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苏威孚B(200581)公告正文

苏威孚B:2011年半年度报告(英文版)

公告日期:2011-06-30

WEIFU HIGH-TECHNOLOGY GROUP CO., LTD.


    SEMI-ANNUAL REPORT 2011
           (Full-Text)




            August 25, 2011
                                Contents

Section I. Important Notice ………………………………………………….…3

Section II. Company Profile ……………………………………………………4

Section III. Changes in Share Capital and Particulars about Shares held by Main
Shareholder……………………………………………………………………...7

Section IV. Directors, Supervisors and Senior Executives ……………………10

Section V. Report of the Board …………………………………….…….……11

Section VI. Significant Events ………………………………………………..15

Section VII. Financial Report …………………………………………………21

Section VIII. Document Available for References ……………………………21




                                         2
        WEIFU HIGH-TECHNOLOGY GROUP CO., LTD.

                            SEMI-ANNUAL REPORT 2011

                                 Section I. Important Notice

Board of Directors and Supervisory 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 important omissions, fictitious statements or serious misleading
information 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 Semi-annual Report or have objection for this
report.

All the directors attended meeting of board of directors and reviewed 2011 semi-annual report.

Chairman of the Company Wang Weiliang; General Manager Chen Xuejun; and Deputy General
Manager (person in charge of Financing) Sun Qingxian hereby confirm that the financial report in
the Semi-annual Report 2011 is true and complete.

The Semi-annual Financial Report of the Company has not been audited.




                                                      3
                              Section II. Company profile
I. Basic information
1. Legal Company Name:
Name in Chinese: 无锡威孚高科技股份有限公司
Abbreviation in Chinese: 威孚高科、苏威孚 B
2. Name in English: WEIFU HIGH-TECHNOLOGY GROUP CO., LTD.
Abbreviation in English: WFHT

II. Legal Representative: Mr. Wang Weiliang

III. Secretary of the Board of the Company: Mr. Zhou Weixing
Representative of Securities Affairs: Ms. Yan Guohong
Mailing Address: No.107, Renmin Road (W), Wuxi City
Tel.: 0510-82719579
Fax: 0510-82751025
E-Mail: wfjt @ public1.wx.js.cn

IV. Registered Address: No.5 of Huashan Road, National Hi-Tech Industry Development Zone,
Wuxi
Postal Code of Registered Address: 214028
Head Office: No.107, Renmin Road (W), Wuxi City
Postal Code of Head Office: 214031
The Company’s Internet Website: http://www. weifu.com.cn
E-Mail: web@ weifu.com.cn

V. Names of Newspapers designated by CSRC and chosen by the Company:
Securities Times, China Securities Journal and Hong Kong Commercial Daily
Internet Website chosen by the Company: http://www.cninfo.com.cn
Semi-annual Report for reference: Office of the Board of the Company

VI. Stock Listing and Trading: 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: Oct. 22, 1988
Address: No.107, Renmin West Road, Wuxi
Date of Change: Dec. 9th, 2008
Address: No.5 of Huashan Road, National Hi-Tech Industry Development Zone, Wuxi
2. Registration Number of enterprise legal person’s business license: 320200000014926
3. Registration Number of taxation: 320208250456967
4. Certified Public Accountants engaged by the Company:
Name: Jiangsu Gongzheng Certified Public Accountants Co., Ltd.
Address: No.28, Liangxi Road, Wuxi




                                                   4
II. Key Financial Data and Indexes
(I) Key accounting data and financial indexes
                                                                                                     (Unit: RMB)
                                                                                                    Increase/dec
                                                                                                     rease at the
                                                                                                     end of this
                                                                                                    report period
                                                             At the end of this   At the period-end
                                                                                                      compared
                                                               report period         of last year
                                                                                                     with that in
                                                                                                     period-end
                                                                                                     of last year
                                                                                                         (%)
  Total assets(RMB)                                           7,626,179,666.94     6,761,622,809.90        12.79
  Owners’ equity attributable to shareholders of the
                                                              4,504,106,955.29     4,106,208,383.62         9.69
  listed company(RMB)
  Share capital(Share)                                           567,275,995.00      567,275,995.00         0.00
  Net assets per share attributable to shareholders of the
                                                                         7.9399              7.2385         9.69
  listed company(RMB/Share)
                                                                                                   Increase/dec
                                                                                                    rease in this
                                                             This report period The same period of
                                                                                                   report period
                                                               (Jan. to Jun.)        last year
                                                                                                   year-on-year
                                                                                                        (%)
  Total operating income(RMB)                                 3,277,559,746.96     2,650,687,135.98        23.65
  Operating profit (RMB)                                         766,609,381.92      368,480,236.61       108.05
  Total profit(RMB)                                              769,696,904.66      361,549,291.43       112.89
  Net profit attributable to shareholders of the listed
                                                                 644,663,629.50     319,107,461.52        102.02
  company(RMB)
  Net profit attributable to shareholders of the listed
  company after deducting non-recurring gains and                639,380,620.02     316,146,898.70        102.24
  losses(RMB)
  Basic earnings per share (RMB/Share)                                     1.14                0.56       103.57
  Diluted earnings per share (RMB/Share)                                   1.14                0.56       103.57
  Return on weighted average net asset (%)                              14.56%              10.57%          3.99
  Return on weighted average net asset deducting
                                                                        14.44%              10.47%          3.97
  non-recurring gains and losses (%)
  Net cash flow arising from operating activities(RMB)            53,803,389.19      -13,935,415.91
  Net cash flow per share arising from operating
                                                                         0.095             -0.0246
  activities (RMB/Share)

 (II)Items of non-recurring gains and losses and concerning amounts
                                                                                                 (Unit: RMB)
                         Items of non-recurring gains and losses                                  Amount
  Gains and losses from the disposal of non-current asset                                       3,621,087.57
  Governmental subsidy calculated into current gains and losses, while closely
  related with the business of the Company, excluding the fixed-amount or
                                                                               1,815,300.00
  fixed-proportion governmental subsidy according to the unified national
  standard
  Cost invested for getting subsidiaries, affiliated corporation and joint 1,240,984.11
                                                             5
corporation is more than income arising from fair value of recognizable net
asset of invested units when getting investment income
Other non-operating income and expenditure beside for the aforementioned
                                                                                            -56,776.35
items
Influenced amount of minority shareholders’ equity                                       -424,436.83
Impact on income tax                                                                      -913,149.02
                                        Total                                             5,283,009.48

(III) Difference in accounting statement prepared under CAS and IAS and explanation:
                                                                                                (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 at             Amount at
                                report period            period          period-end           period-begin
 IAS                              644,663,629.50     319,107,461.52    4,504,106,955.29    4,106,208,383.62

 CAS                              644,663,629.50     319,107,461.52    4,504,106,955.29    4,106,208,383.62

 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




                                                      6
    Section III. Changes in Share Capital and Particulars about Shares Held
                             by Main Shareholders
    I. Statement of change in shares
                                                                                                             Unit: Share
                             Before the change         Increase/decrease in this time (+, -)          After the change
                                                                Capital
                                                   New      Bo
                                                                ization
                                         Proporti shares    nus                                                    Proport
                             Amount                                of       Other      Subtotal       Amount
                                           on     offerin   sha                                                      ion
                                                                Public
                                                     g       re
                                                                reserve
I. Restricted shares     100,075,226 17.64%                               -28,366,651 -28,366,651 71,708,575 12.64%
1.State-owned shares
2. State-owned legal
                           100,021,999   17.63%                           -28,363,800 -28,363,800 71,658,199 12.63%
person’s 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’
                                53,227     0.01%                              -2,851        -2,851       50,376 0.01%
shares
II. Unrestricted shares 467,200,769      82.36%                           28,366,651 28,366,651 495,567,420 87.36%
1.    RMB        Ordinary
                           352,280,769   62.10%                           28,366,651 28,366,651 380,647,420 67.10%
shares
2. Domestically listed
                           114,920,000   20.26%                                                      114,920,000 20.26%
foreign shares
3.    Overseas      listed
foreign shares
4. Others
                                          100.00                                                                   100.00
III. Total shares        567,275,995                                                                 567,275,995
                                              %                                                                        %
Based on promise of share split reform, reviewed and approved by Shenzhen Stock Exchange and
China Securities Depository and Clearing Co., Ltd Shenzhen Branch, on 12 April 2011, China
Securities Depository and Clearing Co., Ltd Shenzhen Branch listed the restricted circulating shares
(part of the shares held by Industry Group). The amount of actual restricted shares available for
listing was 28,363,800 shares, taking up 5% of total shares.

II. About shareholders and shares held
                                                                                                             Unit: Share
 Total shareholders at the
                                                                                                                    37,230
   end of report period
                                Particulars about shares held by the top ten shareholders
                                                   Nature of Proportio Amount of            Amount of           Shares
             Names of shareholders
                                                   sharehold n of share share held       restricted shares    pledged or

                                                               7
                                                   er          held                           held           frozen
                                               State-ow
WUXI INDUSTRY DEVELOPMENT CROUP                   ned
                                                               17.63% 100,021,999          71,658,199
CO., LTD.                                        legal
                                                person
                                              Domestic
Construction Bank of China-FUGUO             non-state-
TIANBO INNOVATION THEME STOCK                 owned            3.33%     18,870,901
FUND                                          legal
                                              person
                                              Foreign
ROBERT BOSCH GMBH                             legal            3.24%     18,387,200
                                              person
                                              Foreign
GAOLING FUND,L.P.                             legal            2.20%     12,502,715
                                              person
                                              Foreign
GUOTAI JUNAN
                                              legal            2.16%     12,249,786
SECURITIES(HONGKONG) LIMITED
                                              person
                                              Foreign
DRAGON BILLION CHINA MASTER FUND legal                         1.95%      11,066,646
                                              person
                                              Domestic
                                              non-state-
China Construction Bank—China Priority
                                              owned            1.92%     10,884,194
Growth Stock Fund
                                              legal
                                              person
                                              Domestic
China Construction Bank-Chinese              non-state-
Commercial Shengshi Growth Stock Securities owned              1.76%     10,000,000
Investment Fund                               legal
                                              person
                                              Domestic
                                              non-state-
Bank of communication----Yifangda Kexun
                                              owned            1.68%       9,516,077
Stock Securities Investment Fund
                                              legal
                                              person
                                              Domestic
China Minsheng Bank-Chinese Commercial non-state-
Strategy Selection Flexible Allocation Hybrid owned            1.59%       9,000,000
Securities Investment Fund                    legal
                                              person
                  Particulars about shares held by the top ten unrestricted shareholders
                                                                          Amount of
                      Name of shareholder                              unrestricted shares           Type of share
                                                                              held
WUXI INDUSTRY DEVELOPMENT CROUP CO., LTD.                                        28,363,800     RMB common share
Construction Bank of China-FUGUO TIANBO INNOVATION
                                                                                18,870,901      RMB common share
THEME STOCK FUND
                                                                                                Domestically listed
ROBERT BOSCH GMBH                                                               18,387,200
                                                                                                  foreign share
                                                                                                Domestically listed
GAOLING FUND,L.P.                                                               12,502,715
                                                                                                  foreign share
                                                                                                Domestically listed
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED                                       12,249,786
                                                                                                  foreign share
DRAGON BILLION CHINA MASTER FUND                                                11,066,646      Domestically listed

                                                           8
                                                                                              foreign share
China Construction Bank—China Priority Growth Stock Fund                    10,884,194   RMB common share
China Construction Bank-Chinese Commercial Shengshi Growth
                                                                                10,000,000 RMB common share
Stock Securities Investment Fund
Bank of Communication----E-fund Kexun Stock Securities
                                                                                 9,516,077 RMB common share
Investment Fund
China Minsheng Bank-Chinese Commercial Strategy Selection
                                                                                 9,000,000 RMB common share
Flexible Allocation Hybrid Securities Investment Fund
                            INDUSTRY DEVELOPMENT CROUP CO., LTD., the first largest shareholder of the
                            Company, and other shareholders, and they do not belong to the consistent actionist
 Explanation on associated
                            regulated by the Management Measure of Information Disclosure on Change of
 relationship or consistent
                            Shareholding for Listed Company. The Company was unknown whether there exists
 actions among the above
                            associated relationship among the other shareholders. Chinese Commercial Shengshi
        shareholders
                            Growth and Chinese Commercial Strategy Selection Flexible Allocation Hybrid
                            Securities Investment Fund belong to consistent actionist.

III. Shares held by the shareholders with restricted tradable conditions and restricted
conditions
       Name of
          the
                   Amount of the    Date when could      Amount of
  No   restricte
                     restricted       be listed for      additional                 Restricted condition
   .       d
                    shares held           trade            shares
       sharehol
         ders
                                        2012--4--5       28,363,800     Non-circulating shares of Weifu Hi-tech
                                                                        held by Wuxi Industry Development Croup
                                        2013--4--5       43,294,399     Co., Ltd. could not listed or transferred
                                                                        within 60 months since possessing of listing
        WUXI
                                                                        right. After the expiry of the commitment
       INDUST
                                                                        period, original non-circulating shares
          RY
                                                                        would be listed for sale in Shenzhen Stock
        DEVEL
                                                                        Exchange, the proportion of sales volume to
  1    OPMEN        71,658,199
                                                                        total share equity of Weifu Hi-tech could
           T
                                                                        not exceed 5% within 12 months as well as
        CROUP
                                                                        10% within 24 months, and sales price
         CO.,
                                                                        ought not to less than RMB 10 per share
         LTD.
                                                                        (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).
Based on promise of share split reform, reviewed and approved by Shenzhen Stock Exchange and
China Securities Depository and Clearing Co., Ltd Shenzhen Branch, on Apr. 12 of 2011, China
Securities Depository and Clearing Co., Ltd Shenzhen Branch listed the restricted circulating shares
(part of the shares held by Industry Group). The amount of actual restricted shares available for
listing was 28,363,800 shares, taking up 5% of total shares.

IV. Particulars about controlling shareholder and actual controller
No change on controlling shareholder and actual controller occurred in reporting period.




                                                         9
Section IV. Particulars about Directors, Supervisors and Senior Executives
I. Alteration in shares held by directors, supervisors and senior executives of the Company
                                                                                                Unit: share
                                                   Shares     Shares              Including    Stock
                                        Shares                           Shares                         Reaso
                                                 increased decreased              restricted   option
  Name                 Position         held at                          held at                         n for
                                                 to hold in to hold in              shares     held at
                                      year begin                       period end                       change
                                                 the period the period               held    period end
Wang
            Chairman of the Board        12,673          0          0     12,673      9,505          0
Weiliang
Chen        Vice Chairman of the
                                          3,169          0          0      3,169      2,376          0
Xuejun      Board & General Manager
Shi
            Director                      1,782          0          0      1,782      1,336          0
Xingyuan
Gao
            Director & Deputy GM         10,297          0          0     10,297      7,722          0
Guoyuan
Ge
            Director                     25,468          0          0     25,468     19,101          0
Songping
  Rudolf
            Director                          0          0          0          0          0          0
  Maier
Du
            Independent director              0          0          0          0          0          0
Fangci
Ma
            Independent director              0          0          0          0          0          0
Huilan
Yu Xiaoli   Independent director              0          0          0          0          0          0
Han
            Chairman of Supervisory
Jiangmin                                 11,405          0          0     11,405      8,554          0
            Committee
g
Wang
            Supervisor                      521          0          0        521          0          0
Xiaodong
Yang
            Supervisor                        0          0          0          0          0          0
Weiliang
            Deputy General Manager
Sun
             & Person in Charge of            0          0          0          0          0          0
Qingxian
             Finance
Miao
        Deputy General Manager                0          0          0          0          0          0
Yuming
Wang
        Deputy General Manager                0          0          0          0          0          0
Yawei
Zhou
        Secretary of the Board            2,377          0          0      2,377      1,782          0
Weixing

II. There is no change in directors, supervisors and senior executives of the Company during
the report period

III. The Company held 2010 Shareholders’ General Meeting in the report period




                                                        10
                              Section V. Report of the Board
I. Analysis on financial condition and operation results of the Company in the report period
1. Analysis on operation achievement
In reporting period, main business of the Company still belonged to range of industry of automobile
parts, mainly engaging in development, manufacturing and sales of products such as automotive
fuel injection systems, automotive after-treatment system, the engine intake system.

In the 1st half year of 2011, situation of national economy was complicated. Since year-begin the
incentive of automobile industry withdrew, and owing to unfavorable factors such as
block-governance and purchase-limitation in big cities and earthquake in Japan, and fuel price
constantly promoted, demands of automobile fell back and increase range decreased after
flourishing demands since 2009. In the first half of 2011, amounts of accumulative production and
sale of automobile industry respectively were 9,156,000 and 9,325,200, increasing by 2.4% and
3.35% over last period, including, the ones of business automobile were respectively 2,111,100 and
2,214,900, decreasing by 6.07% and 3.67%.

In reporting period, the Company insisted goal of building an image of leader in domestic industry
of core parts of automobile (power project), firmed development direction of 3 systems of products,
vigorously enhanced self-innovation ability, feasibly promoted industry structure adjustment and
arrangement, accelerated construction of key and new items, comprehensively promoted developing
ability, cost control ability, quality assurance ability and system assembly ability. Thus we overcame
pressure of falling of automobile industry and kept growth of economic income.

(1) Deepened fine management and enhanced cost control. We deepened the constant cost-reducing,
promoted cost management based on techniques optimization and technology improvement.
Deepened capital management and enhanced control management on capital risk based on capital
turnover and languishment prevention.
(2) Perfected quality management and strengthened quality control. We intensified measurements
for important problems, decreased internal and external losses, built quality improvement system,
constructed a firewall, enhanced internal and external quality appraisal and implementation of
quality accountability, thus quality loss decreased.
(3) We controlled risk, enhanced scientific judgment and prediction on market surrounding market.
And at the same time, we took the market chance, enhanced anti-risk ability.
(4) Strengthened talent incentive mechanism and enhanced bringing and construction of strategic
and key talents.
in reporting period, the Company realized RMB 3.278 billion, increasing by 23.65% over last
period, and RMB 0.645 billion of net profit (attributable to shareholders of listed companies),
increasing by 102.02% over last period.

2. Analysis on financial condition
                                                                                      Unit: RMB
                                                                              Increase/decrease
                   Items               Jan.-Jun., 2011       Jan.-Jun., 2010
                                                                                     %
    Total operation income             3,277,559,746.96      2,650,687,135.98             23.65
    Operation profit                     766,609,381.92        368,480,236.61               108.05
    Total profit                         769,696,904.66        361,549,291.43               112.89


                                                    11
    Net profit attributable to
    shareholders   of     listed         644,663,629.50        319,107,461.52               102.02
    companies
                                         Amount at             Amount at
                                         period-end           period-begin
    Total assets                       7,626,179,666.94      6,761,622,809.90                 12.79
    Owners’ equity attributable
    to shareholders of listed          4,504,106,955.29      4,106,208,383.62                  9.69
    companies

(1) Total operating income increased by 23.65% over last period mainly due to rapid promotion of
products structure adjustment and timely satisfying demands of clients.
(2) Operating profit increased by 108.05% over last period mainly due to operating income and
investment income increased thus investment income in reporting period increased by 45.41% over
last period.
(3) net profit (attributable to shareholders of listed companies) increased by 102.02% over last
period mainly due to operating income and investment income increased thus investment income
increased by 45.41% over last period.

3. Analysis on financial index
(1) Accounts receivable: accounts receivable at end of Jun. of 2011 increased by RMB 455,750,200
with 45.58 percents over year-end of 2010, mainly due to sale of the first half year of 2011
increased along with increase of operating income.
(2) Accounts prepaid: The one at June-end of 2011 increased by RMB 31,807,200 with 30.24
percents over year-end of 2010, mainly due to Weifu Jinning and Weifu Yingtemai added accounts
prepaid for equipments for renewal and restructure of fixed assets.
(3) Receivable equity: The one at June-end of 2011 was received in the 2nd half year of 2011.
(4) Other current asset: the one of June-end of 2011 increased by RMB 7,201,500 with 78.19
percents over year-end of last year, mainly due to receivable refund on export tax of Weifu Guomao
increased.
(5) Projects in construction: the one at June-end of 2011 increased by RMB 236,883,600 with
166.52 percents over year-end of 2010, mainly due to parent company increased construction of
industry park and invested more in technology reform.
(6) Short loan: the one of June-end of 2011 increased by RMB 2,350,000 with 87.04 percents over
year-end of 2010, mainly due to the Company borrowed bank loan for solving capital tension
arising from increased operation business.
(7) Payable notes: the one of June-end of 2011 decreased by RMB 134,547,200 with 34.5 percents
over year-end of 2010, mainly due to payable notes was due.
(8) Accounts received in advance: the one of June-end of 2011 increased by RMB 20,094,900 with
47.54 percents over year-end of 2010, mainly due to goods accounts received in advance.
(9) Payable equity: Cash payable of parent company at June-end of 2011 wad paid on August 17.
(10) Sales expense: Sales expenses of the 1st half year of 2011 decreased by RMB 24,746,200 with
32.88 percents over same period of 2010, mainly due to three guarantees expenses decreased.
(11) Assets impairment losses: Losses of assets disposal at first half year of 2011 increase 100.57%
over that of last year. Mainly because being restructuring the use of sluggish inventory and realizing
the sluggish fixed assts that disposed in first half year of 2010, the impairment provision reversal
correspondingly.
(12) Investment income: The one of the 1st half year of 2011 increased by RMB 91,693,100 with
45.41 percents over same period of last year, mainly due to profit of invested units increased.
(13) Non-operating income: the one of the 1st half year of 2011 increased by RMB 6,611,900 with
982.54 percents over same period of 2010, mainly due to the Company increased RMB 3,485,000
                                                    12
of net income for disposing fixed assets, government subsidies was increased by RMB 1,815,000.
And in 2011 we transferred equity of Kunming Xitong thus produced RMB 1,241,000 of income.
(14) Non-operating expenses: the one of the 1st half year of 2011 decreased by RMB 3,406,500 with
44.8 percents over same period of 2010, mainly due to the Company sold fixed assets thus net
losses decreased by RMB 3,453,000.
(15) Income tax expense: the one of the 1st half year of 2011 increased by RMB 70,288,600 with
280.53 percents, mainly due to profit of this period increased thus corresponding income tax
increased.
4. Main operation classified according to industries
                                                                                                        Unit: RMB’0000
                                                                                                          Increase/decrea
                                                                      Increase/decrease Increase/decrease
                                                                                                              se in gross
 Classified according       Income                           Gross     in income from        in cost of
                                              Cost of                                                         profit ratio
   to industries or          from                            profit    operations over operations over
                                             operations                                                     over the same
       products            operations                      ratio (%) the same period of the same period
                                                                                                            period of last
                                                                        last year (%)    of last year (%)
                                                                                                               year (%)
Automobile
                           299,120.65         215,173.37       28.06              22.78               14.15              5.43
components

5. Main operation classified according to products
                                                                                                          Unit: RMB’0000
                                                                                 Increase/dec
                                                                                                 Increase/dec    Increase/dec
                                                                                    rease in
                                                                                                 rease in cost       rease in
                                                                                    income
                                                                                                        of        gross profit
                                   Total             Total          Gross             from
 Classified according to                                                                          operations       ratio over
                                 operating         operating      profit ratio    operations
        industries                                                                                 over the         the same
                                  income             cost            (%)           over the
                                                                                                 same period       period of
                                                                                 same period
                                                                                                  of last year      last year
                                                                                  of last year
                                                                                                     (± %)           (±%)
                                                                                     (±%)
 Automotive fuel
                                 244,663.57        170,554.38           30.29           17.62            7.92            6.26
 injection system
 Automotive
                                  46,668.34         40,044.15           14.19           35.40           35.44           -0.02
 after-treatment system
 induction system                  7,788.73          4,574.84           41.26         587.14          411.89            20.11


6. Main operations and areas
                                                                                   Unit: RMB’0000
                                                                             Increase/decrease of operating
                          Area                    Operating income             income over the previous
                                                                                       period (%)
             Inside the country                                 286,930.11                             22.40
             Outside the country                                 12,190.54                             32.47


7. Operations of main share-holding company
(1) Bosch Automotive Diesel System Co., Ltd., 31.50% equity held by the Company and
consolidated statement subsidiary, mainly engaged in producing diesel automotive electronic
control system, Total operating income increased by 30% over last period。
(2) Zhonglian Automobile Electronics Co., 20% equity held by the Company, mainly engaged in
producing automobile electronics control system, Total operating income increased by 83% over
last period。


                                                                  13
II. Problems and difficulties in operation
Affected by unfavorable factors such as withdrawal of incentive policy on automobile industry, total
production and sale as well as increase range of automobile industry obviously fell, especially the
decrease range of business automobiles. The unfavorable market influenced operation of the
Company.
Macro economic situation and market demands of the 2nd half year were still faced with uncertainty
which mainly shows in:
1. CPI kept high, prices of production factors were growing, inflation was constant, increase of
interest existed and financing cost ascended.
2. Logistic transportation cost operated highly thus uncertainty remained in market demands and
competitiveness further enlarged.
The above factors will take a certain influence on operation performance of the Company in the 2nd
half year.

Measurements:
1. Accelerate products structure adjustment, speed up development and developing progress on new
products while produce correct products. Ensure marketing share of important products unchanged
and increased marketing share of new products.
2. Enhance control on internal cost, continuously deepen fine management, reduce comprehensive
cost; initially work out, balance factors of cost-increase and profit-decrease, reduce labor expense,
compress non-operational expense and strengthen projects management.
3. Further enhance capital management, reduce capital occupation and reduce operation risk.
4. Improve quality, strictly pay attention to compliance of products based on requirements of quality
system, focus on quality of materials and conduct quality responsibility.

III. Investment of the Company in the report period
1. There was no application of raised proceeds in the report period
2. Investments with non-raised proceeds
In reporting period, total investment in main items such as technology reform and external
investment amounted to RMB 325,288,800.
(1) RMB 48,370,000 was invested in WAPS research and development as well as industrialization
and productivity improvement of parts of diesel common rail system in reporting period.
(2) RMB 7,890,000 was invested in project research institution in reporting period.
(3) RMB 163,720,000 was invested in construction of Weifu Industry Park in reporting period.
(4) RMB 98,640,000 was invested in fragmentary projects in reporting period.
(5) RMB 1,468,800 was invested in purchasing 20% equity of Kunming Xitong Machinery Co., Ltd
previously held by Kunming Jinlida Co., Ltd in reporting period.
(6) The Company set up Anhui Weifu Tianshi Machinery Co., Ltd together with Anhui Quanchai
Power Holding Co., Ltd. RMB 5,200,000 was invested in it I reporting period.

IV. The Board of Directors of the Company didn’t rectify the operation plan of the second half
year.




                                                    14
                                   Section VI. Significant Events
I. Corporation governance
In reporting period, the Company strictly complied with requirements of Company Law, Securities
Law, Governance Rules of Listed Companies, Administration Method for Information Disclosure of
Listed Companies, Guidance for Normalized Operation of Listed Companies in Main Board of
Shenzhen Securities Exchange as well as relevant laws and rules issued by CSRC. And we
continuously perfected governance structure of the Company as well as various systems. The
Company enhanced administration of information disclosure, standardized corporation operation.
Thus there was no difference between actual governance situation and requirements on normalized
documents relevant to governance of listed companies issued by CSRC.

II. Profit Distribution
1. The Company did not distribute bonus or implement capitalization of reserves in the interim of
2011.
2. The Company completed the implementation of the profit distribution plan of 2010 in August,
2011. The distribution plan was: distributing cash bonus of RMB 4.35 per 10 shares (including tax).

III. Significant lawsuits and arbitrations
The Company had no significant lawsuit or arbitration occurred in the report period or occurred in
previous period and sustained in the report period.

IV. Significant assets purchased, sold or assets reconstruction.
In reporting period, the Company had no significant assets purchase, selling or capital restructure.

V. Related Transaction
Related transaction relevant to daily operation
Proposal of Predicted Total Amount of 2011 Daily Related Transaction reviewed on the 16th
meeting of the 6th session of board of directors and approved on 2010 annual shareholders’ meeting
was respectively published on Securities Times, China Securities Journal, Hong Kong Commercial
Daily and Juchao website (http://www.cninfo.com.cn)on March 19, 2011 and on July 1 of 2011.

In reporting period, implementation of daily related transaction:                   Unit: RMB’0000
         Type of
       related                                                                      The 1st half The 1st half
     transaction    Contents of transaction                Related units
                                                                                    year of 2011 year of 2010

                                        Wuxi Weifu Environmental Catalyst Co.,
                                                                                      29,674.80     22,738.2
                                        Ltd.
                                        Bosch Automotive Diesel Oil Systems
                                                                                      15,864.47     14,398.6
                                        Co., Ltd.
    Purchase of
                 Purchase of components Wuxi Weifu Precision Machinery                 7,908.69      6,092.0
    goods, labor                        Manufacturing Co., Ltd.
    service and                         Wuxi Weifu Autocam Fine instruments
    fixed asset                                                                          708.22           3.7
                                        Co., Ltd.
                                              British Temai Engine Co., Ltd. Wuxi              0        41.5
                                              Bosch Automotive Diesel Oil Systems
                   Purchase fixed assets                                                    5.96           0
                                              Co., Ltd.



                                                            15
                                             Bosch Automotive Diesel Oil Systems
                                                                                          21,393.31         20,705.6
                   Sales of oil pump and oil Co., Ltd.
                      mouth products and Wuxi Weifu Precision Machinery
                                                                                            1,409.17         1,042.3
    Sales       of components produced by Manufacturing Co., Ltd.
    goods, labor         the Company         Wuxi Weifu Autocam Fine instruments
    service and                                                                                289.7           110.9
                                             Co., Ltd.
    fixed assets                             Wuxi Weifu Environmental Catalyst Co.,
                  Sales of raw material                                                       736.66           976.9
                                             Ltd.
                                             Wuxi Weifu Precision Machinery
                  Sales of fixed assets                                                        14.90             3.8
                                             Manufacturing Co., Ltd.
     Use of trade
                      Paying fees for using Wuxi Industry Development Group Co.,
      mark and                                                                                514.95           405.4
                   trade mark and land lease Ltd.
      land lease
    Technical
                  Technical service fees Bosch Automotive Diesel Oil Systems
    service fees                                                                                     0         220.7
                  and services payable       Co., Ltd.
    and services
                                         Total                                            78,520.83         66,739.6


VI. Significant contracts and the implementation
1. In the report period, the Company had never kept as custodian, contracted or leased any other
company’s assets and vice versa.
2. Till end of reporting period, the Company had no external guarantee.
3. In reporting period, the Company had no non-operating liability and debts contact with related
parties.
4. Creditor’s rights and debt intercourse with related party
                                                               Unit: RMB
                                                              Occurred
                                        Balance at the                        Occurred Amount
                                                             Amount of                               Balance at the
           Related parties              year-begin of                         of debt in the first
                                                          debtor in the first                         period-end
                                            2011                                   half year
                                                              half year
Wuxi Weifu Autocam Precision
                                             775,162.08        9,717,513.35       10,036,151.47             456,523.96
Machinery Co., Ltd.
Bosch Automotive Diesel Oil Systems
                                          49,756,368.32 308,742,713.24           305,448,279.45          53,050,802.11
Co., Ltd.
Wuxi Weifu Environmental Catalyst
                                         -17,361,199.37 306,122,241.58           352,755,420.61          -63,994,378.40
Co., Ltd.
Wuxi Weifu Precision Machinery
                                         -31,598,559.71 110,581,487.98            94,718,132.11          -15,735,203.84
Manufacturing Co., Ltd.
                Total                      1,571,771.32 735,163,956.15           762,957,983.64          -26,222,256.17


5. In the report period, the Company did not entrust others to do cash management.

VII. In the report period, the Company and its Board of Directors received no inspection,
legislative punishment, a criticism by circulating a notice from CSRC, or public condemnation
from Shenzhen Stock Exchange.

VIII. Special commitments made by original non-circulating shareholders in process of Share
Merger Reform and its implementation
    Comm
                                                                            Particulars of
     itted Acceptor                  Committed contents
                                                                           implementation
    events
    Share Wuxi      Net profit amounted to 0.85 billion yuan from      Implementation has
                                                          16
    reform Industry 2006-2008, the one in 2008 was 0.34 billion yuan.            been completed
    Comm Group         According to the rule of issuing 0.5 shares per 10 shares
     itment Co., Ltd. aiming at share A before share reform, the cash dividend
                       from 2006 to 2008 was not lower than the 50% of the
                       realized profit which can be distributed by investors.
                                                                                 Based on promise of
                                                                                 share split reform,
                       Non-tradable shares of Weifu High-tech held by            Industry Group had
                       Industry Group can’t be listed or transferred in 60      handled listing
                       months after the day when it got listing right. After the procedure of
    Comm               expiry of the commitment period, original                 restricted circulating
    itment Wuxi        non-circulating shares would be listed for sale in        shares available for
    to limit Industry Shenzhen Stock Exchange, the proportion of sales           listing. Actual
    sales Group        volume to total share equity of Weifu Hi-tech could not amount of these
    of       Co., Ltd. exceed 5% within 12 months as well as 10% within 24 shares was
    shares             months, and sales price ought not to less than RMB 10 28,363,800 shares,
                       per share (the lowest impairment price of shares holding taking up 5% of total
                       would be calculated ex-right at the same time if share share capital. Till end
                       price ought to ex-right according to regulation).         of reporting period,
                                                                                 holding-decrease had
                                                                                 not occurred.
    Other              In order to promote healthy development of listed
                                                                                 Commitment
    commi              companies, fully motivate the enthusiasm of
                                                                                 arranged by
    tments             supervisors, make sure to combine the interest of
                                                                                 motivation
    (includ Wuxi       shareholders and supervisors of the Company, Industry
                                                                                 mechanism of
    ing      Industry Group makes a pledge: After Weifu High-tech finishes
                                                                                 supervisors is being
    additio Group      the equity allocation reform, the Company will actively
                                                                                 carrying out and will
    nal      Co., Ltd. promote equity motivation plan in high-tech supervisors
                                                                                 be implemented after
    commi              of Weifu according to related rules made by the country
                                                                                 related policies were
    tments             and Wuxi Government for the motivation mechanism of
                                                                                 issued.
    )                  the supervisors.

IX. Other significant events
1. The shareholders holding over 5% shares of the Company had no commitment in the period or
carried down from the previous period except for special commitment for Share Merger Reform.
2. That the Company issued non-public RMB ordinary share (A share) to major shareholder Wuxi
Industry Development Co., Ltd (hereinafter referred to as Industry Group) and foreign strategic
investor Germany Robert Bosch Co., Ltd (hereinafter referred to as Bosch Company) which was
reviewed and passed on the 14th and 15th meeting of the 6th session of board of directors as well as
2010 secondary extraordinary shareholders’ meeting. On Jun. 29 of 2011, event about bringing
foreign strategic investor in this non-public issue program had obtained principle reply from
national commerce department (SZP [2011] No. 678 Reply to that Commerce Department Agreed
that German Robert Bosch Co., Ltd Strategically Invests Wuxi Weifu High-Tech Group Holding
Co., Ltd). Commerce Department agreed in principle that German Robert Bosch Co., Ltd subscribes
non-public RMB ordinary shares (A share) issued by Wuxi Weifu High-Tech Group Holding Co.,
Ltd in cash. Presently the program about the non-public issue had been reported to CSRC.
Implementation could be only when CSRC approved it. And the approval finally depends on the
decision of China Securities Supervision Administration Commission.

X. Capital occupied by the controlling shareholder and subsidiaries and independent opinion
According to SZJGSZ No. 325 (2008) document released by Jiangsu Supervisory Bureau, CSRC on
                                                    17
Further Standardizing Capital Current Between Listed Company, Big Shareholder as well as Other
Related Parties, as independent directors of Weifu High-Technology Group Co., Ltd., we examined
relevant resolution of Prediction on Daily Related Transaction Amount of 2011 of the Company and
checked the Semi-Annual Report 2011, then we presented the following opinions:
1. Capital current and occupancy do exist between the Company, its large shareholder-Wuxi Weifu
Industry Development Group Co., Ltd. as well as other related parties, which mainly belongs to the
daily related transactions occurred from the daily production and operation activities of the
Company. The daily related transactions amount is in line with the normal business development of
the Company. The daily related transaction of the Company are examined and approved in board
meeting and shareholder’s meeting and such legal procedure, and disclosed in the periodic reports
and resolution notices of the Board and shareholders’ meeting.
2. After inspection, it is not found that the Company has capital current and occupancy which are
not disclosed.
3. With inspection, it is clear that except the normal operation capital current and occupancy, the
Company, its large shareholder as well as other related parties have no other non-operation capital
current and occupancy.

XI. Special explanation and independent opinion issued by independent directors on the
external guarantee
According to relevant regulations of document [2005] No.120 issued by CSRC, we verified the
relevant financial information of the Company for the first half year of 2011; 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. Till period-end, amount of external guarantee of the Company was zero.
3. We would timely supervise the Company to fulfill the obligation of information disclosure for
external guarantee according to relevant regulations of Listed Rules and Articles of Association.

XII. Equity of non-listed financial enterprises and planned listed companies held
                                                                        Unit: RMB ’0000
                                                                                                      Changes on
                                    Initial                Proportion in                 Gains and
                                              Amount held                 Book value                   owners’
  Name of the company held       investment                equity of the                 losses in
                                                (Share)                  at period-end               equity in the
                                   amount                    company                   report period
                                                                                                     report period
Guolian Securities Co., Ltd.         1,200.00     1,800.00        1.20%       1,200.00          0.00          0.00
Nanjing Hengtai Insurance and
                                      100.00        100.00        1.85%        100.00          0.00          0.00
Broker Securities Co., Ltd.
Jiangsu   HSBC       Insurance
                                       50.00         50.00       10.00%         50.00          0.00          0.00
Agents Limited
            Total                   1,350.00      1,950.00       -           1,350.00          0.00          0.00


XIII. Periodical reports and provisional reports of the Company in the report period are as
follows:
      Order of                                                                                  Name of
                                   Contents of notice                      Date of notice
       notice                                                                                  newspapers
                                                                                             China
      2011-001    Notice to 2010 performance                          2011-1-26              Securities
                                                                                             Journal
                  Notice to decisions made on the 16th meeting of the                        Securities
      2011-002                                                        2011-3-19
                  6th session of board of directors                                          Times


                                                         18
                Notice to decisions made on the 7th meeting of the                         Hong    Kong
     2011-003                                                        2011-3-19
                7th session of board of supervisors                                        Commercial
     2011-004   Summary of 2010 annual report                        2011-3-19             Daily
     2011-005   Daily related transaction                            2011-3-19
     2011-006   Offering guarantee for others                        2011-3-19
     2011-007   Notice to more investment in Yingtemai               2011-3-19
     2011-008   Notice to listing of restricted shares               2011-4-11
     2011-009   Notice to 2011 the 1st seasonal performance          2011-4-15
     2011-010   Text of 2011 the 1st seasonal report                 2011-4-23
                                                       th
                Notice to decision made on the 18 meeting of the
     2011-011                                                        2011-6-9
                6th session of board of directors
                Notice to decisions made on the 9th meeting of the
     2011-012                                                        2011-6-9
                6th session of board of supervisors
     2011-013   Notice to holding 2010 annual shareholders’ meeting 2011-6-9
                Reference notice to holding 2010 annual
     2011-014                                                        2011-6-23
                shareholders’ meeting
                Notice to decisions made on the 2010 annual
     2011-015                                                        2011-7-1
                shareholders’ meeting
     2011-016   Notice to particulars about non-public issue         2011-7-1
   All the above documents were published on www.cninfo.com.cn which granted by China
   Securities Regulatory Commission.

XIV. Registration form for receiving research, communication and interview in the report
period.
                                                                                   Contents discussed and
         Date              Place          Way            The received parties
                                                                                     materials supplied
                         Reception
                                                      Bank of Communication,      Operation status and future
 2011-01-06             room of the   Spot research
                                                       Schroeder                 development of the Company
                         Company
                         Reception
                                                                                  Operation status and future
 2011-01-07             room of the   Spot research Life, Franklin
                                                                                 development of the Company
                         Company
                         Reception
                                                      China Merchants             Operation status and future
 2011-02-16             room of the   Spot research
                                                      Securities                 development of the Company
                         Company
                         Reception
                                                                                  Operation status and future
 2011-05-06             room of the   Spot research Huili Fund
                                                                                 development of the Company
                         Company
                         Reception
                                                                                  Operation status and future
 2011-05-10             room of the   Spot research Tiger Fund
                                                                                 development of the Company
                         Company
                         Reception
                                                                                  Operation status and future
 2011-05-12             room of the   Spot research Bosera Fund
                                                                                 development of the Company
                         Company
                         Reception
                                                                                  Operation status and future
 2011-05-20             room of the   Spot research Deutsche Bank
                                                                                 development of the Company
                         Company
                         Reception
                                                                                  Operation status and future
 2011-05-25             room of the   Spot research Hongli
                                                                                 development of the Company
                         Company
                         Reception
                                                      Baling, Zhongxin            Operation status and future
 2011-05-26             room of the   Spot research
                                                      Construction Investment    development of the Company
                         Company
 2011-05-27              Reception    Spot research Yanfu                         Operation status and future

                                                        19
             room of the                                            development of the Company
              Company
              Reception
                                                                     Operation status and future
2011-06-01   room of the   Spot research Fubang Securities
                                                                    development of the Company
              Company
              Reception
                                           Changjiang Securities,    Operation status and future
2011-06-09   room of the   Spot research
                                           Zhongyou Fund            development of the Company
              Company
              Reception
                                           China Merchants           Operation status and future
2011-06-22   room of the   Spot research
                                           Securities               development of the Company
              Company




                                             20
                           Section VII. Financial Statement
I. The Interim 2011 Financial Statements of the Company has not been audited.

II. Financial Report (Supplementary I)

III. Notes to financial statement (Supplementary II)




                 Section VIII. Document Available for Reference
I. The text of 2011 Interim Report bearing the signature of Chairman of the Board;

II. The Accounting Statement bearing signatures and seals of legal representative, financial
charger and accounting organ officer;

III. All text documents disclosed in China Securities Journal, Securities Times and Hong Kong
Commercial Daily during the report period;

IV. The text of Articles of Association of the Company.




                                                        Chairman of the Board: Wang Weiliang
                                                                Board of Directors of
                                                       Weifu High-technology Group Co., Ltd.
                                                                    25 August 2011




                                                 21
Supplementary I. Financial Report (un-audited)

                                                    Balance Sheet
Prepared by Weifu High-Technology Group Co., Ltd.             Jun.30, 2011              Unit: RMB
                                              Amount at period-end                  Amount at year-begin
               Items
                                       Consolidation       Parent Company     Consolidation      Parent Company
Current assets:
      Monetary funds                     650,755,776.12      230,304,728.14    596,958,764.21       149,943,763.55
      Settlement provisions
      Capital lent
      Transaction finance asset
      Notes receivable                   806,727,432.41      238,093,231.72    835,266,266.32       291,611,147.00
      Accounts receivable              1,455,548,616.22      787,170,455.11    999,798,439.30       567,607,398.18
 Accounts paid in advance                136,984,003.56       39,733,401.66    105,176,780.11        42,468,803.76
 Insurance receivable
      Reinsurance receivables
      Contract       reserve     of
reinsurance receivable
      Interest receivable
      Dividend receivable                411,763,187.98      403,474,013.55                           8,496,690.22
      Other receivables                    6,937,631.88      170,381,031.94       6,892,216.92      137,067,355.21
      Purchase restituted finance
asset
      Inventories                        892,581,046.39      286,208,383.69    917,694,296.54       277,723,002.78
      Non-current asset due
within one year
      Other current assets                16,412,254.88                           9,210,782.24
Total current assets                   4,377,709,949.44    2,155,365,245.81   3,470,997,545.64   1,474,918,160.70
Non-current assets:
      Granted loans and advances
      Finance asset available for
sales
      Held-to-maturity
investment
      Long-term            account
receivable
      Long-term              equity
                                       1,595,884,372.95    2,413,386,990.76   1,892,112,152.46   2,558,225,582.62
investment
      Investment property                  4,705,325.58                           4,965,879.52
      Fixed assets                     1,129,106,174.81      544,921,148.93   1,110,068,115.28      538,628,218.28
      Construction in progress           379,140,376.53      326,782,044.17     142,256,732.63      125,932,175.31
      Engineering material
      Disposal of fixed asset
      Productive biological asset
      Oil and gas asset
      Intangible assets                   84,003,591.27       26,398,657.53     85,655,823.12        26,733,764.37
      Expense on Research and
Development
      Goodwill                              1,784,086.79                          1,784,086.79
      Long-term expenses to be
                                            7,225,632.48                          7,473,629.75
apportioned

                                                             22
      Deferred income tax asset           46,620,157.09      15,994,688.34        46,308,844.71      16,198,870.70
      Other non-current asset
Total non-current asset                 3,248,469,717.50   3,327,483,529.73     3,290,625,264.26   3,265,718,611.28
Total assets                            7,626,179,666.94   5,482,848,775.54     6,761,622,809.90   4,740,636,771.98
Current liabilities:
      Short-term loans                   505,000,000.00     475,000,000.00       270,000,000.00     240,000,000.00
      Loan from central bank
      Absorbing deposit and
interbank deposit
      Capital borrowed
      Transaction           financial
liabilities
      Notes payable                       255,438,331.48    147,760,000.00        389,985,533.69    200,278,487.00
      Accounts payable                  1,282,039,231.68    798,944,758.50      1,195,053,077.84    766,617,178.72
      Accounts       received      in
                                          62,366,779.80      31,660,297.45        42,271,899.15      20,438,892.15
advance
      Selling financial asset of
repurchase
      Commission charge and
commission payable
      Wage payable                       296,748,447.80     202,960,229.57       269,751,945.96     168,133,427.32
      Taxes payable                       51,119,679.83      12,873,131.08       107,903,963.31      28,582,184.41
      Interest payable                       794,885.00         720,000.00           490,000.00         320,000.00
      Dividend payable                   246,765,057.83     246,765,057.83        18,696,539.18
      Other accounts payable              79,199,455.69     184,158,024.61        62,501,613.74      56,125,853.06
      Reinsurance payables
      Insurance contract reserve
      Security trading of agency
      Security sales of agency
      Non-current liabilities due
within 1 year
      Other current liabilities            28,321,914.82         425,794.18        24,330,259.35
Total current liabilities               2,807,793,783.93   2,101,267,293.22     2,380,984,832.22   1,480,496,022.66
Non-current liabilities:
      Long-term loans                       3,000,000.00                            3,000,000.00
      Bonds payable
      Long-term account payable           15,670,000.00                           15,670,000.00
      Special accounts payable
      Projected liabilities                                      1,481,745.84                          1,481,745.84
   Deferred income tax liabilities          2,719,799.76                            2,801,008.40
   Other non-current liabilities           15,105,000.00                           13,350,000.00
Total non-current liabilities              36,494,799.76       1,481,745.84        34,821,008.40       1,481,745.84
Total liabilities                       2,844,288,583.69   2,102,749,039.06     2,415,805,840.62   1,481,977,768.50
Owner’s equity (or shareholders’
equity):
      Paid-in capital (or share
                                         567,275,995.00     567,275,995.00       567,275,995.00     567,275,995.00
capital)
      Capital public reserve             895,918,416.59     923,981,806.57       895,918,416.59     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

                                                            23
     Provision of general risk
     Retained profit                   2,757,274,546.20   1,605,203,937.41    2,359,375,974.53   1,483,763,204.41
     Balance     difference     of
foreign currency translation
Total owner’s equity attributable
                                       4,504,106,955.29   3,380,099,736.48    4,106,208,383.62   3,258,659,003.48
to parent company
Minority interests                       277,784,127.96                         239,608,585.66
Total owner’s equity                  4,781,891,083.25   3,380,099,736.48    4,345,816,969.28   3,258,659,003.48
Total liabilities and owner’s
                                       7,626,179,666.94   5,482,848,775.54    6,761,622,809.90   4,740,636,771.98
equity




                                                Profit Statement
Prepared by Weifu High-Technology Group Co., Ltd.          Jan.-Jun., 2011               Unit: RMB
                                            Amount in this period                    Amount in last period
              Items                                          Parent                                    Parent
                                      Consolidation                           Consolidation
                                                            Company                                  Company
I. Total operating income             3,277,559,746.96 1,572,144,387.25       2,650,687,135.98 1,327,925,009.23
Including: Operating income           3,277,559,746.96 1,572,144,387.25       2,650,687,135.98 1,327,925,009.23
       Interest income
       Insurance gained
       Commission charge and
commission income
II. Total operating cost              2,804,561,429.66    1,426,981,752.27    2,484,124,898.09   1,301,797,886.46
Including: Operating cost             2,426,221,608.75    1,276,037,593.43    2,093,055,787.60   1,170,004,402.17
       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          18,420,616.07       4,627,595.77       16,291,617.38          6,433,506.73
       Sales expenses                    50,509,950.62      19,702,447.44       75,256,111.83         37,610,680.96
       Administration expenses          289,086,649.01     114,319,388.36      291,306,504.33         85,142,336.99
       Financial expenses                20,270,250.56      12,074,003.65       17,439,278.30         12,598,125.00
       Losses of devaluation of
                                              52,354.65          220,723.62      -9,224,401.35        -9,991,165.39
asset
       Add: Changing income of
fair value(Loss is listed with
“-”)
       Investment income (Loss
                                        293,611,064.62     267,750,110.24      201,917,998.72        178,193,119.57
is listed with “-”)
       Including:       Investment
income on affiliated company            293,611,064.62     267,750,110.24      200,107,998.72        176,383,119.57
and joint venture
       Exchange income (Loss is
listed with “-”)
III. Operating profit (Loss is
                                        766,609,381.92     412,912,745.22      368,480,236.61        204,320,242.34
listed with “-”)
       Add:           Non-operating
                                           7,284,862.92       3,643,945.37         672,941.34           385,891.83
income
                                                            24
      Less:       Non-operating
                                     4,197,340.18          1,863,915.93        7,603,886.52           4,973,495.20
expense
      Including: Disposal loss of
                                       503,436.27            205,040.54        3,955,948.67           3,136,382.19
non-current asset
IV. Total Profit (Loss is listed
                                   769,696,904.66       414,692,774.66      361,549,291.43          199,732,638.97
with “-”)
      Less: Income tax expense      95,344,637.40        46,486,983.83        25,056,036.34           2,944,537.40
V. Net profit (Net loss is listed
                                   674,352,267.26       368,205,790.83      336,493,255.09          196,788,101.57
with “-”)
      Net profit attributable to
                                   644,663,629.50       368,205,790.83      319,107,461.52          196,788,101.57
owner’s of parent company
     Minority      shareholders’
                                    29,688,637.76                             17,385,793.57
gains and losses
VI. Earnings per share
i. Basic earnings per share                   1.14                 0.65                 0.56                  0.35
ii. Diluted earnings per share                1.14                 0.65                 0.56                  0.35
VII、Other comprehensive
income
VIII、Total comprehensive
                                   674,352,267.26       368,205,790.83      336,493,255.09          196,788,101.57
income
      Total comprehensive
income attributable to owners      644,663,629.50       368,205,790.83      319,107,461.52          196,788,101.57
of parent company
      Total comprehensive
income attributable to a few        29,688,637.76                             17,385,793.57
shareholders
As for enterprise merger under same control in this period, the merging party realized net profit   of RMB 0.00
before consolidation.


                                      Cash Flow Statement
Prepared by Weifu High-Technology Co., Ltd.               Jan.-Jun., 2011                   Unit: RMB
                                          Amount in this period                Amount in last period
                Items
                                   Consolidation      Parent Company      Consolidation    Parent Company
I. Cash flows arising from
operating activities:
      Cash received from selling
commodities and providing labor 3,103,973,047.42 1,646,992,101.70 1,846,936,620.16 1,234,026,176.66
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

                                                         25
      Net increase of capital
borrowed
      Net increase of returned
business capital
      Write-back of tax received          12,117,457.27                            8,782,547.76
      Other       cash      received
                                          13,351,259.84          576,527.71        8,590,049.83       4,854,255.88
concerning operating activities
       Subtotal of cash inflow
                                        3,129,441,764.53   1,647,568,629.41    1,864,309,217.75   1,238,880,432.54
arising from operating activities
      Cash paid for purchasing
commodities and receiving labor         2,372,737,792.86   1,190,501,330.49    1,376,818,187.49   1,138,742,380.50
service
      Net increase of customer
loans and advances
      Net increase of deposits in
central bank and interbank
      Cash paid for original
insurance contract compensation
      Cash paid for interest,
commission          charge        and
commission
      Cash paid for bonus of
guarantee slip
Cash paid to/for staff and workers       250,024,693.71     100,967,959.62      218,927,995.72      98,598,556.63
Taxes paid                               337,795,130.93     108,357,907.68      189,330,563.69      68,043,762.87
Other cash paid concerning
                                         115,080,757.84     144,846,109.46       93,167,886.76      38,660,315.63
operating activities
      Subtotal of cash outflow
                                        3,075,638,375.34   1,544,673,307.25    1,878,244,633.66   1,344,045,015.63
arising from operating activities
      Net cash flows arising from
                                          53,803,389.19     102,895,322.16       -13,935,415.91   -105,164,583.09
operating activities
II. Cash flows arising from
investing activities:
      Cash       received       from
recovering investment
      Cash       received       from
                                         174,072,662.98     174,280,178.77       13,379,333.52      13,379,333.52
investment income
      Net cash received from
disposal of fixed, intangible and           7,126,366.00        6,187,577.12     12,123,918.21        7,665,524.53
other long-term assets
      Net cash received from
disposal of subsidiaries and other
units
      Other       cash      received
                                            1,138,436.51
concerning investing activities
      Subtotal of cash inflow from
                                         182,337,465.49     180,467,755.89       25,503,251.73      21,044,858.05
investing activities
      Cash paid for purchasing
fixed,    intangible and        other    377,850,266.49     263,273,961.57      100,113,353.54      47,833,488.20
long-term assets
      Cash paid for investment                              156,668,800.00      123,265,900.00     127,045,900.00
      Net increase of mortgaged
loans
      Net cash received from
subsidiaries and other units
      Other cash paid concerning
investing activities
      Subtotal of cash outflow from      377,850,266.49     419,942,761.57      223,379,253.54     174,879,388.20

                                                           26
investing activities
     Net cash flows arising from
                                       -195,512,801.00   -239,475,005.68      -197,876,001.81    -153,834,530.15
investing activities
III. Cash flows arising from
financing activities
     Cash received from absorbing
                                          5,610,000.00                            1,490,490.00
investment
     Including: Cash received from
absorbing minority shareholders’         5,610,000.00                            1,490,490.00
investment by subsidiaries
     Cash received from loans          586,512,141.78     556,512,141.78      1,069,864,006.14   1,017,612,099.36
     Cash received from issuing
  bonds
     Other        cash      received
concerning financing activities
     Subtotal of cash inflow from
                                       592,122,141.78     556,512,141.78      1,071,354,496.14   1,017,612,099.36
financing activities
     Cash paid for settling debts      351,512,141.78     321,512,141.78       810,598,025.08     744,598,025.08
     Cash paid for dividend and
profit distributing or interest         29,491,293.22         10,794,754.04     15,613,973.26      14,134,432.99
paying
     Including: Dividend and profit
of minority shareholder paid by         18,696,539.18
subsidiaries
     Other cash paid concerning
                                                                                  2,265,668.46
financing activities
     Subtotal of cash outflow from
                                       381,003,435.00     332,306,895.82       828,477,666.80     758,732,458.07
financing activities
     Net cash flows arising from
                                       211,118,706.78     224,205,245.96       242,876,829.34     258,879,641.29
financing activities
IV. Influence on cash due to
fluctuation in exchange rate
V. Net increase of cash and cash
                                        69,409,294.97         87,625,562.44     31,065,411.62         -119,471.95
equivalents
     Add: Balance of cash and cash
                                       465,219,784.67         85,169,165.70    327,527,351.45      85,790,609.19
equivalents at the period -begin
VI. Balance of cash and cash
                                       534,629,079.64     172,794,728.14       358,592,763.07      85,671,137.24
equivalents at the period–end




                                                         27
                                                  Consolidated Statement on Changes of Owners’ Equity
               Prepared by Weifu High-Technology Co., Ltd.                                          Jun. 30, 2011                                  Unit: RMB

                                                                            Amount in this report period
                                                    Owners' equity attributable to the parent company
       Items                                                                                                                     Minority’s     Total owners’
                                                         Less:                                   General
                        Paid-up capital     Capital                Reasonable       Surplus                                       equity            equity
                                                       Treasury                                    risk   Retained profit Others
                        (Share capital)    reserves                  reserve        reserves
                                                        Stock                                   provision
I. Balance at the
                         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
end of last year
Add: Changes of
accounting policy
Error correction of
the last period
Others
II. Balance at the
beginning of this        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
year
III.        Increase/
Decrease in this
                                                                                                           397,898,571.67        38,175,542.30    436,074,113.97
year (Decrease is
listed with "-")
(I) Net profit                                                                                             644,663,629.50        29,688,637.76    674,352,267.26
(II)Other
comprehensive


                                                                                        28
income
   Subtotal of the
                             644,663,629.50    29,688,637.76   674,352,267.26
  above (I) and (II)
(III)       Owners'
devoted          and                            8,486,904.54      8,486,904.54
decreased capital
1. Owners' devoted
                                                8,486,904.54      8,486,904.54
capital
2.           Amount
calculated       into
owners' equity paid
in shares
3. Others
(IV)           Profit
                             -246,765,057.83                   -246,765,057.83
distribution
1. Withdrawal of
surplus reserves
2. Withdrawal of
general          risk
provisions
3. Distribution for
owners                       -246,765,057.83                   -246,765,057.83
(shareholders)
      4.Other
(V)         Carrying
forward      internal


                        29
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.Other
   (VI)Special
reserve
      1.Withdrawal
  in this period
      2.Usage in
this period
IV. Balance at the
end of the report
period
I. Balance at the
                        567,275,995.00 895,918,416.59   283,637,997.50   2,757,274,546.20   277,784,127.96 4,781,891,083.25
end of last year




                                                                 30
                                              Consolidated Statement on Changes of Owners’ Equity (CONT.)
             Prepared by Weifu High-Technology Co., Ltd.                                 Jun. 30, 2011                                         Unit: RMB
                                                                                Amount in last year
                                                 Owners' equity attributable to the parent company
     Items                                           Less:                                                                           Minority’s   Total owners’
                    Paid-up capital      Capital                 Reasonable       Surplus     General risk
                                                    Treasury                                               Retained profit Others     equity          equity
                    (Share capital)     reserves                   reserve        reserves     provision
                                                     Stock
I. Balance at
the end of last       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
year
Add: Changes
of accounting
policy
Error
correction of
the last period
Others
II. Balance at
the beginning         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
of this year
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 "-")


                                                                                          31
(I) Net profit                            1,340,291,115.79   41,069,497.35 1,381,360,613.14
(II)Other
general
revenue
   Sub-total of
the above (I)                             1,340,291,115.79   41,069,497.35 1,381,360,613.14
and (II)
(III) Owners'
devoted      and
                    -11,661,891.69                           -19,165,166.10   -30,827,057.79
decreased
capital
1.       Owners'
                                                             -19,165,166.10   -19,165,166.10
devoted capital
2.       Amount
calculated into
owners' equity
paid in shares
3. Others           -11,661,891.69                                            -11,661,891.69
(IV)       Profit
                                            -85,091,399.25   -11,878,536.13   -96,969,935.38
distribution
1. Withdrawal
of        surplus
reserves
2. Withdrawal
of general risk
provisions


                                     32
3. Distribution
for      owners         -85,091,399.25   -11,878,536.13   -96,969,935.38
(shareholders)
    4. Other
(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. Other

(VI)Reasonable
reserve



                   33
1.Withdrawal
in this period
      2.Usage in
this period
(VII) Other
IV. Balance at
the end of the        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
report period




                                                  Statement on Changes of Owners' Equity of Parent Company
              Prepared by Weifu High-Technology Co., Ltd.                                   Jan.-Jun., 2011                                                   Unit: RMB
                                                                                                Amount in this report period

                           Items                                                      Less:
                                                  Paid-up capital      Capital                   Reasonable       Surplus      General risk                    Total owners’
                                                                                     Treasury                                               Retained profit
                                                  (Share capital)     reserves                    reserve         reserves       reserve                          equity
                                                                                      Stock
                  I. Balance at the end of last
                                                    567,275,995.00 923,981,806.57                             283,637,997.50               1,483,763,204.41 3,258,659,003.48
              year
                  Add: Changes of accounting
              policy
                  Error correction of the last
              period



                                                                                                34
    Others
     II. Balance at the beginning
                                     567,275,995.00 923,981,806.57        283,637,997.50   1,483,763,204.41 3,258,659,003.48
of this year
III. Increase/ Decrease in this
                                                                                            121,440,733.00   121,440,733.00
year (Decrease is listed with "-")
    (I) Net profit                                                                          368,205,790.83   368,205,790.83
   (2)Other comprehensive
income
   Subtotal of the above (1)and
                                                                                            368,205,790.83   368,205,790.83
(2)
    (III) Owners' devoted and
decreased capital
    1. Owners' devoted capital
   2. Amount calculated into
owners' equity paid in shares
    3. Others
    (IV) Profit distribution                                                               -246,765,057.83 -246,765,057.83
    1. Withdrawal of surplus
reserves
      2.Withdrawal of general
risk reserve
    3. Distribution for owners
                                                                                           -246,765,057.83 -246,765,057.83
(shareholders)
    4. Others
    (V)      Carrying     forward




                                                                     35
internal owners' equity
     1. Capital reserves conversed
to capital (share capital)
    2.    Surplus   reserves
conversed to capital (share
capital)
    3. Remedying          loss   with
surplus reserves
    4. Others
  (VI)Special reserve
     1.Withdrawal in this period
     2.Usage in this period
(VII) Other
IV. Balance at the end of the
                                         567,275,995.00 923,981,806.57                                 283,637,997.50              1,605,203,937.41 3,380,099,736.48
report period




                                 Statement on Changes of Owners' Equity of Parent Company (CONT.)
Prepared by Weifu High-Technology Co., Ltd.                                    Jan.-Jun., 2011                                               Unit: RMB
                                                                                      Amount in this period
       Items              Paid-up capital (Share                     Less: treasury     Special                     General risk                     Total owners’
                                                   Capital reserve                                Surplus reserve                  Retained profit
                                 capital)                                stock          reserve                       reserve                           equity
I. Balance at the
                                   567,275,995.00 923,981,806.57                                  283,637,997.50                    695,343,636.03 2,470,239,435.10
end of last year



                                                                                        36
Add: Changes of
accounting policy
Error correction of
the last period
Others
II. Balance at the
beginning of this       567,275,995.00 923,981,806.57        283,637,997.50   695,343,636.03 2,470,239,435.10
year
III.        Increase/
Decrease in this
                                                                              788,419,568.38   788,419,568.38
year (Decrease is
listed with "-")
    (I) Net profit                                                            873,510,967.63   873,510,967.63
   (2)Other
comprehensive
income
  Subtotal of the
                                                                              873,510,967.63   873,510,967.63
above (1)and (2)
(III)       Owners'
devoted          and
decreased capital
    1.     Owners'
devoted capital
    2.     Amount
calculated   into



                                                        37
owners' equity paid
in shares
    3. Others
(IV)            Profit
                              -85,091,399.25   -85,091,399.25
distribution
    1. Withdrawal
of surplus reserves
     2.Withdrawal
of general risk
reserve
    3. Distribution
for          owners           -85,091,399.25   -85,091,399.25
(shareholders)
    4. Others
(V)        Carrying
forward     internal
owners' equity
    1.     Capital
reserves conversed
to capital (share
capital)
    2.     Surplus
reserves conversed
to capital (share
capital)



                         38
    3. Remedying
loss with surplus
reserves
    4. Others
(VI)Special
reserve
      1.Withdrawal
in this period
      2.Usage in
this period
(VII) Other
IV. Balance at the
end of the report     567,275,995.00 923,981,806.57        283,637,997.50   1,483,763,204.41 3,258,659,003.48
period




                                                      39
Supplementary II:
                                 Notes to Financial Statement
No t e 1 . 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 engages in the production and sales of the system of fuel injection and oil blowout.
According to the Share Merger Reform Scheme of the Company that passed by related
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 August 23, 2011.

Note 2: Major Accounting Policies, Accounting Estimation and Previous Errors of the
Company
1. Basis of preparation of financial statements
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

                                                    41
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 (RMB) 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
(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. Holding more than half of voting right of the investee through agreement with other
investors of the investee enterprises; ;
B. Having the rights of financial and operation strategy controlled according to Article of
Association of Agreement;
C. Having the rights of appointment and dismissal on majority personnel’s 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

                                                    42
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, adjusted 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 different accounting policy or accounting period between the Company
and subsidiaries, consolidating after adjustment on subsidiaries’ financial statement 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 consolidation; 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
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

                                                     43
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:
1 Transfer of right for collecting cash flow of financial assets to another party;
○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
                                                     44
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
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

                                                     45
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
                            receivable whose single amount is not significant, impossible
Recognition evidence
                            collection though with bankrupt properties or heritages of debtors
for group by credit risk
                            due to their bankrupt or death, debtors haven’t implemented their
feature
                            repayment obligations over 3 years upon expiration and there are
                            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 withdrawal                   No withdrawal
             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
Explanation        cash flow and carrying value of such account receivable; bad debt provision is
for provision fully provided for account receivables whose single amount are not significant, but
for bad debt       the portfolio risk is significant after grouped by credit risk feature; provision is
                   offered on the basis of period-end balances 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
                                                     46
                 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. 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:
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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 consolidated 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
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
○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.
2 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
                                                      48
invested unit, carrying value of long-term equity investment shall be subject to adjustment
which shall be then recorded in owners’ equity.
3 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.
(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 occurred 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

                                                     49
 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
         Classification                Depreciation time         Residual      Annual depreciation
         House and Building                20 to 35 years          5%                2.71% to 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 to 10 years          5%              9.50% to 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, 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;
) 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
                                                            50
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 occurred. 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 occurred by project 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 occurred, 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 occurred. Relevant borrowing costs start to be capitalized when all of the following three
conditions are met:
(a) Capital expenditure has been occurred;
(b) Borrowing costs have been occurred;
(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

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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 occurred.
(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 occurred 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 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 occurred
and other related costs.
The cost of an 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
occurred; 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 occurred 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

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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;
(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 occurred or to be occurred 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 occurred or to be occurred 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

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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 occurred 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, the
government grants measured at the nominal amount is 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.


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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.
Goodwill, listed independently in financial statement, while conducting impairment test, amortized
book value to the assets unit or assets combination that benefit from synergistic effect, enterprise
consolidation prediction. Relevant impairment losses should be recognized while the recoverable
amount lower its book value, the recoverable amount was contained within the assets unit or assets
combination with goodwill amortized that resulted from testing; The impairment losses, firstly,
deducted to the book value of goodwill of this assets units or assets combination, then deducted
other vary book value of the assts by proportion in assts except the goodwill of assets units or assts
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 treatment 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 3: 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 state
VAT                          Sale of goods
                                                    with declaration of export tax rebate, rate of tax
                                                      may be “exempted, credited and refunded”
Business tax              Revenue from lease                               5%
Urban maintenance
                         Turnover tax payable
and construction tax                                                       7%
Education         fee
                         Turnover tax payable
surcharges                                                                 5%
Corporate income
                            Taxable income
tax                                                           15% for the parent company

Corporate income taxes of subsidiaries:

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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.
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”) , Chaoyang Weifu Jialin Machinery Manufactures Co., Ltd.
(hereinafter referred to as “Weifu Jialin”) , Anhui Weifu Tianshi Machinery Co., Ltd. (hereinafter
referred to as “Weifu Tianshi”) and Kunming Xitong Machinery Co., Ltd.(hereinafter referred to
as “Kunming Xitong”) is 25%.




                                                     56
             Note IV: Enterprise merger and consolidation financial reports
             1. Particulars about subsidiaries
             (1) Subsidiaries acquired by means of establishment or investment
                                                                                                                                Actual            Balances of other
                                                                              Registered                                      investment          projects actually                                          Whether
                             Type of        Registration     Nature of                                                                                                      Equity held   Proportion of
Name of company                                                                capital               Business scope          amount at the         constituting net                                        consolidated
                            company           Place          business                                                                                                          (%)        vote right (%)
                                                                             (RMB’0000)                                        period          amount of investment                                       report or not
                                                                                                                            end(RMB’0000)          in subsidiaries
                                                                                               Accessories and matching
                             Limited           Wuxi        Manufacturing                           parts of internal
Weifu Mashan                company                                               4,500.00        combustion engine                   4,869                        --            100.00           100.00        Yes
                                                                                               Accessories and matching
                             Limited           Wuxi        Manufacturing                           parts of internal
Weifu Chang’ an            company                                               6,000.00        combustion engine                   7,090                        --            100.00           100.00        Yes
                             Limited
                                               Wuxi        Manufacturing
Weifu Jida                  company                                                 500.00         Metal nano powder                 350.00                        --             70.00            70.00        Yes
                             Limited
                                               Wuxi        Manufacturing
Weifu Nano                  company                                               3,000.00          Nano material                  2,400.00                        --             80.00            80.00        Yes
                                                                                               Accessories and matching
                             Limited           Wuxi        Manufacturing                           parts of internal
Weifu Diesel System         company                                              30,000.00        combustion engine               26,019.00                        --            100.00           100.00        Yes
                                                                                               Accessories and matching
                          Sino-foreign         Wuxi        Manufacturing                           parts of internal
Weifu Schmitter           joint venture                                           1,800.00        combustion engine                  810.00                        --             45.00            45.00        Yes
                                                                                               Accessories and matching
                             Limited                       Manufacturing                           parts of internal
Weifu Tianshi               company           Quanjiao                            1,000.00        combustion engine                  520.00                        --             52.00            52.00        Yes

             (2) Subsidiaries acquired by means of enterprise merger under common control
                                                                                                                                                   Balances of other
                                                                                                                            Actual investment      projects actually
                                                                            Registered                                                                                                                      Whether c
                        Type of        Registration        Nature of                                                         amount at the          constituting net        Equity held   Proportion of
 Company name                                                                capital               Business scope                                                                                          consolidated
                       company           Place             business                                                              period                amount of               (%)        vote right (%)
                                                                           (RMB’0000)                                                                                                                     report or not
                                                                                                                            end(RMB’0000)           investment in
                                                                                                                                                      subsidiaries
                                                                                              Accessories and matching
                        Limited
  Weifu Jinning                           Nanjing        Manufacturing                       parts of internal combustion
                       company
                                                                              34,628.70                  engine                        17,864                          --         80.00           80.00        Yes
                        Limited
   Weifu Leader                            Wuxi          Manufacturing                            Cleaner, muffler
                       company                                                26,000.00                                                23,011                          --         94.81           94.81        Yes
      Weifu
                        Limited
   International                           Wuxi             Trade                                International trade
                       company
       Trade                                                                   3,000.00                                                 3,033                          --        100.00          100.00        Yes
               (3) Subsidiaries acquired by means of enterprise merger under different controls
                                                                                                                        Actual         Balances of other
                                                                      Registered                                      investment       projects actually                                     Whether
                         Type of      Registration     Nature of                                                                                            Equity held   Proportion of
 Company name                                                          capital             Business scope            amount at the      constituting net                                   consolidated
                        company         Place          business                                                                                                (%)        vote right (%)
                                                                     (RMB’0000)                                        period       amount of investment                                  report or not
                                                                                                                    end(RMB’0000)       in subsidiaries
                         Limited                                                      Accessories and matching
                                         Wuxi        Manufacturing
ITM Machinery           company                                          16,000.00   parts of internal combustion        16,700.00                     --        100.00           100.00       Yes
                         Limited                                                      Accessories and matching
Weifu Tianli            company         Ningbo       Manufacturing       10,469.00   parts of internal combustion         9,023.00                     --         51.00            51.00       Yes
                         Limited                                                      Accessories and matching
                                                     Manufacturing
Weifu Jialin            company        Chaoyang                             800.00   parts of internal combustion           400.00                     --         51.00            51.00       Yes
                         Limited                                                      Accessories and matching
Kunming Xitong          company        Kunming       Manufacturing          400.00   parts of internal combustion           570.38                     --         70.00            70.00       Yes




                                                                                                      58
2. Explanation on the change in the consolidated range
                                       Whether it is consolidated in Whether it was consolidatedin
           Name of company
                                           this year or not                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 [Note 2]                          Yes                           Yes
   Weifu Tianli [Note 3]                           Yes                           Yes
   Weifu Jialin [Note 4]                           Yes                           Yes
   Weifu Tianshi [Note 5]                          Yes                            No
   Kunming Xitong[Note 6]                          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 consolidated range as a subsidiary
 since its establishment.
Note 2
 Weifu ITM: changed its name from “Wuxi ITM Information Machinery Development
 Co., Ltd.” to “Wuxi Weifu ITM Pressure Technology Co., Ltd.”. Relevant changes for
 Industrial and Commerce have been completed on 14 March 2011. Capital increase of
 0.15 billion yuan was invested by the Company without equity proportion changed.
 After capital increased, the company owns register capital of 0.16 billion yuan.
 Relevant changes for Industrial and Commerce have been completed on 3 June 2011.
Note 3
 Weifu Tianli-- The Company invested with cash in Ningbo Tianli Supercharger Co., Ltd, the
 Company occupied 51% of 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


                                              59
    Ningbo Weifu Tianli Supercharge Technology Co., Ltd. The company considered as the controlling
    subsidiary of the Company for statement consolidation since November 2010.

   Note 4
    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 equity of the company was held the Company and became as the
    controlling subsidiary of the company, joint in the statement consolidation since
    October 2010.

   Note 5
    Weifu Tianshi: a company limited jointly invested by the Company and Anhui
    Quanchai Power Co., Ltd., the Business License for Legal Entity (No.
    341124000024350(1-1)) granted by Quanjiao County Industrial and Commercial
    Administration Bureau was obtained on 13 April 2011. Register capital amounting to
    10 million yuan, 5.2 million yuan invested by the Company, 52% of the total register
    capital take; Anhui Quanchai Power Co., Ltd. invested 4.8 million yuan with 48% in
    total register capital. The company considered as the subsidiary of the Company for
    statement consolidation since date of establishment.
   Note 6
    Kunming Xitong: In March of 2011, the Company entered into an equity transfer
    agreement with Kunming Jinlida Machinery Co., ltd. Twenty percent equity of
    Kunming Xitong held by Kunming Jinlida Machinery Co., ltd was agreed to transfer by
    the Company with price of 1.4688 million yuan. Relevant changes for Industrial and
    Commerce have been completed on 12 May 2011. After equity transfer, the Company
    holds 70% equity of the company, controlling subsidiary of the Company thereinafter.
    And consolidated into range of consolidation for statement since May of 2011.
   3. Subsidiaries newly taken into consolidated range during this period
                                                               Unit: RMB’000
                                                       Net assets at            Net profit in this
                      Name
                                                       period-end                    period
     Weifu Tianshi                                                 9,867                       -133
     Kunming Xitong                                               10,405                        815


Note 5: Commentary on items of consolidated 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
                               2011-6-30                                 2010-12-31
    Item         Amount Converting             Amount      Amount      Converting         Amount
                in foreign rate               in RMB         in           rate           in RMB

                                               60
                 currency                                         foreign
                                                                 currency
 Cash:                                                    605                                   544
 RMB                     --              --               605          --           --          544
 Bank
 deposit:                                           534,024                                450,166
 RMB                     --              --         504,930            --           --     441,693
 Euro                 3,108        9.3612               29,094        962       8.8065         8,473
 Other                                                 116,127                             146,249
 currency
 capitals:
 RMB                     --              --            116,127         --           --     145,314
 Euro                    --              --                 --        106       8.8065          935
 Total                                              650,756                                596,959


Funds with limited application, funds deposited abroad and funds with latent recovery
risks due to mortgage, pledge or freezing:
                  Item                          2011-6-30                2010-12-31
Bank acceptance bill, L/C and other
                                                         116,127                   131,739
collateral

5-02 Notes receivable
(1) Classification of notes receivable
           Category                           2011-6-30                     2010-12-31
Commercial acceptance bill                                 78,000                     68,900
Bank acceptance bill                                      728,727                    766,366
             Total                                        806,727                    835,266

(2) Notes receivable already pledged by the Company at the end of the period (top
five)
                   Drawer                         Expiration date    Amount
                                                     2011-7-20
Anhui Jianghui Automobile Co., Ltd.                                      12,000
                                                     2011-9-8
Dongfeng Automobile Co., Ltd.                        2011-9-29           10,000
Shanxi Heavy Duty Truck Co., Ltd.                     2011-7-1           10,000
Weichai Power Co., Ltd.                             2011-10-26           10,000
Hubei Changtong Economy & Trading                    2011-7-13
                                                                           7,000
  Development Co., Ltd.                             2011-10-20
                     Total                                               49,000
Among the note receivable at the end of the period, bank acceptance bill of RMB
96.95 million served as pledge for drawing payable bills.

(3) Undue notes already endorsed by the Company to other parties at the end of

                                                  61
period (top five)
                    Drawer                     Expiration date    Amount
                                                Before end of
Weichai Power Co., Ltd.                                               130,456
                                               December 2011
Zhejiang Yuanjing Auto Parts Co., Ltd.          Before end of
                                                                       80,944
                                               December 2011
Mianyang Xincheng Power Machinery               Before end of
                                                                       26,597
Co., Ltd.                                      December 2011
Dongfeng Wealth Motor Co., Ltd.                 Before end of
                                                                       21,190
                                               December 2011
Chongqing Branch of Dongfeng Wealth             Before end of
                                                                       21,180
Motor Co., Ltd.                                December 2011
                Total                                                 280,367

5-03 Accounts receivable
(1) Accounts receivable disclosed according to account nature:
                                                          2011-6-30
                                         Book balance             Bad debt provision
             Category
                                                   Proportion                   Proportion
                                      Amount                     Amount
                                                      (%)                          (%)
Significant single amount and
withdrawal bad debt provision
single                                   47,077          3.09          47,077       100.00
Withdrawal bad debt provision
based on age combination              1,460,417         95.83           4,868          0.33
Including:    significant    single   1,382,458         90.71           1,390          0.10
    Minor single amount                  77,959          5.12           3,478          4.46
Minor single amount but
withdrawal bad debt provision            16,469          1.08          16,469       100.00
              Total                   1,523,963        100.00          68,414          4.49


                                                       2010-12-31
                                        Book balance            Bad debt provision
             Category
                                                Proportion                  Proportion
                                      Amount                  Amount
                                                   (%)                         (%)
Significant single amount and
withdrawal bad debt provision
single                                   47,077          4.41         47,077        100.00
Withdrawal bad debt provision
based on age combination              1,003,974         94.00           4,176          0.42
Including: significant single           942,294         88.22           1,092          0.12
                                            62
amount
     Minor single amount               61,680         5.78           3,084          5.00
Minor single amount but
withdrawal bad debt provision
single                                 17,017        1.59           17,017        100.00
             Total                  1,068,068      100.00           68,270          6.40

 Explanation on categories of accounts receivable:
Account receivable with significant amount in single item indicated account with single
item amount above RMB one 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 withdrawal bad debt
provision single at period end:
                                   Bad
                           Book           Withdrawal
  Account receivable               debt                      Reasons
                          balance          ratio (%)
                                  amount
                                                           Insolvency,
  Yangdong Co., Ltd.                                   re-construction by
                           27,790 27,790       100.00       the Court
     Hunan Power                                       Difficult in recover
     Machine Plant          4,297  4,297       100.00    due to long age
 Jiangxi Diesel Engine                                 Difficult in recover
          Plant             3,561  3,561       100.00    due to long age
Bengbu Diesel Engine                                   Difficult in recover
          Plant             3,318  3,318       100.00    due to long age
    Liuzhou Special                                    Difficult in recover
  Diesel Engine Plant       1,612  1,612       100.00    due to long age
  Shaoyang Shenfeng                                   Long age, un-recover
  Power Manufacture                                         after suit
       Co., Ltd.            1,590  1,590       100.00
  Changchai Wanchou                                    Difficult in recover
   Diesel Engine Co.,       1,500  1,500       100.00    due to long age
     Yuejin Light                                      Difficult in recover
 Automobile Co., Ltd.       1,218  1,218       100.00    due to long age
  Wuxi Sida Xingxing                                   Difficult in recover
   Diesel Engine Co.,                                    due to long age
          Ltd.              1,191  1,191       100.00
  Henan Agricultural                                  Long age, un-recover
    Machinery Co.,          1,000  1,000       100.00       after suit
          Total            47,077 47,077       100.00

                                           63
(3) Account receivable with minor single amount but withdrawal bad debt provision
single at period end:
                                        Bad
                                Book           Withdrawal
     Account receivable                 debt                    Reasons
                               balance           ratio (%)
                                       amount
                                                               Difficult in
Changchai Wanzhou Diesel
                                   843    843        100.00 recover due to
Co., Ltd.
                                                                long age
                                                               Difficult in
Hubei      Duoling      Power
                                   776    776        100.00 recover due to
Machinery Co., Ltd.
                                                                long age
Henna               Xinxiang                                   Difficult in
Internal-Combustion Engine         754    754        100.00 recover due to
Plant                                                           long age
                                                               Difficult in
Urumqi         Xinhengchang
                                   672    672        100.00 recover due to
Pump Equipment Co., Ltd.
                                                                long age
                                                               Difficult in
Zhejiang Haofeng Power
                                   625    625        100.00 recover due to
Manufacture Co., Ltd.
                                                                long age
                                                               Difficult in
Yunnan       Jinma      Diesel
                                   579    579        100.00 recover due to
Machine General Plant
                                                                long age
                                                               Difficult in
Dongfeng Nanchon Motor
                                   570    570        100.00 recover due to
Co., Ltd.
                                                                long age
Jintan              Shunfeng                                   Difficult in
Agricultural       Machinery       567    567        100.00 recover due to
Accessory Co., Ltd.                                             long age
                                                               Difficult in
Nantong Tieniu Power Plant         556    556        100.00 recover due to
                                                                long age
                                                               Difficult in
Jiangsu Changjia Jingfeng
                                   545    545        100.00 recover due to
 Power Machinery Co., Ltd.
                                                                long age
                                                               Difficult in
Guangxi               Liuzhou
                                   475    475        100.00 recover due to
 Zhongxing Power Plant
                                                                long age
                                                               Difficult in
Zhejiang         Agricultural
                                   458    458        100.00 recover due to
Machinery Accessory Co.,
                                                                long age
                                                               Difficult in
Weichai Power Co., ltd.            450    450        100.00
                                                             recover due to

                                          64
                                                                      long age
                                                                     Difficult in
Jiangmen Zhongyu Material
                                  412      412        100.00       recover due to
Supply Co.,Ltd.
                                                                      long age
Jiangsu          Changtong                                           Difficult in
 High-Tech      Heavy-Duty        376      376        100.00       recover due to
 Co., Ltd.                                                            long age
                                                                     Difficult in
Changchai Group Jintan
                                  375      375        100.00       recover due to
Diesel General Plant
                                                                      long age
Fujian Longma Agricultural                                           Difficult in
Vechicle Manufacture Co.,         365      365        100.00       recover due to
Ltd.                                                                  long age
                                                                     Difficult in
Kunming      Zhongantong
                                  328      328        100.00       recover due to
Technology-Trade Co., Ltd.
                                                                      long age
                                                                     Difficult in
Tianjin Lovol Engines Co.,
                                  321      321        100.00       recover due to
Ltd.
                                                                      long age
                                                                     Difficult in
Beijing Pinyang Highway
                                  309      309        100.00       recover due to
Traffic Equipment Co., Ltd.
                                                                      long age
                                                                     Difficult in
Scattered companies             6,114    6,114        100.00       recover due to
                                                                      long age
           Total               16,470   16,470                --          --

(4) Account receivable withdrawal bad debt provision based on age combination:
                                                2011-6-30
                                                          Withdrawal ratio
 Account age                   Proportion    Bad debt                        Net account
                  Amount                                     of bad debt
                                  (%)        provision                         receivable
                                                            provision (%)
 Within     6
 months            1,438,419        98.50             --                         1,438,419
 6 months-
                                                                      10.00
 1year                 9,542         0.65           954                              8,588
 1-2 years             9,400         0.64         1,880               20.00          7,520
 2-3 years             1,703         0.12           681               40.00          1,022
 Over       3
                                                                     100.00
 years                 1,353         0.09         1,353                                  --
 Total             1,460,417       100.00         4,868                0.33      1,455,549

 Account age                                     2010-12-31

                                           65
                                                                        Withdrawal ratio
                                   Proportion        Bad debt                                    Net account
                     Amount                                               of bad debt
                                      (%)            provision                                   receivable
                                                                         provision (%)
 Within    6
 months                 984,880          98.10                   --                                      984,880
 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
                                                                                      100.00
 years                   1,174            0.11            1,174                                                --
 Total               1,003,974          100.00            4,176                          0.42            999,798

(5) No arrears of shareholders (units) 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
 Resource Co., Ltd.                   Client           292,402        1 year                      19.19
 Dongfeng Cummins Engine                                              within
 Co., Ltd.                            Client           133,864        1 year                       8.78
 Wuxi Diesel Engine Factory of
 Faw Jiefang Automobile Co.,                                          within
 Ltd.                                 Client           111,078        1 year                       7.29
 Zhejiang Yuanjing Auto Parts                                         within
 Co., Ltd.                            Client           107,479        1 year                       7.05
 Bosch Automobile        Diesel                                       within
 System Co., Ltd                      Client            58,674        1 year                       3.85
             Total                                     703,497                                    46.16
Bosch Automobile Diesel System Co., Ltd. is hereafter referred to as Bosch Diesel
System.

(7) Related party’s account in accounts receivable

                                     Relationship with                           Proportion in total
             Name                                           Amount
                                      the Company                              account receivable (%)
                                        Associated               58,674                           3.85
 Bosch Diesel System
                                         company
 Wuxi    Weifu-Autocam      Fine       Joint-venture              1,764                           0.12
 Machinery Co. LTD.

                                                  66
 Wuxi Weifu Fine Machinery                    Associated                    450                          0.03
 Manufacture Limited Liability                 company
                 Total                                                 60,888                            4.00


(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
                                Account
 Yangdong Co., Ltd.               for               64         Unrecoverable                     Not
                                 goods
5-04 Accounts paid in advance
(1) Accounts paid in advance listed according to account age
                                      2011-6-30                                   2010-12-31
  Account age
                           Amount             Proportion (%)            Amount               Proportion (%)
Within 1 year                  124,337                     90.77              101,673                   96.67
1 to 2 years                        11,519                  8.40                  2,514                  2.39
2 to 3 years                          449                   0.33                   866                   0.82
above 3 years                         679                   0.50                   124                   0.12
Total                          136,984                    100.00              105,177                  100.00


(2) The top five units in term of amount of account paid in advance
                                              Relationship
                                                                                             Reason for not
               Name of Unit                     with the       Amount        Terms
                                                                                            settling account
                                               Company
                                                                                          Prepaid        goods
High Hope Int’l Group Jiangsu Native         Non-related                    Within
                                                                   16,636                 payment, goods had
Produce Imp&Exp Corp. Ltd.                      party                        1 year
                                                                                          not been delivered
                                                                                          Prepaid        goods
Jiangsu Overseas Group International          Non-related                    Within
                                                                   14,305                 payment, goods had
Technology Engineer Co., Ltd.                   party                        1 year
                                                                                          not been delivered
Nantong      Construction            Group                                                Prepaid        goods
                                              Non-related                    Within
Joint-Stock Co., Ltd.                                              10,076                 payment, goods had
                                                party                        1 year
                                                                                          not been delivered
Shanghai Baosteel         Special     Metal                                               Prepaid        goods
                                              Non-related                    Within
Material Co., Ltd                                                   9,289                 payment, goods had
                                                party                        1 year
                                                                                          not been delivered
SUNLAY    (HONG                 KONG)                                                     Prepaid        goods
                                              Non-related                    Within
DEVELOPMENT                   TRADING                               7,400                 payment, goods had
                                                party                        1 year
LIMITED                                                                                   not been delivered
                  Total                                            57,706
(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
                                                          67
5-05 Dividend receivable
                                                                                              Whether
                               Increase   Decrease                                             related
                                                                        Reason for not
    Item         2010-12-31     in this    in this    2011-6-30                                account
                                                                          collecting
                                period     period                                            depreciated
                                                                                                or not
Dividend receivable with account age
within 1 year
Zhonglian
                                                                        Distributed in
Automobile
                          --   235,651          --         235,651     2011 and haven’t          Not
Electronic
                                                                         been paid yet
Co., Ltd.
                                                                        Distributed in
Bosch Diesel                                                            March of 2011
                          --   348,145    174,073          174,072                                Not
System                                                                     and paid
                                                                        un-completely
Wuxi Weifu
Fine                                                                     Distributed in
Machinery                                                              June of 2011 and
                          --     2,040          --           2,040                                Not
Manufacture                                                            haven’t been paid
Limited                                                                        yet
Liability
   Total                  --   585,836    174,073          411,763             --


5-06 Other accounts receivable
(1) Other accounts receivable disclosed according to category
                                                                        2011-6-30
                                               Book balance                           Bad debt Provision
               Category                                                                            Withdrawal
                                                             Proportion
                                           Amount                                   Amount         proportion
                                                                (%)
                                                                                                      (%)
Significant    single amount and
withdrawal     bad debt provision
single                                          2,000                17.52               2,000             100.00
Withdrawal bad debt provision
based on age combination                        7,014                61.45                   76              1.08
Including: significant single amount                  --                --                   --                --
       Minor single amount                      7,014                61.45                   76              1.08
Minor single amount but withdrawal
bad debt provision single                       2,400                21.03               2,400             100.00
                Total                          11,414            100.00                  4,476              39.21


               Category                                                2010-12-31


                                                     68
                                                Book balance                       Bad debt Provision
                                                                                                Withdrawal
                                                            Proportion
                                           Amount                                Amount         proportion
                                                               (%)
                                                                                                   (%)
Significant   single amount and
withdrawal    bad debt provision
single                                           2,000           17.57                 2,000            100.00
Withdrawal 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 withdrawal
bad debt provision single                        2,400           21.08                 2,400            100.00
                Total                           11,384          100.00                 4,492             39.46
 Explanation on categories of other accounts receivable:
 Other accounts receivable with amount in single item above RMB one 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
         Name of unit          2011-6-30       Time limit        of other             Remark
                                                                accounts
                                                             receivable (%)
                                                                                  Provision for bad
 Jiangsu Techniques      and
                                       2,000   Above 3                   17.52     debt had been
 Technology Center
                                                years                             withdrawn in full
 Nanjing Jinning Machinery                                                          No bad debt
                                        966    Within 6                   8.46
 Plant                                                                                provision
                                               months
                                                                                     withdrawal
                                               Above 3                            Provision for bad
 Nanjing University                     600                               5.26
                                                years                              debt had been
                                               Above 3                            Provision for bad
 Southeast University                   600                               5.26
                                                years                              debt had been
 Nanjing University of                         Above 3                            Provision for bad
                                        600                               5.26
 Science and Technology                         years                              debt had been
 Nanjing University       of                   Above 3                            Provision for bad
                                        600                               5.26
 Technology                                     years                              debt had been
 Total                                 5,366                             47.02

                                                    69
5-07 Inventories
(1) Classification for inventories
                                  2011-6-30                                    2010-12-31

   Item            Book          Provision for                   Book          Provision for
                                                 Book value                                  Book value
                  balance         devaluation                   balance         devaluation

Inventory
materials              243,398         59,135        184,263      230,607           59,437             171,170
Goods in
production             300,868             894       299,974      141,356              894             140,462
Inventory
goods                  468,887         60,543        408,344      666,605           60,543             606,062
Total              1,013,153          120,572        892,581    1,038,568          120,874             917,694

(2) Provision for depreciation of inventory price
    Inventory                               Increase in this     Decrease in this period
                          2010-12-31                                                                    2011-6-30
     category                                   period         Transfer-in       Transfer-out
 Inventory
 materials                        59,437                  --              --              302                    59,135
 Goods            in
 production                                               --              --                 --
                                     894                                                                           894
 Inventory
 goods
                                  60,543                  --              --                 --                  60,543
        Total                    120,874                  --              --              302                120,572

(3) Provision for inventory devaluation
                                                                Reason for               Proportion of
                                                                return and            charge-off amount
                                                              charge- offs of        in this period to the
                Basis for withdrawing provision for inventory
   Item                                                        provision for         period-end amount
                                 devaluation
                                                                 inventory           of inventory in this
                                                              devaluation in               item (%)
                                                                this period
Inventory Compared cost of inventory at period-end
                                                                                             0.12%
  goods with its net realizable value by single item
 Goods in comparison method and withdrew provision
                                                                                                  --
production for price drop according to the balance Charge-off
           between the net realizable value and cost. As mainly due to
           the country improved standard for vehicle the sales for
  Stock exhaust emission, the Company had external
                                                                                                  --
 products correspondingly withdrawn provision for
          devaluation for products and relevant raw
          materials failing to meet new standard.。


                                                         70
5-08 Other current assets
               Item                                2011-6-30                    2010-12-31
Receivable export tax rebates                                  16,412                        9,127
Others                                                             --                            84
Total                                                          16,412                          9,211


5-09 Investment in joint ventures and associated ventures
                                Type of    Registration legal person                  Nature of
           Investee
                               enterprise     place     representative                business
I. Joint venture
                                   Sino-foreign
Wuxi Weifu-Autocam          Fine                                                    Automotive
                                   joint equity         Wuxi       Gao Guoyuan
Machinery Co. LTD.                                                                  spare parts
                                     venture
                                   Sino-foreign
 Weifu           Environmental
                                   joint equity         Wuxi       Ou Jianbin       Catalyst
Protection Catalyst Co., Ltd.
                                     venture
II. Associated company
                                                                                    Accessories
                                                                                    and matching
                                   Sino-foreign
                                                                   BOHLER           parts      of
Bosch Diesel System                joint equity         Wuxi
                                                                   KLAUS            internal
                                     venture
                                                                                    combustion
                                                                                    engine
                                                                                    Accessories
                                                                                    and matching
Zhonglian            Automobile      Limited                                        parts      of
                                                     Shanghai      Chen Hong
Electronic Co., Ltd.                company                                         internal
                                                                                    combustion
                                                                                    engine
                                                                                    Accessories
                                                                                    and matching
Wuxi     Weifu     Precision
                                     Limited                                        parts      of
Machinery Manufacturing Co.,                            Wuxi       Chen Haojun
                                    company                                         internal
Ltd.
                                                                                    combustion
                                                                                    engine
                                     Limited                       Wang             Accessories
Wuxi ITM Engine Co., Ltd.                               Wuxi
                                    company                        Weiliang         and matching


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


                                                   71
 I. Joint venture
 Wuxi         Weifu-Autocam       Fine
 Machinery Co. LTD.                           US$1,000             50.00                  50.00           156,388
 Weifu       Environmental   Protection
 Catalyst Co., Ltd.                                 5,000          49.00                  49.00           694,777

 II. Associated company

 Bosch Diesel System                         US$20,000             31.50                  31.50          5,383,680
 Zhonglian     Automobile    Electronic
 Co., Ltd.                                       60,062            20.03                  20.03          2,725,060
 Wuxi Weifu Precision Machinery
 Manufacturing Co., Ltd.                            1,200          20.00                  20.00           250,370

 Wuxi ITM Engine Co., Ltd.                          1,000          40.00                  40.00             9,133


                                                                                       Total           Net profit
                                            Total value        Total value
                                                                                     operating           of this
                                           of liability at    of net assets
                                                                                    value of this       period
                 Investee                  period-end(in      at period-end
                                                                                     period(in             (in
                                             thousand         (in thousand
                                                                                     thousand          thousand
                                               yuan )             yuan )
                                                                                       yuan )            yuan )
I. Joint venture
Wuxi Weifu-Autocam                  Fine
Machinery Co. LTD.                                19,161              137,227             89,710          20,128
Weifu Environmental Protection
Catalyst Co., Ltd.                               331,307              363,470            566,321          55,856
II. Associated company
Bosch Diesel System                           2,459,517           2,924,163            3,001,751         530,458
Zhonglian Automobile Electronic
Co., Ltd.                                      1,236,118          1,488,942              113,761         420,842
Wuxi Weifu Precision Machinery
Manufacturing Co., Ltd.                          130,698              119,672            159,749          33,496
Wuxi ITM Engine Co., Ltd.                              96               9,037                     --         -350


5-10 Long-term equity investment
(1) Detail List of long-term equity investment
                       calculatin     Investmen       2010-12-3        Increase/                          Cash
     Investee                                                                          2011-6-30
                       g method         t cost            1            decrease                           bonus
  Wuxi
 Weifu-Autoca
 m         Fine          Equity            37,842            60,057        10,063           70,120                   --
 Machinery Co.
 LTD.
 Weifu                   Equity            24,500           150,731        26,001         176,732                    --

                                                             72
Environmental
Protection
Catalyst Co.,
Ltd.
Kunming
Xitong
                     Equity     5704       4,278       -4,278          --        --
Machinery
Co., Ltd.
 Subtotal    of
                                         215,066      31,786     246,852         --
joint ventures
Bosch Diesel
                     Equity             1,108,776    -181,051    927,725    348,145
System                        549,557
Zhonglian
Automobile
                     Equity              439,767     -151,482    288,285    235,651
Electronic Co.,
Ltd.                          120,124
Wuxi      Weifu
Precision
Machinery            Equity               18,788       4,659      23,447      2,040
Manufacturing
Co., Ltd.                       2,000
Wuxi         ITM
Engine        Co.,   Equity                3,775        -140       3,635         --
Ltd.                            4,000
Subtotal       of
associated
ventures                                1,571,106    -328,014   1,243,092   585,836

Guolian
Securities                     12,000     12,000           --     12,000          -
Co., Ltd.            Cost
                     Cost
Guangxi
Liufa   Co.,                    1,600      1,600           --      1,600         --
Ltd.
                     Cost
Financial
Compan y of
                                 800           800         --        800         --
Changchai
Co., Ltd.
                     Cost
H&J
Vanguard
                               33,000     33,000           --     33,000         --
Investment
Co., Ltd.


                                          73
                  Cost
Nanjing
Hengtai
Insurance                 1,000     1,000    --     1,000   --
Brokers Co.,
Ltd.
                  Cost
Jiangsu
Huifeng
Insurance                  500         500   --      500    --
Agency Co.,
Ltd.
                  Cost
Yangdong
                          2,356     2,356    --     2,356   --
Co., Ltd.
                  Cost
Henan Gushi
Weining Oil
Pump      &               2,033     2,033    --     2,033   --
Nozzle Co.,
Ltd. etc.
Yangdong Co.,     Cost
Ltd.(Weifu                 200         200   --      200    --
Jinning)
                  Cost
Wuxi
Venture
Capital                   3,000     3,000    --     3,000   --
Limited
Comp an y
Beijing Foton     Cost
Environmental
                         86,940    86,940    --    86,940   --
Engine    Co.,
Ltd.
Wuxi Xidong       Cost
Technological
                          5,000     5,000    --     5,000   --
Industry Park
Co., Ltd.
Shanghai IMS      Cost
Automotive
Electronic               10,000    10,000    --    10,000   --
System     Co.,
Ltd.
Subtotal    of                    158,429    --   158,429   --
other
investments

                                  74
Total      of                                 1,944,601    -296,228      1,648,373      585,836
long-term
equity
investment
                                                Explanation for
                                                 discrepancy                         Depreciatio
                                                                      Depreciatio
                                 Proportion        between                           n provision
                       Equity                                         n provision
    Investee                       of vote      equity-holding                       withdrawn
                      held (%)                                             at
                                  right (%)     proportion and                          in this
                                                                      period-end
                                                  vote right                           period
                                                  proportion

Guolian
Securities Co.,
Ltd.                      1.20         1.20           --                       --             --

Guangxi Liu fa
Co., Ltd.                 1.22         1.22           --                    1,600             --

Financial
Compan y   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             --

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             --

                                                75
 Wuxi Ventu re
 Capital Limited
 Comp an y                 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                                                                     52,489                 --


(2) No significant limited on the wired investment income of investee
(3) Commentary on long-term equity investment
 [Note 1] Kunming Xitong: In accordance with the equity transfer agreement signed between the
 Company and Kunming Jinlida Machinery Co., ltd. Twenty percent equity of Kunming Xitong held by
 Kunming Jinlida Machinery Co., ltd was agreed to transfer by the Company. Relevant changes for
 Industrial and Commerce have been completed on 12 May 2011. After equity transfer, the Company
 hold 70% equity of the company, then Kunming Xitong turns to be the controlling subsidiary of the
 Company.
 [Note 2] Bosch Diesel System – with register capital of US$ 0.2 billion while US$ 60 million invested
 from the Company, thirty percent in total register capital; US$ 3 million invested from Weifu Jinning,
 one point five percent of total register capital.


5-11 Investment real estate
                                  Book balance at   Increase in this    Decrease in        Book balance at
                                   period-begin         period          this period          period-end
 I. The original book value
      House and building                  24,381                   --                 --               24,381
 II. Accumulated
 depreciation
      House and building                  19,415                261                   --               19,676

 III. Book value of
 investment real estate
      House and building                    4,966               261                   --                4,705
Investment real estate of the Company calculated based on cost method. Totaled RMB 260,553.94
was withdrawal for depreciation in the period.



                                                    76
5-12 Fixed assets
(1) Particulars about fixed assets
                                                        Increase in this        Decrease in this
                                    2010-12-31                                                      2011-6-30
                                                            period                  period


 I. The original book value

 Include: buildings                       701,361                     250                      --         701,611
 General equipment                        164,859                    3,347                 1,604          166,602
 Special equipment                      1,033,811                  68,283                  9,285        1,092,809
 Transportation equipment                  23,286                    2,259                 3,641           21,904
 Other equipment                          206,116                  16,664                  8,456          214,324
 Original book value in total           2,129,433                  90,803                22,986         2,197,250

 II. Accumulated depreciation

 Include: buildings                       153,236                  10,642                      --         163,878
 General equipment                         95,546                    7,573                 1,257          101,862
 Special equipment                        527,714                  41,190                  5,668          563,236
 Transportation equipment                  15,981                    1,289                 3,141           14,129
 Other equipment                          120,555                    6,951                 7,477          120,029
 Accumulated depreciation in
 total                                    913,032                  67,645                17,543           963,134
 III. Provision for fixed assets
 devaluation
 Include: General equipment                20,414                     161                  1,305           19,270
 Special equipment                         77,318                          --                  --          77,318
 Transportation equipment                        134                       --                  --               134
 Other equipment                            8,467                          --                179            8,288
 Total provision for fixed assets
 devaluation                              106,333                     161                  1,484          105,010

 IV. Book value of fixed assets

 Include: buildings                       548,125                                                         537,733
 General equipment                         48,899                                                          45,470
 Special equipment                        428,779                                                         452,255
 Transportation equipment                   7,171                                                           7,641
 Other equipment                           77,094                                                          86,007
     Total book value of fixed
 assets                                 1,110,068                                                       1,129,106


The accumulated depreciation value increased RMB67,645,317.38 in this period, among which,
accumulated depreciation value of RMB 780,418.13 from Kunming Xitong at the beginning of
merger period was included, and depreciation value withdrawal in this period amounted to RMB
66,864,899.25.

Original fixed assets value in the period including RMB 2,523,557.78 original fixed assets value

                                                       77
from Kunming Xitong at begging of the merger. Construction in process transferred RMB
80,101,570.65 into original value of fixed assets; others were referring to purchase directly.

(2) No fixed assets rented by means of financing lease at period-end
(3)No pledged fixed assets at period-end
(4) Property right certificate of fixed assets that had not been received
                                       Original                                              Estimated time to
                                                        Reasons why property right
              Item                     value of                                             obtain property right
                                                      certificate had not been issued
                                     fixed assets                                                certificate
 Plants and office buildings              118,736
                                                        In the progress of fulfilling
 of Weifu Jinning
                                                          relevant property right                   2011
 Plants and office buildings               59,586
                                                                 formalities
 of Weifu Chang’an
 Plants       in        Huishan
 Development Zone of parent                32,450      Newly-built plant, and in the                2011
 company                                                    process of handling

5-13 Project in construction
(1)Specific projects
                                               2011-6-30                          2010-12-31
             Project               Book Depreciation Net book Book Depreciation                   Net
                                  balance provision   value balance provision                    book
Project of High Pressure
Common Rail                               --             --         --      500             --      500
R     &    D    of   WAPS;
productively promotion for
parts of diesel common rail
                                    79,329               --    79,329 33,326                --   33,326
   t
Project    of    Engineering        44,710               --    44,710 39,316                --   39,316
Construction project of Weifu
Industrial Zone                    163,719               -- 163,719          --             --          --

Miscellaneous Projects
                                    96,051           4,669     91,382 73,784            4,669    69,115
Total                              383,809           4,669 379,140 146,926              4,669 142,257

(2) Changes in significant projects in construction
                                                    Fixed assets
                                       Increase
                        Amount at                    converted      Amount at     Project        fund
        Project                         in this
                       period-begin                    in this      period-end    process      resource
                                        period
                                                       period
 Project    of
                                                                                             Self-raised
 High Pressure                  500            --             500            --    100%
                                                                                               funds
 Common Rail
 R & D of
 WAPS;                                                                                       Self-raised
                             33,326     48,371             2,368         79,329     13%
 productively                                                                                  funds
 promotion for

                                                      78
 parts of diesel
 common     rail
 system
 Project       of
                                                                                           Self-raised
  Engineering                39,316     7,891          2,497          44,710        72%
                                                                                             funds
  in stitution
 Construction
 project      of
                                                                                           Self-raised
 Weifu                           --   163,719             --         163,719        25%
                                                                                             funds
 Industrial
 Zone

       Total                 73,142   219,981          5,365         287,758
The aforesaid projects all contained no capitalized interest.

5-14 Intangible assets
(1) Particulars about intangible assets
                                                  Increase in         Decrease in
            Item                2010-12-31                                                2011-6-30
                                                  this period         this period

 I. Original book value
  Land use right of the
 parent company                        30,452                   --              --            30,452
   Permitted trademark use
 right of Weifu Jinning                26,356                   --              --            26,356
   Land use right of Weifu
 Jinning                               28,752                   --              --            28,752
 Software of Weifu Jinning                346                   --              --                346
  Land use right of Weifu
 Diesel System                         13,232                   --              --            13,232
  Software      of Weifu
                                        6,282                   --              --              6,282
 Diesel oil System
  Land use right of ITM
 Machinery                             17,136                   --              --            17,136
 Land use right of the
 WeifuTianli                           13,969                   --              --            13,969
 Non-patent technology of
 WeifuTianli                            2,640                   --              --              2,640
  Software of WeifuTianli                 861                   --              --                861
   Land use right of Weifu
 Jialin                                 1,172                   --              --              1,172
  Weifu Leader computer                      --            128                  --                128
  Total                               141,198              128                  --           141,326


                                                  79
II.         Accumulative
 Land use right of the
parent company                3,718         336     --    4,054
  Permitted trademark use
right of Weifu Jinning        9,709           --   --     9,709
  Land use right of Weifu
Jinning                      12,219         479    ---   12,698
Software of Weifu Jinning      346            --   --      346
Land use right of Weifu
Diesel oil System             1,807         141     --    1,948
 Software      of  Weifu
Diesel oil System             5,532         134     --    5,666
 Land use right of ITM
Machinery                     2,599         171     --    2,770
 Land use right of Weifu       227          164    --      391
Non-patent technology of
WeifuTianli                   2,327         209     --    2,536
 Software of WeifuTianli       278           82    --      360
  Land use right of Weifu      133           57    --      190
  Weifu Leader computer          --           7     --       7
  Total                      38,895        1,780   --    40,675
III. Devaluation provision
for intangible assets
Permitted trademark use
right of Weifu Jinning       16,647           --   --    16,647
IV. Book value of
intangible assets
  Land use right of the
parent company               26,734                      26,398
   Permitted     trademark
use right of Weifu Jinning       --                          --
  Land use right of Weifu
Jinning                      16,533                      16,054
Software of Weifu Jinning        --                          --
Land use right of Weifu
Diesel oil System            11,425                      11,284
 Software      of  Weifu
Diesel oil System              750                         616
 Land use right of ITM
Machinery                    14,537                      14,366
 Land use right of Weifu     13,742                      13,578
Non-patent technology of
WeifuTianli                    313                         104


                                      80
  Software of WeifuTianli                  583                                                 501
  Land use right of Weifu                 1,039                                                982
  Weifu Leader computer                        --                                              121
  Total                                  85,656                                             84,004

Increase amount of accumulated amortization at this period was the same as amortizing amount.

Commentary on intangible assets:
1. Permitted trademark use right of Weifu Jinning: referred the permitted trademark
use right of the original Weifu Group. At present, as the country had implemented new
emission standard and relevant products were hardly marketable, so provision for
book value was withdrawn in full amount in 2009.

5-15 Goodwill
                     Item                                 2011-6-30                  2010-12-31

   Weifu Tianli                                                        1,784                           1,784
Good will of Weifu Tianli: the Company combined Weifu Tianli by controlling with
capital increased. Exceed part from combination cost of the Company to fair value of
recognizable net assets of Weifu Tianli.

5-16 Deferred income tax assets
(1) Confirmed deferred income tax assets
                     Item                                 2011-6-30                  2010-12-31
   Provision for assets devaluation                                   40,434                          40,718
 Others                                                                4,526                           4,191
 Operating losses of subsidiaries                                      1,660                           1,400
 Subtotal                                                             46,620                          46,309


(2) Assets causing temporary difference or temporary difference of liabilities items
                   Item                              2011-6-30                 2010-12-31
Provision for bad debt                                           72,890                      72,762
Devaluation provision for inventory                           120,572                       120,874
Devaluation provision for fixed assets                        105,010                       106,333
Devaluation provision for projects in
construction                                                      4,669                       4,669
Devaluation provision for intangible assets                      16,647                      16,647
Operating losses of Weifu Schmitter                               6,643                       5,599
Others                                                           30,170                      27,939
                  Total                                       356,601                       354,823


(3) Specific deferred income tax assets unconfirmed
                  Item                        2011-6-30    2010-12-31                Note


                                                     81
                                                                            It would be difficult to list
 Deductible                temporary                                        expense before taxation in the
 difference--provision for bad debt             57,156          57,027      future as evidence required by
 (parent company)                                                           tax authority was difficult to
                                                                            obtain.
                                                                            There were uncertainties in the
 Deductible losses--ITM Machinery                16,642         17,742      potential of generating enough
                                                                            taxable income.
                      Total                      73,798         74,769


(4) The deductible losses of unconfirmed deferred income tax assets would fall due in
the year as follow
        Expire year             2011-6-30       2010-12-31                           Note
                                                                  Weifu ITM Machinery have un-recover
           2013                   16,642           17,742
                                                                            losses in 2008


5-17 Provision for assets devaluation
                                             Increase in       Decrease in this period
          Item                2010-12-31                                                       2011-6-30
                                             this period      Transfer-in      Transfer-out
Provision for bad
debt                                72,762           192                 --              64          72,890
Devaluation
provision             for
inventory                          120,874               --              --            302          120,572
Devaluation
provision             for
long-term
investment                          52,489               --              --              --          52,489
Devaluation
provision for fixed
assets                             106,333           161                 --          1,484          105,010
Devaluation
provision             for
projects               in
construction                         4,669               --              --              --            4,669
Devaluation
provision         for
intangible assets                   16,647               --              --              --          16,647
Total                              373,774           353                 --          1,850          372,277


5-18 Short-term loans


                                                    82
                Item                            2011-6-30                         2010-12-31
Credit loan                                                   505,000                          270,000



5-19 Notes payable
                 Type                                   2011-6-30                   2010-12-31
Bank acceptance bill                                              255,438                      309,986
Commercial acceptance bill                                                --                    80,000
Total                                                             255,438                      389,986


Commentary on notes payable:
For the purpose of issuing bank acceptance bill, guaranty deposits for notes payable at period-end
should sum up to RMB 115.38 million and pledged notes receivable should be worth RMB 96.95
million.


5-20 Accounts payable
(1) Account age of account payable
                 Item                             2011-6-30                        2010-12-31
Within 1 year                                                 1,268,497                    1,177,029
1 to 2 years                                                      2,483                          7,745
2 to 3 years                                                      8,495                          5,539
Above 3 years                                                     2,564                          4,740
                 Total                                        1,282,039                    1,195,053

(2) No accounts should pay for shareholders holding more than 5% (include 5%) vote
right share of the Company among accounts payable in this report period
(3) Accounts of other related parties among accounts payable in this report period
         Name of Unit                     Related relationship                 2011-6-30 2010-12-31
Wuxi      Weifu     Precision
Machinery Manufacturing Co.,              Affiliated enterprise                   17,723        32,123
Ltd.
Bosch Diesel System                       Affiliated enterprise                    5,623         5,623
Wuxi Weifu Environmental
                                              Joint-venture                       65,131        17,532
Protection Catalyst Co., Ltd.
Weifu     Autocam      Precision
Machinery Co., Ltd.                           Joint-venture                        1,307          205

Total                                                                             89,784        55,483


(4) Commentary on huge accounts payable with account age above one year
 There was no huge account payable with account age above one year.

5-21 Account received in advance

                                                   83
(1) Account age of account received in advance
                  Item                            2011-6-30                           2010-12-31
Within 1 year                                                      56,034                               32,915
1 to 2 years                                                        1,695                                5,058
2 to 3 years                                                        2,508                                2,339
Above 3 years                                                       2,130                                1,960
                  Total                                            62,367                               42,272


(2) No accounts of shareholders (units) holding more than 5% (include 5%) vote right
share of the Company among other accounts received in advance in this report period.
(3) Accounts of other related unites among accounts received in advance in this report
period
          Name of Unit           Related relationship                2011-6-30        2010-12-31
Kunming Xitong Machinery Co., Controlling subsidiary of the
                                Company at period-end                            --         9,067
Ltd.
Weifu    Precision    Machinery
                                      Associated enterprise                      --           319
Manufacturing Co., Ltd.



Commentary on huge accounts received in advance with account age above one year:
There were no huge accounts received in advance with account age exceeding one
year.

5-22 Employees’ wage payable
                                                  Increase in        Decrease in
               Item                2010-12-31                                          2011-6-30
                                                  this period        this period
I. Salary, bonus, allowance and
subsidy                                164,242        190,508               165,192       189,558
II. Employees’ welfare                     --         16,486                16,486                --
III. Social insurance                   37,355         51,888                50,674         38,569
IV. Housing       Fund    Social
Insurance                                3,446         15,785                15,791          3,440
V. Housing       allowance   for
employees                               28,202                --                 2          28,200
VI. Labor union expenditure
and    Personnel  education
expenditure                             15,326           3,727                3,416         15,637
VII. Others                             21,181            176                   13          21,344
               Total                   269,752        278,570               251,574       296,748
No payment of arrears among employees' salary payable.
Arrangements about the estimated distribution time and amount, etc. for employees'
salary payable
The reward fund withdrawn by parent company according to resolutions of

                                                 84
Shareholders’ General Meeting was contained in salary, bonus, allowance and
subsidy. The Company withdrew RMB 10.50 million in 2008, RMB 22 million in
2009, RMB 73 million in 2010 respectively for the reward fund in conformity with
the arrangement of the Board of Directors.

5-23 Taxes payable
                       Item                            2011-6-30                     2010-12-31
Value-added tax                                                       5,523                          7,490
Tax for city construction                                             1,209                          1,197
Enterprise income tax                                                39,040                         92,570
Extras of education expense                                            769                            684
Individual income tax                                                  757                           1,491
Others                                                                3,822                          4,472
Total                                                                51,120                     107,904


5-24Dividend payable
               Item                      2011-6-30                            2010-12-31
Minority shareholders’
   dividend of Weifu Diesel
   System                                                     --                            3,406
Minority shareholders’
dividend of Weifu
International Trade                                           --                               59
Minority shareholders’
dividend of Weifu Tianli                                      --                           15,232
Dividend payable for parent
company                                                 246,765                                --
Total                                                   246,765                            18,697


5-25 Other accounts payable
(1) Account age of other account payable
               Item                      2011-6-30                            2010-12-31
Within 1 year                                            67,394                            50,119
1 to 2 years                                              2,279                             3,420
2 to 3 years                                              2,415                             3,629
Above 3 years                                             7,111                             5,334
               Total                                     79,199                            62,502

(2) No accounts of shareholders (units) holding more than 5% (include 5%) vote right
share of the Company among other accounts payable in this report period.
(3) Commentary on other accounts payable with account age exceeding one year:
                         Item                            2011-6-30                    Remark
Nanjing Electromechanical Industry (Group) Co.,                    4,500          Current accounts

                                                  85
5-26 Long-term loans
(1) Classification of long-term loans
                 Item                          2011-6-30                  2010-12-31
Credit loan                                                 3,000                        3,000


(2) The top five long- term loans in term of amount
                  Taking-effect date Expiration date of          Interest
    Creditor                                            Currency          2011-6-30 2010-12-31
                     of the loan         the loan                  rate
Jiangsu
International
Trust                   2009-11-27     2012-5-27        RMB      0.3%     3,000        3,000
Corporation
Limited


Commentary on long-term loan:
According to Loan Contract signed with Jiangsu International Trust Corporation Limited, Weifu
Jinning borrowed RMB 3 million for the project "Industrialization of Electricity-controlled
High-pressure VE Jetting Pump System of Low-emission Diesel Engine".


5-27 Long-term accounts payable
                                               Item                 2011-6-30          2010-12-31
Nanjing Finance Bureau Hi-tech       Financial supporting fund
                                                                          1,710                   1,710
Branch [Note 1]                            (year 2004)
Nanjing Finance Bureau Hi-tech       Financial supporting fund
                                                                          1,140                   1,140
Branch [Note 2]                            (year 2005)
Nanjing Finance Bureau Hi-tech       Financial supporting fund
                                                                          1,250                   1,250
Branch [Note 3]                            (year 2006)
Nanjing Finance Bureau Hi-tech       Financial supporting fund
                                                                          1,230                   1,230
Branch [Note 4]                            (year 2007)

Loan transferred from treasury
                                                                          5,600                   5,600
bond[Note 5]
Nanjing Finance Bureau Hi-tech       Financial supporting fund
                                                                          2,750                   2,750
Branch [Note 6]                            (year 2008)
Nanjing Finance Bureau Hi-tech       Financial supporting fund
                                                                          1,030                   1,030
Branch [Note 7]                            (year 2009)
Nanjing Finance Bureau Hi-tech       Financial supporting fund
                                                                            960                     960
Branch [Note 8]                            (year 2010)
                Total                                                    15,670                  15,670


 [Note 1] To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development
 Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for

                                                   86
 supporting use, the term is from August 5, 2004 to August 4, 2012. Provided that the operation period in
 the zone is less than 15 years, financial supporting capital will be reimbursed.
 [Note 2] To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development
 Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for
 supporting use, the term is from Oct. 20, 2005 to Oct. 20, 2020. Provided that the operation period in the
 zone is less than 15 years, financial supporting capital will be reimbursed.
 [Note 3] To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development
 Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for
 supporting use, the term is from Jul. 20, 2006 to Jul. 20, 2021. Provided that the operation period in the
 zone is less than 15 years, financial supporting capital will be reimbursed.
 [Note 4] To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development
 Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for
 supporting use, the term is from Sep. 17, 2007 to Sep. 17, 2022. Provided that the operation period in the
 zone is less than 15 years, financial supporting capital will be reimbursed.
 [Note 5] National debt transferred to loan: is the transferred national debt capital received by Weifu
 Jinning in 2007.
 [Note 6] To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development
 Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for
 supporting use, the term is from Nov. 10, 2008 to Nov. 10, 2023. Provided that the operation period in
 the zone is less than 15 years, financial supporting capital will be reimbursed.
 [Note 7] To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development
 Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for
 supporting use, the term is from Oct. 27, 2009 to Oct. 27, 2024. Provided that the operation period in the
 zone is less than 15 years, financial supporting capital will be reimbursed.
 [Note 8] To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development
 Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for
 supporting use, the term is from Dec. 27, 2010 to Dec. 27, 2025. Provided that the operation period in
 the zone is less than 15 years, financial supporting capital will be reimbursed.


5-28Deferred income tax liability
(1) Recognized deferred income tax liability
                     Item                               2011-6-30                      2010-12-31
  The evaluation of Weifu Tianli appreciated               2,720                         2,801


(2) Corresponding temporary difference arising from assets or liabilities
                   Item                            2011-6-30                   2010-12-31
The evaluation of Weifu Tianli appreciated                     18,132                       18,673


5-29 Other non-current liabilities
                          Item                                       2011-6-30              2010-12-31
Appropriation on industrialization project of electrical
control and high voltage jet VE system of low emissions
diesel                                                                        11,125                 11,125
                         Others                                                3,980                  2,225
                            Total                                             15,105                 13,350

Explanation on other non-current liabilities, including various obtained government
subsidies and end amounts related to assets and incomes in this period:

                                                   87
1. Appropriation on industrialization project of electrical control and high voltage jet VE
system of low emissions diesel: in Sep of 2009, Weifu Jinning signed “Project Contract of
Technology Outcome Transferring Special Capital in Jiangsu Province” with Nanjing
Technical Bureau, according to which Weifu Jinning received appropriation RMB 6.35
million in 2009, and RMB 4.775 million received in 2010. According to the contract, the
attendance date of this project was: from October of 2009 to March of 2012. This contract
agreed 62% of newly increased investment in project would be spent in fixed assets
investment.


5-30 Share capital
(1) Change of share capital in the report period
                                           Increase and decrease in the period(+, 一)
                                   New                    Capitalized
                     2010-12-31                Bonus                                                   2011-6-30
                                  issued                    surplus        Others        Subtotal
                                               issue
                                   share                   reserves
Restricted
                        100,075                                                                          71,708
equity                                 --          --              --      -28,367        -28,367
-Domestic legal
                        100,022                                                                          71,658
person shares                          --          --              --      -28,364        -28,364
Shares by senior
                            53                                                                                  50
executors                              --          --              --           -3                -3
Circulating
                        467,201                                                                         495,568
share capital                          --          --              --       28,367            28,367
Circulating
share capital (A        352,281                                                                         380,648
Shares)                                --          --              --       28,367            28,367
Circulating
share capital (B        114,920                                                                         114,920
Shares)                                --          --              --               --            --
     Total              567,276        --          --              --               --            --    567,276


(2) Explanation on relevant particulars of share capitals
Wuxi Industry Group was the first largest shareholder of the Company with
100,021,999 shares held, which accounting 17.63% of total share capital of the
Company.


5-31 Capital reserve
                                                    Increase in the        Decrease in
             Items            2010-12-31                                                            2011-6-30
                                                        period             the period
Other capital reserve                19,083                           --                 --                19,083
Capital premium                     876,835                           --                 --               876,835
         Total                      895,918                           --                 --               895,918


                                                     88
 5-32 Surplus public reserve
                                                    Increase in the             Decrease in the
           Items                 2010-12-31                                                                 2011-6-30
                                                        period                      period
 Statutory surplus
 public reserve                       283,638                         --                       --                283,638


 5-33 Retained profit
                          Item                          2011-6-30                  2010-12-31
 Pre-adjustment undistributed profit of the end
 of last year                                                2,359,376                  1,104,176
 Adjusting total amount of undistributed profit
 of beginning of the year (increase+, decrease-)                           --                       --
 Post-adjustment undistributed profit at the
 beginning of the year                                       2,359,376                  1,104,176
 Add: profit attributable to owners of parent
     company in this period                                   644,664                   1,340,291
 Subtract: extract statutory surplus public
 reserve                                                                   --                       --
 Payable cash dividend                                        246,765                       85,091
 Retained profit in the period-end                           2,757,275                  2,359,376


 Explanation on distributing profit:
 According to preplan of profit distribution of 2010 issued by the Board of Directors in
 March 2011, the general meeting of shareholders of 2010 decided that the Company
 would distribute cash dividend RMB 4.35 (tax included) per 10 shares based on share
 capital on Dec 31st of 2010, total distributed share capital of common stock was RMB
 246,765,057.83.

 5-34 Operating income, operating cost
 (1) Operating income, operating cost
                   Item                         January – June 2011                  January – June 2010
Income arising from main business                             2,991,207                                  2,436,213
Income from other business                                      286,353                                   214,474
Total business income                                         3,277,560                                  2,650,687
operating cost                                                2,426,222                                  2,093,056


 (2) Main business (Sub-sectors)
                                      January – June 2011                         January – June 2010
         Sectors                  Operating                                     Operating
                                                   Operating cost                               Operating cost
                                   income                                        income
Vehicle components                    2,991,207          2,151,734                 2,436,213              1,884,995



                                                       89
 (3) Main business (Sub-products)
                                       January – June 2011                    January – June 2010
          Products                 Operating                                Operating
                                                   Operating cost                            Operating cost
                                    income                                   income
Fuel injection system                  2,446,636           1,705,544           2,080,217           1,580,404
Intake system                             77,887                45,748              11,335             8,937
Tail treatment system                    466,684               400,442             344,661           295,654
Total                                  2,991,207           2,151,734           2,436,213           1,884,995


 (4) Main business (Sub-region)
                                   January – June 2011                       January – June 2010
        Region
                        Operating income       Operating cost       Operating income         Operating cost
Domestic sales                    2,869,301           2,032,796              2,344,187             1,798,640
Overseas sales                     121,906                118,938                  92,026             86,355
Total                             2,991,207           2,151,734              2,436,213             1,884,995


 (5) Particulars of operating income of top five clients of the Company
                                                                                         Proportion in
                        Clients                           Operating income
                                                                                     operating income (%)
Weichai Power (Weifang) spare resources Co.,
Ltd                                                                      427,093                      13.03
Dongfeng Cummins Engine Co., Ltd.                                        285,097                       8.70
Bosch Diesel Systems                                                     213,933                       6.53
Jiangling Motor Co., Ltd.                                                193,006                       5.89
FAW Jiefang Automatic Co., Ltd. Wuxi Diesel
Engine Plant                                                             143,126                       4.37
                          Total                                     1,262,255                         38.52


 5-35busines tax and extra
                            Item                                 January – June 2011         January – June 2010
Urban maintenance and construction tax                                             10,709                      10,352
Educational surcharge                                                               7,205                       5,930
Business tax                                                                          507                         10
Total                                                                              18,421                      16,292


 5-36 sales expense
                            Item                                 January – June 2011         January – June 2010
 Salary and expense related to salary                                              12,051                      11,211
 Consumption of office materials and business                                       4,240                       2,991
 Transportation                                                                     7,632                       5,429
 Warehouse                                                                          3,854                       1,874


                                                          90
Three-guarantee                                                      17,324                         35,096
Other                                                                    5,409                      18,655
                         Total                                       50,510                         75,256


5-37 Administrative expense
                         Item                          January – June 2011       January – June 2010
Salary and expense related to salary                                 81,613                        103,094
Depreciation expense and long-term assets amortized                  14,363                         13,193
Consumption of office materials and business                         12,973                         11,798
Taxes                                                                    6,378                       5,978
Other                                                               173,760                        157,244
                         Total                                      289,087                        291,307


5-38 Financial expense
                              Item                     January – June 2011       January – June 2010
Interest expense                                                     16,540                         20,200
Interest expense of notes discounted                                     5,238                       3,114
Interest expense of deposit                                              -3,245                     -3,975
Exchange gains and losses                                                1,342                      -2,252
Commission expense                                                         395                        352
                         Total                                       20,270                         17,439


5-39 Losses from impairment of assets
                          Item                         January – June 2011        January – June 2010
Bad debt losses                                                            193                       2,309
Loss on depreciation of inventories                                       -302                      -4,230
Impairment losses on fixed assets                                          161                      -7,303
                         Total                                              52                      -9,224

5-40 Investment income
(1) Details situation of investment income
                       Item                       January – June 2011      January – June 2010
Long term equity investment income of cost
accounting method                                                   --                    1,810
Long term equity investment income of equity
accounting method                                             293,611                   200,108
                       Total                                  293,611                   201,918


(2) Long term equity investment income of equity accounting method (Top 5)
                   Invested units                 January – June 2011     January – June 2010
Bosch Diesel Systems                                          167,094                   116,047


                                                 91
Zhonglian Automotive Electronic Co., Ltd.                           84,169                    48,000
Weifu Environmental Protection Catalyst Co.,                        26,001                    24,287
Ltd.
Weifu Autocam Precision Machinery Co., Ltd.                         10,064                     8,606
Weifu Precision Machinery Manufacturing Co.,                         6,699                     3,091
Ltd.
                        Total                                      294,027                   200,031


(3) Explanation on investment income
There was no significant restriction on investment income of the Company.

5-41 Non-operating income
(1) Details of non-operating income
                        Item                             January – June 2011          January – June 2010
 Net income from disposal of fixed assets                                4,125                           640
 Government grants                                                       1,815                                --
 Others                                                                      104                          33
 The difference between owned interest and
 consolidated costs with different control                               1,241                                --
                        Total                                            7,285                           673

(2) Details of government grants:
          Item              January – June 2011                                Note
 Funds            for                               Technology, North District, Ningbo City [2011] No.
                                            1,030
 technology projects                                13
 Other                                        785
 Total                                      1,815


Relevant explanation on non-operating income:
The difference between owned interest and consolidated costs with different control: income
arising from equity transfer of Kunming Xitong in 2011.

5-42 Non-operating expense
                        Item                             January – June 2011          January – June 2010
 Net loss from disposal of fixed assets                                      503                       3,956
 Donation expenditure                                                           --                       200
 Flood protection Security Fund ect                                      3,533                         3,051
 Other expense                                                               161                         397
                        Total                                            4,197                         7,604

5-43 Income tax expense
                        Item                             January – June 2011          January – June 2010

                                                    92
 Income tax payable                                                    95,737                        24,108
 Increased assets from deferred income tax                               -311                          948
 Increased of deferred income tax liability                               -81
 Income tax expense                                                    95,345                        25,056

5-44 Calculation of basic earnings per share and diluted earnings per share
Basic earnings per share =P0÷S
S= S0+S1+Si×Mi÷M0– Sj×Mj÷M0-Sk
Among which: P0 is the net profit attributable to the shareholders of ordinary shares of
the Company or the net profit attributable to the shareholders of ordinary shares after
the deduction of non-recurring gains and losses; S is the weighted average number of
ordinary shares outstanding; S0 is the total number of shares at the beginning of the
period; S1 is the number of increased shares due to reserve’s conversion into share
capital or distribution of dividends in the reporting period; Si is the number of
increased shares due to issue of new shares or debt-to-equity in the reporting period;
Sj is the number of decreased shares due to repurchase in the reporting period; Sk is
the number of contraction of shares in the reporting period; M0 is the number of
months in the reporting period; Mi is the number of accumulated months from the
next month of shares increase to the end of the reporting period; Mj is the number of
accumulated months from the next month of shares decrease to the end of the
reporting period.
Diluted earnings per share=P1/(S0 +S1 +Si×Mi÷M0–Sj×Mj÷M0–Sk+ The weighted
average number of ordinary shares increased due to call warrants, share options and
convertible bonds etc.)
Among which, P1 is the net profit attributable to the shareholders of ordinary shares of
the Company or the net profit attributable to the shareholders of ordinary shares after
the deduction of non-recurring gains and losses, as adjusted according to Enterprise
Accounting Standards and relevant regulations after the effect of diluted potential
ordinary shares is taken into account. In the calculation of diluted earnings per share,
the Company shall taken the effect of all diluted potential ordinary shares on the net
profit attributable to the shareholders of ordinary shares of the Company or the net
profit attributable to the shareholders of ordinary shares after the deduction of
non-recurring gains and losses and the weighted average number of shares and into
account of the diluted earnings per share according to the extent of dilution in
sequence until the diluted earnings per share reaches the minimum.

5-45 Notes of cash flow statement
(1) Tax returned received
               Item                           January – June 2011      January – June 2010
Export tax refund received by
                                                             12,117                       8,783
Weifu International Trade

(2) Received other cash related to operating activities
               Item                     January – June 2011             January – June 2010
Interest income on bank deposits                               3,245                       3,975
Government subsidy                                             3,800                            --
Others                                                         6,306                       4,615

                                                    93
                 Total                                         13,351                                  8,590


(3) Other cash paid related to operating activities
                Item                     January – June 2011                   January – June 2010
Operating expense for cash                                     45,264                                 23,468
Management expense for cash                                    67,518                                 67,280
Others                                                              2,299                              2,420
                 Total                                        115,081                                 93,168


5-46 Additional information of consolidated cash flow statement
(1) Additional information of consolidated cash flow statement
                                                                            January – June         January – June
                                 Item
                                                                                2011                    2010
 1. Net profit subject to cash flow arising from operating
 activities
 Net profit                                                                         674,352                 336,493
 Add: Provision for assets devaluation                                                    52                   -9,224
 Depreciation of fixed assets, oil and gas assets, and productive
 biological assets                                                                   66,865                    66,859
 Amortization of intangible assets                                                      1,780                   1,710
 Allocations of long-term expenses to be amortized                                       963                     467
 Losses from disposal of fixed, intangible and other long-term
 assets                                                                               -3,621                    3,316
 Losses from obsolete fixed assets                                                            --                   --
 Losses from changes of fair value                                                            --                   --
 Financial expenses                                                                  10,795                    15,614
 Losses from investment                                                            -293,611                -201,918
 Decrease of deferred income tax                                                         -311                    948
 Increase of deferred income tax                                                          -81                      --
 Decrease of inventory                                                               61,219                 -45,042
 Decrease of operating receivables                                                 -465,429                -766,802
 Increase of operating payables                                                          830                583,644
 Net cash generated from operations                                                  53,803                 -13,935
 2. Net increase in cash /cash equivalent
 Balance of cash at period-end                                                      534,629                 358,592
 Less: Balance of cash at period-beginning                                          465,220                 327,527
 Add: Balance of cash equivalent at period-end
 Less: Balance of cash equivalent at period-beginning
 Net increase in cash /cash equivalent                                               69,409                    31,065

(2) The composition of cash and cash equivalents
                           Item                                     2011-6-30                      2010-12-31
 I. Cash
 Including: cash in treasury                                                      605                            544

                                                    94
      Bank deposit for payment at any time                                   534,024                       450,166
      Other monetary capital for pay at any time                                      --                     14,510
 II. Cash equivalents
 Including: investment on bonds due in 3 months
 III. Balance of cash and cash equivalents in period-end                     534,629                       465,220


Note 6: Related party relationships and related transactions (Amount unit:
RMB’000)
6-01 Particulars about parent company of the Company
  Parent      Related                                            Legal
                                Business    Registratio                         Nature of        Registere
 compan     relationship                                     representativ
                                 type         n area                            business         d capital
    y             s                                                e
                                                                                Operation
                            State-owne
  Wuxi           Parent                                          Jiang               of
                                 d               Wuxi                                           3,239,202
 Industry       company                                         Guoxiong        state-owne
                            exclusively
  Group                                                                           d assets

                      Parent
                                        Proportion of
                    company's
   Parent                             parent company’s          Ultimate controlling       Organization
                   shareholding
  company                              voting rights of         party of the enterprise        code
                    ratio of the
                                      the company (%)
                   Company (%)
                                                                 Wuxi State-owned
Wuxi                                                            Assets Supervision &
Industry                17.63              17.63                  Administration             13600265-4
Group                                                           Commission of State
                                                                       Council
                           Explanation on particulars of parent company
Wuxi Industry Group was solely state-owned enterprise funded and established by Wuxi
Municipal People’s Government which mainly took responsibility of authorizing the
state-owned assets operation within a certain areas, investment management of significant
project, investment and development of manufacturing and services and venture capital in
high-tech achievement transformation.


6-02 Particulars of subsidiaries of the Company
   Full name of   Subsidiary   Enterprise Registration                   Legal              Nature of
   subsidiaries      type         type       area                    representative         business
                      Holding          Limited                           Wang
Weifu Jinning                                           Nanjing                            Engine parts
                     subsidiary       company                           Weiliang
                      Holding                                                              Automobile
                     subsidiary        Limited                           Wang               exhaust
Weifu Leader                                             Wuxi
                                      company                           Weiliang            purifier,
                                                                                            muffler
                        Wholly         Limited
Weifu Mashan                                             Wuxi        Gao Guoyuan           Engine parts
                        owned         company


                                                    95
                      subsidiary
                       Wholly
                                       Limited                         Han
Weifu Changan           owned                           Wuxi                        Engine parts
                                      company                       Jiangming
                      subsidiary
                       Holding         Limited                                        Metallic
Weifu Jida                                              Wuxi       Xu Liangfei
                      subsidiary      company                                       Nanoparticles
                       Holding         Limited
Weifu Nano                                              Wuxi       Xu Liangfei     Nano materials
                      subsidiary      company
                       Wholly
Weifu  Diesel                          Limited                        Wang
                        owned                           Wuxi                        Engine parts
System                                company                        Weiliang
                      subsidiary
Weifu                  Wholly
                                       Limited                                      International
International           owned                           Wuxi       Gao Guoyuan
                                      company                                           trade
Trade                 subsidiary
                       Wholly                                                       Engine parts
                                       Limited                        Wang
Weifu ITM               owned                           Wuxi
                                      company                        Weiliang
                      subsidiary
Weifu                  Holding         Limited                        Wang          Engine parts
                                                        Wuxi
Schmitter             subsidiary      company                        Weiliang
                       Holding         Limited                        Wang          Engine parts
 Weifu Tianli                                          Ningbo
                      subsidiary      company                        Weiliang
                       Holding         Limited                                      Engine parts
  Weifu Jialin                                     Chaoyang        Miao Yuming
                      subsidiary      company
                       Holding         Limited                        Wang          Engine parts
 Weifu Tianshi                                     Quanjiao
                      subsidiary      company                        Weiliang
   Kunming             Holding         Limited                                      Engine parts
                                                   Kunming         Chen Xuejun
    Xitong            subsidiary      company


  Full name of          Registered      Equity ratio        Voting rights
                                                                                Organization code
  subsidiaries           capital           (%)               ratio (%)
Weifu Jinning               346,287        80.00                80.00             13497754-6
Weifu Leader                260,000        94.81                94.81             13600159-8
Weifu Mashan                 45,000       100.00                100.00            13625011-3
Weifu Changan                60,000       100.00                100.00            70354868-9
Weifu Jida                    5,000        70.00                70.00             72223147-6
Weifu Nano                   30,000        80.00                80.00             74066428-3
Weifu        Diesel
System                      300,000       100.00                100.00            76418029-1
Weifu
International
Trade                        30,000       100.00                100.00            76103151-4
Weifu ITM                   160,000       100.00                100.00            72418270-0
Weifu Schmitter              18,000        45.00                45.00             69449050-9

                                                       96
   Weifu Tianli             104,690        51.00              51.00              73424810-1
   Weifu Jialin                  8,000     51.00              51.00              78877120-5
  Weifu Tianshi                 10,000     52.00              52.00              57301523-4
 Kunming Xitong                  4,000     70.00              70.00              77554741-5


6-03 Particulars of other related parties of this enterprise
                                         Relationship between other related parties         Organization
       Name of other related parties
                                                      and the Company                          code
 Weifu Autocam Precision Machinery
                                                        Joint Venture                       77540714-8
 Co., Ltd.
 Weifu Environmental Protection Catalyst
                                               Joint Venture of Weifu Leader                75969849-1
 Co., Ltd.
 Bosch Diesel Systems                              Associated companies                     60791796-6
 Weifu       Precision            Machinery
                                                        Associated companies                73944370-7
 Manufacturing Co., Ltd.
 Wuxi ITM Engine Co., Ltd.                     Associated company of ITM Machinery          77540703-3
6-04 Particulars of related transactions
(1) Related transactions of purchasing goods, providing and accepting service
Related detailed situation of goods purchasing of the Company from related party was
as follows:
                                                   January – June 2011           January – June 2010
                                                              Proportion in                    Proportion
                                                                amount of                     in amount of
                  Enterprises
                                                Amounts          similar         Amounts         similar
                                                               transaction                     transaction
                                                                   (%)                             (%)
 Weifu       Precision             Machinery        79,087                4.02     60,920            3.73
 Manufacturing Co., Ltd.
 Bosch Diesel Systems                              158,645                8.06    143,986            8.82
 Weifu Trade Co., Ltd.                                   --                 --      1,021            0.06
 Weifu Environmental Protection Catalyst           296,748            15.08       227,382           13.93
 Co., Ltd.
 Wuxi Longsheng Technology Co., Ltd.                     --                 --     16,451            1.01
 Weifu Autocam Precision Machinery Co.,              7,082                0.36         37           0.002
 Ltd Jialin
 Weifu                                                   --                            20           0.001
                                                                            --
 Wuxi ITM Engine Co., Ltd.                               --                 --        415            0.03
 Kunming Xitong[Note]                                   863        0.04         2,682                0.16
[Note] Kunming Xitong consolidated into the range of consolidation since May of 2011,
related purchasing from January 2011 to April 2011 amounting to RMB 0.8627 million.

Related detailed situation of goods selling of the Company from related party was as
follows:
                   Enterprises                       January&nbs