CHAIRMAN'S STATEMENT

CELEBRATING CEL’S 20TH ANNIVERSARY

The year of 2017 is particular significance for China Everbright Limited as it marked its 20th anniversary. With the new brand philosophy of “The Power To Transform”, the Company managed to seize market opportunities to expedite its development and created many milestones during the year.

In 2017, the global economy maintained stability and a positive momentum, with unemployment rates across US and Europe economies experiencing continued decline, sending stock markets in the US, Japan, South Korea and Australia to multiple-year highs. During the year, China’s GDP growth rate was higher than last year. Consumer spending became the key driver of China’s economy, contributed significantly to the economy. The 19th CPC National Congress concluded successfully, with the government’s report mentioning “New social tension in the new era” for the first time, implying that China will focus more on the quality of economic growth going forward.

The year 2017 is of particular significance for the Company as it marked the 20th anniversary of the establishment of China CELEBRATING CEL’S 20TH ANNIVERSARY The year of 2017 is particular significance for China Everbright Limited as it marked its 20th anniversary. With the new brand philosophy of “The Power To Transform”, the Company managed to seize market opportunities to expedite its development and created many milestones during the year. Everbright Limited (“CEL”). During the year, CEL was guided by its new brand philosophy of “The Power to Transform”, grasping market opportunities to grow rapidly and reached many milestones including solid growth in Fund of Funds (FoF) through the strong cooperation with leading commercial bank; diversifying its investment portfolios to enter new economy sectors; and increasing profitability of principal investments, resulting in continual increase in the contribution to earnings. Following years of exploration, CEL has established a mature business model, and has continued to innovate its fund offerings. These have enabled it to gain widespread market recognition and established the Company as one of China’s leading cross-border asset managers.

During the reporting period, its direct operating businesses, comprising fund management and principal investments, posted a profit attributable to shareholders of HK$2,862 million, up 4% year-on-year. In addition, CEL’s share of profit in its associate, Everbright Securities amounted to HK$835 million. China Everbright Bank reported a dividend income after tax of HK$157 million. Profit attributable to shareholders of the Company for the year was HK$4,148 million increased by 2% year on year. On the basis of outstanding profit and healthy cashflow, the board recommends the payment of a 2017 final dividend of HK$0.6 per share, representing a growth of 20% compared wi th the same per iod last year . Total dividends for the year amount to HK$0.85 per share, representing an increase of 13%, continue to provide sustainable returns to our shareholders.

In terms of fund management, CEL’s total fund raising scale grew 48% year-on-year to HK$129.1 billion, exceeding the HK$100 billion threshold for the first time, elevating the Company to the ranks of a top-tier player in the industry in terms of funds raised. All of CEL’s primary market funds, secondary market funds and FoFs fared remarkably well. Specifically, primary market funds proactively invested into different sectors in the economy, accelerating its inroads into industries such as pan-entertainment, intelligent manufacturing, semi-conductors and artificial intelligence. EBA Real Estate Fund management platform was successfully incorporated into Everbright Jiabao Group, an A-share listed company, creating the right mix of asset-light and asset-heavy businesses in its real estate portfolio. At the same time, the flagship fixed-income offerings under secondary market funds achieved outstanding performance. The fund raising scale and return have increased significantly. FoFs also continued their robust momentum. During the year, CEL partnered with China Merchants Bank, one of the leading jointstock banks in China and launched a RMB5 billion FoF that offers an integrated asset allocation solution for large scale institutional investors.

In respect to principal investments, CEL accelerated projects exit, which generated stellar returns. Investments in the strategic industries of aircraft leasing and elderly care performed equally well. Of note, China Aircraft Leasing Group Holdings Limited’s total deliveries exceeded 100 aircrafts for the first time during the year, and the company also accelerated recovery of capital through asset-backed securitisations to support continuous business growth. In the highend elderly care sector, CEL’s two major platforms, Beijing Huichen Nursing Home Management and Wuxi Enjoy Twilight Years Elderly Care, fine-tuned its servicing model and extended the service scale. They became the top tier service providers in China in terms of income and the number of nursing beds.

CEL has earned wide recognition for its investment performance in the market. During the year, CEL ranked the 14th private equity firm in China in the Zero2IPO Group-China Venture Capital & Private Equity Annual Ranking, and also won the “Outstanding Investment & Asset Management Group in China” award from “Capital” magazine. Meanwhile, CEL’s teams also received recognition in their respective industries, including the “Best Divestment Case” award for Beijing Hanbang Technology Company Limited (“Hanbang Gaoke”), an investment project of Everbright Huiyi Weiye Capital Management (Beijing) Co., Ltd. (“Everbright Huiyi Weiye”). In addition, CEL’s EBA Real Estate Fund ranked first among “China’s Top 10 Real Estate Funds” for the third consecutive year; and Everbright-IDG Industrial Fund was named “Top 10 Up-and-coming Institutional PE Investors in 2016”.

Looking forward to 2018, while global economic recovery continues to pick up speed, it should be noted that potential overheating of global stock markets, as well as tax reform, interest rate hikes and balance sheet reduction in the US could all have a significant impact on capital flows. The rise of trade protectionism could also fuel conflicts among nations, adding to uncertainties in the market. Chinese economy is in the critical phase of development shifting, economic structure optimization and switch of development momentum and is expected to face a lot of expectable and unexpectable risks and challenges ahead.

Amidst complex and v o l a t i l e market conditions , CEL in 2018 will adapt to change and leverage its power to transform. Supported by its influential shareholders, CEL will focus on investment themes aligned with the Belt and Road Initiative and the Guangdong-Hong Kong-Macau Bay Area, injecting national and market resources to these projects. CEL will keep developing innovative fund products, expanding the size of its FoF business, and will continue to accelerate the growth of funds under management to identify market entry points for investors. By virtue of its advantages in cross-border investments, CEL is committed to expanding its exposure across sectors and enhancing its cross-border asset integration capabilities. As a cross-sector integrator, CEL can assist portfolio companies’ growth into industry leaders. Principal Investments will be more focused on sectors with medium- to long-term potential, as well as on the incubation of high-quality fund products. Principal Investments supports and complements the fund management business as one of the dual-growth drivers, increasing overall returns and sustaining the Group’s robust growth.

The monumental twenty years of CEL have passed almost like a fleeting moment. A future of more subdivided industries has arrived. In this new era, we need to achieve further progress. CEL aims to establish itself as a global leader in cross-border asset management with the ability to continue creating maximum value for both its shareholders and the community.

Cai Yunge
Chairman

Hong Kong, 30 March 2017