMB 90.2024 million with
50.24% up as compared to the end of 2009, mainly caused by the bonus fund RMB 73,000,000
was withdrawal for higher the salary bonus of employee, which withdrawal by the parent
company that approved by Shareholders’ General Meeting of 2010.
(13) Operating income and operating cost: The operating income of 2010 increased RMB
2,290,596,900 with 74.36% up as compared to year of 2009, mainly due to the dramatically
soaring in operating income benefit from the rapidly development of motor industry in domestic.
The operating cost of 2010 increased RMB 1,403,529,100 with 56.69% up as compared to year
of 2009, mainly due to the increased from operating income.
(14) Business tax and surcharge: The business tax and surcharge of 2010 increased RMB
13,645,100 with 74.42% up as compared to year of 2009, mainly due to the increased from
operating income.
(15) Sales expenses: The sales expenses of 2010 increased RMB 28,831,300 with 30.47% up as
compared to year of 2009, mainly due to the increased from operating income.
(16) Administrative expense: The administrative expense of 2010 increased RMB 138,073,200
with 43.27% up as compared to year of 2009, mainly caused by the bonus fund RMB 73,000,000
was withdrawal for higher the salary bonus of employee, which withdrawal by the parent
company that approved by Shareholders’ General Meeting of 2010; and the increased investment
in R&D.
(17) Investment income: The investment income of 2010 increased RMB 318,459,200 with
85.60% up as compared to year of 2009, mainly due to the investee enterprise was realized
dramatically profit soaring benefit from the rapidly development of motor industry.
(18) Income tax expense: The income tax expense of 2010 increased RMB 99,431,400 with
521.61% up as compared to year of 2009, mainly due to the payable income tax dramatically
increased from the dramatically profit soaring in the period.

5. Material changes in cash flow composition in the report period
(1) Net cash flow arising from operation activities: amounted to RMB 536.1719 million in 2010,
increased RMB 320.2789 million flowed in compared to 2009, which was mainly due to the
rapidly development in main business of 2010.
(2) Net cash flow arising from investment activities: amounted to RMB-17.7173 million in 2010,
less RMB 62.4368 million flowed in compared to 2009, which was mainly due to the equity
acquisition and the increased of external investment in 2010.

                                               25
(3) Net increase in cash and cash equivalents: amounted to RMB 137.6924 million in 2010,
increased RMB 305.4499 million flowed in compared to 2009, which was mainly due to the cash
flow increased from operating activities in 2010.
6. Utilization of equipments, obtaining of orders, sales or overstock of products and change of
technical personnel
(1) In the report period, production equipments worked well and utilization rate of main
equipments was over 95%.
(2) In the report period, the products inventory of the Company increased RMB 32. 863 million
over period-begin.
(3) In the report period, technical personnel of the Company remain unchanged.
7. Operation status of main holding company and share-participating company
(1) Nanjing Weifu Jinning Co., Ltd., (the Company holds 80% equity), was mainly engaged in
the production of diesel and fuel injecting system products (the core product was VE distribution
pump) with its registered capital amounting to RMB 346,286,800. At the end of year 2010, its
total assets amounted to RMB 963,929,600 and its net profit was RMB 161,498,600 for 2010.
(2) Wuxi Weifu Leader Catalytic Converter Co., Ltd., (the Company holds 94.81% equity), was
mainly engaged in production of products such as cleaners and mufflers of tail gas etc., with
registered capital amounting to RMB 260 million. At the end of year 2010, its total assets
amounted to RMB 849,518,800 and its net profit was RMB 123,964,100 for 2010.
(3) Bosch Automobile Diesel System Co., Ltd., (the Company holds 31.50% equity), was mainly
engaged in production of electrical control diesel oil system series, with registered capital
amounting to US$ 200 million. At the end of year 2010, its total assets amounted to RMB
5,042,138,800 and its net profit was RMB 1,300,782,000 for 2010.
(4) Zhonglian Automobile Electronics Co., Ltd., (the Company holds 20% equity), was mainly
engaged in production of automobile electronic control system products, with registered capital
amounting to RMB 600.62 million. At the end of year 2010, its total assets amounted to RMB
2,338,294,000 and its net profit was RMB 996,294,000 for 2010.
8. Problems exist in 2010
In 2010, the Company gained a rapidly development in manufacture operation, but still have
same distance in the work, main performance as:
(1) The sales platform was in an insufficient advantage, have no sufficient scientific judgment on
complex market; the promotion of the key products and new products meets no requirement of
the rapidly development of the Company.
(2) Management ability on new products needs more qualification; the tempo and quality of new
products meets no requirement of eth clients; has a distance in the development ability with
clients.
(3) The reflection tempo of manufacture system not suited to the rapidly development of the
market.
(II) Outlook on future development of the Company
1. Analysis on industry trends
Trends on automobile industry in China within future years:
(1) The automobile industry in China during the “Twelve Five-Year” will maintain the steady
development.
(2) The investment scale in fixed assets still in a high standard. The development of commercial
vehicle benefits a lot from the rapidly urbanization and fully expansion on comfortable housing

                                                26
projects.
(3) The core spare parts of vehicles will upgrade in technical standard due to the continually
promotion of emission regulations which came out with a separation industry as a result.
2. Future developing strategy of the Company
According to the technical upgrade of automobile industry and the requirement from
energy-saving and emission reduction, the Company’s future development strategy as:
(1) Developed the products fuel injection system that meets the requirement of emission
regulations of the State activity, stand in the point of development-independent as the realization
of future development strategy. Developed relevant tail processing system products with
energy-saving and emission reduction and auto intake system that meet the requirement from
State. Forming an integrity industry chain to realized system supply. Strive to take the priority in
industry among the market.
(2) Higher the manufacture technology and expand the use-rage of products in traditional
industry with the goal to be the No. 1 in domestic automobile (power project) on core spare part
of the auto.
3. Capital demand for future development of the Company, financing and utilization plan
In accordance to demand for future development, the Company will promptly make development
programming and implementation scheme. Through raising proceeds by capital markets, the
Company guarantees proceeds supply for future development.
4. Risks existed in future development
Fuel ejection system industry is severely influenced by state policy, similar to auto industry,
especially change and implementation power of the industry-applicable policies. Main risks
existed in future development:
(1) Promotion speed and implementation power of state policies relevant to saving energy and
reducing emission;
(2) Changes in raw materials and interest rate of loans.
5. The price of raw materials soaring resulted from the rapidly economy recovery; the inflation
brought proper pressures on the manufacture business of the Company. Measures will take to
prevent the above mentioned risks:
(1) Strength analyst on the national macro-policy and the variation of market tendency, adjusted
operation strategy timely.
(2) Continuously strength the internal management, higher the quality of the products, reduced
the materials consumption and cost reduction activates for the purpose of maximized the
economy benefic.
6. Main works in 2011
(1) To establish a R&D platform, gain progress in the development of new products;
(2) Higher the quality on products and service, rank in first place in the industry on core business;
(3) Risk prevention with innovation and cost reduction, higher the ability of cost control;
(4) establish a long-term incentive system, lay out a qualified personnel basis on the healthy
development of the Company;
(5) Implementation significant projects to higher the ability of sustainable development of the
Company.
II. Investment of the Company
1. Application of raised proceeds
No re-financing activities occurred in the report period, the last raised capital were all contributed to

                                                   27
the relevant investment projects that approved by Shareholders’ General meeting.
2. Investment with the non-raised proceeds
During the report period, the investments with the non-raised proceeds are as follows:
The total amount of investment spent on main projects of technical transformation and external
investment was RMB 295,528,900.
(1)RMB 0.246 million was input for high-pressure common rail project in this report period.
(2)RMB 34.741 million was input for the R& D of WAPS, industrialization and the capacity
promotion on spare parts of diesel common-rail system.
(3) Project of engineering research institution input RMB 42.811 million in the report period.
(4) Equity acquisition of 30% equity of Wuxi Weifu Automotive Diesel System Co., ltd. and
9.17% equity of Weifu International Trade Co., Ltd. and 50% equity of Kunming Xitong
Machinery Co., Ltd. held all by Wuxi Industry Development Group Co., Ltd. by the Company
were totally input RMB 127.5009 million in the report period.
(5) The Company purchased 51% equity of Ningbo Tianli Supercharger Co., Ltd. by
capital-increased, RMB 90.23 million was input in the report period totally.
III. Routine work of the board of directors
(I) Meetings and resolutions of the board of directors
1. On January 25, 2010, the board of directors of the Company held the 9th Meeting of 6th Board,
and the contents of the meeting was published respectively on China Securities Journal,
Securities Times, Hong Kong Commercial Daily and Juchao website (www.cninfo.com.cn) dated
January 27, 2010.
2. On April 20, 2010, the board of directors of the Company held the 10th Meeting of 6th Board,
and the contents of the meeting was published respectively on China Securities Journal,
Securities Times, Hong Kong Commercial Daily and Juchao website (www.cninfo.com.cn) dated
April 22, 2010.
3. On April 23, 2010, the board of directors of the Company held the 11th Meeting of 6th Board,
and the contents of the meeting was published respectively on China Securities Journal,
Securities Times, Hong Kong Commercial Daily and Juchao website (www.cninfo.com.cn) dated
April 25, 2010.
4. On August 9, 2010, the board of directors of the Company held the 12th Meeting of 6th Board,
and the contents of the meeting was published respectively on China Securities Journal,
Securities Times, Hong Kong Commercial Daily and Juchao website (www.cninfo.com.cn) dated
August 11, 2010.
5. On October 25, 2010, the board of directors of the Company held the 13th Meeting of 6th Board,
and the contents of the meeting was published respectively on China Securities Journal,
Securities Times, Hong Kong Commercial Daily and Juchao website (www.cninfo.com.cn) dated
October 27, 2010.
6. On November 11, 2010, the board of directors of the Company held the 14th Meeting of 6th
Board, and the contents of the meeting was published respectively on China Securities Journal,
Securities Times, Hong Kong Commercial Daily and Juchao website (www.cninfo.com.cn) dated
November 15, 2010.
7. On December 6, 2010, the board of directors of the Company held the 15th Meeting of 6th
Board, and the contents of the meeting was published respectively on China Securities Journal,
Securities Times, Hong Kong Commercial Daily and Juchao website (www.cninfo.com.cn) dated
December 8, 2010.

                                               28
(II) Implementations of resolutions of the Shareholders’ General Meeting
1. Approved by the 1st Extraordinary Shareholders’ General Meeting 2010:
(1) Thirty percent equity of Weifu Automotive Diesel System Co., Ltd. held by Wuxi Industry
Development Group Co., Ltd. was purchased by the Company;
(2)Nine point seventeen percent equity of Weifu International Trade Co., Ltd. held by Wuxi
Industry Development Group Co., Ltd. was purchased by the Company;
(3) Fifty percent equity of Kunming Xitong Machinery Co., Ltd. held by Wuxi Industry
Development Group Co., Ltd. was purchased by the Company;
Implemented till end of the report period.
2. The Proposal on Distribution of Bonus and Dividend confirmed by 2009 Annual Shareholders’
General Meeting was implemented completely in July 2010. Distribution plan was cash dividend
RMB 1.50 (tax included) per 10 shares.
3. Concerning the private placement of the Company which approved by 2nd Shareholders’
General Meeting 2010, the event have been submitted to Ministry of Commerce for approval,
after that should submit to CSRC for approval.
(III) Duty performance of the Audit Committee of the Board
The audit committee of the Board consisted of three directors with two independent directors and
one shareholders director. The professional CPA of independent directors will be the director
committee.
In accordance with the relevant regulations of CSRC, Shenzhen Stock Exchange, Implementation
Fine of Audit Committee of the Board, Work System of Annual Report for Independent Director
and Work Procedures of Annual Report for Audit Committee of Board, the audit committee of the
Board implemented followed duties in responsibility as:
1. Reviewing relevant information and the work plan of annual auditing 2010 of the Company.
Communication with CPA who works in Jiangsu Gongzheng Tianye Certified Public Accountants
Co., Ltd. for auditing time schedule confirm.:
Audit committee of the Company reviewed the Work Plan of Annual Auditing 2010 submitted on
December 30, 2010 from financial control department, communicated with the person in charge
of the auditing work of the Company from Jiangsu Gongzheng Tianye Certified Public
Accountants Co., Ltd., make-out an accord opinions that, the plan prepared in a detail way with
clearly responsibility on person which guarantee the smoothly work on Annual Auditing Work of
2010 of the Company.
2. The Audit Committee examined the primary prepared financial statements of the Company
before the entrance of the CPA for annual audit, and issued a written opinion as:
Audit committee reviewed the primary prepared financial statement submitted on January 4, 2011
by financial control department, which including the balance sheet statement dated December 31,
2010, profit statement of 2010, Changes on Shareholders’ Equity, cash flow statement and part of
the note to financial statement.
The audit committee takes the opinions as followed by inquiring relevant financial personnel and
management personnel, reviewing the resolutions and records of Shareholders’ General Meeting,
Supervisory Committee and Board of Directors Meeting, relevant book and vouchers as well as
the analysis on significant financial data
(1) The data carried in financial accounting statement of the Company reflected the real situation
of the assts liability date December 31, 2010 and manufacture business outcome of 2010.
(2) Performing the financial auditing 2010 based on the above mentioned financial statement

                                               29
with one consent, and submitted to financial control department for relevant statement
preparation according to Accounting Standard for Business Enterprises. Make sure the financial
statement carried with a truth, completeness and fair-ness way.
(3) Concerning the problems found in auditing and report submission schedule, the audit
committee was communicated with the CPA after their entrance for auditing.
(4) After the primary auditing opinion issued from annual auditing CPA, the audit committee
reviewed the financial accounting statement 2010 again and with the followed written opinion as:
The audit committee reviewed the financial statement that submitted by financial control
department on February 25, 2011, being primary auditing opinion issued by annual auditing CPA
and issued by the Company which including the balance sheet dated December 31, 2010, Profit
Statement of 2010, Changes on Shareholders’ Equity, cash flow statement and not of financial
statement. The audit committee takes the opinions as:
①the data carried in financial accounting statement 2010 of the Company reflected the real
situation of the assts liability date December 31, 2010 and manufacture business outcome of
2010.
②Performing the Annual Report 2010 and Summary of Annual Report 2010 based on the above
mentioned financial statement with one consent, and submitted to the Board for approval after
audit committee reviewed. Furthermore, required the CPA completed the auditing work of the
Company as soon as possible according to general auditing plan, make sure the disclosure on
Annual Report 2010 will timely for public.
3. After the Auditing Report 2010 issued by Jiangsu Gongzheng Tianye Certified Public
Accountants Co., Ltd, the audit committee convening a meeting for the conclusion on auditing
work from the CPAs:
(1) Conclusion report of Auditing Work 2010 from Audit Committee
Audit committee of the Company reviewed the Work Plan of Annual Auditing 2010 submitted on
December 30, 2010 from financial control department, communicated with the person in charge
of the auditing work of the Company from Jiangsu Gongzheng Tianye Certified Public
Accountants Co., Ltd. on January 3, 2011 concerning the above mention working plan, make-out
an accord opinions that, the plan prepared in a detail way with clearly responsibility on person
which guarantee the smoothly work on Annual Auditing Work of 2010 of the Company.
Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd.
Totally 11 (person in charge of the project included) auditing personnel contained in Jiangsu
Gongzheng Tianye Certified Public Accountants Co., Ltd., according to the appointment above
mentioned, they enter the office for auditing on January 5, 2011. Among which, subsidiaries that
in the consolidation scope of the Company were finished in their field auditing on February 25,
2011 by 11 auditors. The person in charge of the auditing project communicated with the
Company and members of the audit committee concerning the followed aspects: statement
consolidation, accounting adjustment, accounting policy adoption, financial works that needs
perfection found in auditing. The communication makes clear and more understanding in aspects
of the operation situation, financial treatment, adoption and implementation of accounting
standards for business enterprises between the Company and every members which reformed a
maturity judgment on fair-ness auditing conclusions that issued by the CPAs. Concerning the
problems found in auditing process during the time of field auditing by CPA, the audit committee
pay more attention on these problems that communication with CPA face to face: 1.whether the
transaction all record or not, transaction events whether truth or not and information whether

                                               30
integrity or not; 2. Whether the financial statement prepared under the regulations of Accounting
Standards for Business Enterprise, CSRC and financial system of the Company or not; 3. whether
the annual stocktaking implemented successfully or not, whether the conclusion reflect the assets
quality or not; 4. whether compliance with the terms of regulations, laws, other eternal
requirements, management policies, indications and other internal requirements by financial
control department or not; 5. whether construction or perfected the system of internal accounting
control or not; 6. whether obtained sufficient and proper evidence for auditing from vary
department by CPAs or not. The annual auditing CPA positively confirmed the above mentioned
problems and issued the auditing report with unqualified opinion on March 17, 2011.
Audit committee of the Board takes the opinions that: annual auditing CPA performing the
auditing work on the Company strictly complied with regulations of the Independent Auditing
Criterion for Chinese Registered Accountant with sufficient audit time, reasonable personnel
allocation, execution capability qualified. The auditing report issued by annual auditing CPA was
reflected the real financial status of the Company dated December 31, 2010 and business results
of 2010 and cash flow, auditing conclusion also complied with real situation of the Company.
②The third meetings of audit committee of the Board for Weifu High-Technology Group Co.,
Ltd.
The 3rd Meeting of Audit Committee of the Board was held at 9 a.m. in conference room on
March 17, the meeting attend-able with 3 persons, and 3 persons present in person. All members
of the audit committee passed the followed proposals by signature decision:
Proposal I: Financial Settlement Report 2010 approved;
Proposal II: Full Text of Annual Report 2010 and its Summary approved;
Proposal III: Conclusion Report of Auditing Work 2010 from Audit Committee of the Board
approved;
Proposal IV. Proposal of CPA Engagement for 2011 approved.

(IV) Duty performance of the Remuneration and Examination Committee of the Board
According to Plan on Remuneration and Incentive and Examination of Remuneration of the
Senior Executives of the Company, the Company appraised salary of directors, supervisors and
senior executives in the report period. The annual remuneration (before taxed) of the directors,
supervisors and senior executives of the Company disclosed in the 2010 Annual Report, which
covers the basic salary, bonus, allowance, welfare of employee, various insurance premium,
public reserve, annual bonus and remuneration received from the Company in other way, is the
same to the remuneration they actually receive.

IV. Profit distribution preplan of 2010
According to the auditing report 2010 of the Company offered by Jiangsu Gongzheng Tianye
Certified Public Accountants Co., Ltd.: the consolidated net profit of the Company amounts to
RMB 1,381.36 million, among which RMB 1,340.29 million for the net profit attributable to
owners of parent company, RMB 41.07 million for minority shareholders’ equity. Net profit of
the parent company is RMB 873.51 million.
According to the regulations of the Article of Association, the parent company should take 10%
of its net profit for withdrawing statutory surplus public reserve unless statutory surplus public
reserve took over 50% of registered capital. No statutory surplus public reserve withdrawal in
2010 due to the accumulated statutory surplus public reserve that withdrawal reached 50% of the

                                                31
registered capital of the Company in 2009.
Annual profit distribution re-plan for 2010: The Company plans to take the total shares at the end
of 2010 amounting to 567,275,995 shares as the radix, and distributed RMB 4.35 (tax included)
cash dividend for every 10 shares of all the shareholders, so totally RMB 246.7651 million
dividends could be sent out.
Form of cash dividend of the Company in the last three years       Unit: RMB
                                 Net profit attributable to
                                                                Proportion of net profit
             Amounts of cash      shareholders of listed
  Dividend                                                    attributable to shareholders Annual distributable
              dividend (tax        companies in annual
    year                                                         of listed companies in          profit
                included)        consolidated accounts of
                                                                 consolidated accounts
                                         dividend
    2009         85,091,399.25              448,224,754.55             18.98%                  427,026,262.92

    2008         91,898,711.19              193,418,292.38             47.51%                  172,949,250.10

    2007         86,793,227.23              230,829,383.93             37.67%                  211,224,921.00


V. Explanation on fund occupation made by the holding shareholders and other related
parties of the Company in 2010 issued by Jiangsu Gongzheng Tianye Certified Public
Accountants Co., Ltd.

                            Explanation on Fund Occupation Made
             By the Holding Shareholders and Other Related Parties of the Company
                                                           SG W [2011] E No. 1097

All the shareholders of Weifu High-Technology Group Co., Ltd.,
We accepted entrustment to audit 2010 Financial Report for Weifu High-Technology Group Co.,
Ltd. (Hereinafter referred to Weifu High Technology), and issued the unqualified auditing
report of SG W [2011] A No. 163 on March 17, 2011.
According to regulations of Notice of Regulating the Funds between Listed Companies and
Associated Parties and Listed Companies’ Provision of Guarantee to Other Parties-No.56 [2003]
document promulgated by CSRS and State-owned Assets Supervision & Administration
Commission of State Council, conclusion sheet of fund occupation by controlling shareholders
and other related parties of the Company 2010 (conclusion sheet for short) was prepared by
Weifu High Technology attached.
Weifu High Technology responsible for the truth-ness, legality and completeness of the
conclusion sheet preparation and disclosure. We verified the information carried in conclusion
sheet with relevant accounting information examined during the financial statement 2010 and
audited financial statements, and found no differences in significant aspects while verifying. We
auditing the relevant related transactions occurred in the Annual Financial Statement 2010, no
auditing procedures on the information carried in conclusion sheet. The conclusion sheet should
be read with financial statement together for further understanding purpose in fund occupation
from controlling shareholders and other related parties of Weifu High-technology of 2010.
The specific explanation for fund occupation by controlling shareholders and other related parties
of Weifu High-technology for disclosure purpose only, no other purpose permit.
Attachment: conclusion sheet of fund occupation by controlling shareholders and other related
                                                   32
parties of the Company 2010

 Jiangsu Gongzheng Tianye Certified Public Accountants   Chinese CPA: LIU YONG
 Co., Ltd.



                    Wuxi   P. R. C.                      Chinese CPA: HE XIAO FENG



                                                         March 17, 2011




                                                  33
                     Summary table of Weifu High-Tech 2010 annual capital occupation of controlling shareholders and other related parties
                                     Related
                                   relationship                                               2010 annual
                      Name of                        Accounting          Balance of                              2010 annual     2010 annual        Balance of
                                     between                                             accumulated amount
Types of capital       capital                         subjects      occupied capitals                            interest of    accumulated     occupied capitals   Reason for     Nature of
                                   occupation                                                of occupation
occupation party     occupation                     calculated by     at year-begin of                             occupied       amount of       at year-end of     occupation    occupation
                                    party with                                           (interest of occupied
                        party                     listed companies          2010                                    capitals       payment             2010
                                       listed                                              capital excluded)
                                    companies
  Controlling
 shareholders,
actual controller
 and affiliated
  corporations                                                                                                                                           -

   Subtotal              -              -                -                   -                     -                  -               -                  -
                                                  Other receivable                                                                                                    Capital     Non-operating
                     Weifu Lida    Subsidiary                         24,000,000.00        287,650,000.00        4,553,800.00   226,650,000.00    89,553,800.00
                                                   accounts etc                                                                                                       contacts     occupation
 Subsidiaries of
                                                    Receivable                                                                                                        Capital     Non-operating
listed companies    Weifu Mashan   Subsidiary                         32,000,000.00                              1,555,200.00    1,555,200.00     32,000,000.00
                                                   accounts etc                                                                                                       contacts     occupation
    as well as
                      Weifu                         Receivable                                                                                                        Capital     Non-operating
     affiliated                    Subsidiary                         70,000,000.00                              1,360,800.00    1,360,800.00     70,000,000.00
                     Chang’an                     accounts etc                                                                                                       contacts     occupation
   corporations
                       ITM                        Other receivable                                                                                                    Capital     Non-operating
                                   Subsidiary                         30,629,791.33         15,502,813.04        368,600.00      368,600.00       46,132,604.37
                     Machinery                     accounts etc                                                                                                       contacts     occupation
   Subtotal              -              -                -           156,629,791.33        303,152,813.04        7,838,400.00   229,934,600.00   237,686,404.37
Related natural
                                                                                                                                                         -
  person and
controlled legal
                                                                                                                                                         -
    person
   Subtotal              -              -                -                   -                     -                  -               -                  -
 Other related
                                                                             -                     -                  -               -                  -
 parties as well
  as affiliated
                                                                                                                                                         -
  corporations
   Subtotal              -              -                -                   -                     -                  -               -                  -

     Total               -              -                -           156,629,791.33        303,152,813.04        7,838,400.00   229,934,600.00   237,686,404.37




                                                                                                 34
                      Section IX. Report of Supervisory Committee

       In 2010, Supervisory Committee of the Company exerted supervisory function independently
to inspect and supervise material decision-making, operational activities and performance of
directors and senior executives in line with obligations and privileges granted by Articles of
Association and relevant regulations of Company Law, better safeguarding interest of the Company
and investors.
Supervisory Committee totally held 2 meetings in this year, presented all Board meetings without
voting rights and attended shareholder’s general meeting for 3 times. Supervisory Committee
examined 2009 Annual Report, The First Quarterly Report of 2010, 2010 Semi-Annual Report and
The Third Quarterly Report of 2010 presented by the Board, inspected financial information in the
periodic reports of the Company and thought that: In 2010, the Company seized opportunity of
rapid development of auto-industry, placed emphasis on new product development and
industrialization of the Company and made every effort to construct core competitive
competitiveness through adjusting product structure, promoting fine production, merger and
acquisition and optimization of personnel composition, bringing rapid growth to economic interest
of the Company and laying foundation for the domestic leading position of the Company in auto
(power engineering) core components.
Judging from inspection on operation and financial position of the Company and supervision on
directors and senior executives, we held a view that:
1. The Company could function according to laws in 2010. Board and Directors all strictly
complied with discussion procedures for the Board while making significant decisions. In term of
internal management, the Company further improved internal control system and earnestly put it
into effective action. Directors and senior executives could abide by national laws and rules and
Articles of Association while performing their duties, and defended interest of the Company and
shareholders.
2. Based on the inspection on financial position, we thought that 2009 Annual Report, The First
Quarterly Report of 2010, 2010 Semi-annual Report and The Third Quarterly Report of 2010 truly
reflected financial position and operational achievements of the Company.
3. The Company’s transactions with related parties were all normal business in nature and were
approved by shareholders’ general meeting, which accorded with the principles of market trade.
There was no harmful behavior to interest of the Company.
4. The purchase and selling of assets of the Company were completed in accordance with approval
procedure and notice liability, the trading price was in accordance with estimation report issued by
appraisal institution, the price was fair and just.
5. Supervisory Committee urged the Board to further optimize internal control system. According to
CSRC’s requirements of strengthening special administration campaign of listed companies and
continuing to rectify, Supervisory Committee earnestly supervised and urged the Board to further
implement construction of internal control system so that the internal control would be perfected in
system and be strictly implemented to effectively safeguard interest of all shareholders.
The board of supervisors carefully reviewed the Self-estimation Report of Internal Control
submitted by the board of directors, and believed self-estimation report of the board of directors was
real in reflecting internal control construction of the Company, having no argue about that.




                                                  35
                                 Section X. Significant Events

I. In the report period, the Company had no significant lawsuits and arbitrations.

II. In the report period, the Company had no significant purchase of assets.

1. On Mar. 3 of 2010, the Company held the first extraordinary general meeting of shareholders of
2010, reviewed and approved:
(1) The Company purchased 30% equity of Wuxi Weifu Automobile Diesel System Co., Ltd held by
Wuxi Industry Development Group Co., Ltd;
(2) The Company purchased 9.17% equity of Wuxi Weifu International Trade Co., Ltd held by
Wuxi Industry Development Group Co., Ltd;
(3)The Company purchased 50% equity of Kunming Xitong Machinery Co., Ltd held by Wuxi
Industry Development Group Co., Ltd, which has been totally completed till the end of reporting
period.
(Details could be found in notices published on Securities Times, China Securities , Hong Kong
Commercial Daily and website designated by CSRC dated Mar. 4, 2010)
Purchase of equity of the above objective companies further solved related investment between the
Company and large shareholders and benefited further completion of corporate governance. At the
same time, it was helpful for regulation of industry structure and products structure, effectively
improved efficiency of corporate decision and ensured overall promotion and implementation of
development strategy.
2. On Aug. 9 of 2010, the Company held the 12th meeting of the 6th board of directors, which
reviewed and approved the Proposal of Investing More to Purchase 51% Equity of Ningbo Tianli
Supercharger Co., Ltd. The Company purchased 51% equity of Ningbo Tianli in form of cash
investment with amount of 90.23 million yuan. After the increased investment and purchase,
registration capital of Ningbo Tianli increased from 51.30 million yuan to 104.69 million yuan, 51%
equity was held by the Company, which was totally completed till the end of reporting period.
(Details can be found on notices of Securities Times, China Securities Journal, Hong Kong
Commercial Daily and Juchao Website (www.cninfo.com.cn)on Oct. 27 of 2010). The increasing
investment and purchase of 51% equity of Ningbo Tianli did good for industry chain taking Weifu
as automobile core parts manufacture, making use of market platform of Weifu, conducting
systemic goods supply, laying a foundation for a stronger Weifu.
III. Plan for annual non-public stock issue of the Company
The 14th and 15th meeting of the 6th board of directors decided to issue no-public stock.
The issuing targets were large shareholder Industry Group and foreign strategic investor Bosch
Company. After the issue, Industry Group was still the biggest shareholder of the Company.
Amount of this non-public stock issue was not beyond 112858000 shares (112858000 shares
included). Industry Group planed to increase holding of A stock of Weifu High-Technology
36017600 shares, thus holding proportion became 20% after increase; Bosch Company planned to
increase holding of A stock of us 76840400 shares, thus holding proportion became 14% after
increase. If dividend payout, present shares and capital reserve into share capital or other exact
interest events happened during pricing ex-date to the first date of issuing period, the amount of this
issue will be adjusted correspondingly.
Specific investors of this issue subscribed shares in cash.
Subscribed shares by Industry Group and Bosch Company can’t be transferred in 36 months since
ending of issue after the completion of the issue.
The issue price of the non-public issue was 25.83 yuan per share. If dividend payout, bonus share
and capital reserve into share capital or other exact interest events happened during pricing ex-date
to the first date of issuing period, the price of this issue will be adjusted correspondingly with


                                                  36
  ex-warrant and ex-divided. .
  After the completion of this non-public issue, old and new shareholders can share undistributed
  profit before the completion of this non-public issue of the Company.
  Funds raised from this non-public issue are predicted to be applied for R&D and industrialization of
  WAPS as well as improvement of parts productivity of diesel common-rail system, industrialization
  of products of post-processing system of automobile exhaust, engineering institution project,
  industry park project, R&D of automobile motive battery material and motive battery, equity
  purchase and supplementary current capital or other projects.
  The 2nd extraordinary general meeting of shareholders of 2010 reviewed and passed the proposal of
  non-public stock issue. The non-public issue plan still needs approval of Commerce Department
  and relevant government departments. It could be conducted after approval of China Securities
  Regulatory Commission, and takes the final approval of CSRC as the criterion. (Details can be
  found on decision notice of 2010 the 2nd extraordinary general meeting of shareholders on
  Securities Times, China Securities Journal, Hong Kong Commercial Daily and Juchao Information
  Website (www.cninfo.com.cn) on Dec. 25 of 2010.)
  Presently it has been submitted to Commerce Department for approval and reply.

  IV. Particulars on sharing securities and insurance companies:                                        Unit: RMB
                                                Proporti                                        Change
                                                                                                         Accoun
                                                 on in                                            in
                     Initial                                                     Gains and                 ting
 Name of the                        Amount held equity Book value at                           owners’            Share
                  investment                                                     losses in               calculat
  party held                          (Share)    of the  period-end                            equity in          source
                    amount                                                     report period                ion
                                                Compan                                        the report
                                                                                                           item
                                                   y                                            period
                                                                                                         Long-te
Guolian                                                                                                     rm
                                                                                                                  Subsc
Securities Co.,   12,000,000.00        18,000,000   1.20%        12,000,000.00 5,400,000.00         0.00 equity
                                                                                                                  ription
Ltd.                                                                                                     investm
                                                                                                            ent
Nanjing                                                                                                  Long-te
Hengtai                                                                                                     rm
                                                                                                                  Subsc
Insurance and      1,000,000.00         1,000,000   1.85%         1,000,000.00     10,000.00        0.00 equity
                                                                                                                  ription
Broker    Co.,                                                                                           investm
Ltd.                                                                                                        ent
                                                                                                         Long-te
Jiangsu HSBC                                                                                                rm
                                                                                                                  Subsc
Insurance              500,000.00        500,000 10.00%             500,000.00           0.00       0.00 equity
                                                                                                                  ription
Agents Limited                                                                                           investm
                                                                                                            ent
     Total        13,500,000.00        19,500,000    -           13,500,000.00 5,410,000.00          0.00      -        -


  V. The related transactions of the Company in 2010
  1. Routine related transaction
                                                                                    Unit: RMB’0000
          Type of                                                                     Transaction      Transaction
                         Contents of
          related                                    Related units                     amount in        amount in
                         transaction
        transaction                                                                      2010             2009
      Purchase of       Purchase of      Wuxi Weifu Precision Machinery
                                                                                         11,858.23           8,880.10
      goods      and    components       Manufacturing Co., Ltd.
      labor force                        Kunming Xitong Machinery Co., Ltd.                 552.41                 0

                                         Bosch Automotive Diesel System Co.,             29,162.73          19,372.30


                                                            37
                                     Ltd.
                                     Wuxi Weifu-Autocam Precision
                                                                                  24.21               69.40
                                     Machinery Co. Ltd.
                                     Wuxi Weifu Environmental Catalyst
                                                                              42,796.09        19,833.90
                                     Co., Ltd.
                                     Wuxi ITM Engine Co., Ltd                     51.02            158.70
                                     Wuxi Weifu Precision Machinery
                                                                               2,191.62         1,174.60
                                     Manufacturing Co., Ltd.
                    Sales of oil     Bosch Automotive Diesel System Co.,
                                                                              50,716.81        25,277.00
                    pump,      oil   Ltd.
                    nozzle           Kunming Xitong Machinery Co., Ltd.          131.93         6,788.40
                    products and
                                     Wuxi Weifu-Autocam Precision
                    opponents                                                    275.25            170.30
                                     Machinery Co. Ltd.
                    produced by
                    the              Wuxi ITM Engine Co., Ltd                          0              759.1
                    Company
                    Sales of raw     Wuxi Weifu Environmental Catalyst
                                                                               1,291.35         1,351.30
                    material         Co., Ltd.
    Other related   Payable
    transaction     charge     for
                                     Wuxi Industry Development Group
                    use of land                                                  852.18            627.80
                                     Co., Ltd.
                    and
                    trademark
                    Payable
                    service
                                     Bosch Automotive Diesel System Co.,
                    charge     for                                             1,444.64         2,425.00
                                     Ltd.
                    labor     and
                    technique
                                     Wuxi Weifu-Autocam Precision
                                                                                 131.26            212.10
                    Receivable       Machinery Co. Ltd.
                    lease charge     Wuxi Weifu Environmental Catalyst
                                                                                  95.68               54.00
                                     Co., Ltd.
                    Receivable
                                     Wuxi Weifu Environmental Catalyst
                    guarantee                                                     46.25               32.50
                                     Co., Ltd.
                    fee
                                      Total                                   141,621.7        87,186.50
Total amount of daily related transaction in reporting period wasn’t beyond the predicted number at
year-begin. The predicted total amount of daily related transaction of 2010 in year-begin was 1437
million yuan while the actual amount was 1416.217 million yuan.

2. The Company’s claim and debt transactions with related parties
                                                                             Unit: RMB’0000
                                                 Proceeds provided for      Proceeds provided by
                                                     related party             related party
                    Related Party
                                                 Actual                    Actual
                                                               Balance                   Balance
                                                 amount                    amount
     Bosch Automotive Diesel System Co.,
                                                  64,085.01     4,975.64   59,844.03          0.00
     Ltd.
     Kunming Xitong Machinery Co., Ltd.              586.07         0.00      677.88        906.22
     Wuxi Weifu-Autocam Precision
                                                     550.99        77.52      473.47          0.00
     Machinery Co. Ltd.
     Wuxi Weifu Environmental Catalyst Co.,
                                                  54,801.74         0.00   51,372.57       1,736.12
     Ltd.



                                                      38
     Wuxi Weifu Precision Machinery
                                              13,564.78         0.00     14,371.06      3,159.86
     Manufacturing Co., Ltd.
     Wuxi ITM Engine Co., Ltd                     90.00         0.00        133.61          0.00
                      Total                  133,678.59     5,053.16    126,872.62      5,802.20
Note: In the report period, the occurred amount of capital of the listed company provided for
controlling shareholders and its subsidiaries was RMB 0.00, and the balance was RMB 0.00.
The above associated transactions were executed strictly according to the associated contracts
signed by the two involved parties and there was no change in respect of trading price, trading way
and settlement.

VI. Significant contracts and implementation
1. In the report period, the Company had no entrustment, contracting or leasing for assets from
other companies and vice verse.
2. In reporting period, controlling subsidiary Wuxi Lida Catalytic Cleaner LLC offered 115 million
yuan of guarantee for its subsidiary Wuxi Weifu Environmental Catalyst Co., Ltd, and there was no
events against the rules;
3. In the report period, the Company did not entrust others to conduct management of cash assets.

VII. Commitment events of the principal shareholders
The principal shareholders holding over 5% equity of the Company had no commitment events
except Share Merger Reform Commitments in the report period or lasting to the report period.

VIII. Engagement and dismissal of CPAs
In the report period, Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. was
reengaged as auditing institutions of the Company in 2010. And the auditing expense of 2010 for
Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. was RMB 1.30 million (all
expenses) and this CPAs had provided services for the Company for 19 years.
IX. In the report period, the Company, its Board of Directors and directors received no inspection
and administrative penalty from CSRC, criticism by circulating a notice by CSRC, or public
condemnation by Shenzhen Stock Exchange.

X. Relevant Particulars about the Receptions of the Company on Investigation and Interview
In order to further regulate the actions of information disclosure of listed companies, the Company
received investigation and media interview with criterion and in strict accordance with relevant
regulations of Guidance for Information Disclosure of Listed Companies formulated by Shenzhen
Stock Exchange and Management System of Investor Relations of the company. In the report period,
the Company respectively received the investigation and interview from investors in some
institutions such as fund companies, securities companies, insurance companies, etc. and common
investors; meanwhile, the Company communicated adequately with vast investors through forms of
investor consultative calls, and answered the questions the investors raised seriously, accurately and
timely. During the reception, both the Company and relevant person for information disclosure, in
strict accordance with relevant laws and regulations and related provisions of Information
Disclosure Measure of the Company, followed the fair, open and just principle, without
implementing discriminated treatment and without disclosing, revealing or betraying non-public
and significant information selectively and privately to specific objects, and received 200 visiting
investors all the year.
Particulars about reception of investigation, communication and interview
                                                                       Contents discussed and materials
    Date          Place            Way        The received parties
                                                                                   supplied



                                                 39
                Reception room                                                  Current operation status and        future
  2010-01-07                       Spot research China Assets Fund
                of the Company                                                  development of the Company
                Reception room                                                  Current operation status and        future
  2010-01-08                       Spot research Jinying Funds
                of the Company                                                  development of the Company
                Reception room                                                  Current operation status and        future
 2010-01--12                       Spot research CITIC Security
                of the Company                                                  development of the Company
                Reception room                                                  Current operation status and        future
  2010-01-20                       Spot research Harvest Funds
                of the Company                                                  development of the Company
                                                 Huaan Funds, Chinese
                Reception room                   business, China                Current operation status and future
  2010-02-03                       Spot research
                of the Company                   Universal, United              development of the Company
                                                 Securities
                                                 Oriental Securities,
                Reception room                                                  Current operation status and future
  2010-02-24                       Spot research China Assets Fund,
                of the Company                                                  development of the Company
                                                 Guolian Securities
                Reception room                                                       Current operation status and   future
  2010-03-12                       Spot research CITIC-Prudential Fund
                of the Company                                                       development of the Company
                Reception room                                                       Current operation status and   future
  2010-06-03                       Spot research    Daiwa Capital
                of the Company                                                       development of the Company
                Reception room                      Everbright Prumeri-ca, Current operation status and             future
  2010-06-17                       Spot research
                of the Company                      Anxin Trust                      development of the Company
                Reception room                      BOC International, Huatai        Current operation status and   future
  2010-06-24                       Spot research
                of the Company                      Securities                       development of the Company
                Reception room                                                       Current operation status and   future
  2010-07-05                       Spot research    KGI Securities
                of the Company                                                       development of the Company
                Reception room                      Oriental Securities research -30 Current operation status and   future
  2010-07-15                       Spot research
                of the Company                      people                           development of the Company
                Reception room                      CITIC Securities research – Current operation status and       future
  2010-08-12                       Spot research
                of the Company                      20 people                        development of the Company
                Reception room                                                       Current operation status and   future
  2010-09-09                       Spot research    Guotai Junan research 8-people
                of the Company                                                       development of the Company
                Reception room                                                       Current operation status and   future
  2010-09-15                       Spot research    Value Partners Limited
                of the Company                                                       development of the Company
                Reception room                      Union Securities, China Current operation status and            future
  2010-09-20                       Spot research
                of the Company                      Assets Fund                      development of the Company
                Reception room                                                       Current operation status and   future
  2010-09-21                       Spot research    Everbright Securities
                of the Company                                                       development of the Company
                                                    China Assets, Fullgoal,
                Reception room                                                       Current operation status and   future
  2010-12-14                       Spot research    Dacheng, Huaan, E-fund,
                of the Company                                                       development of the Company
                                                    Harvest


X. Special commitments made by original non-circulating shareholders in process of Share Merger
Reform and its implementation:
  Commit
   ment        Promisee                            Content of commitment                                 Fulfillment
   event
           Wuxi           Realized 0.85 billion yuan of net profit form 2006 to 2008, including
   Share
           Industry       0.34 billion yuan in 2008. Appended 0.5 share per 10 shares of current       Has been
  reform
           Developme      A stock before share reform, proportion of cash dividend from 2006 to        completely
 commitm
           nt Group       2008 was not below 50% of profit realized in current year distributable      fulfilled.
    ent
           Co., Ltd.      for investors.
 Restricte Wuxi           Non-circulating shares of Weifu Hi-tech held by Weifu Group could            The
 d shares Industry        not listed or transferred within 60 months since possessing of listing       commitment
 commitm Developme        right. After the expiry of the commitment period, original                   was being



                                                         40
 ent         nt Group    non-circulating shares would be listed for sale in Shenzhen Stock         fulfilled
             Co., Ltd.   Exchange, the proportion of sales volume to total share equity of Weifu   without
                         Hi-tech could not exceed 5% within 12 months as well as 10% within        holdings-reduc
                         24 months, and sales price ought not to less than RMB 10 per share        ing shares.
                         (the lowest impairment price of shares holding would be calculated
                         ex-right at the same time if share price ought to ex-right according to
                         regulation).
                                                                                                   The
                                                                                                   commitment
 Other                 In order to promote the listed company’s steady and healthy                of arrange for
 commitm               development, fully mobilize senior executives so as to ensure to            excitation
             Wuxi
 ent                   combine the interests of the governance and shareholders of the             mechanism is
             Industry
 (appende              Company, Weifu Industry Group committed: after Weifu High-tech              being
             Developme
 d                     finishing Share Merger Reform, under related regulations of the state       implemented,
             nt Group
 commitm               and Wuxi government in terms of governance encouragement system             and would be
             Co., Ltd.
 ents                  of listed company, the Group would the stock incentive plan for             performed
 included)             management level of Weifu High-tech.                                        since related
                                                                                                   policy is
                                                                                                   released.
XII. Capital occupied by the controlling shareholder and its subsidiaries
Ended the report period, the controlling shareholders and subsidiaries didn’t occupy capital of the
Company.

XIII. Special explanation and independent opinions on external guarantee of the Company provided
by independent directors:
According to relevant regulations of Company Law, document [2003] No. 56 and document [2005]
No.120 issued by CSRC, we verified the submitted financial information of Wufu High Technology
Group Co., Ltd and audit report provided by CPAs; according to our independent judgment, we
made the following explanations on the external guarantee of the Company:

1. The Company didn’t provide guarantee for controlling shareholders, their subsidiaries, any
non-legal units or individuals.
2. The Company had no direct or indirect guarantee for objects whose assets liability rate was over
70%.
(III) Total guarantee amount of the Company was not exceeded 50% of the net assets.
 (IV) Particular about guarantee for wholly-owned and controlling subsidiaries of the Company
1. Guarantee for wholly-owned subsidiary—Weifu Changan Co., Ltd.: with guarantee amount of
RMB 80 million, a credit guarantee from April 20, 2010 to April 19, 2011, guarantee agreement
signed on June 11, 2010 with actual guarantee amount RMB 7 million for 6 months term.
2. Guarantee for controlling subsidiary—Weifu Leader Catalytic Converter Co., Ltd.: with
guarantee amount of RMB 80 million, a credit guarantee from April 20, 2010 to April 19, 2011,
guarantee agreement signed on January 21, 2010( within the approved limit and term of 2009) with
actual guarantee amount RMB 8.75 million for 6 months term.
Concerning the above mention guarantee for Weifu Changan and Weifu Leader, the balance was
RMB 00.00 at period-end.
(V) Particulars about guarantee for stock-joint company of the controlling subsidiary of the
Company
In the report period, controlling subsidiary—Weifu Leader Catalytic Converter Co., Ltd. provided
guarantee for its stock-joint company, Weifu Environmental Catalyst Co., Ltd. approved guarantee
with amount of RMB 250 million for terms from April 20, 2010 to April 19, 2011. Actual amount
was RMB265 million. The initial guarantee agreement signed on March 2, 2010 with occurred
amount of RMB 150 million (within the approved limit and term of 2009) for 6 months term; the


                                                       41
second guarantee signed on September 3, 2010 with RMB 115 million for 6 months term. The
balance was RMB 115 million at period-end.
(VI) The Company’s guarantee did not reach the requirement of Item 41 in Articles of Association.
(VII) In the report period, the external guarantees have implemented necessary approval procedures
and disclosure obligations.
(VIII) Risk system of the external guarantee have established by the Company.
(IX) The Company revealed the risk of external guarantee. Weifu Environmental Catalyst Co., Ltd.
was the joint-venture enterprise of Weifu Leader Catalytic Converter Co., Ltd.—controlling
subsidiary of the Weifu High-Technology Group Co., Ltd. The company has a rapidly development
in latest two years. The company obtained its operating income of RMB 844.617 million in 2010,
RMB 105.508 million in net profit. No significant risk from the company for its rapidly
development period in recent years.


XIV. Periodically reports and provisional reports of the Company in the report period are as
follows:
                                                                                               Disclosing
      Notice No.                       Titles of notice                      Date of notice
                                                                                               newspaper
                                                                                              China
      2010-001 Resolution of 9th Meeting of 6th Board                       2010-1-27         Securities
                                                                                              Journal
                                                                                              Securities
      2010-002 Equity Acquisition and Related Transaction of the Company 2010-1-27
                                                                                              Time
                                                                                              Hong Kong
      2010-003 prediction benefit on Performance of 2009                    2010-1-29         Commercial
                                                                                              Daily
               1st Extraordinary Shareholders’ General Meeting 2010
      2010-004                                                               2010-2-10
               Convene
               Indicative Notice of 1st Extraordinary Shareholders’ General
      2010-005                                                               2010-2-24
               Meeting 2010 Convene
               Resolution of 1st Extraordinary Shareholders’ General
      2010-006                                                               2010-3-4
               Meeting 2010
      2010-007 Pre-announcement on 1st Quarter Performance of 2010          2010-4-2
      2010-008 Summary of Annual Report      2009                           2010-4-22
                                th             th
      2010-009 Resolution of 10 Meeting of 6 Board                          2010-4-22
                               th
      2010-010 Resolution of 5 Meeting of Supervisory Committee             2010-4-22
      2010-011 Prediction on the Daily Related Transaction 2010             2010-4-22
      2010-012 Guarantee for other person of the Company 2010               2010-4-22
      2010-013 Annual Shareholders’ General Meeting 2009 Convene           2010-4-22
      2010-014 First Quarterly Report 2010                                  2010-4-27
      2010-015 Pre-announcement on Performance in first half of 2010        2010-4-27
               Indicative Notice for Holding of 2009 Annual General
      2010-016                                                       2010-5-21
               Meeting of Shareholders
               Notice for Decision of 2009 Annual General Meeting of
      2010-017                                                       2010-5-28
               Shareholders
      2010-018 Bonus Distribution of 2009                                   2010-7-13
      2010-019 Summary of Semi-Annual Report 2010                           2010-8-11



                                                     42
      2010-020 Resolution of 12th Meeting of 6th Board                     2010-8-11
      2010-021 Resolution of 6th Meeting of 6th Supervisory Committee      2010-8-11
               Notice for Controlling Subsidiary Wuxi Lida Catalytic
      2010-022 Cleaner Co., Ltd Appending Investment in Investor 2010-8-11
               Corporations
               Notice for Implementation of City-Reducing and
      2010-023                                                       2010-8-11
               Parks-Increasing Project
      2010-024 Name Changes of the Company                                 2010-9-8
      2010-025 Pre-announcement on Performance in 3rd quarterly 2010       2010-9-30
      2010-026 Abnormal Stock Fluctuation                                  2010-10-12
      2010-027 Text of Third Quarterly Report 2010                         2010-10-27
                 Notice for Increasing Investment for Purchasing 51% Equity
      2010-028                                                              2010-10-27
                 of Ningbo Tianli Supercharger Co., Ltd
      2010-029 Resolution of 13th Meeting of 6th Board                     2010-10-27
               Notice for Wholly-Owned Wuxi Weifu ITM Information
               Machinery Development Co., Ltd Transferred 50% Holding
      2010-030                                                              2010-10-27
               Equity of Suzhou ITM Hongyi Real Estate Development Co.,
               Ltd
      2010-031 Suspension Notice for Major Events of the Board of Directors 2010-11-9
      2010-032 Resolution of 14th Meeting of 6th Board                     2010-11-15
                                th            th
      2010-033 Resolution of 15 Meeting of 6 Board                         2010-12-8
      2010-034 Resolution of 7th Meeting of 6th Supervisory Committee      2010-12-8
      2010-035 Private Placement and Related Transaction                 2010-12-8
               Notice for Purchase of 1.5% Equity of Bosch Automobile
               Diesel System Co., Ltd Held by Wuxi Industry Development
               Group with Funds Raised from Non-public Issue and 1%
      2010-036                                                           2010-12-8
               Equity of Bosch Automobile Diesel System Co., Ltd Held by
               Foreign Strategic Investor ROBERT BOSCH GMBH and
               Related Transaction
               Notice for Holding of 2010 2nd Extraordinary General
      2010-037                                                           2010-12-8
               Meeting of Shareholders
      2010-038 Notice for Proceeds of Large Shareholders Change          2010-12-8
                                                          nd
               Indicative Notice for Holding of 2010 2 Extraordinary
      2010-039                                                           2010-12-20
               General Meeting of Shareholders
                                                 nd
               Notice for Decision of 2010 2 Extraordinary General
      2010-040                                                           2010-12-25
               Meeting of Shareholders
      2010-041 Content of the express conference                           2010-12-25
The aforesaid notices were all published on the website http://www.cninfo.com.cn engaged by
CSRC.




                                                     43
                               Section XI. Financial Report
                                                                             SG W No. [2011]A163

To the shareholders of Weifu High-Technology Group Co., Ltd.,
We have audited the accompanying financial statements of Weifu High-Technology Group Co., Ltd.
(“the Company”), including consolidated balance sheet and balance sheet of parent company of 31
December 2010, and consolidated profit statement and profit statement, and consolidated cash flow
statement and cash flow statement for the year ended, consolidated statement on changes of
shareholders’ equity and statement on changes of shareholders’ equity, and notes to the financial
statements for the year ended.

I. Management’s responsibility for the financial statements
The Company’s management is responsible for the preparation and fair presentation of the financial
statements in accordance with the Enterprises Accounting Standards and Enterprises Accounting
System. The responsibility includes: (1) designing, performing and maintaining internal control
related to the preparation and fair presentation of the financial statements, which are free from
material misstatements whether due to frauds or errors; (2) choosing and applying right accounting
policies; (3) making reasonable accounting estimates.

II. Auditor’s responsibility
Our responsibility is to express an audit opinion on these financial statements based on our audit.
We performed our audit in accordance with Chinese Certified Public Accountants' Auditing
Standards. Those standards require us to comply with professional ethics, and to plan and perform
our audit so as to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures of the financial statements. The selective audit procedures depend on auditor's judgment,
including the evaluation of the risk of material misstatement of the consolidated financial
statements due to frauds or errors. When evaluating risk, we consider internal control related to
financial statements, in order to design auditing procedures, but not for the purpose of expressing an
opinion on the internal control's effectiveness. An audit also includes assessing the appropriateness
of the accounting policies adopted and the reasonableness of the accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that we have obtained sufficient and appropriate audit evidences to provide a basis for
our audit opinion.
III. Auditing opinion
In our opinion, the Company’s financial statements have been prepared in accordance with the
Enterprises Accounting Standards, and they fairly present, in all material respects, the financial
position of the Company as of December 31, 2010, and its operation results and cash flows for the
year ended.
Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd.          China CPA: Liu Yong
Wuxi, P.R.China                                                           China CPA: He Xiaofeng
                                                                           March 17, 2011




                                                 44
                                   BALANCE SHEET
                                      Dec. 31, 2010
Prepared by Weifu High-Technology Group Co., Ltd.                                               Unit: RMB
                                         Balance at period-end                    Balance at year-begin
             Items
                                       Merger        Parent Company             Merger        Parent Company
Current assets:
Monetary funds                       596,958,764.21         149,943,763.55    425,495,172.94      147,690,609.19
Settlement provisions
Capital lent
Transaction finance asset
Notes receivable                     835,266,266.32         291,611,147.00    453,653,565.32      213,409,328.00
Accounts receivable                  999,798,439.30         567,607,398.18    746,386,907.24      520,732,353.03
Accounts paid in advance             105,176,780.11          42,468,803.76     40,727,577.69       22,923,823.09
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance
receivable
Interest receivable
     Dividend receivable                                      8,496,690.22    118,953,514.59      118,953,514.59
Other receivables                       6,892,216.92        137,067,355.21      5,035,076.41       55,976,240.61
Purchase restituted finance asset
Inventories                          917,694,296.54         277,723,002.78    588,559,021.47      190,091,308.65
Non-current asset due within one
year
Other current assets                    9,210,782.24                             4,410,577.10
Total current assets                3,470,997,545.64    1,474,918,160.70     2,383,221,412.76   1,269,777,177.16
Non-current assets:
Granted loans and advances
Finance asset available for sales
Held-to-maturity securities
Long-term account receivable
Long-term equity investment         1,892,112,152.46    2,558,225,582.62     1,347,808,607.78   1,856,146,852.35
Investment property                     4,965,879.52                               480,226.64
Fixed assets                        1,110,068,115.28        538,628,218.28   1,152,721,081.59     636,153,023.49
Construction in progress              142,256,732.63        125,932,175.31      32,064,910.42      11,592,432.05
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets                     85,655,823.12          26,733,764.37     72,512,044.82       27,403,978.05
Expense on Research and
Development
Goodwill                                1,784,086.79
Long-term expenses to be
                                        7,473,629.75                             1,246,567.09
apportioned
Deferred income tax asset             46,308,844.71          16,198,870.70     45,816,731.92       11,960,179.88
Other non-current asset
Total non-current asset             3,290,625,264.26    3,265,718,611.28     2,652,650,170.26   2,543,256,465.82
Total assets                        6,761,622,809.90    4,740,636,771.98     5,035,871,583.02   3,813,033,642.98



                                                       45
                                BALANCE SHEET (Con.)
                                      Dec. 31, 2010
Prepared by Weifu High-Technology Group Co., Ltd.                                            Unit: RMB
Current liabilities:
Short-term loans                        270,000,000.00         240,000,000.00    532,985,925.72     466,985,925.72
Loan from central bank
Absorbing deposit and interbank
deposit
Capital borrowed
Transaction financial liabilities
Notes payable                            389,985,533.69        200,278,487.00    179,890,364.39     137,630,000.00
Accounts payable                       1,195,053,077.84        766,617,178.72    861,714,156.40     556,506,677.80
Accounts received in advance              42,271,899.15         20,438,892.15     27,104,569.77      13,403,217.65
Selling     financial     asset   of
repurchase
Commission           charge      and
commission payable
Wage payable                            269,751,945.96         168,133,427.32    179,549,521.47      97,631,080.36
Taxes payable                           107,903,963.31          28,582,184.41     30,359,533.71       6,972,875.05
Interest payable                            490,000.00             320,000.00        807,622.50         620,000.00
     Dividend payable                    18,696,539.18
Other accounts payable                   62,501,613.74          56,125,853.06     95,854,679.34      57,502,685.46
Reinsurance payables
Insurance contract reserve
Security trading of agency
Security sales of agency
Non-current liabilities due within
1 year
Other current liabilities                 24,330,259.35                             3,946,860.41
Total current liabilities              2,380,984,832.22    1,480,496,022.66     1,912,213,233.71   1,337,252,462.04
Non-current liabilities:
Long-term loans                            3,000,000.00                             3,000,000.00
Bonds payable
Long-term account payable                15,670,000.00                            16,730,000.00
Special accounts payable
Projected liabilities                                            1,481,745.84                          1,481,745.84
Deferred income tax liabilities            2,801,008.40
Other non-current liabilities             13,350,000.00                            11,675,000.00       4,060,000.00
Total non-current liabilities             34,821,008.40        1,481,745.84        31,405,000.00       5,541,745.84
Total liabilities                      2,415,805,840.62    1,481,977,768.50     1,943,618,233.71   1,342,794,207.88
Owner’s equity (or shareholders’
equity):
Paid-in capital (or share capital)      567,275,995.00         567,275,995.00    567,275,995.00     567,275,995.00
Capital public reserve                  895,918,416.59         923,981,806.57    907,580,308.28     923,981,806.57
Less: Inventory shares
     Reasonable reserve
Surplus public reserve                  283,637,997.50         283,637,997.50    283,637,997.50     283,637,997.50
Provision of general risk
Retained profit                        2,359,375,974.53    1,483,763,204.41     1,104,176,257.99    695,343,636.03
Balance difference of foreign


                                                          46
currency translation
Total owner’s equity attributable
                                         4,106,208,383.62    3,258,659,003.48   2,862,670,558.77   2,470,239,435.10
to parent company
Minority interests                         239,608,585.66                         229,582,790.54
Total owner’s equity                    4,345,816,969.28    3,258,659,003.48   3,092,253,349.31   2,470,239,435.10
Total liabilities and owner’s
                                         6,761,622,809.90    4,740,636,771.98   5,035,871,583.02   3,813,033,642.98
equity

           PROFIT STATEMENT AND PROFIT DISTRIBUTION STATEMENT
                                        Jan.-Dec. 2010
Prepared by Weifu High-Technology Group Co., Ltd.      Unit: RMB
                                                      Amount in this period           Amount in last period
                     Items
                                                     Merger      Parent Company      Merger      Parent Company
                                                 5,371,213,196.4 2,740,148,715.3 3,080,616,313.7 1,750,116,937.7
I. Total operating income
                                                               5               5               7               8
                                                 5,371,213,196.4 2,740,148,715.3 3,080,616,313.7 1,750,116,937.7
Including: Operating income
                                                               5               5               7               8
Interest income
Insurance gained
Commission charge and commission income
                                                 4,575,399,369.8 2,518,148,150.6 2,988,140,209.7 1,747,273,763.3
II. Total operating cost
                                                               1               9               9               2
                                                 3,879,197,923.0 2,160,670,478.6 2,475,668,835.8 1,496,119,674.9
Including: Operating cost
                                                               8               5               1               5
Interest expense
Commission charge and commission
expense
Cash surrender value
Net amount of expense of compensation
Net amount of withdrawal of insurance
contract reserve
Bonus expense of guarantee slip
Reinsurance expense
Operating tax and extras                           31,979,087.88 12,733,210.70 18,334,016.30     8,624,497.14
Sales expenses                                    123,454,157.96 59,298,338.33 94,622,884.55 53,719,812.63
Administration expenses                           457,166,602.80 220,770,095.02 319,093,388.76 136,945,370.17
Financial expenses                                 33,354,876.99 21,866,382.01 31,415,151.06 27,604,187.86
Losses of devaluation of asset                     50,246,721.10 42,809,645.98 49,005,933.31 24,260,220.57
Add: Changing income of fair value(Loss is
listed with “-”)
Investment income (Loss is listed with “-”)     690,474,746.82 666,107,945.71 372,015,501.77 361,980,513.72
Including: Investment income on affiliated
                                                  684,229,162.07 615,827,725.94 368,013,451.70 327,447,428.72
company and joint venture
Exchange income (Loss is listed with “-”)
III. Operating profit (Loss is listed with       1,486,288,573.4
                                                                 888,108,510.37 464,491,605.75 364,823,688.18
“-”)                                                         6
Add: Non-operating income                          24,118,213.10 14,918,166.13 32,979,705.79     7,453,266.33
Less: Non-operating expense                        10,552,280.58   5,190,129.95 14,708,127.31    5,073,043.51
Including: Disposal loss of non-current asset       2,458,935.02     939,330.17 10,314,968.89    2,860,291.24
                                                 1,499,854,505.9
IV. Total Profit   (Loss is listed with “-”)                   897,836,546.55 482,763,184.23 367,203,911.00
                                                               8
Less: Income tax                                  118,493,892.84 24,325,578.92 19,062,506.01    -3,316,515.11



                                                            47
                                              1,381,360,613.1
V. Net profit (Net loss is listed with “-”)                 873,510,967.63 463,700,678.22    370,520,426.11
                                                            4
Net profit attributable to owner’s equity of 1,340,291,115.7
                                                              873,510,967.63 448,224,754.55    370,520,426.11
parent company                                              9
Minority shareholders’ gains and losses        41,069,497.35                 15,475,923.67              0.00
VI. Earnings per share
i. Basic earnings per share                              2.36           1.54           0.79              0.65
ii. Diluted earnings per share                           2.36           1.54           0.79              0.65
VII. Other consolidated income
                                              1,381,360,613.1
VIII. Total consolidated income                               873,510,967.63 463,700,678.22    370,520,426.11
                                                            4
Total consolidated income attributable to 1,340,291,115.7
                                                              873,510,967.63 448,224,754.55    370,520,426.11
owners of parent company                                    9
Total consolidated income attributable to
                                                41,069,497.35                 15,475,923.67              0.00
minority shareholders


                                  CASH FLOW SHEET
                                         Jan.-Dec. 2010
Prepared by Weifu High-Technology Group Co., Ltd.                                             Unit: RMB
                                                 Amount in this period             Amount in last period
                     Items
                                                Merger      Parent Company        Merger      Parent Company
I. Cash flows arising from operating
activities:
Cash received from selling commodities
                                             5,768,065,163.37 3,069,277,986.66 3,200,544,577.36 1,720,134,709.04
and providing labor services
     Net increase of customer deposit and
interbank deposit
     Net increase of loan from central bank
Net increase of capital borrowed from other
financial institution
Cash received from original insurance
contract fee
     Net cash received from reinsurance
business
     Insured savings and net increase of
investment
     Net increase of disposal of transaction
financial asset
Cash received from interest, commission
charge and commission
     Net increase of capital borrowed
Net increase of returned business capital
Write-back of tax received                      23,295,670.45                     17,689,715.41
Other cash received concerning operating
                                                26,195,516.08     8,901,264.84    31,701,728.23    12,764,123.91
activities
  Subtotal of cash inflow arising from
                                             5,817,556,349.90 3,078,179,251.50 3,249,936,021.00 1,732,898,832.95
operating activities
Cash paid for purchasing commodities and
                                             4,077,287,781.02 2,091,667,974.56 2,207,072,602.98 1,311,048,327.45
receiving labor service
Net increase of customer loans and
advances
     Net increase of deposits in central
bank and interbank
Cash paid for original insurance contract



                                                    48
compensation
      Cash paid for interest, commission
charge and commission
      Cash paid for bonus of guarantee slip
Cash paid to/for staff and workers                454,429,383.50    189,701,729.36   335,707,122.84   136,079,622.12
Taxes paid                                        392,206,044.31    144,769,438.55   241,467,594.42    82,289,474.05
Other cash paid concerning operating
                                                  357,461,288.89    248,829,159.99   249,795,676.33   142,137,743.37
activities
Subtotal of cash outflow arising from
                                                 5,281,384,497.72 2,674,968,302.46 3,034,042,996.57 1,671,555,166.99
operating activities
Net cash flows arising from operating
                                                  536,171,852.18    403,210,949.04   215,893,024.43    61,343,665.96
activities
II. Cash flows arising from investing
activities:
Cash received from recovering investment           37,139,800.00                       3,933,609.76
Cash received from investment income              267,625,427.77    297,707,919.61   160,373,297.93   179,013,073.86
Net cash received from disposal of fixed,
                                                   16,126,313.17      9,833,661.24    11,543,716.68     5,234,011.30
intangible and other long-term assets
      Net cash received from disposal of
subsidiaries and other units
Other cash received concerning investing
activities
Subtotal of cash inflow from investing
                                                  320,891,540.94    307,541,580.85   175,850,624.37   184,247,085.16
activities
Cash paid for purchasing fixed, intangible
                                                  230,865,180.42    147,888,573.56   116,195,604.83    14,883,761.07
and other long-term assets
Cash paid for investment                          107,743,689.89    223,130,000.00    14,935,487.61    19,700,000.00
      Net increase of mortgaged loans
      Net cash received from subsidiaries
and other units
Other cash paid concerning investing
activities
Subtotal of cash outflow from investing
                                                  338,608,870.31    371,018,573.56   131,131,092.44    34,583,761.07
activities
Net cash flows arising from investing
                                                   -17,717,329.37   -63,476,992.71    44,719,531.93   149,663,324.09
activities
III. Cash flows arising from financing
activities
Cash received from absorbing investment             2,960,650.00                       1,785,260.00
      Including: Cash received from
absorbing        minority       shareholders’      2,960,650.00                       1,785,260.00
investment by subsidiaries
Cash received from loans                         1,642,609,959.36 1,562,609,959.36 1,566,548,025.08 1,277,548,025.08
      Cash received from issuing bonds
Other cash received concerning financing
                                                                                      27,600,000.00
activities
Subtotal of cash inflow from financing
                                                 1,645,570,609.36 1,562,609,959.36 1,595,933,285.08 1,277,548,025.08
activities
Cash paid for settling debts                     1,905,595,885.08 1,789,595,885.08 1,883,598,824.85 1,425,562,099.36
Cash paid for dividend and profit
                                                  120,736,813.87    113,369,474.10   140,704,482.37   118,973,384.76
distributing or interest paying
Including: Dividend and profit of minority
                                                    8,414,199.98                       8,234,907.39
shareholder paid by subsidiaries
Other cash paid concerning financing
activities
Subtotal of cash outflow from financing          2,026,332,698.95 1,902,965,359.18 2,024,303,307.22 1,544,535,484.12



                                                          49
activities
Net cash flows arising from financing
                                             -380,762,089.59 -340,355,399.82 -428,370,022.14 -266,987,459.04
activities
IV. Influence on cash due to fluctuation in
exchange rate
V. Net increase of cash and cash equivalents 137,692,433.22      -621,443.49 -167,757,465.78 -55,980,468.99
Add: Balance of cash and cash equivalents
                                              327,527,351.45   85,790,609.19 495,284,817.23 141,771,078.18
at the period -begin
VI. Balance of cash and cash equivalents at
                                              465,219,784.67   85,169,165.70 327,527,351.45    85,790,609.19
the period -end




                                                  50
                                      CONSOLIDATED STATEMENT ON CHANGES OF SHAREHOLDERS’ EQUITY
                                                                 2010
Prepared by Weifu High-Technology Group Co., Ltd.                                                                                                                             Unit: RMB
                                                                                                         Amount in this report period
                                                                       Owners’ equity attributable to the parent company
                                                                                  Less:
                   Items                                                                  Reaso                         Gener                                Minority
                                                  Paid-up                         Trea                                                                                       Total equity of
                                                                   Capital                 nable                        al risk                      Oth   shareholders’
                                               capital (Share                     sury              Surplus reserves               Retained profit                              owners
                                                                  reserves                reserv                        provi                        ers      equity
                                                  capital)                        Stoc
                                                                                             e                           sion
                                                                                    k
I. Balance at the end of the last year           567,275,995.00   907,580,308.28                        283,637,997.50              1,104,176,257.99       229,582,790.54    3,092,253,349.31
Add: Changes of accounting policy
Error correction of the last period
Others
II. Balance at the beginning of this year        567,275,995.00   907,580,308.28                      283,637,997.50              1,104,176,257.99         229,582,790.54    3,092,253,349.31
III. Increase/ Decrease in this year
                                                                  -11,661,891.69                                                  1,255,199,716.54           10,025,795.12   1,253,563,619.97
(Decrease is listed with “-”)
(I) Net profit                                                                                                                    1,340,291,115.79           41,069,497.35   1,381,360,613.14
(II) Other consolidated income
Subtotal of (I) and (II)                                                                                                          1,340,291,115.79           41,069,497.35   1,381,360,613.14
(III) Owners’ devoted and decreased capital                      -11,661,891.69                                                                            -19,165,166.10     -30,827,057.79
1. Owners’ devoted capital                                                                                                                                 -19,165,166.10     -19,165,166.10
2. Amount calculated into owners’ equity
paid in shares
3. Others                                                         -11,661,891.69                                                                                               -11,661,891.69
(IV) Profit distribution                                                                                                            -85,091,399.25          -11,878,536.13     -96,969,935.38
1. Withdrawal of surplus reserves
2. Withdrawal of general risk provisions
3. Distribution for owners (shareholders)                                                                                           -85,091,399.25          -11,878,536.13     -96,969,935.38
4. Others
(V) Carrying forward internal owners’
equity
1. Capital reserves conversed to capital
(share capital)
2. Surplus reserves conversed to capital
(share capital)
3. Remedying loss with surplus reserve
4. Others
(VI) Reasonable reserve
1. Withdrawal in the report period
2. Usage in the report period
IV. Balance at the end of the report period
I. Balance at the end of the last year           567,275,995.00   895,918,416.59                      283,637,997.50              2,359,375,974.53         239,608,585.66    4,345,816,969.28

                                                                                            51
                                 CONSOLIDATED STATEMENT ON CHANGES OF SHAREHOLDERS’ EQUITY (Con.)
                                                              2010
                  Prepared by Weifu High-Technology Co., Ltd.                                                                                                  Unit: RMB
                                                                                                                   Amount in last year
                                                                             Owners’ equity attributable to the parent company
                                                                                     Less:
                     Items                                                                                                 Gener
                                                       Paid-up                       T r e a s Reaso
                                                                        Capital                                            al risk                    Othe Minority’s equity Total owners’ equity
                                                    capital (Share                    u r y nable Surplus reserves                   Retained profit
                                                                       reserves                                            provisi                     rs
                                                       capital)                      S t o c reserve
                                                                                                                             on
                                                                                        k
I. Balance at the end of the last year               567,275,995.00   907,580,308.28                       262,439,505.87              769,048,706.26        220,556,514.26      2,726,901,029.67
Add: Changes of accounting policy
Error correction of the last period
Others
II. Balance at the beginning of this year            567,275,995.00   907,580,308.28                     262,439,505.87              769,048,706.26           220,556,514.26      2,726,901,029.67
III. Increase/ Decrease in this year (Decrease is
                                                                                                          21,198,491.63              335,127,551.73             9,026,276.28        365,352,319.64
listed with “-”)
(I) Net profit                                                                                                                       448,224,754.55            15,475,923.67        463,700,678.22
(II) Other consolidated income
Subtotal of (I) and (II)                                                                                                             448,224,754.55            15,475,923.67        463,700,678.22
(III) Owners’ devoted and decreased capital                                                                                                                    1,785,260.00          1,785,260.00
1. Owners’ devoted capital                                                                                                                                     1,785,260.00          1,785,260.00
2. Amount calculated into owners’ equity paid in
shares
3. Others
(IV) Profit distribution                                                                                  21,198,491.63              -113,097,202.82            -8,234,907.39      -100,133,618.58
1. Withdrawal of surplus reserves                                                                         21,198,491.63               -21,198,491.63
2. Withdrawal of general risk provisions
3. Distribution for owners (shareholders)                                                                                             -91,898,711.19            -8,234,907.39      -100,133,618.58
4. Others
(V) Carrying forward internal owners’ equity
1. Capital reserves conversed to capital (share
capital)
2. Surplus reserves conversed to capital (share
capital)
3. Remedying loss with surplus reserve
4. Others
(VI) Reasonable reserve
1. Withdrawal in the report period
2. Usage in the report period
(VII) Other
IV. Balance at the end of the report period          567,275,995.00   907,580,308.28                     283,637,997.50             1,104,176,257.99          229,582,790.54      3,092,253,349.31


                                                                                              52
                                         STATEMENT ON CHANGES OF OWNERS’ EQUITY OF PARENT COMPANY
                                                                   2010
Prepared by Weifu High-Technology Group Co., Ltd.                                                                                                               Unit: RMB
                                                                                                                Amount in this report period
                                                                                                            Reas
                           Items                                                                     Less: onabl                          General
                                                                Paid-up capital
                                                                                   Capital reserves Treasur e      Surplus reserves         risk     Retained profit      Total owners’ equity
                                                                (Share capital)
                                                                                                    y Stock reser                        provision
                                                                                                             ve
I. Balance at the end of the last year                            567,275,995.00     923,981,806.57                    283,637,997.50                   695,343,636.03         2,470,239,435.10
Add: Changes of accounting policy
Error correction of the last period
Others
II. Balance at the beginning of this year                         567,275,995.00     923,981,806.57                      283,637,997.50                 695,343,636.03         2,470,239,435.10
III. Increase/ Decrease in this year (Decrease is listed with
                                                                                                                                                        788,419,568.38           788,419,568.38
“-”)
(I) Net profit                                                                                                                                          873,510,967.63           873,510,967.63
(II) Other consolidated income
Subtotal of (I) and (II)                                                                                                                                873,510,967.63           873,510,967.63
(III) Owners’ devoted and decreased capital


3. Others
(IV) Profit distribution                                                                                                                                 -85,091,399.25          -85,091,399.25
1. Withdrawal of surplus reserves
2. Withdrawal of general risk provisions
3. Distribution for owners (shareholders)                                                                                                                -85,091,399.25          -85,091,399.25
4. Others
(V) Carrying forward internal owners’ equity
1. Capital reserves conversed to capital (share capital)
2. Surplus reserves conversed to capital (share capital)
3. Remedying loss with profit surplus
4. Others
(VI) Reasonable reserve
1. Withdrawal in the report period
2. Usage in the report period
(VII) Other
IV. Balance at the end of the report period                       567,275,995.00     923,981,806.57                      283,637,997.50                1,483,763,204.41        3,258,659,003.48




                                                                                               53
                                    STATEMENT ON CHANGES OF OWNERS’ EQUITY OF PARENT COMPANY (Con.)
                                                                2010
Prepared by Weifu High-Technology Group Co., Ltd.                                                                                                                   Unit: RMB
                                                                                                                       Amount in last year
                                                                                                              Reaso
                           Items                                                                       Less:                                  General
                                                                Paid-up capital                               nable
                                                                                   Capital reserves   Treasur          Surplus reserves         risk     Retained profit      Total owners’ equity
                                                                (Share capital)                               reserv
                                                                                                      y Stock                                provision
                                                                                                                 e
I. Balance at the end of the last year                            567,275,995.00     923,981,806.57                       262,439,505.87                     437,920,412.74       2,191,617,720.18
Add: Changes of accounting policy
Error correction of the last period
Others
II. Balance at the beginning of this year                         567,275,995.00     923,981,806.57                       262,439,505.87                     437,920,412.74       2,191,617,720.18
III. Increase/ Decrease in this year (Decrease is listed with
                                                                                                                            21,198,491.63                    257,423,223.29         278,621,714.92
“-”)
(I) Net profit                                                                                                                                               370,520,426.11         370,520,426.11
(II) Other consolidated income
Subtotal of (I) and (II)                                                                                                                                     370,520,426.11         370,520,426.11
(III) Owners’ devoted and decreased capital
1. Owners’ devoted capital
2. Amount calculated into owners’ equity paid in shares
3. Others
(IV) Profit distribution                                                                                                    21,198,491.63                   -113,097,202.82          -91,898,711.19
1. Withdrawal of surplus reserves                                                                                           21,198,491.63                    -21,198,491.63
2. Withdrawal of general risk provisions
3. Distribution for owners (shareholders)                                                                                                                    -91,898,711.19          -91,898,711.19
4. Others
(V) Carrying forward internal owners’ equity
1. Capital reserves conversed to capital (share capital)
2. Surplus reserves conversed to capital (share capital)
3. Remedying loss with profit surplus
4. Others
(VI) Reasonable reserve
1. Withdrawal in the report period
2. Usage in the report period
(VII) Other
IV. Balance at the end of the report period                       567,275,995.00     923,981,806.57                       283,637,997.50                     695,343,636.03       2,470,239,435.10




                                                                                                54
                            Notes to Financial Statement

N o t e I . Basic information of the Company
1. History development of the Company
By the approval of STGS (1992) No. 130 issued by Jiangsu Economic Restructuring
Committee (hereinafter referred to as Jiangsu ERC), Weifu High-Technology Group Co., Ltd.
(original Weifu High-Technology Co., Ltd., hereinafter referred to the Company or
Company) was established as a company of limited liability with funds raised from targeted
sources, and registered at Wuxi Administration for Industry & Commerce in October 1992.
The original share capital of the Company totaled RMB 115.4355 million, including
state-owned share capital amounting to RMB 92.4355 million, public corporate share capital
amounting to RMB 8 million and inner employee share capital amounting to RMB 15
million.
In the year 1994 and 1995, the Company was restructured and became a holding subsidiary
of Wuxi Weifu Group Co., Ltd (hereinafter referred to as “Weifu Group”).
By the approval of Jiangsu ERC and Shenzhen Securities Administration Office in August
1995, the Company issued 68 million special ordinary shares (B-share) with value of RMB
1.00 for each, and the total value of those shares amounted to RMB 68 million. After the
issuance, the Company’s total share capital increased to RMB 183.4355 million.
By the approval of CSRC in June 1998, the Company issued 120 million RMB ordinary
shares (A-share) at Shenzhen Stock Exchange through on-line pricing and issuing. After the
issuance, the total share capital of the Company amounted to RMB 303.4355 million.
In the middle of 1999, deliberated and approved by the Board and Shareholders’ General
Meeting, the Company implemented the plan of granting 3 bonus shares for each 10 shares.
After that, the total share capital of the Company amounted to RMB 394.46615 million, of
which state-owned shares amounted to RMB 120.16615 million, public corporate shares
RMB 10.4 million, foreign-funded shares (B-share) RMB 88.40 million, RMB ordinary
shares (A-share) RMB 156 million and inner employee shares RMB 19.5 million.
In the year 2000, by the approval of the CSRC and based upon the total share capital of
303.4355 million shares after the issuance of A-share in June 1998, the Company allotted 3
shares for each 10 shares, with a price of RMB 10 for each allotted share. Actually 41.9
million shares was allotted, and the total share capital after the allotment increased to RMB
436.36615 million, of which state-owned corporate shares amounted to RMB 121.56615
million, public corporate shares RMB 10.4 million, foreign-funded shares (B-share) RMB
88.4 million and RMB ordinary shares (A-share) RMB 216 million.
In April 2005, Board of Directors of the Company has examined and approved 2004 Profit
Pre-distribution Plan, and examined and approved by 2004 Shareholders’ General Meeting ,
the Company distributed 3 shares for each 10 shares to the whole shareholders totaling to
130,909,845 shares in 2005.
The Company registered at the Wuxi High and New Technology Development Zone and the
registration number was 320200000014926. The Company belongs to the mechanical
industry and mainly engaged in the manufacture and sales of fuel injection system and its
accessories
According to the Share Merger Reform Scheme of the Company that passed by related
                                           -55-
shareholders’ meeting of Share Merger Reform and SGZF [2006] No.61 Reply on Questions
about State-owned Equity Management in Share Merger Reform of Weifu High-Technology
Co., Ltd. issued by State-owned Assets Supervision & Administration Commission of Jiangsu
Province, the Weifu Group etc. 8 non-circulating shareholders arranged pricing with granting
1.7 shares for each 10 shares to circulating A-share shareholders (totally granted 47,736,000
shares), so as to realize the originally non-circulating shares can be traded on market when
satisfied certain conditions, the scheme has been implemented on April 5, 2006.
As on 27 May 2009, Weifu Group satisfied the consideration arrangement by dispatching 0.5
shares for each 10 shares based on the number of circulating A shares as prior to Share
Merger Reform, according to the aforesaid Share Merger Reform, with an aggregate of
14,039,979 shares dispatched. Subsequent to implementation of dispatch of consideration
shares, Weifu Group then held 100,021,999 shares of the Company, representing 17.63% of
the total share capital of the Company.
Pursuant to the document (XGZQ(2009)No.46) about “Approval for Merger of Wuxi Weifu
Group Co., Ltd. by Wuxi Industry Development Group Co., Ltd.” issued by the
State-owned Assets Supervision and Administration Commission of Wuxi City Government,
Wuxi Industry Development Group Co., Ltd. (hereinafter referred to as Wuxi Industry
Group) acquired Weifu Group. After the merger, Weifu Group was then revoked, and its
assets and credits & debts were transferred to be under the name of Wuxi Industry Group.
Accordingly, Wuxi Industry Group became the first largest shareholder of the Company
since then.
2. Registered place, organization structure and head office of the Company
Registered place and head office of the Company: Wuxi, Jiangsu.
The Company sets up Shareholders’ General Meeting, the Board of Directors and the
Supervisory Committee.
The Company sets up Administration Department, Engineering Technology Research
Institution, Human Resources Department, Marketing Department, Finance Control
Department, Project Purchase Department, MS Business Segment, AC Business Segment,
and subsidiaries such as Wuxi Weifu Leader Catalytic Converter Co., Ltd. (referred to as
Weifu Leader), Nanjing Weifu Jinning Co., Ltd. (referred to as Weifu Jinning), and Wuxi
Weifu Diesel System Co., Ltd. (referred to as Weifu Diesel System).
3. Business nature and major operation activities of the Company
Operation scope of parent company: manufacture of engine fuel oil system products, fuel oil
system testers and equipments; sales of energy-oriented machinery, hardware & electric
materials, chemical products and raw materials (other than chemical dangerous). Auto spare
parts, autos (other than autos under-9 seats); repair of engine, technological development and
consultancy service of machinery industry; import and export business in respect of
diversified commodities and technologies (other than those commodities and technologies
limited or forbidden by the State for import and export) by self-operation and works as agent
for such business
Major subsidiaries respectively activate in production and sales of engine accessories, auto
spare parts, mufflers, and purifiers.
4. Relevant party offering approval reporting of financial statements and date thereof
Financial statements of the Company were approved by the Board of Directors for reporting
dated March 17, 2011


Note II: Major Accounting Policies, Accounting Estimation and Previous
                                            -56-
Errors of the Company
1 . B a s i s o f p re p a r a t i o n o f f i n a n c i a l s t a t e m e n t s
The financial statement were stated in compliance with Accounting Standard for Enterprises
No.30-Presentation of Financial Statement, with recognitions and measurements made by
reference to Accounting Standard for Enterprises and Application Instruments thereof
promulgated by the Ministry of Finance dated 15 February 2006 in respect of the actual
transactions and proceedings, on a basis of ongoing operation.
2. Statement on observation of Accounting Standard for Enterprises
Financial statements prepared by the Company were in accordance with requirements of
Accounting Standard for Enterprises, which truly and completely reflected the financial
information of the Company, such as financial position, operation achievements and cash
flow.
3. Accounting period
The accounting period of the Company comprises of annual period and interim period,
among which, the annual period commences from 1 January to 31 December, and interim
period includes monthly, quarterly and half-year.
4. Standard currency for accounting
The Company takes Renminbi as its standard currency for accounting.
5. Accounting treatment methods for business combination under and not under the
same control
(1)Business combination under the same control
Business combination under the same control: consideration paid by acquirer for
combination and net assets acquired by him shall all be measured with carrying value.
Difference between carrying values of net assets and combination consideration respectively
obtained and paid by acquirer over total par value of shares in issue shall be used to adjust
capital reserve; when capital reserve is insufficient for offset, then retained profit shall be
adjusted. All direct related expenses arising from business combination, including auditing
expenses paid for combination, evaluation expenses and law service expenses, shall be
recorded in current gains and losses upon occurrence; while procedure charge and
commission arising from issuance of equity securities or bonds in relation to business
combination shall be accounted in initial measurement amount of shareholders’ equity or
liabilities.
(2) Business combination not under the same control
Business combination not under the same control: combination cost paid by acquirer and net
recognizable assets obtained from combination shall be measured at fair value. In the event
that difference between combination costs over fair value of net recognizable assets obtained
from combination is positive, thus such difference shall be recognized as goodwill; if
negative, and then shall be accounted in current gains and losses. All direct related expenses
arising from business combination including auditing expenses paid for combination,
evaluation expenses and law service expenses shall be recorded in business combination
cost; while procedure charge and commission arising from issuance of equity securities or
bonds in relation to business combination shall be accounted in initial measurement amount
of shareholders’ equity or liabilities.

6. Preparation method for consolidated statements
                                            -57-
(1) Confirmation principle of consolidation scope
Preparation of the consolidation financial statement of the Company mainly complied with
the consolidation scope recognized by Parent Company Theory, details consolidation scope
as:
①More than half of the equity capital of the investee enterprise that owned by Parent
company, directly/indirectly and jointly owned more than half of the equity capital by
indirectly and directly included;
②Other investee enterprises control by Parent company including:
A. Helding more than half of voting right of the investee through agreement with other
investors of the investee enterprises; ;
B. Having the rights of fainanical and operation strategy controlled according to Article of
Association ot Agreement;
C. Having the rights of appointment and dismissal on majority personnels in Board or in
similar power institution of the enterprise; ;
D. Having more than half of the rights to vote in Board or similar power institution of the
enterprise.
(2) measures used in consolidation
①The Company consolidations permit since the day of actual control right obtained; cease
consolidation since the day of control right lost. Consolidation financial statement based on
the financial statement of the Company and other relevant information of vary subsidiaries
that joint in the consolidation scope, ajusted long-term equity investment to subsidiaries
according to equity method, off-setting the investment, transaction and contacts between the
Company and vary subsidiaries that in the consolidation scope, consolidated for preparation
after minority shareholders’ gains/loss and minority shareholders’ equity calculation.
②Concerning the diferrent accounting policy or accounting period between the Company
and subsidiaries, consolidating after adjustment on subsidiaries’ fainancial stataement based
on the Company’s accounting policy or accounting period.
③Concerning the subsidiary obtained under combination with different control, adjusted
several financial statement of the subsidiary based on the fair value of recognizable net
assets on purchased day while financial statement consoldiation; concerning the subsidiary
obtained under combination with same control, considered current status of being control by
ultimate controller for consolidation while financial statement consolidation.
7. Standard for recognition of cash equivalents when preparing cash flow statement
Cash equivalent represents such kind of investment featuring with short term (generally due
within 3 months since purchase day), active liquidity, being easy for converting to cash with
already-known amount, as well as tiny exposure to value change risks.
8. Foreign currency business
Foreign currency business is accounted with amount denominated in RMB as translated at
the spot exchange rate as of the occurrence day of such business. The occurred foreign
currency exchange business or transactions with foreign currency exchange involved shall be
translated at the effective exchange rate (i.e. exchange rate adopted by banks for such
transactions) adopted by such transaction. As at balance sheet date, division between foreign
currency monetary items and foreign currency non-monetary items are dealt with according
the to following principles:
Foreign currency monetary items are translated at spot exchange rate as of balance sheet
                                            -58-
date, and then recorded in current gains and losses when happening during normal operation
period; exchange gains and losses related to borrowings for purchasing fixed assets are
disposed with principle of capitalization of borrowing expense. Monetary item represents the
monetary capital, and assets or liabilities respectively received or paid at fixed or insurable
amount, among other things, stock cash, bank deposit, account receivables, other
receivables, long-term receivables, short-term loans, account payables, other payables,
long-term loans, bond payables and long-term payables, etc.
Foreign currency non-monetary items are translated at spot exchange rate as of transaction
date, with no change in its amount accounted in standard currency. Non-monetary items
represent items except for monetary items.
As for foreign currency non-monetary items measured at fair value, translation is subject to
the spot exchange rate as of the date when fair value is recognized. Difference between the
accounted standard currency amount subsequent to translation and its original accounted
standard currency amount is dealt with as movement in fair value (movement in exchange
rate included), and then recorded in current gains and losses.
9. Financial instruments
(1)Recognition of financial assets
In the case that when a company constitutes one party to financial instrument agreement, one
item of financial asset or financial liability shall then be recognized.
(2)Division and measurement for financial assets and financial liabilities
In terms of investment purposes and economic natures, the Company divides its financial
assets into transactional financial assets, financial assets available for sale, account
receivables and held-to-maturity investments, among which, transactional financial asset is
measured at fair value and movement of its fair value is recorded in current gains and losses;
financial asset available for sale is measured at fair value and movement of its fair value is
recorded in shareholders’ equity; account receivables and held-to-maturity investments are
measured at amortized cost.
In terms of economic nature, the Company divides its financial liabilities into two groups,
namely financial liabilities at fair value through gains and losses and other financial
liabilities at amortized cost.
(3)Recognition of fair values of financial assets and financial liabilities
○1 In case of an active market, financial assets or financial liabilities which are respectively
held and proposed to be undertaken by the Company are subject to the prevailing offer price
of such market, and financial assets or financial liabilities which are respectively proposed to
be held and undertaken by the Company are subject to the prevailing asked price of such
market. In case of absence of such prevailing offer or asked prices, market quotation of the
latest transaction or adjusted market quotation of the latest transaction shall be adopted,
except that there is clear evidence showing that such market quotation is not fair value.
○ In case of absence of an active market, the Company recognizes fair value by reference
to valuation technology which includes reference to the price adopted by parties who are
willing to make business and knowing conditions quite well in their latest transactions,
reference to prevailing fair values of other financial instruments with similar essence,
discount cash flow method and option pricing pattern.
(4)Recognition and measurement of financial assets transfer
That the Company grants or delivers financial assets to party other than the issuer of such
financial assets equals transfer of financial assets. Financial assets transferred could be the
entire or part of such financial assets. Two forms are listed as follows:
○Transfer of right for collecting cash flow of financial assets to another party;

                                             -59-
○Transfer financial assets to another party, while the aforementioned right is retained, with
obligation of paying such cash flow to final collector.
In the even that the Company has transferred almost all risks and remunerations arising from
ownership of all or part financial assets to another party, accordingly, recognition for such
entire or part financial assets shall be ceased. Gains and losses are determined by the
received consideration less the carrying value of the transferred financial assets. Meanwhile,
the original accumulated gains or losses of financial assets recognized in the owners’ equity
shall transferred to gains and losses; when all risks and remunerations attached to ownership
are retained, recognition for such entire or part financial assets shall continue, and the
consideration received shall be viewed as financial liabilities.
As for the financial assets which the Company has neither transferred nor retained all risks
and remunerations attached to ownership of such financial assets, while control upon such
financial assets still exists, recognition shall be conducted in light of the degree of its
continuous involvement in the transferred financial assets. Accordingly, relevant liabilities
shall be recognized.
(5)Discontinued recognition of financial assets and financial liabilities
Upon satisfaction of one of the following condition, financial assets will immediately
experience discontinued recognition:
①Right entitled by contract in respect of collection of cash flow from such financial asset
terminates.
②Such financial assets have been transferred and meet discontinued recognition condition
for financial assets as regulated by Accounting Standard for Enterprise No.23-Transfer of
Financial Assets.
Only when present obligations under financial liability have been released entirely or partly,
could cease recognition of such financial liability or part thereof.
(6) Impairment of financial assets
The Company conducts inspection on carrying values of financial assets, except for
transactional financial assets, as at balance sheet date. If there is objective evidence
indicating that impairment has happened to financial assets, impairment reserve then shall be
provided. Financial asset with great amount in single item is subject to separate impairment
test. In case of any objective evidence indicating that impairment has happened to such
financial asset, impairment loss shall be recognized and recorded in current gains and losses.
As for the financial assets with no great amount in single item and those which prove to be
not impaired after separate test, the Company will conduct impairment test on basis of credit
portfolio which is determined in light of customers’ credit records and historical bad debts,
so as to recognize impairment loss.
Objective evidence indicating impairment happens to financial assets means the proceedings
meeting the three characteristics: actually occurred subsequent to initial recognition of such
financial assets, bring influence over the estimated future cash flow of such financial assets,
and such influence could be reliably measured by the Company.
The followings are included in objective evidences indicating impairment happens to
financial assets:
A: Serious financial difficulty happens to issuer or debtor;
B: Breach of terms of contract by debtor, such as breach or overdue in repaying interest or
principal;
C: Creditor makes concession for debtors who experience financial trouble in light of
consideration for economy or laws;
D: Debtor is very likely to experience bankrupt or financial reorganization;
E: Financial assets are not able to be traded in active market since material financial
difficulty happens to issuer;
F: It is unable to judge whether cash flow from certain asset in a group of financial assets has
                                             -60-
decreased, while it is finally found that the estimated future cash flow of such financial asset
has actually decreased since its initial recognition and the decrease can be reliably measured
by reference to the general valuation based on open data. For example, payment capacity of
debtor of such financial assets portfolio gradually worsens, or unemployment in country or
region where the debtor locates risen, price of guaranty falls greatly in the place where it
locate, and the industry in which it belongs to is unpromising;
G: Material negative changes happen to technologies, markets, economy or law environment
in which debtor operates, which leads to that equity instrument investor is not likely to be
able to recover investment cost;
H: Fair value of equity instrument investment experiences severe or non-temporary falling;
I: Other objective evidence indicating impairment happens to financial assets.
In the event of impairment in financial asset at amortized cost, impairment loss is calculated
based on the difference between carrying value and present value of estimated future cash
flow discounted at effective interest rate.
After impairment loss is recognized for financial asset at amortized cost, if there is objective
evidence indicating value of such financial asset has recovered, which is objectively related
to proceedings occurred after recognition of such loss, the original impairment loss shall be
reversed and recorded in current gains and losses. However, the carrying value subsequent to
such reversal shall not exceed the amortized cost of such financial asset as at the reversal
date on assumption that such impairment loss had not been provided.
For impairment in financial assets available for sale, the original accumulated loss through
owners’ equity directly arising from falling fair value shall be reversed to current gains and
losses.
10. Account receivables
(1)Recognition standard and provision method for bad debt provision of account receivables
with significant amount in single item:
                           The Company’s account receivables with above RMB 1 million in
                           single item is defined as account receivables with significant
Recognition standard
                           amount in single item. Such kind of account receivables are
for bad debt provision
                           recognized as bad debts in case of impossible collection though
of account receivables
                           with bankrupt properties or heritages of debtors due to their
with          significant
                           bankrupt or death, or in the even that debtors haven’t implemented
amount in single item
                           their repayment obligations over 3 years upon expiration and there
                           are obvious evidences indicating impossible collection.
                           As for account receivables with significant amount in single item
Provision method for
                           which can not be directly recognized as bad debts, debt provision
bad debt provision of
                           shall be provided according to the Company’s policies by aged
account      receivables
                           analysis method. 100% bad debt provision shall be provided for
with          significant
                           those account receivables with great amount in single item which
amount in single item
                           can be directly recognized as bad debts
(2)Recognition standard and provision method for bad debt provision of account receivables
whose single amount are not significant, but the portfolio risk is significant after grouped by
credit risk feature
                           Account receivable meeting the following conditions: account
Recognition evidence receivable whose single amount is not significant, impossible
for group by credit risk collection though with bankrupt properties or heritages of debtors
feature                    due to their bankrupt or death, debtors haven’t implemented their
                           repayment obligations over 3 years upon expiration and there are
                                            -61-
                           obvious evidences indicating impossible collection.
Provision method confirmed by portfolio of credit risk feature
Provision percentage                           Provision percentage
for percentage of total                        for percentage of total
                                       100%                                                100%
accounts      receivable                       other         receivable
outstanding (%)                                outstanding (%)
(3)Aged analysis method
                                          Provision percentage for     Provision percentage for
                 Age
                                            accounts receivable             other receivable
            Within 6 months                No provision                 No provision
           6 months to 1 year                                  10%                            10%
            1 year to 2 years                                  20%                            20%
           2 years to 3 years                                  40%                            40%
              Over 3 years                                    100%                           100%
                 Bad debt loss is calculated by allowance method. Separate impairment test is
                 provided for account receivable whose single amount is significant, its bad
                 debt provision is subject to the difference between the present value of
                 estimated future cash flow and carrying value of such account receivable;
                 bad debt provision is fully provided for account receivables whose single
Explanation
                 amount are not significant, but the portfolio risk is significant after grouped
for provision
                 by credit risk feature; provision is offered on the basis of period-end balances
for bad debt
                 by aged analysis method for account receivables whose single amounts are
                 significant and not impaired and account receivable whose single amount is
                 not significant, and which is not grouped by credit risk feature to the
                 portfolio whose risk is significant. Bad debt provision withdrew is accounted
                 in current gains and losses.
11. Inventories
(1)Classification of inventories
The Company’s inventories are categorized into stock materials, product in process and stock
goods ect.
(2)Pricing for delivered inventories
A. Generally, stock materials are calculated at planned cost. Material cost difference is
individually set according to classification of grant types. Pursuant to the difference between
the planned cost of the received or delivered raw materials and the material cost the
aforesaid cost should share after carrying forward at period-end, the Company adjusts the
planned cost to effective cost; finished products are priced at effective costs, and carried
forward to operating cost by weighted average method when being delivered;
B. Products in process are priced at effective costs, and carried forward to finished products
at actually occurred cost;
C. Finished self-produced products are priced at effective costs, and carried forward to
operating cost by weighted average method; external purchase goods (from import and
export trades) are carried forward to sales cost by individual pricing method.
(3)Recognition evidence for net realizable value of inventories and withdrawal method for
inventory impairment provision
Inventories as at period-end are priced at the lower of costs and net realizable values; at
period end, on the basis of overall clearance about inventories, inventory impairment
provision is withdrew for uncollectible part of costs of inventories which result from destroy
of inventories, out-of-time of all and part inventories, or sales price lowering than cost.
                                             -62-
Inventory impairment provision for stock goods and quantity of raw materials is subject to
the difference between costs of single inventory item over its net realizable value. As for
other raw materials with large quantity and comparatively low unit prices, inventory
impairment provision is withdrawn pursuant to categories.
As for inventories such as stock goods and materials available for direct sales, their net
realizable values are determined by their estimated selling prices less estimated sales
expenses and relevant taxes. For material inventories held for purpose of production, their net
realizable values are determined by the estimated selling prices of finished products less
estimated costs, estimated sales expenses and relevant taxes accumulated till completion of
production. As for inventories held for implementation of sales contracts or service contracts,
their net realizable values are calculated on the basis of contract prices. In the event that
inventories held by a company exceed order amount as agreed in sales contracts, net
realizable values of the surplus part are calculated on the basis of normal sale price.
(4)Inventory system
Inventory system is perpetual inventory system.
(5)Amortization method for low value consumables
Low value consumables are subject to one-off amortization when being received.
12. Long-term equity investment
(1)Recognition of investment cost
Long-term equity investment mainly includes the equity investments made to subsidiaries,
joint ventures and associates, and the equity investment which couldn’t entitle the Company
to conduct control, common control or significant influence over the invested units and
which have no quotation price in active market and whose fair value could not be able to
measured surely.
Initial investment cost of long-term equity investment of the Company is recognized by the
following ways based on different acquisition ways:
①In situation of a long-term equity investment acquired through business combination
under common control, the carrying value of the owners’ equity of the acquired company as
at the combination date is deemed as initial investment cost for this long-term equity
investment; difference between acquisition cost and initial investment cost is used to adjust
capital reserve. In case of insufficient capital reserve for offset, retained profit shall be then
adjusted.
②In situation of a long-term equity investment acquired through business combination not
under common control, the initial investment cost of long-term equity investment is
determined at the combination cost calculated by reference to the fair value of assets, equity
instruments issued and liabilities occurred or undertaken, plus any direct cost related to
acquisition. Realizable assets and liabilities undertaken by such assets (include contingent
liabilities) of the party being combined as at the combination date are all measured at fair
values, without consideration to amount of minority interests. The surplus of combination
cost less fair value net realizable assets of the party being combined is recorded as goodwill,
and the deficit is directly recognized in the consoLeaderted statement of gains and losses.
③Long-term investments obtained through other ways
A. Initial investment cost of long-term equity investment obtained through cash payment is
determined according to actual payment for purchase.
B. Initial investment cost of long-term equity investment obtained through issuance of equity
securities is determined at fair value of such securities.
C. Initial investment cost of long-term equity investment injected by investor is determined

                                             -63-
at the agreed value in investment contract or agreement. In case of an unfair contract or
agreement value, measurement shall be conducted at fair value.
D. Initial investment cost of long-term equity investment (exchanged-in) obtained through
exchange with non-monetary assets, which is of commercial nature, is determined at fair
value of the assets exchanged-out; otherwise determined at carrying value of the assets
exchanged-out if it is not of commercial nature.
E. Initial investment cost of long-term equity investment obtained through debt
reorganization is determined at fair value of such investment.
(2)Recognition method for subsequent measurement and gains and losses
○1 Investment to subsidiaries is calculated under cost method
It is referred to the equity investment made to subsidiaries held by the Company which can
conduct control upon invested unit. If the Company holds over 50% equities of an entity or
has control power in such entity though equity holding is fewer than 50%, such entity
comprises a subsidiary of the Company.
○Investment to joint ventures or associates is calculated under equity method
It is referred to the equity investment made to joint ventures held by the Company which can
conduct common control upon the joint venture with other joint parties; It is referred to the
equity investment made to associates held by the Company which has material influence
upon such associates. In the event that the Company holds equities of an entity from 20% to
50% and no essential control exists in such entity meanwhile or that though the Company
holds equities of an entity fewer than 20% while it has material influence upon such entity,
then the entity shall be deemed as a joint venture or associate of the Company.
When recognizing its share in net gains and losses of the invested unit, the Company shall
achieve recognition based on fair values of various realizable assets of such invested unit
upon obtaining such investment after adjustment in net profit of such invested unit.
In case of any inconsistency of the accounting policies and accounting periods adopted by
invested unit and the Company, financial statements of such invested unit shall be subject to
adjustment in compliance with accounting policies and accounting periods adopted by the
Company, so as to recognize investment gains and losses on that basis.
As for treatment for other movement of owners’ equity other than net gains and losses of
invested unit, carrying value of long-term equity investment shall be subject to adjustment
which shall be then recorded in owners’ equity.
○Long-term equity investment to entities where the Company has no control, common
control or material influence
Long-term equity investment which has no quotation in active market and whose fair value
could not be reliably measured is calculated under cost method.
Long-term equity investment which has quotation in active market or whose fair value could
be reliably measured is presented under item of financial asset available for sale, and is
measured at fair value, and fair value movement thereof shall be recorded in shareholders’
equity.
(3)Reference for confirmation of common control and material influence in invested unit
Common control over invested unit means common control over certain economic activity
pursuant to contract agreement, and only exists when investors who need to share control
power on material financial and operation decisions related to such economic activity make
unanimous agreement. That a party has material influence upon invested unit means that such
party has power to join decision-making related to finance and operation decisions of the
invested unit, while no ability of control or joint control with other parties upon
establishement of such decisions.
                                           -64-
(4)Impairment test method and withdrawal method for impairment provision
If any impairment indication is found in long-term equity investment by the Company in its
period-end inspection, the recoverable amount shall be estimated. In case of such recoverable
amount lowering than its carrying value, impairment provision shall be withdrawn for
long-term investment by reference to the difference of the aforesaid two items.
As for long-term equity investment which has no quotation in active market and whose fair
value could not be reliably measured, its impairment loss is determined by reference to its
carrying value less the amount recognized through discounting future cash flow at the
prevailing market yield ratio of similar financial assets, and then recorded in current gains
and losses.
As for long-term equity investment except for financial assets available for sale, its
impairment provision will not be reversed during asset permanent period once it is
withdrawn. Impairment loss of financial assets available for sale can be reversed through
equities.
13. Investment real estate
Investment real estate is stated at cost. During which, the cost of externally purchased
properties held-for-investment includes purchasing price, relevant taxes and surcharges and
other expenses which are directly attributable to the asset. Cost of self construction of
properties held for investment is composed of necessary expenses occured for constructing
those assets to a state expected to be available for use. Properties held for investment by
investors are stated at the value agreed in an investment contract or agreement, but those
under contract or agreement without fair value are stated at fair value.
The Company adopts cost methodology amid subsequent measurement of properties held for
investment, while depreciation and amortization is calculated using the straight-line method
according to their estimated useful lives.
The basis of provision for impairment of properties held for investment is referred to the
provision for impairment of relevant fixed assets.
14. Fixed assets
(1) Recognition of fixed assets
Fixed assets refer to the buildings, machinery and equipment, transportation vehicle and
other equipments related to operation with useful lives of more than one year and held for
production of products, provision of labor, lease or operation. A fixed asset is recognized
when it is Contingent that the relevant economic benefits flow into the enterprise and the
cost of the fixed assets can be reliably measured.
(2) Depreciation of fixed assets
                                                           Residual      Annual depreciation
              Class                   Depreciation time
                                                              rate             rate
       House and Building                20 - 35 years         5%              2.71% - 4.75%
     Machinery equipment                    10 years          5%                       9.50%
     Transportation vehicle                  4 years          5%                      23.75%
  Electronic equipment                      3 years           5%                      31.67%
  Other equipment                         5 - 10 years        5%              9.50% - 19.00%
(3) Impairment testing of fixed assets and provision for impairment
At the end of the Reporting Period, the Company carries out a review on fixed assets. If the
following conditions exist, the Company shall value the recoverable amount of fixed assets in
order to determine whether there is any impairment of fixed assets. For fixed assets with
recoverable amount falling below the carrying amount, the Company will make a provision
for impairment loss on fixed asset equals to an amount of the difference between the
recoverable amount and the carrying amount. Provision is made based on a single item basis,
                                           -65-
and based on a group of assets to which the assets belong to if it is hard to estimate the
recoverable amount of the single assets. The impairment provision cannot be reversed in the
period of duration of the assets once it is provided.
(a) There is a significant decrease in the market price of fixed assets. Such decrease is beyond
any decrease to the large extent in the market price as time goes by or any expected decrease
from normal use of fixed assets;
(b)Fixed assets are obsolete and damaged;
(c) There is a significant negative change to the intended use of fixed assets, such as idleness
or forthcoming idleness of the fixed assets, termination or restructuring of the operating
business to which the fixed assets belong to and disposal of fixed assets earlier than the end
of its useful life, thereby resulting in negative influence on the Company;
(d) There is a significant current or recent change in the economic, technological and legal
environment in which the Company operates and in the market in which fixed assets are,
thereby resulting in negative influence on the Company;
(e) There is a significant increase in the market interest rate or return on investment in other
markets, posing a potential impact on the discount rate on the calculation of the present value
of the estimated future cash flows, thereby resulting in significant decrease in recoverable
amount of fixed assets;
(f) There is evidence from internal reports of the enterprise that the economic benefits of the
fixed assets have been lower or will be lower than expected, for example, the net cash flows
or operating profits (or losses) of the fixed assets are far lower (or higher) than the expected
amount;
(g) Other circumstances showing an indication of impairment of fixed assets.
(4) Basis of recognition and method of measurement of fixed assets by financing lease
The assets will be classified as fixed assets by financing lease if the Company satisfies one or
more of the following conditions:
(a) As stipulated in the lease agreement (or a reasonable judgment made pursuant to relevant
conditions at the commencement date of the lease), the ownership of fixed assets by
financing lease can be passed to the Company when the lease expires;
(b) As the Company has a option to acquire the leased fixed assets and the agreed price of
purchase is far below the fair value of leased fixed assets at the time of exercise of the option,
it is certain that the Company will exercise the option at the commencement date of the lease;
(c) Despite that the ownership of fixed assets is not transferable, the lease period represents
75% or more of the useful life of leased fixed assets;
(d) The present value of the minimum lease payment by the Company at the commencement
date of lease is equal to 90% or more of the fair value of leased fixed assets at the
commencement date of lease. The present value of the minimum lease payment received by
the lesser at the commencement date of lease is equal to 90% or more of the fair value of
leased fixed assets at the commencement date of lease;
(e) Due to the special nature of the leased assets, those assets can be used only by the
Company if without any substantial renovation;
(f) The fixed assets by financing lease is carried at the lower of the fair value of the leased
fixed assets at the commencement date of lease and the present value of the minimum lease
payment.
15. Projects under construction
(1) Calculation of construction prices of projects under construction:
Project costs are determined on the basis of the expenses actually occured. Projects for own
account are measured on the basis of direct materials, direct wages, direct work
commencement expenses, etc. Subcontracted projects are measured on the basis of project
prices payable. Costs of equipment installation projects are determined on the basis of the
value of the equipment installed, installation fees, and expenses occured by project
                                             -66-
debugging, etc. The costs of projects under construction also include the capitalized
borrowing expenses and exchange gains and losses.
(2) Standard and timing of converting projects under construction into fixed assets: From the
date on which the fixed assets built by the Company come into an expected usable state, the
projects under construction are converted into fixed assets on the basis of the estimated value
of project estimates or pricing or project actual costs, etc. Depreciation is calculated from the
next month. Further adjustments are made to the difference of the original value of fixed
assets after final accounting is completed upon completion of projects; however, the original
depreciation is not adjusted.
(3) Recognition and provision for impairment of projects under construction:
The Company carries out a comprehensive inspection of projects under construction at the
conclusion of each year. Where there is an indication of impairment, the recoverable amount
is estimated and impairment is provided on the basis of the difference between the amount
recoverable by a project and the carrying amount of such project. Impairment provision is
not reversed during the period of duration of the assets once it is provided.
16. Borrowing costs
(1) Recognition of capitalization of borrowing costs
Borrowing costs comprise interest occured, amortization of discounts or premiums, ancillary
costs and exchange differences in connection with foreign currency borrowings. The
borrowing costs of the Company, which incur from the special borrowings occupied by the
fixed assets that need more than one year (including one year) for construction, development
of investment properties or inventories or from general borrowings, are capitalized and
recorded in relevant assets costs; other borrowing costs are recognized as expenses and
recorded in the profit or loss in the period when they are occured. Relevant borrowing costs
start to be capitalized when all of the following three conditions are met:
(a) Capital expenditure has been occured;
(b) Borrowing costs have been occured;
(c) Acquisition or construction necessary for the assets to come into an expected usable state
has been carried out.
(2) Period of capitalization of borrowing costs:
The borrowing costs in relation to acquisition or construction of fixed assets, investment
properties and inventories, incurring before the assets reach an expected usable state or
saleable state, are recorded in the costs of the assets when the above conditions of
capitalization are met. When acquisition or construction of fixed assets undergo abnormal
suspension, and the suspension lasts for more than 3 months consecutively, then the
capitalization of suspension borrowing ceases and will be recognized as current expenses,
until the acquisition or construction of assets start again. When the expected usable state or
saleable state is achieved, capitalization of borrowing costs ceases, and the borrowing costs
incurring subsequently are directly recorded into financial expenses in the period when they
are occured.
(3) Calculation of capitalized amounts of borrowing costs:
In respect of the special borrowings borrowed for acquisition, construction or production and
development of the assets qualified for capitalization, the amount of interests expenses of the
special borrowings actually occured in the period less interest income derived from unused
borrowings deposited in banks or less investment income derived from provisional
investment, are recognized.
With respect to the general borrowings occupied for acquisition, construction or production
and development of the assets qualified for capitalization, the capitalized interest amount for
general borrowings is calculated and recognized by multiplying a weighted average of the
accumulated expenditure on the assets in excess of the expenditure on the some assets of the
special borrowings, by a capitalization rate for general borrowings. The capitalization rate is
                                             -67-
determined by calculation of the weighted average interest rate of the general borrowings.
17. Intangible assets
(1) Measurement of intangible assets:
The intangible assets of the Company include land use rights etc.
The cost of a purchased intangible asset shall be determined by the expenditure actually
occured and other related costs.
The cost of a intangible asset contributed by an investor shall be determined in accordance
with the value stipulated in the investment contract or agreement, except where the value
stipulated in the contract or agreement is not fair.
The intangible assets acquired through exchange of non-monetary assets, which is
commercial in substance, is carried at the fair value of the assets exchanged out; for those
not commercial in substance, they are carried at the carrying amount of the assets exchanged
out.
The intangible assets acquired through debt reorganization, are recognized at the fair value.
Expenditure in the research stage of the intangible assets with independent research and
development should be included in the profit or loss for the current period in which they are
occured; expenditure in the development stage should be recognized as intangible assets
(patent technologies and non-patent technologies) when all of the following conditions are
met:
(a) It is technically feasible that the intangible assets are completed for the purpose of their
uses or sales;
(b) The Company has an intention to complete the intangible assets for their uses or the sale;
(c) Ways of creating economic benefits by intangible assets include proof of existing market
of the products manufactured by use of intangible assets or the existing market of intangible
assets and the proof of the use if the intangible assets are only for the Company’s internal
use;
(d) The Company has sufficient technical and financial resources and other supporting
resources to complete the research and development of such intangible assets and are
capable of using or selling such intangible assets;
(e) Expenditure occured in the development stage of such intangible assets can be accurately
calculated;
(f) The cycle of the product produced with the intangible assets is above one year.
(2) Amortization and duration of intangible assets:
The land use rights of the Company are amortized evenly over the period of the grant since
the date of commencement of the grant (the date of acquisition of the land use rights).
(3) Recognition and provision of impairment of intangible assets:
The Company tests impairment of the intangible assets with indefinite benefit years such as
goodwill annually and estimates their recoverable amounts and impairment of the intangible
asset is provided at the difference between the estimated recoverable amount and the
carrying amount of such intangible assets.
A year-end review is conducted to other intangible assets. When there is an indication of
impairment, the recoverable amount is estimated and impairment of the intangible asset is
provided at the difference between the estimated recoverable amount and the carrying
amount of such intangible assets. The impairment provision is not reversed during the
duration of the assets once it is provided.
(a)The intangible assets have been replaced by other new technology so that there is a
material adverse effect on their capacity to generate economic benefits for the Company;
(b) The market value has fallen substantially in the current period and is not expected to
recover in the remaining amortization period;
(c) The intangible assets have exceeded the term protected by laws but some of them can still
be used;
                                             -68-
(d)Other circumstances sufficient to prove that impairment has been made actually.
18. Long-term expenses to be amortized
Long-term expenses to be amortized of the Company the expenses that are already charged
and with the beneficial term of more than one year are evenly amortized over the beneficial
term. For the long-term deferred expense items cannot benefit the subsequent accounting
periods, the amortized value of such items is all recorded in the profit or loss during
recognition.
19. Estimated liabilities
(1) Principles of recognition:
An obligation related to a contingency, such as guarantees provided to outsiders, pending
litigations or arbitrations, product warranties, redundancy plans, onerous contracts,
reconstructing, expected disposal of fixed assets, etc. shall be recognized as an estimated
liability when all of the following conditions are satisfied:
(a) the obligation is a present obligation of the Company;
(b) it is Contingent that an outflow of economic benefits will be required to settle the
obligation;
(c) the amount of the obligation can be measured reliably.
(2) Measurement: to measure on the basis of the best estimates of the expenses necessary for
paying off the contingencies.
On the balance sheet date, the carrying amount of estimated liabilities is reviewed. If there is
obvious evidence that the carrying amount cannot actually reflect the current best estimates,
then the carrying amount is adjusted according to the current best estimates.
20. Revenue
The Company’s revenue is mainly from sale of goods.
(1) Principles of recognition of revenue from sale of goods:
(a) the Company has transferred to the buyer the significant risks and rewards of ownership
of the goods;
(b) the Company retains neither continuing managerial involvement to the degree usually
associated with ownership nor effective control over the goods sold;
(c) the amount of revenue can be measured reliably;
(d) it is Contingent that the associated economic benefits will flow into the Company;
(e) the associated costs occured or to be occured can be measured reliably.
(2) Principles of recognition of revenue from the rendering of services:
Revenue from the rendering of services shall be recognized only when all of the following
conditions are satisfied: the amount of revenue and costs occured or to be occured for the
transaction involving the rendering of services can be measured reliably; the associated
economic benefits can flow into the Company; the stage of completion of the transaction can
be measured reliably.
(3) Principles of recognition of assignment of asset use rights:
Revenue from use by others of enterprise assets shall be recognized only when the associated
economic benefit can flow into the Company, and the amount of revenue can be measured
reliably.
21. Government grants
The government grants related to earnings are recognized as deferred earnings if they are
used for compensating the relevant expenses or losses of the Company in subsequent periods,
and are recorded in the profit or loss in the period of recognition of relevant expenses; if they
are used to compensate the relevant expenses or losses occured of the Company, they are
directly recorded in the profit or loss.
Asset-related government grants are recognized as deferred income, and are allocated evenly
over the useful life of related assets and are included in the current profit and loss. However,
                                             -69-
the government grants measured at the nominal amount are recorded directly in the profit or
loss.
22. Deferred income tax assets and deferred income tax liabilities
A deferred tax asset and deferred tax liability shall be determined by a difference between the
carrying amount of an asset or liability and its tax base at the tax rates that are expected to
apply to the period when the asset is realized or the liability is settled.
The Company recognizes deferred tax assets to the extent that the taxable income that the
Company can possibly obtain to deduct the deductible temporary differences. On the balance
sheet date, when there is obvious evidence that it is Contingent that sufficient taxable income
can be obtained in the future to deduct the deductible temporary differences, the deferred
income tax assets not recognized in previous accounting periods are recognized.
On the balance sheet date, the Company reviews the carrying amount of deferred tax assets.
If the Company cannot possibly obtain sufficient taxable income in future to deduct the
benefits of deferred tax assets, the carrying amount of deferred tax assets is written down
accordingly. When it is Contingent that sufficient taxable income is obtained, then the
written-down amount is reversed.
23. Lease
Finance lease refers to a lease that has transferred in substance all the risks and rewards
related to the ownership of an asset, no matter whether the ownership of it has been
transferred eventually.
The finance lease assets are carried at the lower of the fair value of the leased assets and the
present value of the minimum lease payments on the lease beginning date, and the minimum
lease payments are recorded in long-term payables, with the difference as unrecognized
finance expenses. The initial direct costs arising from finance lease of the Company are
recorded in the value of the leased assets. Depreciation and impairment are provided for the
finance lease assets according to the policies of the Company.
Where there is reasonable assurance that the ownership of the leased assets can be obtained
when the lease term expires, depreciation is provided for the leased assets over the estimated
useful life. Otherwise, depreciation is provided for the leased assets at the lower of the lease
term and the estimated useful life of the leased assets.
The Company allocates the unrecognized financing expenses over the lease term by using
the effective interest rate method and in accordance with the principles of borrowing costs.
On the balance sheet date, the Company lists the difference of the long-term payables related
to finance lease less unrecognized financing expenses as finance lease payable and
non-current liabilities due within one year respectively.
Operating lease refers to other lease other than finance lease. The rental expenses of the
operating leased assets are recognized as relevant assets costs or expenses over the lease
term on a straight-line basis.
24. Other significant accounting policies, accounting estimates and preparation of
financial statements
(1) Goodwill
In the business combination not under the same control, the difference of the merger cost in
excess of the fair value of net identifiable assets of the acquired party is recognized as the
goodwill and is tested for impairment according to requirements.
Concerning the goodwill listed separately in financial statement, while performing
depreciation test, amortized the book value of goodwill into the predicted assets group or
assets group combination that benefit from the synergistic effect while consolidation. In the
testing results, if the coverable amount of assets group or assets group combination with
goodwill amortized lower than its book value, than confirmed corresponding impairment
losses. The amount of impairment losses should off-set the book values of goodwill that

                                            -70-
amortized to assets group or assts group combination, than off-set book value of other various
assets by proportion that except the goodwill among assets group or assts group combination.
(2) Employees’ remuneration
Employees’ remuneration includes: employees’ salaries, bonus, allowance and subsidies;
welfare provision; social insurance such as pension insurance, unemployment insurance and
work injury insurance etc.; housing reserve fund, labor union expenditures and staff
education expenditures; benefits not in monetary value; compensation paid for the
termination of employment contracts with employees; relevant expenditures relating to the
provision of other services by employees.
In the accounting period in which employees provide service to the Company, payable
employees’ remuneration is recognized as liabilities. Other than the compensation for
termination of the labor relationship with employees, the employees’ remuneration is
recorded in fixed assets costs, intangible assets costs, product costs or labor costs respectively
according to the beneficiaries of the services provided by employees. The employees’
remuneration other than the above is directly recorded in the profit or loss.
Prior to the expiry of the labor contracts of employees, the compensation for termination of
the labor relationship with employees or encouraging employees to accept to be laid off is
recognized as estimated liabilities and recorded in the profit or loss.
(3) Accounting for income tax
The Company applies the balance sheet liability method for accounting of income tax.
Current income tax and deferred income tax is recorded in the profit or loss as income tax
expenses or gains, but the income tax arising from the following conditions is excluded:
1) Business combination;
2) The transaction events directly recognized in the owner’s equity.

Note III: Taxation
Major taxes and tax rates
       Tax                     Basis                                Tax rate
                                                Tax rate for sale of goods is 17%; rate for
                                                exported commodities is stipulated by the
VAT                        Sale of goods        state with declaration of export tax rebate, rate
                                                of tax may be “exempted, credited and
                                                refunded”
Business tax           Revenue from lease                              5%
Urban
maintenance and        Turnover tax payable
construction tax                                                       7%
Education        fee
                       Turnover tax payable
surcharges                                                             4%
Corporate income
                          Taxable income                 15% for the parent company
tax

Corporate income taxes of subsidiaries:
           The Company and its subsidiaries Weifu Jinning, Weifu Diesel System,
           Weifu Leader and Ningbo Weifu Tianli Pressurized Technology Co., Ltd.
           (Weifu Tianli for short) are all high-tech enterprises, and enjoy a
           preferential tax rate of 15% according to relevant state regulations on
           income taxation.

                                              -71-
The income tax of Wuxi Weifu Mashan Oil Pump and Oil Nozzle Co., Ltd. (hereinafter
referred to as “Weifu Mashan”), Wuxi Weifu Chang’an Fuel Co., Ltd. (formerly known as
“Wuxi Weifu Chang’an Oil Pump and Oil Nozzle Co., Ltd.”, hereinafter referred to as
“Weifu Chang’an), Wuxi Weifu International Trade Co., Ltd. (hereinafter referred to as
“Weifu International Trade”), Wuxi Weifu Jida New Material Technology Development Co.,
Ltd. (hereinafter referred to as “Weifu Jida”), Jiangsu Weifu Nano Technology Co., Ltd.
(hereinafter referred to as “Weifu Nano”), Wuxi Weifu ITM Information Machinery
Development Co., Ltd. (hereinafter referred to as “ITM Machinery”) ,Wuxi Weifu Schmitter
Power System Parts and Components Co., Ltd. (hereinafter referred to as “Weifu Schmitter”)
and Chaoyang Weifu Jialin Machinery Manufactures Co., Ltd. (hereinafter referred to as
“Weifu Jialin”) is 25%.




                                           -72-
Note 4: Enterprise merger and consolidation financial reports
1. Particulars about subsidiaries
(1) Subsidiaries acquired by means of establishment or investment
                                                                                                                        Balances of
                                                                                                                       other projects
                                                                  Registered                     Actual investment       actually        Equity   Proportion      Whether
             Name of    Type of    Registration     Nature of                      Business
                                                                    capital                     amount at the period   constituting       held      of vote    consoLeaderte
        company        company        Place         business                            scope
                                                                  (RMB’0000)                    end(RMB’0000)        net amount of      (%)      right (%)    report or not
                                                                                                                       investment in
                                                                                                                       subsidiaries
                                                                                  Accessories
                                                                                      and
                        Limited                                                    matching
                                      Wuxi        Manufacturing                     parts of
                       company                                                      internal
                                                                                  combustion
Weifu Mashan                                                          4,500.00       engine                   4,869                 --   100.00       100.00        Yes
                                                                                  Accessories
                                                                                      and
                        Limited                                                    matching
                                      Wuxi        Manufacturing                     parts of
                       company                                                      internal
                                                                                  combustion
Weifu Chang’ an                                                      6,000.00       engine                   7,090                 --   100.00       100.00        Yes
                        Limited
                                      Wuxi        Manufacturing                   Metal nano
Weifu Jida             company                                          500.00     powder                    350.00                 --    70.00        70.00        Yes
                        Limited
                                      Wuxi        Manufacturing                      Nano
Weifu Nano             company                                        3,000.00     material                2,400.00                 --    80.00        80.00        Yes
                                                                                  Accessories
                                                                                      and
                        Limited                                                    matching
                                      Wuxi        Manufacturing
                       company                                                      parts of
                                                                                    internal
Weifu Diesel System                                                  30,000.00    combustion              26,019.00                 --   100.00       100.00        Yes

                                                                               -73-
                                                                                          engine
                                                                                        Accessories
                                                                                            and
                                                                                         matching
                         Sino-foreign       Wuxi       Manufacturing                      parts of
                             joint                                                        internal
                                                                                        combustion
Weifu Schmitter            venture                                           1,800.00      engine                810.00                --     45.00        45.00        Yes




(2) Subsidiaries acquired by means of enterprise merger under common control
                                                                                                                           Balances of
                                                                                                                          other projects
                                                                                                          Actual
                                                                                                                             actually
                                                              Registered                                investment                          Equity    Proportion      Whether
 Company           Type of   Registration     Nature of                                                                    constituting
                                                               capital         Business scope          amount at the                         held       of vote    consoLeaderte
  name            company      Place          business                                                                     net amount
                                                             (RMB’0000)                                  period                             (%)       right (%)    report or not
                                                                                                                          of investment
                                                                                                      end(RMB’0000)
                                                                                                                                in
                                                                                                                           subsidiaries
                                                                              Accessories and
   Weifu           Limited                                                    matching parts of
                               Nanjing      Manufacturing      34,628.70                                       17,864                --       80.00        80.00        Yes
  Jinning         company                                                         internal
                                                                             combustion engine
                   Limited
Weifu Leader                    Wuxi        Manufacturing      26,000.00      Cleaner, muffler                 23,011                --       94.81        94.81        Yes
                  company
    Weifu         Limited
International                   Wuxi            Trade          3,000.00      International trade                3,033                --      100.00       100.00        Yes
    Trade        company
   (3) Subsidiaries acquired by means of enterprise merger under different controls




                                                                                   -74-
                                                                                                                    Balances of other
                                                                                                      Actual
                                                                                                                    projects actually
                                                        Registered                                  investment                                       Proportion        Whether
  Company      Type of   Registration     Nature of                                                                 constituting net      Equity
                                                          capital           Business scope         amount at the                                     of vote right   consoLeaderte
      name     company      Place         business                                                                     amount of          held (%)
                                                        (RMB’0000)                                   period                                             (%)         report or not
                                                                                                                     investment in
                                                                                                  end(RMB’0000)
                                                                                                                      subsidiaries
ITM            Limited                                                 Accessories and matching
                            Wuxi        Manufacturing                      parts of internal
Machinery      company                                      1,000.00         combustion                  1,700.00                    --     100.00         100.00         是
               Limited                                                 Accessories and matching
                                                                           parts of internal
Weifu Tianli   company     Ningbo       Manufacturing      10,469.00         combustion                  9,023.00                    --      51.00          51.00         是
               Limited                                                 Accessories and matching
                                                                           parts of internal
Weifu Jialin   company    Chaoyang      Manufacturing         800.00         combustion                   400.00                     --      51.00          51.00         是




                                                                                -75-
 2. Explanation on the change in the consoLeadertion range
                                               Whether it is consoLeaderted Whether it was consoLeaderted
               Name of company
                                                 in this year or not             in last year or not
       Weifu Mashan                                       Yes                           Yes
       Weifu Chang’an                                    Yes                           Yes
       Weifu Jida                                         Yes                           Yes
       Weifu Nano                                         Yes                           Yes
       Weifu Diesel System                                Yes                           Yes
       Weifu Jinning                                      Yes                           Yes
       Weifu Leader                                       Yes                           Yes
       Weifu Internal Trade                               Yes                           Yes
       Weifu Schmitter[Note 1]                            Yes                           Yes
       ITM Machinery                                      Yes                           Yes
       Weifu Tianli[Note 2]                               Yes                           No
       Weifu Jialin[Note 3]                               Yes                           No
   Note 1
    Weifu Schmitter -- Sino-foreign equity joint venture jointly funded and established by
    the Company, Germany Schmitter Group Aktiengesellschaft and Shanghai Weishi
    Automobile Technology Development Co., Ltd. obtained Business License for Legal
    Entity (No. 320200400033433) granted by Jiangsu Wuxi Industrial and Commercial
    Administration Bureau on Sep. 17th, 2009. The registered capital of the Company was
    RMB 18 million, among which, Company funded RMB 7.2 million, accounting for
    40% of the total capital , and Shanghai Weishi Automobile Technology Development
    Co., Ltd. funded RMB 2.7 million, accounting for 15% of the total capital. During this
    year, the Company invested RMB 2.7 million as the investment fund for the first time.
    As the biggest shareholder owning a majority of vote rights of the Board of Directors
    of Weifu Schmitter, the Company had taken it into consoLeadertion range as a
    subsidiary since its establishment.
   Note 2
    Weifu Tianli-- The Company invested with cash in Ningbo Tianli Supercharger Co., Ltd, the
    Company occupied 51% fo the total register capital of the company after capital increased. Relevant
    re-registration of Industry and Commerce were finished in end of October 2010 with new name of
    Ningbo Weifu Tianli Supercharge Technology Co., Ltd. The company considered as the controlling
    subsidiary of the Company for statement consolidation since November 2010.
   Note 3
    Weifu Jialin-- According to the Equity Transfer Agreement between the Company and Chaoyang
    Jialin Machinery Manufacture Co., Ltd., 1% equity of Weifu Jialin owned by Chaoyang Jialin
    Machinery Manufacture Co., Ltd. has been transferred by the Company. Relevant Industry and
    Commerce re-registration finished in October 2010. Fifty-one percent equty of the company was
    held the Company and became as the controlling subsidiary of the company, joint in the statemen
    consolidation since October 2010.
3. Subsidiaries newly taken into consoLeadertion range during this period
                                                                  Unit: RMB’000
                                                         Net value at            Net profit in this
                      Name
                                                         period-end                   period
     Weifu Tianli                                                   155,789                       2,204
     Weifu Jialin                                                       9,983                       795

                                                -76-
Note 5: Commentary on items of consoLeaderted financial statements
(There is no specific explanation for the following items and             the amount for items is
taking RMB thousand as unit.)
  5-01 Momentary capital
                             2010-12-31                                      2009-12-31
                                                       Amount
                 Amount
     Item                    Converting    Amount          in             Converting        Amount
                in foreign
                                rate      in RMB        foreign              rate          in RMB
                 currency
                                                       currency
 Cash:                                           544                                               372
 RMB                     --           --         544           --                    --            372
 Bank
 deposit:                                    450,166                                        326,534
 RMB                     --           --     441,693           --                    --     325,559
 Euro                  962       8.8065        8,473         100                9.7971          975
 Other                                       146,249                                         98,589
 currency
 capitals:
 RMB                     --           --     145,314           --                    --    98,589
 Euro                  106       8.8065          935           --                    --          --
 Total                                       596,959                                      425,495
Funds with limited application, funds deposited abroad and funds          with latent recovery risks
due to mortgage, pledge or freezing:
                    Item                              2010-12-31                   2009-12-31
Bank acceptance bill, L/C and other collateral                  131,739                         97,968
5-02 Notes receivable
(1) Classification of notes receivable
              Category                           2010-12-31                       2009-12-31
Commercial acceptance bill                              68,900                        31,700
Bank acceptance bill                                   766,366                       421,954
             Total                                     835,266                       453,654
(2) Notes receivable already pledged by the Company at the end of the period (top five)

                         Drawer                               Expiration date             Amount
Dongfeng Cummins Engine Co., Ltd.                                2011-5-25                      16,000
Shanxi Automobile Co., Ltd.                                      2011-2-28                      10,000
Baotou Bei Ben Heavy-Duty Truck Co., Ltd.                        2011-4-11                      10,000
                                                                 2011-1-28
Anhui Jianghui Automobile Co., Ltd.                                                             10,000
                                                                 2011-4-22
Dongfeng Automobile Co., Ltd.                                    2011-3-15                       8,800
Total                                                                                           54,800
Among the bills receivable at the end of the period, bank acceptance bill of RMB 85.1785
million served as pledge for drawing payable bills.
                                                 -77-
(3) Undue notes already endorsed by the Company to other parties at the end of period (top
five)
                              Drawer                            Expiration date             Amount
Dongfeng Automobile Co., Ltd. Dongfeng Commercial              Befor end of June
                                                                                                120,900
Vechicle Co.,                                                        2011
Shanxi Automobile Co., Ltd.                                    Befor end of June
                                                                                                 50,000
                                                                     2011
Weichai Power Co., Ltd.                                        Befor end of June
                                                                                                 34,440
                                                                     2011
Anhui Jianghui Automobile Co., Ltd. Engine Branch              Befor end of June
                                                                                                 30,490
                                                                     2011
Baotou Bei Ben Heavy-Duty Truck Co., Ltd.                      Befor end of June
                                                                                                 30,000
                                                                     2011
Total                                                                                           265,830
5-03 Accounts receivable
(1) Accounts receivable disclosed according to account nature:
                                                                  2010-12-31
                                                Book value                  Provision for bad debts
                Category
                                                          Proportion                        Proportion
                                            Amount                         Amount
                                                             (%)                               (%)

Significant single amount and withdrwal
bad bedt provision single
                                                47,077           4.41              47,077         100.00

Withdrwal bad debt provision based on age
combination                                   1,003,974         94.00               4,176             0.42

Including: significant single amount           942,294          88.22               1,092             0.12
     Minor single amount                        61,680           5.78               3,084             5.00
Minor single amount but withdrwal bad
bedt provision single                           17,017           1.59              17,017         100.00
Total                                         1,068,068        100.00              68,270             6.40




                                                                  2009-12-31
                                                Book value                  Provision for bad debts
                Category
                                                          Proportion                        Proportion
                                            Amount                         Amount
                                                             (%)                               (%)
Significant single amount and withdrwal
bad bedt provision single                       48,080           5.91              48,080         100.00
Withdrwal bad debt provision based on
age combination                                750,253          92.21               3,866             0.52
Including: significant single amount           650,462          79.95                818              0.13

                                                 -78-
        Minor single amount                                    99,791             12.26                     3,048                3.05
Minor single amount but withdrwal bad
bedt provision single                                          15,271              1.88                    15,271              100.00
Total                                                        813,604             100.00                    67,217                8.26
 Explanation on categories of accounts receivable
Account receivable with significant amount in single item indicated account with single
item amount above RMB 1 million. For account receivable with significant amount in
single item, as no objective evidence showing that the potential devaluation would exceed
the provision for bad debts withdrawn by aging analysis was found, so the provision was
still withdrawn in the same way.
(2) Account receivable with significant single amount and withdrwal bad bedt provision
single at period end:
                                                Book         Bad debt          Withdrwal
            Account receivable                                                                                 Reasons
                                            balance            amount          ratio (%)

                                                                                                Insolvency, re-constructre by the
            Yangdong Co., Ltd.                  27,790         27,790           100.00
                                                                                                                Court
    Hunan Power Machine Plant                   4,297           4,297           100.00         Difficult in recover due to long age
     Jiangxi Diesel Engine Plant                3,561           3,561           100.00         Difficult in recover due to long age
    Bengbu Diesel Engine Plant                  3,318           3,318           100.00         Difficult in recover due to long age
Liuzhou Special Diesel Engine Plant             1,612           1,612           100.00         Difficult in recover due to long age
        Shaoyang Shenfeng Power
                                                1,590           1,590           100.00              Long age, un-recover after suit
          Manufacture Co., Ltd.
 Changchai Wanchou Diesel Engine
                                                1,500           1,500           100.00         Difficult in recover due to long age
                   Co.,
 Yuejin Light Automobile Co., Ltd.              1,218           1,218           100.00         Difficult in recover due to long age
 Wuxi Sida Xingxing Diesel Engine
                                                1,191           1,191           100.00         Difficult in recover due to long age
                Co., Ltd.
 Henan Agricultural Machinery Co.,              1,000           1,000           100.00              Long age, un-recover after suit
                  Total                         47,077         47,077           100.00
(3) Account receivable with minor single amount but withdrwal bad bedt provision single at
period end:
                                                    Book          Bad debt         Withdrwal
              Account receivable                                                                                    Reasons
                                                   balance         amount          ratio (%)
Wuxi Automobile Body Co., Ltd.                                                                        Difficult in recover due to long
                                                         851             851               100.00                     age
Hubei Duoling Power Mahcinery Co., Ltd.                                                               Difficult in recover due to long
                                                         776             776               100.00                     age
Henna       Xinxiang      Internal-Combustion                                                         Difficult in recover due to long
Engine Plant                                             754             754               100.00                     age
Zhejiang Haofeng Power Manufacture                                                                    Difficult in recover due to long
Co., Ltd.                                                625             625               100.00                     age
Yunnan Jinma Diesel Machine General                                                                   Difficult in recover due to long
Plant                                                    579             579               100.00                     age
Dongfeng Nanchon Motor Co., Ltd.                         570             570               100.00     Difficult in recover due to long

                                                                -79-
                                                                                                          age
Jintan Shunfeng Agricultural Machinery                                                      Difficult in recover due to long
 Accessory Co., Ltd.                                  567             567          100.00                 age
Nantong Tieniu Power Plant                                                                  Difficult in recover due to long
                                                      556             556          100.00                 age
Guangxi Liuzhou Zhongxing Power Plant                                                       Difficult in recover due to long
                                                      475             475          100.00                 age
Zhejiang       Agricultural       Machinery                                                 Difficult in recover due to long
Accessory Co.,                                        458             458          100.00                 age
Jiangmen      Zhongyu    Material    Supply                                                 Difficult in recover due to long
 Co.,Ltd.                                             412             412          100.00                 age
Changchai Group Jintan Diesel General                                                       Difficult in recover due to long
Plant                                                 375             375          100.00                 age
Urumqi Xinhengchang Pump Equipment                                                          Difficult in recover due to long
 Co., Ltd.                                            366             366          100.00                 age
Fujian Longma Agricultural Vechicle                                                         Difficult in recover due to long
Manufacture Co., Ltd.                                 365             365          100.00                 age
Kunming                        Zhongantong                                                  Difficult in recover due to long
 Technology-TradeCo., Ltd.                            328             328          100.00                 age
Tianjin Lovol Engines Co., Ltd.                                                             Difficult in recover due to long
                                                      321             321          100.00                 age
Beijing      Pinyang    Highway      Traffic                                                Difficult in recover due to long
 EquipmetnCo., Ltd.                                   309             309          100.00                 age
Scattered companies                                                                         Difficult in recover due to long
                                                     8,330        8,330            100.00                 age
Total                                               17,017       17,017                --                  --
(4) Account receivable withdrwal bad debt provision based on age combination
                                                                  2010-12-31
                                                                                  Withdrwal ratio of
  Account age                                  Proportion       Bad debt                                    Net account
                          Amount                                                  bad debt provision
                                                  (%)           provision                                   receivable
                                                                                         (%)
 Within           6
 months                        984,881              98.10                    --                                    984,881
 6     months-
                                                                                                10.00
 1year                            7,893              0.79                   789                                       7,104
 1-2 years                        9,200              0.92               1,840                   20.00                 7,360
 2-3 years                          827              0.08                   373                 40.00                   454
 Over 3 years                     1,174              0.11               1,174                  100.00                     --
 Total                        1,003,975            100.00               4,176                     0.42             999,799


                                                                  2009-12-31
                                                                                  Withdrwal ratio of
  Account age                                  Proportion      Bad debt                                     Net account
                          Amount                                                  bad debt provision
                                                  (%)          provision                                    receivable
                                                                                         (%)
                                                             -80-
 Within         6
                                                                                                       --
 months                      732,660                97.66                   --                                       732,660
 6     months-
                                                                                                   10.00
 1year                          10,990                1.46               1,099                                           9,891
 1-2 years                       4,189                0.56                838                      20.00                 3,351
 2-3 years                        808                 0.11                323                      40.00                  485
 Over 3 years                    1,606                0.21               1,606                    100.00                       --
 Total                       750,253               100.00                3,866                      0.52             746,387
(5) No arrears of shareholders (uints) holding over 5% (include 5%) vote-right share of the
Company in accounts receivable at period-end.
(6) The top five units in term of amount of account receivable
                                                 Relationship                                       Proportion to the total
                                                                                     Time
              Name of Unit                         with the            Amount                         amount of account
                                                                                     limit
                                                  Company                                               receivable (%)
 Weichai     Power    (Weifan)     Spare                                            within 1
 Resource Co., Ltd.                                 Client               132,529      year                               12.41
                                                                                    within 1
 Dongfeng Cummins Engine Co., Ltd.
                                                    Client               128,501      year                               12.03
 Zhejiang Yuanjing Auto Parts Co., Ltd.                                             within 1
                                                    Client               100,375      year                                9.40
 Wuxi Diesel Engine Factory of Faw                                                  within 1
 Jiefang Automobile Co., Ltd.                       Client                74,515      year                                6.98
 Bosch Automobile Diesel System Co.,                                                within 1
 Ltd                                                Client                55,380      year                                5.19
 Total                                                                   491,300                                         46.01
Bosch Automobile Diesel System Co., Ltd. is hereafter referred to as Bosch Diesel System.
(7) Related party’s account in accounts receivable
                                                 Relationship with the                         Proportion in total account
                    Name                                                         Amount
                                                       Company                                      receivable (%)
 Bosch Automobile Diesel System                   Associated company               55,380                                5.19
 Co., Ltd
 Wuxi     Weifu-Autocam              Fine             Joint-venture                  980                                 0.09
 Machinery Co. LTD.
 Kunming Xitong Machinery Co.,                        Joint-venture                       5                                   --
 Ltd.
 Total                                                                             56,365                                5.28
(8) Actual write-off of account receivable in this report period
                                     Nature
                                                      write-off                                      Caused by related
           Name of Unit                 of                             Reason for write-off
                                                      amount                                         transaction or not
                                     account
 Fuzhou Dimin Machinery                                                The account was too
                                                                220                                          No
 Co., Ltd.                                货款                            old to collect


5-04 Accounts paid in advance
                                                              -81-
(1) Accounts paid in advance listed according to account age
                                          2010-12-31                                        2009-12-31
   Account age
                                Amount              Proportion (%)                 Amount                Proportion (%)
Within 1 year                        101,673                      96.67                 37,062                        91.00
1 to 2 years                              2,514                    2.39                     3,363                      8.26
2 to 3 years                               866                     0.82                       44                       0.11
above 3 years                              124                     0.12                       259                      0.63
Total                                105,177                  100.00                    40,728                       100.00
(2) The top five units in term of amount of account paid in advance
                                                   Relationship
                                                                                                   Reason for not settling
                 Name of Unit                        with the        Amount         Terms
                                                                                                         account
                                                    Company
                                                                                                           Prepaid goods
High Hope Int’l Group Jiangsu Native Produce      Non-related                     Within 1
                                                                          19,002                      payment, goods had
Imp&Exp Corp. Ltd.                                   party                          year
                                                                                                       not been delivered
                                                                                                           Prepaid goods
Shanghai Baosteel Special Metal Material           Non-related                     Within 1
                                                                          10,905                      payment, goods had
Co., Ltd                                             party                          year
                                                                                                       not been delivered
LANEXX GMBH                                                                                                Prepaid goods
                                                   Non-related                     Within 1
                                                                           8,378                      payment, goods had
                                                     party                          year
                                                                                                       not been delivered
Jiangsu    Overseas     Group      International                                                       Prepaid goods
                                                   Non-related                     Within 1
Technology Engineer Co., Ltd.                                              7,455                    payment, goods had
                                                     party                          year
                                                                                                     not been delivered
Wuxi Power Supply Company of Jiangsu               Non-related                     Within 1
                                                                           4,606                   Prepaid electricity fee
Electric Power Company                               party                          year
Total                                                                     50,346

(3) No accounts paid in advance in this report period involved no shareholder (unit) holding
more than 5% vote right share (include 5%) of the Company at period-end
5-05 Dividend receivable
                                                                                                             Whether
                                            Increase     Decrease                       Reason for            related
          Item           2009-12-31          in this      in this     2010-12-31           not                account
                                             period       period                        collecting          depreciated
                                                                                                               or not
Dividend receivable with account age within 1
year
Zhonglian
Automobile                      118,715            --     118,715                  --         --                No
Electronic Co., Ltd.
Weifu Jialin                       239             --         239                  --         --                No
Total                           118,954            ---    118,954                  --         --
5-06 Other accounts receivable
(1) Other accounts receivable disclosed according to category
                                                         -82-
                                                                       2010-12-31
                                                    Book balance                     Provision for bad debt
                Category                      Amount           Proportion           Amount           Withdrwal
                                                                  (%)                                proportion
                                                                                                        (%)
Significant single amount and withdrwal
bad debt provision single                            2,000           17.57                 2,000            100.00
Withdrwal bad debt provision based on
age combination                                      6,984           61.35                    92               1.31
Including: significant single amount                 3,099           27.22                    --                  --
        Minor single amount                          3,885           34.13                    92               2.36
Minor single amount but withdrwal bad
debt provision single                                2,400           21.08                 2,400            100.00
Total                                               11,384          100.00                 4,492              39.46


                                                                       2009-12-31
                                                    Book balance                     Provision for bad debt
                Category                      Amount           Proportion           Amount           Withdrwal
                                                                  (%)                                proportion
                                                                                                        (%)
Significant single amount and withdrwal
bad debt provision single                            2,000           20.72                 2,000            100.00
Withdrwal bad debt provision based on
age combination                                      5,253           54.42                   218               4.15
Including: significant single amount                    --               --                   --                  --
        Minor single amount                          5,253           54.42                   218               4.15
Minor single amount but withdrwal bad
debt provision single                                2,400           24.86                 2,400            100.00
Total                                                9,653          100.00                 4,618              47.84
 Explanation on categories of other accounts receivable
 Other accounts receivable with amount in single item above RMB 1 million indicated other
 accounts receivable with significant amount in single item from which provision for bad debt
 was still drawn based on account age analysis method, as no objective evidence showed that
 the potential depreciation would exceed provision for bad debt drawn by age analysis.
(2) No arrears held by shareholder (unit) holding more than 5% vote right share (include 5%)
of the Company at period-end
(3) The top five units in term of amount of other accounts receivable
                                                                     Proportion to total
                                                                      amount of other
            Name of unit               2010-12-31     Time limit                                   Remark
                                                                         accounts
                                                                      receivable (%)




                                                      -83-
                                                                                                              Provision for bad debt
 Jiangsu           Techniques         and
                                                      2,000                                          17.57   had been withdrawn in
 Technology Center
                                                                  Above 3 years                                      full amount.

                                                                    Within 6                                  No bad debt provision
 Nanjing Jinning Machinery Plant                      1,862                                          16.36
                                                                      months                                          withdrwal

 Nanjing Yinkun Tongchan Assets                                                                               No bad debt provision
                                                      1,237         Within 6                         10.87
  Operational Co., Ltd.                                                                                               withdrwal
                                                                      months
                                                                                                              Provision for bad debt
 Nanjing University                                     600                                           5.27   had been withdrawn in
                                                                  Above 3 years                                      full amount.
                                                                                                              Provision for bad debt
 Southeast University                                   600                                           5.27   had been withdrawn in
                                                                  Above 3 years                                      full amount.
                                                                                                              Provision for bad debt
 Nanjing University of Science
                                                        600                                           5.27   had been withdrawn in
 and Technology
                                                                  Above 3 years                                      full amount.
                                                                                                              Provision for bad debt
 Nanjing            University         of
                                                        600                                           5.27   had been withdrawn in
 Technology
                                                                  Above 3 years                                      full amount.
 Total                                                7,499                                          65.88

5-07 Inventories
(1) Classification for inventories
                                         2010-12-31                                                    2009-12-31
    Item                                Provision for                                                 Provision for
                    Book balance                              Book value            Book balance                          Book value
                                        devaluation                                                    devaluation

Inventory
materials
                           230,607                 59,437                171,170           227,728            74,298              153,430

Goods      in
production
                           141,356                   894                 140,462           108,493                 843            107,650

Inventory
goods
                           666,605                 60,543                606,062           408,559            81,080              327,479

Total                     1,038,568               120,874                917,694           744,780           156,221              588,559


(2) Provision for depreciation of inventory price
        Inventory                                  Increase in this                Decrease in this period
                             2009-12-31                                                                                  2010-12-31
        category                                        period               Transfer-in         Transfer-out

 Inventory
 materials                            74,298                     1,687                     --            16,548                   59,437
 Goods               in
 production                                 843                   439                      --                388                     894
 Inventory goods                      81,080                     3,496                     --            24,033                   60,543
                                                                   -84-
         Total                   156,221                  5,622                     --                 40,969                120,874
[Note] the increased amount in the period contained RMB 628,866.31 of inventory
depreciation provision at period-begin from Weifu Tianli combination.
(3) Provision for inventory devaluation
                                                                                  Reason for return           Proportion of charge-off
                                                                                 and charge- offs of          amount in this period to
                                                                                    provision for           the period-end amount of
    Item         Basis for withdrawing provision for inventory devaluation
                                                                                      inventory             inventory in this item (%)
                                                                                 devaluation in this
                                                                                          period
 Inventory       Compared cost of inventory at period-end with its net
                                                                                                                                   7.18%
   goods         realizable value by single item comparison method and
  Goods in       withdrew provision for price drop according to the
                                                                                 Charge-off mainly                                 0.27%
 production      balance between the net realizable value and cost. As the
                                                                                 due to the sales for
                 country improved standard for vehicle exhaust emission,
                                                                                         external
   Stock         the Company had correspondingly withdrawn provision
                                                                                                                                   3.61%
  products       for devaluation for products and relevant raw materials
                 failing to meet new standard.。


5-08 Other current assets
                         Item                                       2010-12-31                                 2009-12-31
Receivable export tax rebates                                                            9,127                                    4,411
Others                                                                                     84                                        --
Total                                                                                    9,211                                    4,411


5-09 Investment in joint ventures and associated ventures
                                                              Type     Registration          legal person               Nature of
                   Investee
                                                   of enterprise          place             representative              business
I. Joint venture

 Wuxi Weifu-Autocam Fine Machinery             Sino-foreign joint                                                  Automotive spare
Co. LTD.                                           equity venture         Wuxi              Gao Guoyuan                   parts

 Weifu       Environmental       Protection    Sino-foreign joint
Catalyst Co., Ltd.                                 equity venture         Wuxi                   Ou Jianbin             Catalyst
                                                                                                                    Accessories and
                                                                                                                    matching parts of
 Kunming Xitong Machinery Co., Ltd.                                                                                     internal
                                                                                                                       combustion
                                               Limited company          Kunming                  Yang Bao                engine
II. Associated company




                                                             -85-
                                                                                                       Accessories and
                                                                                                      matching parts of
Bosch Diesel System                                                                                         internal
                                                                                                           combustion
                                               Sino-foreign joint                       BOHLER
                                                                                                             engine
                                                 equity venture         Wuxi             KLAUS
                                                                                                       Accessories and
                                                                                                      matching parts of
Zhonglian Automobile Electronic Co.,
                                                                                                            internal
Ltd.
                                                                                                           combustion
                                               Limited company         Shanghai        Chen Hong             engine

                                                                                                       Accessories and
                                                                                                      matching parts of
Wuxi     Weifu       Precision    Machinery
                                                                                                            internal
Manufacturing Co., Ltd.
                                                                                                           combustion
                                                                                                             engine
                                               Limited company          Wuxi           Chen Haojun

                                                                                                       Accessories and
                                                                                                      matching parts of
Wuxi ITM Engine Co., Ltd.                                                                                   internal
                                                                                                           combustion

                                               Limited company          Wuxi          Wang Weiliang          engine




                                              Registered
                                                                 Equity   Proportion of   Net assets value at
                 Investee                     capital( ten
                                                               held(%) vote right(%) period-end(thousand)
                                               thousand)

I. Joint venture

Wuxi Weifu-Autocam Fine Machinery
Co. LTD.                                         USD1,000             50.00              50.00                   135,708
Weifu      Environmental         Protection
Catalyst Co., Ltd.                                   5,000            49.00              49.00                   552,246
Kunming Xitong Machinery Co., Ltd.                   4,000            50.00              50.00                    10,637
II. Associated company
Bosch Diesel System                            USD20,000              31.50              31.50                 5,042,139

Zhonglian Automobile Electronic Co.,
Ltd.                                                60,062            20.03              20.03                 2,338,294
Wuxi    Weifu      Precision     Machinery
Manufacturing Co., Ltd.                              1,200            20.00              20.00                   221,610
Wuxi ITM Engine Co., Ltd.                            1,000            40.00              40.00                        9,751




                Investee                        Total value of          Total value      Total operating     Net profit
                                                             -86-
                                            liability at            of net        value of this          of this
                                       period-end(thousand)        assets at    period(thousand)        period
                                                                 period-end                           (thousand)
                                                                 (thousand)
I. Joint venture
Wuxi Weifu-Autocam            Fine
Machinery Co. LTD.                                    18,603         117,105                136,642         34,443
Weifu Environmental Protection
Catalyst Co., Ltd.                                   244,632         307,614                844,617        105,508
 Kunming Xitong Machinery Co., Ltd.                      496          10,141                  2,313            87
II. Associated company
Bosch Diesel System                                 1,543,210      3,498,929            5,864,484      1,300,782
Zhonglian            Automobile
Electronic Co., Ltd.                                  91,100       2,247,194                265,627        996,294
Wuxi     Weifu      Precision
Machinery Manufacturing Co.,
Ltd.                                                 125,234          96,376                243,657         40,513
Wuxi ITM Engine Co., Ltd.                                363           9,388                  3,005           725


5-10 Long-term equity investment
(1) Detail List of long-term equity investment
                                      calculating   Investment                  Increase/                    Cash
                Investee                                          2009-12-31                 2010-12-31
                                        method         cost                     decrease                     bonus
 Wuxi Wifu- Autocam Fine
                                        Equity          37,840        52,086        7,971        60,057        9,250
 Machinery Co., Ltd.
 Weifu Jialin                           Equity           4,000         6,007       -6,007             --       2,080
 Weifu           Environmental
                                        Equity          24,500       101,616       49,115       150,731              --
 Protection Catalyst Co., Ltd.
 Suzhou ITM Hongyi Real
                                        Equity          30,000        37,037      -37,037             --             --
 Estate Development Co., Ltd.
 Kunming Xitong Machinery Co.,
                                        Equity                             --       4,278         4,278              --
 Ltd.
 Subtotal of joint ventures                                          196,746       18,320       215,066       11,330
 Bosch Diesel System                    Equity         549,557       829,566      279,210      1,108,776     130,537
 Zhonglian            Automobile
                                        Equity                       240,209      199,558       439,767              --
 Electronic Co., Ltd.                                  120,124
 Wuxi     Weifu     Precision
 Machinery Manufacturing Co.,           Equity                        12,005        6,783        18,788        1,320
 Ltd.                                                    2,000
 Wuxi Longsheng Technology
                                        Equity                         3,358       -3,358             --             --
 Co., Ltd.                                               1,000
 Wuxi ITM Engine Co., Ltd.              Equity           4,000         3,485         290          3,775              --
 Subtotal of associated ventures                                   1,088,623      482,483      1,571,106     131,857
 Guolian Securities Co., Ltd.            Cost           12,000        12,000           --        12,000        5,400
                                                    -87-
Guangxi Liufa Co., Ltd.                   Cost           1,600        1,600            --        1,600          --
Financial    Company               of     Cost
                                                           800          800            --            800        --
Changchai Co., Ltd.
H&J Vanguard           Investment         Cost
                                                        33,000       33,000            --       33,000          --
Co., Ltd.
Nanjing Hengtai          Insurance        Cost
                                                         1,000        1,000            --        1,000         10
Brokers Co., Ltd.
Jiangsu Huifeng          Insurance        Cost
                                                           500          500            --            500        --
Agency Co., Ltd.
Yangdong Co., Ltd.                        Cost           2,356        2,356            --        2,356          --
 Henan Gushi Weining Oil                  Cost
                                                         2,033        2,033            --        2,033          --
Pump & Nozzle Co., Ltd. etc.
Yangdong       Co.,    Ltd.(Weifu         Cost
                                                           200          200            --            200        --
Jinning)
Wuxi Venture Capital Limited              Cost
                                                         3,000        3,000            --        3,000         75
Company
Beijing Foton Environmental               Cost
                                                        56,940       56,940        30,000       86,940          --
Engine Co., Ltd.
 Wuxi Xidong Technological                Cost
                                                         5,000        5,000            --        5,000          --
Industry Park Co., Ltd.
Shanghai      IMS        Automotive       Cost
                                                        10,000              --     10,000       10,000          --
Electronic System Co., Ltd.
Subtotal of other investments                                       118,429        40,000      158,429       5,485

Total of long-term             equity                              1,403,798      540,803     1,944,601    148,672

investment


                                                                  Explanation
                                                                       for
                                                                                                     Depreciation
                                                                  discrepancy
                                          Equity   Proportion                      Depreciation       provision
                                                                    between
              Investee                     held      of vote                       provision at       withdrawn
                                                                 equity-holding
                                           (%)      right (%)                       period-end          in this
                                                                 proportion and
                                                                                                        period
                                                                   vote right
                                                                   proportion
Guolian Securities Co., Ltd.               1.20          1.20          --                       --              --

Guangxi Liufa Co., Ltd.                    1.22          1.22          --                    1,600              --
Financial Company of Changchai
Co., Ltd.                                                              --                     800               --
H&J Vanguard Investment Co.,
Ltd.                                      11.72         11.72          --                   33,000              --
Nanjing    Hengtai            Insurance
Brokers Co., Ltd.                          1.85          1.85          --                    1,000              --



                                                    -88-
 Jiangsu   Huifeng      Insurance
 Agency Co., Ltd.                     10.00          10.00         --      500               --

 Yangdong Co., Ltd.                    1.18           1.18         --     2,556              --
 Henan Gushi Weining Oil Pump
 & Nozzle Co., Ltd. etc.                                           --     2,033              --
 Wuxi Venture Capital Limited
 Company                             1.4118         1.4118         --        --              --
 Beijing Foton Environmental
 Engine Co., Ltd.                     14.40          14.40         --    11,000              --
 Wuxi Xidong Technological
 Industry Park Co., Ltd.               1.43           1.43         --        --              --
 Shanghai     IMS    Automotive
 Electronic System Co., Ltd.          18.52          18.52         --        --              --

 Total
                                                    &nb