Year 2011 witnesses the 60th anniversary of China’s aviation industry. It also witnesses the third-time inclusion of Aviation Industry Corporation of China (“AVIC”) in the worldwide Fortune 500, ranked 310th. During the past 60 years, the PRC’s aviation industry has been evolving from a “have-not” stage to a “have” stage, from a small industry to a large industry, and from a weak industry to a strong industry. AviChina, as a complete-value-chain flagship manufacturer of civil aviation products in China, will benefit from the development of China’s aviation industry.

 

During the Period, the aviation business of the Group recorded a sales revenue of RMB5,797 million, representing increases of 52.63% compared to the corresponding period in 2010. Profit for the Period and earnings per share from the aviation business amounted to RMB414 million and RMB0.043 respectively, representing year-on-year increases of 20% and 19.44% respectively.

 

During the first half of 2011, the Company continued to push ahead its assets re-organisation work, having completed the disposal of the automobile engine business and the reorganization of the aviation electronics business, thereby forming an assets chain composed of purely aviation manufacturing. AVIC Avionics, a subsidiary of AviChina, has completed the assets handover and equity transfer of 6 aviation electronics companies that it had newly acquired, thereby expanding the portfolio of the Company’s aviation products and optimizing the assets structure of its aviation business. The Company has also become the first batch of pilot H-share companies approved by the State-owned Assets Supervision and Administration Commission to launch a restricted share incentive scheme, which will be a powerful motivation for senior management staff and key talents to perform to their best, helping the Company on its strategic and continued development.

 

During the first half of 2011, AviChina has scored achievements and progress on quite a number of projects. A contract has been concluded with CATIC to export 30 helicopters of the Z9 series, to be delivered from 2011-2015. Agreements have been signed with Airbus to manufacture composite materials, aiming to gradually raise the production quantity of rudders of A320. The simulator of L15, the company’s newly developed advanced trainer, was exhibited at the Paris Aero Show, giving a strong boost to the Company’s overseas business development. The installation of the new equipment and systems for the agri-forestry aircraft was proceeding; the trial voyage for ten K8 exported aircraft manufactured by Hongdu Aviation was completed with satisfaction; and various contract manufacturing projects proceeded smoothly. Several subsidiary companies of AviChina actively participated in the large commercial aircraft (C919) project, and were selected as suppliers of components.

 

In the second half of 2011, the Company will further enhance its profitability, continuing to expand and improve its assets chain in the aviation business. It will also aim to strengthen its market capitalization management, enhancing investor confidence through carrying out fine corporate governance with a high degree of transparency, and rewarding shareholders with good, concrete performance.