Basic Information of the Company H Listing stock exchange: The Stock Exchange of Hong Kong Limi

2014 ANNUAL REPORT

Basic Information of the Company 00161 www.avic161.com 25 20 2001 2006 H 183 17 1712 1716 Listing stock exchange: The Stock Exchange of Hong Kong Limited Stock short name: AVIC IHL Stock Code: 00161 Website: www.avic161.com EXECUTIVE DIRECTORS Mr. Wu Guang Quan, chairman Mr. You Lei, vice chairman Mr. Lai Wei Xuan (appointed on 6 June 2014) Mr. Pan Lin Wu Mr. Chen Hong Liang Mr. Liu Jun INDEPENDENT NON-EXECUTIVE DIRECTORS Ms. Wong Wai Ling Mr. Wu Wei Mr. Wei Wei (appointed on 30 December 2014) Mr. Zhang Ping (resigned on 30 December 2014) SUPERVISORS Mr. Cao Jiang, chairman (appointed on 30 December 2014) Ms. Wang Xin Mr. Deng Bo Song Mr. Huang Bin (resigned on 30 December 2014) COMPANY SECRETARY Mr. Huang Yong Feng AUDIT COMMITTEE Ms. Wong Wai Ling, chairman Mr. Wu Wei Mr. Wei Wei (appointed on 30 December 2014) Mr. Zhang Ping (resigned on 30 December 2014) REMUNERATION COMMITTEE Mr. Wei Wei, chairman (appointed on 30 December 2014) Mr. Wu Guang Quan Mr. Chen Hong Liang Ms. Wong Wai Ling Mr. Wu Wei Mr. Zhang Ping (resigned on 30 December 2014) NOMINATION COMMITTEE Mr. Wu Wei, chairman Mr. Wu Guang Quan Mr. Chen Hong Liang Ms. Wong Wai Ling Mr. Wei Wei (appointed on 30 December 2014) Mr. Zhang Ping (resigned on 30 December 2014) LEGAL ADDRESS OF THE COMPANY Level 25, Hangdu Building, Catic Zone, Shennan Road Central, Futian Dist., Shenzhen, China PRINCIPAL PLACE OF BUSINESS IN HONG KONG Suites 2001-2006, 20/F, Jardine House, 1 Connaught Place, Central, Hong Kong STOCK-H SHARE REGISTRAR (FOR STOCK TRANSFER) Hong Kong Registrars Limited Shops 1712 1716, 17th Floor, Hopewell Centre, 183 Queen s Road East, Wanchai, Hong Kong INDEPENDENT AUDITOR PricewaterhouseCoopers Certified Public Accountants Hong Kong LEGAL ADVISER AS TO HONG KONG LAWS LOONG & YEUNG PRINCIPAL BANKS Bank of China Agricultural Bank of China Industrial and Commercial Bank of China China Construction Bank

Contents 2 4 6 7 14 16 19 22 25 36 64 68 138 140 151 Financial Highlights 70 Chairman s Statement 72 Management Discussion and Analysis Corporate Organization Chart 74 Business Review 75 Financial Review 82 Business Prospects 84 Social Responsibilities 87 Corporate Governance Profile of Directors and Supervisors 90 Corporate Governance Report 93 Report of the Directors 104 Reports of the Board s Subcommittees 132 Report of the Supervisory Committee 136 Independent Auditor s Report 138 Financial Statements 140 151

34,426,424 37,262,006 31,252,572 27,817,178 6,964,551 1,574,778 1,947,400 1,448,543 1,181,726 454,888 1,258,317 1,678,840 1,266,241 907,962 342,590 641,949 1,030,898 969,839 674,556 193,561 616,368 647,942 295,539 233,406 149,029 0.55 0.90 0.85 0.58 0.29 0.34 0.54 0.51 0.35 0.29 0.10 0.03 57,773,262 50,835,400 43,713,280 36,857,120 17,267,413 39,383,749 37,063,462 31,564,512 26,142,255 12,318,964 18,389,513 13,771,938 12,148,768 10,714,865 4,948,449 9,622,052 8,798,798 7,838,847 6,636,143 1,977,482 8,767,461 4,973,140 4,309,921 4,078,722 2,970,967 8.66 7.92 7.06 5.98 2.94 * 5.03 4.60 4.10 3.47 2.94 * 2 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

40,000,000 32,000,000 27,817,178 31,252,572 37,262,006 34,426,424 24,000,000 16,000,000 8,000,000 6,964,551 0,000,000 1,200,000 1,000,000 969,839 1,030,898 800,000 600,000 674,556 641,949 400,000 200,000 193,561 0,000 2014 3

34,426,424,000 37,262,006,000 8% 641,949,0001,030,898,000 38% 4 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

2014 5

AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014 6 100% 35.63% 39.37% 14.31% 62.52% 8.86% 14.31% 22.35% 47.12% 2011 100% 41.49% 90% 51% 60% 100% 75% 100% 100% 100% 100% 73.87% 69.77% 97.5% 100% 100% 25.76% 92.99% 100%

25.76% (LCD) 92.99% PCB 100% 41.49% 90% 60% 51% 100% 75% 2014 7

100% 73.87% 69.77% 100% 100% 97.5% 100% 100% 34% 17% 1% 10% 38% 8 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

34,426,424,000 37,262,006,0008%641,949,000 1,030,898,00038% LCD PCB 13,067,654,000 11,059,896,00018%906,770,000 1,012,183,00010% 2014 9

(LCD)(LCM) 6( LTPS TFT-LCD) (AM-OLED) PCB PCB PCB 4G PCB 10 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

3,221,007,000 3,041,122,0006%149,498,000142,964,0005% + 40%500 2014 11

5,891,369,000 4,187,299,00041%686,933,000 537,398,00028% 291,718,000 4 7.12 12 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

11,780,260,000 18,600,479,00037%93,121,000 318,454,000130% 13 224317 (EPC) EPCKHD Humboldt Wedag International AGKHD EPC 2014 13

466,134,000 248,906,000 21,071,804 21,425,962 39,383,749 37,063,462 8,767,461 4,973,140 9,622,052 8,798,798 57,773,262 50,835,400 114.59% 155.58% 214.16% 269.12% 14 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

4,828,610,000 5,076,449,000 21,071,804,000 21,425,962,0000% 17.83% 0% 12.5% 10,474,485,000 7,880,864,00010,597,319,000 13,545,098,000 2,223,840,000 TFTTP ON-CELL 573,355 8 711,830 73,091 44,675 104,804 386,028 14,000 93,035 28,598 194,424 2,223,840 2014 15

6,185,499,000 G6 3,841,000 8 556,000 12,199 154,000 165,660 221,240 50,000 843,320 120,500 221,580 6,185,499 16 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

6 LTPS TFT LCD PCB PCB +PCB PCB 2014 17

KHD KHDEPC EPC 18 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

ISO9000 1) 2014 2) 100G IC 2014 2014 2014 19

2) (LTPS) 700 297 Training Within IndustryTWI 4010 30 20 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

2014 2014 AVAYA2014 20 2000 KHD Humboldt WedagKHD Humboldt Wedag International AGKHD KHD 2014 21

53 232 51EMBA 43.04% 46 51 47 53 22 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

54 20 7 527 3366 3608 JC Group Holdings Limited 8326 8059 6893 42 50 0751000063 0763 000829 002069 600525 2014 23

58 57 63 41 EMBA 24 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

A.2.1 A.2.1 2014 25

9 6 3 * * * * * 1/6 13/17 76.47% 1/1 2/2 1/6 7/8 87.50% 2/6 13/17 76.47% 1/6 17/17 100.00% 5/6 17/17 100.00% 1/1 2/2 1/6 17/17 100.00% 1/6 17/17 100.00% 2/2 1/1 2/2 1/6 17/17 100.00% 2/2 1/1 2/2 1/6 17/17 100.00% 2/2 1/1 2/2 * 26 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

(1) (2) (3) (4) (5) (6) (7) (8) (9) 2014 27

(10) (11) (12) (13) (14) 3.10(1) (2)3.10A 3.13 28 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

(2014.08.27) A.2.1 2014 29

3.13 3.13 1 (1)(2) (3)(4) (5). 2 30 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

2 (1) (2) B.1.2(c)(ii). 3 3.13 (1) (2) (3); (4). 2014 31

3 14 (1) (2) 4 (a) (b) (c) (d) (e) 14 32 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

760 60 40 860 15 2014 33

25 86-755-837938910755-83790228 34 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

2014 35

14 141617 6 3,592,876,000 36 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

董事會報告年 10% 50% 年年度年 13.17% 146,296 8.47% 94,084 年度報 31 年年度 0.1 年年度年報年年年度 10,908,021,000 年年度 36.43%13.40% 年年度年度 14.33% 年 18.17%6.14% 年 5.23% 年 5% 2014 年度報告 37

12 11 3,312,965,000 23,000 72,735 645,641 1,213,671 889,850 108,948 64,477 294,643 3,312,965 33 45 25% 38 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

571 XV 2 3 1,634,608,792 1 1,329,499,564 1 429,774,574 1 305,109,228 1 196.24% 147.18% 159.61% 119.71% 51.60% 38.70% 36.62% 27.47% 29,644,000 H 2 29,644,000 H 2 Li Ka-Shing Unity Trustee 29,644,000 H Corporation Limited 2 Li Ka-Shing Unity 29,644,000 H Trustcorp Limited 2 Li Ka-Shing Unity Trustee 29,644,000 H Company Limited 2 Cheung Kong Investment 14,823,000 H Company Limited 2 Empire Grand Limited 14,823,000 H 2 Hutchison International 14,821,000 H Limited 2 14,821,000 H 2 18,396,000 H 3 18,222,000 H 3 10.67% 2.67% 10.67% 2.67% 10.67% 2.67% 10.67% 2.67% 10.67% 2.67% 5.34% 1.33% 5.34% 1.33% 5.33% 1.33% 5.33% 1.33% 6.63% 1.64% 6.56% 1.64% 2014 39

1. 62.52%100% 60% 100% (1) (A) 437,264,90639.37%(B) 1,604,736,493 3.47 462,460,084 (2) (A) 395,709,09135.63%(B) 118,207,225 3.47 34,065,483 (3) 1,058,729,0213.47 305,109,228 2. 29,644,000 H (A) (B) Empire Grand LimitedEmpire Grand 14,823,000 HEmpire Grand Cheung Kong Investment Company Limited Cheung Kong Investment Company Limited Hutchison International LimitedHIL 14,821,000 HHIL Li Ka-Shing Unity Holdings LimitedLi Ka-Shing Unity Trustee Company LimitedTUT1TUT1 The Li Ka-Shing Unity TrustTUT1 The Li Ka-Shing Unity Trust Li Ka-Shing Unity Holdings LimitedLi Ka-Shing Unity Trustee Corporation LimitedTDT1The Li Ka-Shing Unity Discretionary TrustDT1Li Ka-Shing Unity Trustcorp LimitedTDT2 DT2TDT1 TDT2The Li Ka-Shing Unity Trust DT1 DT2 TUT1 TDT1 TDT2Empire Grand HIL29,644,000 H 3. 100% 40 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

30 2014 41

XV XV7 8 35210 42 42 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

43,14428,338 3,834,648,000 2,880,254,000 44 2014 43

35,000,000 40,000,000 45,000,000 (i) 5,000,000 5,000,000 5,000,000(ii)75,000,000 80,000,000 85,000,000 44 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

(i)5,000,000 5,000,000 5,000,000(ii)60,000,000 60,000,000 60,000,000 (i)(ii) (iii) 14A0.1%5% 14A 28,800,000,000 23,800,000,000 200,000,000 5,200,000,000 442,000,000 341,000,000 8,000,000 109,000,000 5% 14A 2014 45

5,000,000 40% 20% 40% 40% 20% 40%398,000,000 199,000,000 398,000,000 120,000,000 60,000,000120,000,000 278,000,000 139,000,000 278,000,000 25%120,000 40% 20%14A 100,000,000 14A 5%25% 14.06 46 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

15,000,000 15,000,000 15.3% 14.7% 14A 14A KHD AVIC International Engineering Holdings Pte. Ltd. KHD Humboldt Wedag International AGKHD9,456,000 KHD KHD19.03%60,993,000 Europe Project Management Pte. Ltd. Europe Technology Investment Pte. Ltd. Europe Engineering Holdings Pte. Ltd. Yap Lian Seng 6.45KHD KHD Golden Prosperity Group LimitedGolden Prosperity Golden Prosperity 2014 47

KHD 24,847,045 KHD 1,500,000 KHDKHD 3.0% 9,675,000101,100,00023,347,045 KHD 150,588,440.251,573,600,000 12 25%100% 14 14.44 14A.43 437,264,906 39.37%395,709,091 35.63% Golden Prosperity 1,500,000 44,244,113 KHDKHD89.02% KHDKHDKHD 48 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

5 A (A) 70%21% (B) 40% (C)90% (D) (E) A 12.69A20 20AA A 101,670,40048,038,700135,361,600138,272,30025,971,900 A12.69 1,290,197,300 609,611,100 1,717,738,700 1,754,675,500 329,583,400 12.69149,772,000A A 2014 49

5 A 1,241,816,300 582,660,800 1,670,477,5001,685,682,300 315,764,900A12.69 433,129,000 A 5,496,401,800 12.69144,376,196 A 30% 40% 30% 6.5 1,200,000,000523,800,000 30%600,000,000 25%100% 14 14A AA 14.29 A 75% 14.06A 14A 50 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

5 A A A 10A1 A (A) 12.6912.59 433,128,585 A436,568,842A (B) A12.6912.59 144,376,196140,239,015 A1,832,133,933 1,765,609,199 140,239,015 5 9436,568,842 436,568,842 A14.60120,932,133A 1,765,609,000 5 A 1,131,738,475 2014 51

75% 25% 62,678,000 20,892,000 25% 14A14A 0.1%5% 14A (i) (ii) 1.1 150,000,000 180,000,000 200,000,000 1.2 200,000,000 300,000,000 400,000,000 2.1 3,000,000,000 3,200,000,000 3,500,000,000 2.2 3,500,000,000 4,000,000,000 4,500,000,000 52 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

1.3 120,000,000 150,000,000 200,000,000 35,000,000 38,000,000 40,000,000 2.3 160,000,000 200,000,000 220,000,000 120,000,000 150,000,000 160,000,000 1.4 1,200,000,000 1,300,000,000 1,500,000,000 4,500,000,000 5,000,000,000 5,000,000,000 80,000,000 90,000,000 90,000,000 300,000,000 350,000,000 350,000,000 2.4 3,000,000,000 3,500,000,000 4,000,000,000 15,000,000,000 18,000,000,000 22,000,000,000 200,000,000 230,000,000 280,000,000 500,000,000 600,000,000 800,000,000 2.5 1,000,000,000 1,200,000,000 1,500,000,000 2014 53

19 (1)7 36.84% (2) 6 31.58% (3)2 10.53% (4)1.5 7.895% (5) 1.5 7.895%(6) 1 5.26% 14A 0.1% 5% 14A 54 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

CF 120 1506,000,000,000 7,500,000,0006,000,000,000 7,500,000,000 6% 15.3% 14.7% 64% 602888 60 80% 200,000,00039.37% 100%35.63% 30%14A 14A 14.07 5%25%14 2014 55

32,000,000 35,000,000 40,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 14A 0.1%5%14A 56 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

14A.56 3000740 (a) (b) (c) (d) 45% 105,000,000 47,250,000 5%25% 1414 2014 57

216,000,000 480,000,000 5% 25% 14 14 49,000,000 5% 25% 14 14 H H 20%HHH H 55,531,599 H H 58 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

370,212,000 5%25% 14 201510 5 1 23 1 552,815,000 3 6,328,303,000 1 2 3 2014 59

692,623 33,590 176,000 6% Radiance Catico Offshore 161,621 Pte. Ltd. 68,600 150,934 1,283,368 60 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

77,887 2.49% 73,992 2.37% 13,943 25,000 1.25% 268,058 2.5% 1.59% 170,322 629,202 Humboldt Wedag Inc., Norcross (Georgia) HWUS HWUS HWUS KHD 9,400,00058,186,0005,200,000 32,188,000 HWUS HWUS KHD HWUS KHD 2014 61

20%6,032,20060% 14A 334,821,428AA 25.76%19.88% 14 45%84,124,000 45% 91,811,000 91,811,00045% 550,000,000 5%25% 1414 62 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

A.2.1 A.2.1. 3.13 3.13 2014 63

64 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

2 2 1. 2. 3. 4. 5. 2014 65

1 1 1. 2. 66 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

3.13 3.13 2 2 1. 2. 3. 4. 2014 67

68 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

2014 69

Independent Auditor s Report 140 364 INDEPENDENT AUDITOR S REPORT TO THE SHAREHOLDERS OF AVIC INTERNATIONAL HOLDINGS LIMITED (Established in the People s Republic of China with limited liability) We have audited the consolidated financial statements of AVIC International Holdings Limited (the Company ) and its subsidiaries (together, the Group ) set out on pages 140 to 364, which comprise the consolidated and company balance sheets as at 31 December 2014, and the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. DIRECTORS RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS The directors of the Company are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. AUDITOR S RESPONSIBILITY Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. 138 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

Independent Auditor s Report An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. OPINION In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2014, and of the Group s profit and cash flows for the year then ended in accordance with International Financial Reporting Standards and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance. OTHER MATTERS This report, including the opinion, has been prepared for and only for you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. PricewaterhouseCoopers Certified Public Accountants Hong Kong, 20 March 2015 2014 139

Consolidated Balance Sheet As at 31 December As at 1 January 2014 2013 2013 Note RMB 000 RMB 000 RMB 000 (Restated) (Restated) ASSETS Non-current assets Land use rights 7 1,757,824 1,530,773 1,331,337 Exploration and extraction rights 8 765,937 836,543 505,317 Goodwill 9 952,556 392,554 273,546 Intangible assets 10 879,874 364,885 303,772 Property, plant and equipment 11 13,583,312 10,454,696 10,900,556 Investment properties 12 2,232,376 2,153,462 2,099,314 Construction-in-progress 13 2,479,701 1,934,988 1,394,070 Investments accounted for using the equity method 15 4,342,730 4,386,692 4,298,291 Trade and other receivables 24 1,585,580 260,540 422,480 Available-for-sale financial assets 19 257,940 291,090 259,819 Deferred income tax assets 20 637,611 515,550 441,238 Other non-current assets 21 514,331 2,082,784 382,128 29,989,772 25,204,557 22,611,868 Current assets Inventories 22 6,376,810 5,210,974 4,327,819 Properties under development 23 1,808,116 2,317,086 1,256,078 Trade and other receivables 24 12,134,461 10,884,104 9,513,512 Amounts due from customers for contract work 25 2,017,763 1,493,175 1,161,194 Financial assets at fair value through profit or loss 26 4,242 5,405 3,110 Pledged bank deposits 27 522,864 643,650 643,671 Cash and cash equivalents 28 4,828,610 5,076,449 4,196,028 Investments in associates classified as held-for-sale 29 90,624 27,783,490 25,630,843 21,101,412 Total assets 57,773,262 50,835,400 43,713,280 EQUITY Capital and reserves attributable to owners of the Company Share capital 30 1,110,632 1,110,632 1,110,632 Share premium 30 1,294,633 1,294,633 1,294,633 Other reserves 31 655,789 422,272 469,136 Perpetual subordinated convertible securities 32 2,781,674 2,781,674 2,781,674 Retained earnings Proposed final dividend 48 111,063 Others 3,668,261 3,189,587 2,182,772 9,622,052 8,798,798 7,838,847 Non-controlling interests 14 8,767,461 4,973,140 4,309,921 Total equity 18,389,513 13,771,938 12,148,768 140 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

Consolidated Balance Sheet As at 31 December As at 1 January 2014 2013 2013 Note RMB 000 RMB 000 RMB 000 (Restated) (Restated) LIABILITIES Non-current liabilities Borrowings 33 10,477,284 6,834,524 4,939,368 Deferred income tax liabilities 20 862,398 636,280 539,245 Deferred income on government grants 34 761,479 766,578 784,994 Provisions 38 213,085 6,689 40,458 Trade and other payables 37 22,883 44,871 46,128 Retirement and other supplemental benefit obligations 35 384,357 217,667 249,483 Other non-current liabilities 36 166,803 1,105,347 1,256,762 12,888,289 9,611,956 7,856,438 Current liabilities Trade and other payables 37 14,600,170 13,827,261 11,847,757 Amounts due to customers for contract work 25 1,491,725 194,180 200,434 Borrowings 33 9,429,473 13,204,529 11,548,985 Financial liabilities at fair value through profit or loss 26 66,895 Current income tax liabilities 226,956 220,872 106,526 Retirement and other supplemental benefit obligations 35 16,931 4,664 4,372 Other current liabilities 36 663,310 26,495,460 27,451,506 23,708,074 Total liabilities 39,383,749 37,063,462 31,564,512 Total equity and liabilities 57,773,262 50,835,400 43,713,280 Net current assets/(liabilities) 1,288,030 (1,820,663) (2,606,662) Total assets less current liabilities 31,277,802 23,383,894 20,005,206 151 364 The accompanying notes on page 151 to 364 are an integral part of these consolidated financial statements. Director: Wu Guang Quan Director: You Lei 140 364 The financial statements on page 140 to 364 were approved by the Board of Directors on 20 March 2015 and were signed on its behalf. 2014 141

Company Balance Sheet As at 31 December 2014 2013 Note RMB 000 RMB 000 ASSETS Non-current assets Property, plant and equipment 11 6,503 7,277 Investments in subsidiaries 14 5,798,278 4,585,828 Investments in associates 16 298,198 298,198 Investments in joint ventures 17 2,371,409 2,371,409 Available-for-sale financial assets 19 1,400 15,224 8,475,788 7,277,936 Current assets Trade and other receivables 24 2,046,219 797,762 Cash and cash equivalents 28 61,742 206,467 2,107,961 1,004,229 Total assets 10,583,749 8,282,165 EQUITY Capital and reserves attributable to owners of the Company Share capital 30 1,110,632 1,110,632 Share premium 30 1,294,633 1,294,633 Other reserves 31 146,296 94,084 Perpetual subordinated convertible securities 32 2,781,674 2,781,674 Retained earnings Proposed final dividend 48 111,063 Others 309,537 29,873 Total equity 5,753,835 5,310,896 142 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

Company Balance Sheet As at 31 December 2014 2013 Note RMB 000 RMB 000 LIABILITIES Non-current liabilities Borrowings 33 1,527,000 1,075,000 Other non-current liabilities 36 800,000 1,527,000 1,875,000 Current liabilities Trade and other payables 37 920,914 123,269 Borrowings 33 2,382,000 973,000 3,302,914 1,096,269 Total liabilities 4,829,914 2,971,269 Total equity and liabilities 10,583,749 8,282,165 Net current liabilities (1,194,953) (92,040) Total assets less current liabilities 7,280,835 7,185,896 151 364 The accompanying notes on page 151 to 364 are an integral part of these financial statements. Director: Wu Guang Quan Director: You Lei 140 364 The financial statements on page 140 to 364 were approved by the Board of Directors on 20 March 2015 and were signed on its behalf. 2014 143

Consolidated Income Statement Year ended 31 December 2014 2013 Note RMB 000 RMB 000 (Restated) Revenue 6 34,426,424 37,262,006 Cost of sales 41 (28,786,784) (32,256,324) Gross profit 5,639,640 5,005,682 Distribution costs 41 (1,762,722) (1,429,199) Administrative expenses 41 (3,060,765) (2,683,244) Fair value gain on investment properties 12 15,990 56,942 Other income 39 700,892 1,130,778 Other gains net 40 343,413 112,670 Operating profit 1,876,448 2,193,629 Finance income 43 513,415 291,029 Finance costs 43 (1,286,786) (1,063,631) Finance costs net (773,371) (772,602) Share of profit of investments accounted for using the equity method 15 471,701 526,373 Profit before income tax 1,574,778 1,947,400 Income tax expense 45 (316,461) (268,560) Profit for the year 1,258,317 1,678,840 144 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

Consolidated Income Statement Year ended 31 December 2014 2013 Note RMB 000 RMB 000 (Restated) Profit attributable to: Owners of the Company 641,949 1,030,898 Non-controlling interests 616,368 647,942 1,258,317 1,678,840 Earnings per share attributable to the owners of the Company during the year (RMB per share) basic 47 0.5530 0.9032 diluted 47 0.3357 0.5391 151 364 The accompanying notes on page 151 to 364 are an integral part of these consolidated financial statements. Year ended 31 December 2014 2013 Note RMB 000 RMB 000 Dividends 48 111,063 2014 145

Consolidated Statement of Comprehensive Income Year ended 31 December 2014 2013 Note RMB 000 RMB 000 (Restated) Profit for the year 1,258,317 1,678,840 Other comprehensive income: Items that will not be reclassified to profit or loss Remeasurements of post-employment benefit obligations, gross of tax 35 (21,380) (3,870) Remeasurements of post-employment benefit obligations, tax 20 7,475 4,709 Gain on transfer of owner-occupied property to investment property, gross of tax 11,773 Gain on transfer of owner-occupied property to investment property, tax (2,943) Items that may be subsequently reclassified to profit or loss Fair value gains on available-for-sale financial assets, gross of tax 10,864 Fair value gains on available-for-sale financial assets, tax (2,716) Currency translation differences (447,160) (68,126) Recycle of fair value gains on availablefor-sale financial assets, gross of tax (14,263) (5,430) Recycle of fair value gains on availablefor-sale financial assets, tax 3,566 1,357 Share of an associate s other comprehensive income 31 (47) (325) Recycle of share of an associate s other comprehensive income 31 12,098 Other comprehensive income for the year, net of tax (459,711) (54,707) Total comprehensive income for the year, net of tax 798,606 1,624,133 Attributable to: Owners of the Company 257,925 987,635 Non-controlling interests 540,681 636,498 Total comprehensive income for the year 798,606 1,624,133 151 364 The accompanying notes on page 151 to 364 are an integral part of these consolidated financial statements. 146 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

Consolidated Statement of Changes in Equity Share capital Attributable to owners of the company Perpetual subordinated Share convertible premium securities Other reserves Retained earnings Noncontrolling interests Total equity Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Group Balance as at 1 January 2013 (as previously reported) 1,110,632 1,294,633 2,781,674 (380,075) 2,762,828 7,569,692 3,989,077 11,558,769 Effect of business combination under common control 849,211 (580,056) 269,155 320,844 589,999 Balance as at 1 January 2013, as restated 1,110,632 1,294,633 2,781,674 469,136 2,182,772 7,838,847 4,309,921 12,148,768 Comprehensive income Profit for the year 1,030,898 1,030,898 647,942 1,678,840 Other comprehensive income (43,263) (43,263) (11,444) (54,707) Total comprehensive income (43,263) 1,030,898 987,635 636,498 1,624,133 Transactions with owners Transactions with non-controlling interests (10,387) (10,387) (38,079) (48,466) Share of reserves of an associate arising from its transactions with non-controlling interests (17,297) (17,297) (17,297) Acquisition of subsidiaries 41,438 41,438 Disposals of subsidiaries (23,010) (23,010) Capital contributed by non-controlling interests 123,912 123,912 Appropriation to other reserves 24,083 (24,083) Dividends for 2013 (77,540) (77,540) Total transactions with owners (3,601) (24,083) (27,684) 26,721 (963) Balance as at 31 December 2013, as restated 1,110,632 1,294,633 2,781,674 422,272 3,189,587 8,798,798 4,973,140 13,771,938 2014 147

Consolidated Statement of Changes in Equity Share capital Attributable to owners of the company Perpetual subordinated Share convertible premium securities Other reserves Retained earnings Noncontrolling interests Total equity Total Note RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Balance as at 1 January 2014, as restated 1,110,632 1,294,633 2,781,674 422,272 3,189,587 8,798,798 4,973,140 13,771,938 Comprehensive income Profit for the year 641,949 641,949 616,368 1,258,317 Other comprehensive income (384,024) (384,024) (75,687) (459,711) Total comprehensive income (384,024) 641,949 257,925 540,681 798,606 Transactions with owners Transactions with non-controlling interests 31(a) 2,907,121 2,907,121 3,023,965 5,931,086 Merger reserve 31(b) (2,320,979) (2,320,979) (2,320,979) Share of reserves of an associate arising from its transactions with non-controlling interests 15(a) (20,813) (20,813) (20,813) Disposals of subsidiaries 49(e) (1,413) (1,413) Capital contributed by non-controlling interests 60,267 60,267 Acquisition of subsidiaries 52 272,660 272,660 Appropriation to other reserves 31 52,212 (52,212) Dividends for 2014 (101,839) (101,839) Total transactions with owners 617,541 (52,212) 565,329 3,253,640 3,818,969 Balance as at 31 December 2014 1,110,632 1,294,633 2,781,674 655,789 3,779,324 9,622,052 8,767,461 18,389,513 151 364 The accompanying notes on page 151 to 364 are an integral part of these consolidated financial statements. 148 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

Consolidated Statement of Cash Flows Year ended 31 December 2014 2013 Note RMB 000 RMB 000 (Restated) Cash flows from operating activities Cash generated from operations 49 2,654,521 2,181,368 Interest paid (1,176,196) (1,020,994) Income tax paid (278,887) (203,056) Net cash generated from operating activities 1,199,438 957,318 Cash flows from investing activities Payment for the additions of construction-in-progress (1,845,472) (1,442,871) Purchase of property, plant and equipment 11 (700,827) (486,684) Purchase of land use rights 7 (45,870) (234,899) Purchase of intangible assets 10 (39,669) (39,218) Payment for the additions of other non-current assets (220,322) (145,632) Acquisition of subsidiaries, net of cash acquired (167,514) Proceeds from acquisition of subsidiaries, net of cash paid 52 2,705,087 Capital injection to associates (128,510) (8,890) Capital injection to joint ventures 15(b) (8,636) (25,904) Cash inflow/(outflow) from disposals of subsidiaries 49(e) 598 (7,979) Release of guarantee deposits for acquisition of a subsidiary 216,618 Prepayment for the establishment of subsidiaries (6,192) Prepayment for the acquisition of subsidiaries (1,876,460) Purchase of available-for-sale financial assets 19 (6,600) (14,891) Proceeds from disposals of property, plant and equipment 49(b) 66,428 11,228 Proceeds from disposals of investment properties 92 29,007 Proceeds from disposals of intangible assets 818 69 Proceeds from disposals of available-for-sale financial assets 49(d) 54,040 50,035 Proceeds from disposals of joint venture 49(c) 213 151,863 Government grants received 393,775 309,406 Interest received 107,363 80,400 Loans to related parties (1,121,861) (104,772) Repayments of loan from related parties 71,027 235,141 Dividends received 207,591 397,549 Payment for environmental restoration costs (28,780) Net cash used in investing activities (510,735) (3,109,370) 2014 149

Consolidated Statement of Cash Flows Year ended 31 December 2014 2013 Note RMB 000 RMB 000 (Restated) Cash flows from financing activities Proceeds from bank borrowings 17,727,226 19,120,237 Repayments of bank borrowings (20,421,279) (15,569,537) Borrowings from related parties 405,032 995,203 Repayments of borrowings from related parties (363,899) (1,440,664) Capital contribution to subsidiaries from non-controlling interests 49(a) 60,267 123,912 Dividends paid to non-controlling interests of subsidiaries (48,569) (81,348) Transactions with non-controlling interests 1,730,096 (48,466) Net cash (used in)/generated from financing activities (911,126) 3,099,337 Net (decrease)/increase in cash and cash equivalents (222,423) 947,285 Cash and cash equivalents at beginning of year 5,076,449 4,196,028 Currency translation differences (25,416) (66,864) Cash and cash equivalents at end of year 4,828,610 5,076,449 151 364 The accompanying notes on page 151 to 364 are an integral part of these consolidated financial statements. 150 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

1. 433,129,000 A 1 GENERAL INFORMATION AVIC International Holdings Limited (the Company ) was established as a joint stock limited company in the People s Republic of China (the PRC ) and its shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited. On 1 November 2013, Tianma Micro-electronics Co. Ltd. ( Tianma ), a subsidiary of the Company entered into five separate framework agreements for acquiring the interests in the related companies in consideration for which Tianma will issue and allot approximately 433,129,000 A Shares to the related selling parties ( Tianma Transactions ). The related selling parties and the interests in the related companies are as follows: (a) 70% (a) Shanghai Zhangjiang (Group) Co., Ltd. ( () ), Shanghai State-owned Assets Company Limited ( ) and Shanghai Optical Communications Corporation ( ) in relation to the acquisition of 70% equity interest in Shanghai Tianma Microelectronics Co., Ltd. ( Shanghai Tianma ); and (b) 40% (b) Chengdu Industrial Group Company Limited ( ) and Chengdu Gaoxin Investment Group Company Limited ( ) in relation to the acquisition of 40% equity interest in Chengdu Tianma Microelectronics Co., Ltd. ( Chengdu Tianma ); and (c) 90% (c) Hubei Province Technology Investment Group Company Limited ( ) in relation to the acquisition of 90% equity interest in Wuhan Tianma Microelectronics Co., Ltd. ( Wuhan Tianma ); and (d) (d) AVIC International Holding Corporation ( ) ( AVIC International ) and AVIC International Shenzhen Company Limited ( ) ( AVIC Shenzhen ) in relation to the acquisition of the entire equity interest in Shanghai AVIC Opto-electronics Co., Ltd. ( Shanghai Opto-electronics ); and (e) (e) AVIC International and AVIC Shenzhen in relation to the acquisition of the entire equity interest in Shenzhen AVIC Opto-electronics Co., Ltd. ( Shenzhen Opto-electronics ), respectively. 2014 151

1. 12.69 149,722,000A 12.69 12.59 433,129,000 A 436,569,000 A 144,376,000 A 140,239,000 A 30% 30% 10% 51% 49% 70% 1 GENERAL INFORMATION (continued) On 1 November 2013, the board of directors of Tianma proposed to issue not more than approximately 149,772,000 new A Shares to not more than ten investors in cash at a placing price not lower than RMB12.69 per share after the completion of the Tianma Transactions for raising additional funds ancillary to the Tianma Transactions. On 22 August 2014, the board of directors of Tianma announced to adjust the issue and placing price from RMB12.69 to RMB12.59, and the total consideration shares was adjusted from approximately 433,129,000 A Shares to approximately 436,569,000 A Shares, and the maximum number of placing shares was adjusted from approximately 144,376,000 A Shares to approximately 140,239,000 A Shares. Prior to the Tianma Transactions, Tianma held 30% equity interests in Shanghai Tianma, 30% equity interests in Chengdu Tianma, 10% equity interests in Wuhan Tianma. Shanghai Opto-electronics and Shenzhen Optoelectronics were held as to 51% equity interests by AVIC Shenzhen and 49% equity interests by AVIC International respectively. Tianma, the Company, AVIC Shenzhen and AVIC International are under common control of Aviation Industry Corporation of China ( ) ( Aviation Industry ). As Tianma could control Shanghai Tianma and Chengdu Tianma through the agreements with other shareholders, Tianma and the Company accounted for investments in Shanghai Tianma and Chengdu Tianma as subsidiaries before the Tianma Transactions. Tianma and the Company accounted for investment in Wuhan Tianma as an associate before the Tianma Transactions. The Tianma Transactions was completed on 28 August 2014. Upon completion of the Tianma Transactions, Shanghai Tianma, Wuhan Tianma, Shanghai Optoelectronics and Shenzhen Opto-electronics became wholly owned subsidiaries of Tianma, while Tianma held 70% equity interests in Chengdu Tianma. 152 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

1. 25 1 GENERAL INFORMATION (continued) For accounting purpose, the acquisitions of equity interests in Shanghai Tianma and Chengdu Tianma was accounted for as transactions with non-controlling interests, the acquisition of equity interests in Wuhan Tianma was accounted for as business combination involving entities not under common control, and the acquisitions of equity interests in Shanghai Optoelectronics and Shenzhen Opto-electronics was treated as business combinations involving entities under common control and accounted for on the basis of merger accounting. The Company and its subsidiaries (hereinafter collectively referred to as the Group ) are principally engaged in the manufacturing and sales of liquid crystal displays, printed circuit boards and watches, property development, international engineering, trading and logistic services and development mining resources in the PRC. The office address of the Company is 25/F, Hangdu Building, CATIC Zone, Shennan Road Central, Futian District, Shenzhen, the PRC. The consolidated financial statements have been approved for issue on 20 March 2015. 2. (2006)2006 5 2 BASIS OF PREPARATION The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ( IFRS ) and IFRS Interpretations Committee applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties, available-for-sale financial assets and derivative financial instruments at fair value through profit or loss. The accounting policies and bases adopted in the preparation of these financial statements differ from those used in the statutory accounts of the Group which are prepared in accordance with the Accounting Standards for Business Enterprises (2006) of the People s Republic of China ( CAS 2006 ). The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5. 2014 153

2. 2 BASIS OF PREPARATION (continued) Changes in accounting policy and disclosures: (a) (a) The following standards have been adopted by the Group for the first time for the financial year beginning on or after 1 January 2014: 32 Amendment to IAS 32, Financial instruments: Presentation on offsetting financial assets and financial liabilities. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms. The adoption of this newly effective standard does not have significant impact to the Group. 36 13 36 Amendments to IAS 36, Impairment of assets, on the recoverable amount disclosures for non-financial assets. This amendment removed certain disclosures of the recoverable amount of cash generating units ( CGUs ) which had been included in IAS 36 by the issue of IFRS 13. The adoption of this newly effective standard does not have significant impact to the Group. 39 39 Amendment to IAS 39, Financial instruments: Recognition and measurement on the novation of derivatives and the continuation of hedge accounting. This amendment considers legislative changes to over-the-counter derivatives and the establishment of central counterparties. Under IAS 39 novation of derivatives to central counterparties would result in discontinuance of hedge accounting. The amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument meets specified criteria. The Group has applied the amendment and there has been no significant impact on the Group financial statements as a result. 154 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

2. (a) 21 37 622358 9 6229 2 BASIS OF PREPARATION (continued) (a) (continued) IFRIC 21, Levies, sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37 Provisions. The interpretation addresses what the obligating event is that gives rise to the payment a levy and when a liability should be recognised. The Group is not currently subjected to significant levies so the impact on the Group is not material. Other standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2014 are not material to the Group. In addition, the requirements of Part 9 Accounts and Audit of the new Hong Kong Companies Ordinance (Cap. 622) come into operation as from the Company s first financial year commencing on or after 3 March 2014 in accordance with section 358 of that Ordinance. The Group is in the process of making an assessment of expected impact of the changes in the Companies Ordinance on the consolidated financial statements in the period of initial application of Part 9 of the new Hong Kong Companies Ordinance (Cap. 622). So far it has concluded that the impact is unlikely to be significant and only the presentation and the disclosure of information in the consolidated financial statements will be affected. 2014 155

2. (b) 2 BASIS OF PREPARATION (continued) (b) The following new standards, amendments and interpretations have been issued but are not effective for the financial year beginning 1 January 2014, and have not been early adopted by the Group. Effective for annual periods beginning on or after 14 IFRS 14 Regulatory Deferral Accounts 1 January 2016 11 Amendment to IFRS 11 on accounting for 1 January 2016 acquisitions of interests in joint operations 16 38 Amendments to IAS 16 and IAS 38 on clarification of 1 January 2016 acceptable methods of depreciation and amortisation 16 41 Amendments to IAS 16 and IAS 41 on Agriculture: bearer plants 1 January 2016 10 28 Amendments to IFRS 10 and IAS 28 on sale or contribution of 1 January 2016 assets between an investor and its associate or joint venture 27 Amendment to IAS 27 on equity method in separate financial statements 1 January 2016 5 Amendment to IFRS 5, Non-current assets held for sale and 1 January 2016 discontinued operations 7 Amendment to IFRS 7, Financial instruments: Disclosures 1 January 2016 19 Amendment to IAS 19, Employee benefits 1 January 2016 34 Amendment to IAS 34, Interim financial reporting 1 January 2016 15 IFRS15 Revenue from Contracts with Customers 1 January 2017 9 IFRS 9 Financial Instruments 1 January 2018 156 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

2. (b) 15 18 11 15 1 5 5 2 BASIS OF PREPARATION (continued) (b) (continued) None of these is expected to have a significant effect on the consolidated financial statements of the Group, except the following set out below: IFRS 15, Revenue from contracts with customers deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 Revenue and IAS 11 Construction contracts and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is permitted. The Group is assessing the impact of IFRS 15. There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group. Application of merger accounting The acquisitions of equity interests in Shanghai Optoelectronics and Shenzhen Opto-electronics disclosed in Note 1 were regarded as a business combination involving entities under common control, since the Company, Shanghai Opto-electronics and Shenzhen Opto-electronics were all under common control of Aviation Industry. Thus, the financial information of Shanghai Optoelectronics and Shenzhen Opto-electronics has been consolidated into the financial statements of the Company under merger accounting in accordance with the requirements of Accounting Guideline 5 Merger Accounting for Common Control Combinations ( AG 5 ) issued by the Hong Kong Institute of Certified Public Accountants (the HKICPA ). No adjustment has been made to the net assets or net profit to achieve consistency of accounting policies as a consequence of the combination. 2014 157

2. 5 2 BASIS OF PREPARATION (continued) Application of merger accounting (continued) These consolidated financial statements have been prepared using the principles of merger accounting, as prescribed in AG 5. These consolidated financial statements include the balance sheets, the income statements, the statements of comprehensive income, the statement of changes in equity and the statement of cash flows of the acquired companies as if they had been in existence throughout the year, or since its date of incorporation. Comparative figures as at 31 December 2013 and for the year then ended have been presented on the same basis. Accordingly, the financial information of the comparative period presented in this consolidated financial information has been restated. The following is a reconciliation of the effect arising from the common control combination on the consolidated balance sheets: The consolidated balance sheet as at 31 December 2014: Amounts without taken into consideration of the effect of merger accounting Merger of Shanghai Opto-electronics and Shenzhen Opto-electronics Adjustments As stated RMB 000 RMB 000 RMB 000 RMB 000 (a) Non-current assets 27,949,197 2,042,837 (2,262) 29,989,772 Current assets 27,727,917 2,103,466 (2,047,893) 27,783,490 Total assets 55,677,114 4,146,303 (2,050,155) 57,773,262 Non-current liabilities 12,052,562 835,727 12,888,289 Current liabilities 26,388,070 2,155,283 (2,047,893) 26,495,460 Total liabilities 38,440,632 2,991,010 (2,047,893) 39,383,749 158 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

2. 2 BASIS OF PREPARATION (continued) Application of merger accounting (continued) The consolidated balance sheet as at 31 December 2014: (continued) Amounts without taken into consideration of the effect of merger accounting Merger of Shanghai Opto-electronics and Shenzhen Opto-electronics Adjustments As stated RMB 000 RMB 000 RMB 000 RMB 000 (a) Share capital 1,110,632 1,880,000 (1,880,000) 1,110,632 Share premium 1,294,633 1,294,633 Perpetual subordinated convertible securities 2,781,674 2,781,674 Other reserves 200,885 (114,070) 568,974 655,789 Retained earnings 3,937,207 (612,899) 455,016 3,779,324 Capital and reserves attributable to owners of the Company 9,325,031 1,153,031 (856,010) 9,622,052 Non-controlling interests 7,911,451 2,262 853,748 8,767,461 Total equity 17,236,482 1,155,293 (2,262) 18,389,513 Total equity and liabilities 55,677,114 4,146,303 (2,050,155) 57,773,262 Net current assets 1,339,847 (51,817) 1,288,030 Total assets less current liabilities 29,289,044 1,991,020 (2,262) 31,277,802 2014 159

2. 2 BASIS OF PREPARATION (continued) Application of merger accounting (continued) The consolidated balance sheet as at 31 December 2013: Amounts without taken into consideration of the effect of merger accounting Merger of Shanghai Opto-electronics and Shenzhen Opto-electronics Adjustments Restated RMB 000 RMB 000 RMB 000 RMB 000 (a) Non-current assets 22,758,020 2,433,549 12,988 25,204,557 Current assets 24,243,315 1,869,139 (481,611) 25,630,843 Total assets 47,001,335 4,302,688 (468,623) 50,835,400 Non-current liabilities 8,421,561 1,178,873 11,522 9,611,956 Current liabilities 25,862,154 2,061,183 (471,831) 27,451,506 Total liabilities 34,283,715 3,240,056 (460,309) 37,063,462 160 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014

2. 2 BASIS OF PREPARATION (continued) Application of merger accounting (continued) The consolidated balance sheet as at 31 December 2013: (continued) Amounts without taken into consideration of the effect of merger accounting Merger of Shanghai Opto-electronics and Shenzhen Opto-electronics Adjustments Restated RMB 000 RMB 000 RMB 000 RMB 000 (a) Share capital 1,110,632 1,880,000 (1,880,000) 1,110,632 Share premium 1,294,633 1,294,633 Perpetual subordinated convertible securities 2,781,674 2,781,674 Other reserves (404,201) (68,352) 894,825 422,272 Retained earnings 3,535,079 (749,632) 404,140 3,189,587 Capital and reserves attributable to owners of the Company 8,317,817 1,062,016 (581,035) 8,798,798 Non-controlling interests 4,399,803 616 572,721 4,973,140 Total equity 12,717,620 1,062,632 (8,314) 13,771,938 Total equity and liabilities 47,001,335 4,302,688 (468,623) 50,835,400 Net current liabilities (1,618,839) (192,044) (9,780) (1,820,663) Total assets less current liabilities 21,139,181 2,241,505 3,208 23,383,894 2014 161

2. 2 BASIS OF PREPARATION (continued) Application of merger accounting (continued) The following is a reconciliation of the effect arising from the common control combination on the consolidated income statement: The consolidated income statement for the year ended 31 December 2014: Amounts without taken into consideration of the effect of merger accounting Merger of Shanghai Opto-electronics and Shenzhen Opto-electronics Adjustments As stated RMB 000 RMB 000 RMB 000 RMB 000 (a) Revenue 30,509,522 5,101,686 (1,184,784) 34,426,424 Profit for the year 1,121,237 138,369 (1,289) 1,258,317 The consolidated income statement for the year ended 31 December 2013: Amounts without taken into consideration of the effect of merger accounting Merger of Shanghai Opto-electronics and Shenzhen Opto-electronics Adjustments Restated RMB 000 RMB 000 RMB 000 RMB 000 (a) Revenue 33,437,688 4,624,811 (800,493) 37,262,006 Profit for the year 1,164,675 520,036 (5,871) 1,678,840 162 AVIC INTERNATIONAL HOLDINGS LIMITED ANNUAL REPORT 2014