Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong

Limited take no responsibility for the contents of this announcement, make no representation

as to its accuracy or completeness and expressly disclaim any liability whatsoever for any

loss howsoever arising from or in reliance upon the whole or any part of the contents of this

announcement.

This announcement is for information purposes only and does not constitute an invitation or

offer to acquire, purchase or subscribe for securities.

This announcement does not constitute or form a part of any offer or solicitation to purchase

or subscribe for securities in the United States. The securities have not been, and will not

be, registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or

with any securities regulatory authority of any state of the United States or other jurisdiction.

The securities are being offered and sold outside the United States in reliance on Regulation

S under the Securities Act and may not be offered or sold within the United States absent

registration or an exemption from registration under the Securities Act. No public offering of

the securities will be made in the United States or in any other jurisdiction where such an

offering is restricted or prohibited.

This announcement and the listing document referred to herein have been

published for information purposes only as required by the Rules Governing the

Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing

Rules”) and do not constitute an offer to sell nor a solicitation of an offer to buy any

securities. Neither this announcement nor anything referred to herein (including the

listing document referred to herein) forms the basis for any contract or commitment

whatsoever. For the avoidance of doubt, the publication of this announcement and the

listing document referred to herein shall not be deemed to be an offer of securities made

pursuant to a prospectus issued by or on behalf of the Issuer (as defined below) for the

purposes of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.

32 of the Laws of Hong Kong) nor shall it constitute an advertisement, invitation or

document containing an invitation to the public to enter into or offer to enter into an

agreement to acquire, dispose of, subscribe for or underwrite securities for the purposes

of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).

Notice to Hong Kong investors: The Issuer and the Guarantor (as defined below) confirm

that the Instruments (as defined in the offering circular appended hereto) are intended for

purchase by Professional Investors (as defined in Chapter 37 of the Listing Rules) only and

will be listed on The Stock Exchange of Hong Kong Limited on that basis. Accordingly, the

Issuer and the Guarantor confirm that the Instruments are not appropriate as an investment

for retail investors in Hong Kong. Investors should carefully consider the risks involved.

Soar Wise Limited

(the “Issuer”)

(a company incorporated in the Cayman Islands with limited liability)

U.S.$3,500,000,000

Guaranteed Medium Term Note and Perpetual Capital Securities Programme

Unconditionally and Irrevocably Guaranteed by

AVIC International Leasing Co., Ltd.

(the “Guarantor”)

(a company incorporated in the People’s Republic of China with limited liability)

This announcement is issued pursuant to Rule 37.39A of the Listing Rules.

Please refer to the offering circular dated 16 May 2022 (the “Offering Circular”) appended

hereto in relation to the Programme. As disclosed in the Offering Circular, the Instruments are

intended for purchase by Professional Investors (as defined in Chapter 37 of the Listing Rules)

only and will be listed on The Stock Exchange of Hong Kong Limited on that basis.

The Offering Circular does not constitute a prospectus, notice, circular, brochure or

advertisement offering to sell any securities to the public in any jurisdiction, nor is it an

invitation to the public to make offers to subscribe for or purchase any securities, nor is it

circulated to invite offers by the public to subscribe for or purchase any securities.

The Offering Circular must not be regarded as an inducement to subscribe for or purchase

any securities, and no such inducement is intended. No investment decision should be made

based on the information contained in the Offering Circular.

17 May 2022

As at the date of this announcement, the directors of the Issuer are Zhou Yong, Tom Geary

and Laura Morgan.

As at the date of this announcement, the directors of the Guarantor are Zhou Yong, Zhou

Qinye, Cai Mingsheng, Zhao Zhuping, Li Tianshu, Wu Liang and Liu Xinfeng.

TABLE OF CONTENTS

APPENDIX – OFFERING CIRCULAR DATED 16 MAY 2022

APPENDIX – OFFERING CIRCULAR DATED 16 MAY 2022

IMPORTANT NOTICE

NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE UNITED STATES OR TO ANY U.S. PERSON

OR ANY PERSON ACTING FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON (AS DEFINED IN

REGULATION S UNDER THE U.S. SECURITIES ACT OF 1993, AS AMENDED (THE “SECURITIES ACT”)).

IMPORTANT: You must read the following disclaimer before continuing. The following disclaimer applies to the

attached offering circular (the “Offering Circular”). You are therefore advised to read this disclaimer carefully before

accessing, reading or making any other use of the attached Offering Circular. In accessing the attached Offering Circular, you

agree to be bound by the following terms and conditions, including any modifications to them from time to time, each time

you receive any information from the company as a result of such access. In order to review the attached Offering Circular

or make an investment decision with respect to the securities, you must be located outside the United States and not be a

U.S. person or acting for the account or benefit of a U.S. person.

Confirmation of Your Representation: The attached Offering Circular is being sent to you at your request and by accepting

the e-mail and accessing the attached Offering Circular, you shall be deemed to represent to Soar Wise Limited (the

“Issuer”), AVIC International Leasing Co., Ltd. (the “Guarantor”) and each of Agricultural Bank of China Limited Hong

Kong Branch, Bank of China Limited, BNP Paribas, BOCI Asia Limited, DBS Bank Ltd., Haitong International Securities

Company Limited, ICBC International Securities Limited, Industrial and Commercial Bank of China (Asia) Limited and

Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch (together the “Arrangers” or “Dealers”, each an

“Arranger” or a “Dealer”) that (1) you are not in the United States and are not a U.S. person nor acting for the account or

benefit of a U.S. person, (2) the e-mail address that you gave us and to which this e-mail has been delivered is not located

in the United States, its territories or possessions, and (3) you consent to delivery of the attached Offering Circular and any

amendments or supplements thereto by electronic transmission.

Except with respect to eligible investors in jurisdictions where such offer or invitation is permitted by law, nothing in this

electronic transmission constitutes an offer or an invitation by or on behalf of the Issuer, the Guarantor, the Arrangers, the

Dealers, the Trustee or the Agents or any of their respective directors, officers, employees, representatives, agents, affiliates

or advisers or any person who controls any of them to subscribe for or purchase any of the securities described therein, and

access has been limited so that it shall not constitute in the United States or elsewhere a general solicitation or general

advertising (as those terms are used in Regulation S under the Securities Act) or directed selling efforts (within the meaning

of Regulation S under the Securities Act). If a jurisdiction requires that the offering be made by a licensed broker or dealer

and the Dealers or any affiliate of the Dealers is a licensed broker or dealer in that jurisdiction, the offering shall be deemed

to be made by such Dealer or such affiliate on behalf of the Issuer and the Guarantor in such jurisdiction.

The attached Offering Circular has been made available to you in electronic form. You are reminded that documents

transmitted via this medium may be altered or changed during the process of transmission and, consequently, none of the

Issuer, the Guarantor, the Arrangers, the Dealers, the Trustee or the Agents (each as defined in the attached Offering Circular)

or any of their respective directors, officers, employees, representatives, agents, affiliates or advisers or any person who

controls any of them accepts any liability or responsibility whatsoever in respect of any discrepancies between the document

distributed to you in electronic format and the hard copy version available to you upon request from any of the Issuer, the

Guarantor, the Arrangers or the Dealers.

Restrictions: The attached Offering Circular is being furnished in connection with an offering exempt from registration

under the Securities Act solely for the purpose of enabling a prospective investor to consider the purchase of the securities

described herein.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN

ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES AND THE GUARANTEE

DESCRIBED IN THE ATTACHED OFFERING CIRCULAR HAVE NOT BEEN, AND WILL NOT BE, REGISTERED

UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR

OTHER JURISDICTION AND THE SECURITIES ARE SUBJECT TO U.S. TAX LAW REQUIREMENTS. THE

SECURITIES MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, WITHIN THE UNITED STATES,

OR TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS EXCEPT PURSUANT TO AN EXEMPTION

FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE

SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THIS OFFERING IS MADE

SOLELY IN OFFSHORE TRANSACTIONS PURSUANT TO THE SECURITIES ACT.

You are reminded that you have accessed the attached Offering Circular on the basis that you are a person into whose

possession the attached Offering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in which

you are located and you may not nor are you authorised to deliver or forward this document, electronically or otherwise, to

any other person. If you have gained access to this transmission contrary to the foregoing restrictions, you are not allowed

to purchase any of the securities described in the attached Offering Circular.

Actions that You May Not Take: If you receive this document by e-mail, you should not reply by e-mail to this electronic

transmission, and you may not purchase any securities by doing so. Any reply e-mail communications, including those you

generate by using the “Reply” function on your e-mail software, will be ignored or rejected.

YOU ACKNOWLEDGE THAT THE ATTACHED OFFERING CIRCULAR AND THE INFORMATION CONTAINED

THEREIN ARE STRICTLY CONFIDENTIAL AND INTENDED FOR YOU ONLY. YOU ARE NOT AUTHORISED

TO AND YOU MAY NOT FORWARD OR DELIVER THE ATTACHED OFFERING CIRCULAR,

ELECTRONICALLY OR OTHERWISE, TO ANY OTHER PERSON OR REPRODUCE SUCH OFFERING

CIRCULAR IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF

THE ATTACHED OFFERING CIRCULAR IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY

WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE

LAWS OF OTHER JURISDICTIONS.

You are responsible for protecting against viruses and other destructive items. If you receive this document by e-mail,

your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses

and other items of a destructive nature.

Strictly Confidential

Soar Wise Limited

(a company incorporated in the Cayman Islands with limited liability)

unconditionally and irrevocably guaranteed by

AVIC International Leasing Co., Ltd.

(a company incorporated in the People’s Republic of China with limited liability)

U.S.$3,500,000,000

Guaranteed Medium Term Note and Perpetual Capital Securities Programme

Under the U.S.$3,500,000,000 Guaranteed Medium Term Note and Perpetual Capital Securities Programme described in this Offering Circular (the “Programme”), Soar Wise Limited (the “Issuer”), subject to

compliance with all relevant laws, regulations and directives, may from time to time issue medium term notes (the “Notes”) or perpetual capital securities (the “Perpetual Capital Securities” and, together with the

Notes, the “Instruments”) unconditionally and irrevocably guaranteed (the “Guarantee”) by AVIC International Leasing Co., Ltd. (the “Guarantor”). The Issuer is a wholly-owned subsidiary of the Guarantor. The

aggregate nominal amount of Instruments outstanding will not at any time exceed U.S.$3,500,000,000 (or the equivalent in other currencies), subject to increase as further described in “Summary of the Programme”.

Application has been made to The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) for the listing of the Programme under which Instruments may be issued by way of debt issues to

professional investors (as defined in Chapter 37 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Professional Investors”)) only during the 12-month period after

the date of this Offering Circular on the Hong Kong Stock Exchange. This document is for distribution to Professional Investors only.

Notice to Hong Kong investors: The Issuer and the Guarantor confirm that the Instruments are intended for purchase by Professional Investors only and, with respect to Instruments to be listed on the Hong Kong

Stock Exchange, will be listed on the Hong Kong Stock Exchange on that basis. Accordingly, the Issuer and the Guarantor confirm that the Instruments are not appropriate as an investment for retail investors in

Hong Kong. Investors should carefully consider the risks involved.

The Hong Kong Stock Exchange has not reviewed the contents of this document, other than to ensure that the prescribed form disclaimer and responsibility statements and a statement limiting distribution

of this document to Professional Investors only have been reproduced in this document. Listing of the Programme and the Instruments on the Hong Kong Stock Exchange is not to be taken as an indication

of the commercial merits or credit quality of the Programme, the Instruments or the Issuer or the Guarantor or the Group or quality of disclosure in this document. Hong Kong Exchanges and Clearing

Limited and the Hong Kong Stock Exchange take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for

any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.

Notice of the aggregate nominal amount of Instruments, interest (if any) payable in respect of Instruments, the issue price of Instruments and any other terms and conditions not contained herein which are applicable

to each Tranche (as defined in “Terms and Conditions of the Notes” and “Terms and Conditions of the Perpetual Capital Securities” and each term therein, a “Condition”) of Instruments will be set out in a pricing

supplement (each a “Pricing Supplement”) which, with respect to Instruments to be listed on the Hong Kong Stock Exchange, will be delivered to the Hong Kong Stock Exchange on or before the date of issue

of the Instruments of such Tranche.

Instruments may be issued in bearer or registered form. The Instruments of each Series (as defined in “Terms and Conditions of the Notes” and “Terms and Conditions of the Perpetual Capital Securities”) issued

in bearer form (“Bearer Instruments”) will be represented on issue by a temporary global instrument in bearer form (each a “Temporary Global Instrument”) or a permanent global instrument in bearer form (each

a “Permanent Global Instrument”) (collectively, the “Global Instruments”). Instruments in registered form (“Registered Instruments”) will be represented by registered certificates (each a “Certificate”), one

Certificate being issued in respect of each Noteholder’s (as defined in “Terms and Conditions of the Notes”) or Perpetual Capital Securityholder’s (as defined in “Terms and Conditions of the Perpetual Capital

Securities”) (each, an “Instrumentholder’s”) entire holding of Registered Instruments of one Series. The Instruments of each Series in registered form will initially be represented by a global certificate (each a “Global

Certificate”). Global Instruments and Global Certificates may be deposited on the relevant issue date with a common depositary on behalf of Euroclear Bank SA/NV (“Euroclear”) and/or Clearstream Banking S.A.

(“Clearstream”), or with a sub-custodian for the Central Moneymarkets Unit Service operated by the Hong Kong Monetary Authority (the “CMU”). In relation to Global Instruments issued in compliance with TEFRA

D as indicated in the relevant Pricing Supplement, interests in the Temporary Global Instrument will be exchangeable for interests in a Permanent Global Instrument or, if so provided in the relevant Pricing Supplement,

for Definitive Instruments (as defined in “Summary of Provisions Relating to the Instruments while in Global Form”), on or after a date which is expected to be the first day following the period of 40 days from

the issue date of the relevant tranche of Instruments upon certification as to non-U.S. beneficial ownership. The provisions governing the exchange of interests in Global Instruments for other Global Instruments

or Definitive Instruments or Global Certificates for Certificates are described in “Summary of Provisions Relating to the Instruments while in Global Form”.

The Instruments and the Guarantee have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold or, in case of Bearer

Instruments, delivered, in the United States or to, or for the account or benefit of, U.S. persons, subject to certain exceptions. There will be no public offer of securities in the United States. The Instruments are being

offered to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act (“Regulation S”). Bearer Instruments are subject to U.S. tax law requirements. See “Subscription and Sale”.

Where the Circular on Promoting the Reform of the Administrative System on the Issuance by Enterprises of Foreign Debt Filings and Registrations (國家發展改革委關於推進企業發行外債備案登記制管理改革的

通知(發改外資[2015] 2044號)) issued by the National Development and Reform Commission of the PRC or its local counterparts (“NDRC”) and which came into effect on 14 September 2015, and any implementation

rules or applicable policies in relation thereto as issued by NDRC from time to time (the “NDRC Circular”) apply, for the benefit of the Instruments to be issued in accordance with the Terms and Conditions of

the Notes (in relation to Notes) and the Terms and Conditions of the Perpetual Capital Securities (in relation to Perpetual Capital Securities), with respect to the offering of a particular tranche of Instruments, the

Guarantor undertakes to make the required filing with NDRC within the period prescribed in the NDRC Circular and provide the Trustee (as defined in “Terms and Conditions of the Notes” and “Terms and Conditions

of the Perpetual Capital Securities”) with the relevant certificate of any registration or amended registration (where applicable) with respect to the offering of the Instruments.

PRIIPS/IMPORTANT – EEA RETAIL INVESTORS – If the Pricing Supplement in respect of any Instruments includes a legend entitled “Prohibition of Sales to EEA Retail Investors”, the Instruments are not

intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (the “EEA”). For these purposes, a “retail

investor” means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; (ii) a customer within the meaning of Directive (EU) 2016/97 (the “Insurance Distribution

Directive”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (the “Prospectus

Regulation”). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Instruments or otherwise making them available

to retail investors in the EEA has been prepared and therefore offering or selling the Instruments or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.

IMPORTANT – UK RETAIL INVESTORS – If the Pricing Supplement in respect of any Instruments includes a legend entitled “Prohibition of Sales to UK Retail Investors”, The Instruments are not intended to

be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom (“UK”). For these purposes, a “retail investor” means a person

who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”);

(ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (“FSMA”) and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that

customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor

as defined in Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the EUWA. Consequently no key information document required by Regulation (EU) No 1286/2014 as it forms

part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Instruments or otherwise making them available to retail investors in the UK has been prepared and therefore

offering or selling the Instruments or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.

Singapore SFA Product Classification: In connection with Section 309B of the Securities and Futures Act 2001 of Singapore (the “SFA”) and the Securities and Futures (Capital Markets Products) Regulations 2018

of Singapore (the “CMP Regulations 2018”), unless otherwise specified before an offer of Instruments, the Issuer has determined and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA),

that the Instruments are “prescribed capital markets products” (as defined in the CMP Regulations 2018) and are Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment

Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

The Instruments may be issued on a continuing basis to one or more of the Dealers specified under “Summary of the Programme” and any additional Dealer appointed under the Programme from time to time by

the Issuer (each a “Dealer” and together the “Dealers”), which appointment may be for a specific issue or on an ongoing basis. References in this Offering Circular to the “relevant Dealer” shall, in the case of

an issue of Instruments being (or intended to be) subscribed by more than one Dealer, be to all Dealers agreeing to subscribe such Instruments.

Investing in Instruments issued under the Programme involves certain risks and may not be suitable for all investors. Investors should have sufficient knowledge and experience in financial and business

matters to evaluate the information contained in this Offering Circular and in the relevant Pricing Supplement and the merits and risks of investing in a particular issue of Instruments in the context of

their financial position and particular circumstances. Investors also should have the financial capacity to bear the risks associated with an investment in Instruments. Investors should not purchase

Instruments unless they understand and are able to bear risks associated with Instruments. Prospective investors should have regard to the factors described under the section headed “Risk Factors” in

this Offering Circular. Investors should be aware that the Perpetual Capital Securities are perpetual and have no fixed redemption date, and there are various other risks relating to the Perpetual Capital

Securities, the Issuer, the Guarantor, the Group and their respective business and jurisdiction of operations which investors should familiarise themselves with before making an investment in the Perpetual

Capital Securities. See “Risk Factors” in relation to the perpetual features of the Perpetual Capital Securities beginning on page 28 of this Offering Circular.

The Programme is rated “A-” by Fitch Ratings Ltd. (“Fitch”). The rating assigned to the Programme is applicable to the senior unsecured notes issued under the Programme; ratings in respect of the Perpetual Capital

Securities issued may be separately obtained. This rating is only correct as at the date of this Offering Circular. Tranches of Instruments to be issued under the Programme will be rated or unrated. Where a Tranche

of Instruments is to be rated, such rating will not necessarily be the same as the ratings assigned to the Programme. A rating is not a recommendation to buy, sell or hold securities and may be subject to suspension,

reduction, revision or withdrawal at any time by the assigning rating agency.

Arrangers

Agricultural Bank of China

Limited Hong Kong Branch

Haitong International

Bank of China

ICBC International

BNP PARIBAS

ICBC (Asia)

DBS Bank Ltd.

Shanghai Pudong Development

Bank Hong Kong Branch

Dealers

Agricultural Bank of China

Limited Hong Kong Branch

Haitong International

Bank of China

ICBC International

BNP PARIBAS

ICBC (Asia)

DBS Bank Ltd.

Shanghai Pudong Development

Bank Hong Kong Branch

Offering Circular dated 16 May 2022

NOTICE TO INVESTORS

Each of the Issuer and the Guarantor, having made all reasonable enquiries, confirms that (i) this

Offering Circular contains all information with respect to the Issuer, the Guarantor and the

Guarantor’s subsidiaries and associated companies taken as a whole (the “Group”) and to the

Guarantee and the Instruments which is material in the context of the issue and offering of the

Instruments (including the information which is required by applicable laws of the Cayman Islands,

Hong Kong or the PRC and according to the particular nature of the Issuer, the Guarantor, the

Guarantee and the Instruments, is necessary to enable investors to make an informed assessment of

the assets and liabilities, financial position, profits and losses, and prospects of the Issuer and the

Guarantor); (ii) the statements contained in this Offering Circular relating to the Issuer, the Guarantor

and to the Group are in every material particular true and accurate and not misleading; (iii) the

opinions and intentions expressed in this Offering Circular with regard to the Issuer, the Guarantor

and the Group are honestly held, have been reached after considering all relevant circumstances and

are based on reasonable assumptions; (iv) there are no other facts in relation to the Issuer, the

Guarantor, the Group, the Guarantee or the Instruments the omission of which would, in the context

of the issue and offering of the Instruments make any statement in this Offering Circular misleading

in any material respect; and (v) all reasonable enquiries have been made by the Issuer and the

Guarantor to ascertain such facts and to verify the accuracy of all such information and statements.

This Offering Circular includes particulars given in compliance with the Rules Governing the Listing

of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information

with regard to the Issuer, the Guarantor and the Group. The Issuer and the Guarantor accept full

responsibility for the accuracy of the information contained in this Offering Circular and each

confirms, having made all reasonable enquiries, that to the best of its knowledge and belief there are

no other facts the omission of which would make any statement herein misleading.

Admission to the Hong Kong Stock Exchange and quotation of any Instruments on the Hong Kong

Stock Exchange is not to be taken as an indication of the merits of the Programme, the Instruments,

the Issuer, the Guarantor or the Group. In making an investment decision, investors must rely on their

own examination of the Issuer, the Guarantor, the Group and the terms of the offering, including the

merits and risks involved. Please see “Risk Factors” for a discussion of certain factors to be

considered in connection with an investment in the Instruments.

Each Tranche of Instruments will be issued on the terms set out under the Terms and Conditions of

the Notes or the Terms and Conditions of the Perpetual Capital Securities, as the case may be, as

amended and/or supplemented by a Pricing Supplement. This Offering Circular must be read and

construed together with any amendments or supplements hereto and with any information

incorporated by reference herein (see “Information Incorporated by Reference and Financial

Information”) and, in relation to any Tranche of Instruments, must be read and construed together

with the relevant Pricing Supplement. This Offering Circular shall be read and construed on the basis

that such documents are incorporated in and form part of this Offering Circular.

The distribution of this Offering Circular and any Pricing Supplement and the offering, sale and

delivery of the Instruments in certain jurisdictions may be restricted by law. Persons into whose

possession this Offering Circular comes are required by the Issuer, the Guarantor, each of

Agricultural Bank of China Limited Hong Kong Branch, Bank of China Limited, BNP Paribas, BOCI

Asia Limited, DBS Bank Ltd., Haitong International Securities Company Limited, ICBC

International Securities Limited, Industrial and Commercial Bank of China (Asia) Limited and

Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch (together the “Arrangers” or

– i –

“Dealers”, each an “Arranger” or a “Dealer”), the Trustee and the Agents (as defined in “Terms and

Conditions of the Notes” and “Terms and Conditions of the Perpetual Capital Securities”) to inform

themselves about and to observe any such restrictions. None of the Issuer, the Guarantor, the

Arrangers, the Dealers, the Trustee or the Agents or any of their respective affiliates, directors,

officers, employees, representatives, advisers or agents or any person who controls any of them

represents that this Offering Circular or any Pricing Supplement may be lawfully distributed, or that

any Instruments may be lawfully offered, in compliance with any applicable registration or other

requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assumes

any responsibility for facilitating any such distribution or offering. No action is being taken to permit

a public offering of any of the Instruments or the distribution of this Offering Circular or any Pricing

Supplement in any jurisdiction where action would be required for such purposes. Accordingly, no

Instruments may be offered or sold, directly or indirectly, and none of this Offering Circular, any

Pricing Supplement or any advertisement or other offering material may be distributed or published

in any jurisdiction, except under circumstances that will result in compliance with any applicable

laws and regulations.

No prospectus is required in accordance with Directive 2003/71/EC in relation to offers of

Instruments under the Programme.

There are restrictions on the offer and sale of the Instruments, and the circulation of documents

relating thereto, in certain jurisdictions including the United States, the EEA, the United Kingdom,

the PRC, Hong Kong, Singapore, Japan and Taiwan, and to persons connected therewith. For a

description of certain further restrictions on offers, sales and resales of the Instruments and

distribution of this Offering Circular and any Pricing Supplement, see “Subscription and Sale”.

PRIIPS/Important – EEA Retail Investors: If the Pricing Supplement in respect of any Instruments

includes a legend entitled “Prohibition of Sales to EEA Retail Investors”, the Instruments are not

intended to be offered, sold or otherwise made available to and should not be offered, sold or

otherwise made available to any retail investor in the EEA. For these purposes, a “retail investor”

means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of

MiFID II; (ii) a customer within the meaning of the Insurance Distribution Directive, where that

customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID

II; or (iii) not a qualified investor as defined in the Prospectus Regulation. Consequently no key

information document required by the PRIIPs Regulation for offering or selling the Instruments or

otherwise making them available to retail investors in the EEA has been prepared and therefore

offering or selling the Instruments or otherwise making them available to any retail investor in the

EEA may be unlawful under the PRIIPs Regulation.

IMPORTANT – UK RETAIL INVESTORS – If the Pricing Supplement in respect of any

Instruments includes a legend entitled “Prohibition of Sales to UK Retail Investors”, The Instruments

are not intended to be offered, sold or otherwise made available to and should not be offered, sold

or otherwise made available to any retail investor in the UK. For these purposes, a “retail investor”

means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of

Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the EUWA; (ii) a customer

within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA

to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client,

as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic

law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of Regulation (EU)

2017/1129 as it forms part of domestic law by virtue of the EUWA. Consequently no key information

– ii –

document required by the UK PRIIPs Regulation for offering or selling the Instruments or otherwise

making them available to retail investors in the UK has been prepared and therefore offering or

selling the Instruments or otherwise making them available to any retail investor in the UK may be

unlawful under the UK PRIIPs Regulation.

Singapore SFA Product Classification – In connection with Section 309B of the SFA and the

CMP Regulations 2018, unless otherwise specified before an offer of Instruments, the Issuer has

determined, and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA), that

the Instruments are “prescribed capital markets products” (as defined in the CMP Regulations 2018)

and are Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of

Investment Products and MAS Notice FAA-N16: Notice on Recommendation on Investment Products).

No person has been or is authorised to give any information or to make any representation concerning

the Issuer, the Guarantor, the Group or the Instruments other than as contained in this Offering

Circular or any other document entered into in relation to the Programme and the sale of Instruments

and, if given or made, any such other information or representation should not be relied upon as

having been authorised by the Issuer, the Guarantor, any Arranger, any Dealer, the Trustee or any

Agent or any of their respective affiliates, directors, officers, employees, representatives, advisers or

agents or any person who controls any of them. Neither the delivery of this Offering Circular or any

Pricing Supplement nor any offering, sale or delivery made in connection with the issue of the

Instruments shall, under any circumstances, constitute a representation that there has been no change

or development reasonably likely to involve a change in the affairs of the Issuer, the Guarantor or the

Group since the date hereof, or if later, the date upon which this Offering Circular has been most

recently amended or supplemented or create any implication that the information contained herein is

correct as at any date subsequent to the date hereof or, as the case may be, the date upon which this

Offering Circular has been most recently amended or supplemented or that any other information

supplied in connection with the Programme is correct as at any time subsequent to the date on which

it is supplied or, if different, the date indicated in the document containing the same. The Arrangers,

the Dealers, the Trustee and the Agents and each of their respective affiliates, directors, officers,

employees, representatives, advisers and agents and each person who controls any of them expressly

do not undertake to review the financial condition or affairs of the Issuer, the Guarantor or the Group

during the life of the Programme or to advise any investor in the Instruments of any information

coming to their attention. Investors should review, inter alia, the most recent documents incorporated

by reference into this Offering Circular when deciding whether or not to purchase any Instruments.

Neither this Offering Circular nor any Pricing Supplement constitutes an offer of, or an invitation by

or on behalf of any of the Issuer, the Guarantor, the Arrangers, the Dealers, the Trustee or the Agents

or any of their respective affiliates, directors, officers, employees, representatives, advisers or agents

or any person who controls any of them to subscribe for or purchase any Instruments and may not

be used for the purpose of an offer to, or a solicitation by, anyone in any jurisdiction or in any

circumstances in which such offer or solicitation is not authorised or is unlawful. Each recipient of

this Offering Circular or any Pricing Supplement shall be taken to have made its own investigation

and appraisal of the condition (financial or otherwise) of the Issuer, the Guarantor and the Group.

This Offering Circular is highly confidential and has been prepared by the Issuer solely for use in

connection with the Programme and the proposed offering of the Instruments under the Programme

as described herein. Neither the Issuer nor the Guarantor has authorised its use for any other purpose.

This Offering Circular may not be copied or reproduced in whole or in part. It may be distributed only

to and its contents may be disclosed only to the prospective investors to whom it is provided. By

accepting delivery of this Offering Circular each investor agrees to these restrictions.

– iii –

No representation or warranty, express or implied, is made or given by the Arrangers, the Dealers,

the Trustee or the Agents or any of their respective affiliates, directors, officers, employees,

representatives, advisers or agents or any person who controls any of them as to the accuracy,

completeness or sufficiency of the information contained or incorporated in this Offering Circular or

any other information provided by the Issuer and the Guarantor in connection with the Programme,

and nothing contained or incorporated in this Offering Circular is, or shall be relied upon as, a

promise, representation or warranty by the Arrangers, the Dealers, the Trustee or the Agents or any

of their respective affiliates, directors, officers, employees, representatives, advisers or agents or any

person who controls any of them. None of the Arrangers, the Dealers, the Trustee or the Agents or

any of their respective affiliates, directors, officers, employees, representatives, advisers or agents or

any person who controls any of them has independently verified any of the information contained in

this Offering Circular and can give assurance that such information is accurate, truthful or complete.

To the fullest extent permitted by law, the Arrangers, the Dealers, the Trustee and the Agents and each

of their respective affiliates, directors, officers, employees, representatives, advisers and agents and

each person who controls any of them do not accept any responsibility for the contents of this

Offering Circular or for any other statement, made or purported to be made by the Arrangers, the

Dealers, the Trustee or the Agents or any of their respective affiliates, directors, officers, employees,

representatives, advisers or agents or any person who controls any of them or on its behalf in

connection with the Issuer, the Guarantor or the Group or the issue and offering of the Instruments.

Each of the Arrangers, the Dealers, the Trustee and the Agents and each of their respective affiliates,

directors, officers, employees, representatives, advisers and agents and each person who controls any

of them accordingly disclaims all and any liability whether arising in tort or contract or otherwise

which it might otherwise have in respect of this Offering Circular or any such statement. None of the

Arrangers, the Dealers, the Trustee or the Agents or any of their respective affiliates, directors,

officers, employees, representatives, advisers or agents or any person who controls any of them

accepts any liability in relation to the information contained or incorporated by reference in this

Offering Circular or any other information provided by the Issuer in connection with the Programme.

This Offering Circular, each Pricing Supplement and any other information supplied in connection

with the Programme or any Instruments (i) are not intended to provide the basis of any credit or other

evaluation and (ii) should not be considered as a recommendation by any of the Issuer, the Guarantor,

the Arrangers, the Dealers, the Trustee or the Agents or any of their respective affiliates, directors,

officers, employees, representatives, advisers or agents or any person who controls any of them that

any recipient of this Offering Circular should purchase any Instruments. Each potential purchaser of

the Instruments should determine for itself the relevance of the information contained in this Offering

Circular and its purchase of the Instruments should be based upon such investigations with its own

tax, legal and business advisers as it deems necessary.

None of the Issuer, the Guarantor, the Arrangers, the Dealers, the Trustee or the Agents or any of their

respective affiliates, directors, officers, employees, representatives, advisers or agents or any person

who controls any of them makes any representation to any investor in the Instruments regarding the

legality of its investment under any applicable laws. Any investor in the Instruments should be able

to bear the economic risk of an investment in the Instruments for an indefinite period of time.

– iv –

THE INSTRUMENTS AND THE GUARANTEE HAVE NOT BEEN AND WILL NOT BE

REGISTERED UNDER SECURITIES ACT OR WITH ANY SECURITIES REGULATORY

AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND

THE INSTRUMENTS MAY INCLUDE BEARER INSTRUMENTS THAT ARE SUBJECT TO

U.S. TAX LAW REQUIREMENTS. SUBJECT TO CERTAIN EXCEPTIONS, THE

INSTRUMENTS MAY NOT BE OFFERED, SOLD, OR, IN CASE OF BEARER

INSTRUMENTS, DELIVERED, WITHIN THE UNITED STATES OR TO, OR FOR THE

ACCOUNT OR BENEFIT OF, U.S. PERSONS. REGISTERED INSTRUMENTS ARE

SUBJECT TO CERTAIN RESTRICTIONS, SEE “SUBSCRIPTION AND SALE”.

IN CONNECTION WITH THE ISSUE OF ANY TRANCHE OF INSTRUMENTS, THE

DEALER OR DEALERS (IF ANY) NAMED AS THE STABILISATION MANAGER(S) (THE

“STABILISATION MANAGER(S)”) (OR PERSON(S) ACTING ON BEHALF OF ANY

STABILISATION MANAGER(S)) IN THE RELEVANT PRICING SUPPLEMENT MAY

OVER-ALLOT INSTRUMENTS OR EFFECT TRANSACTIONS WITH A VIEW TO

SUPPORTING THE MARKET PRICE OF THE INSTRUMENTS AT A LEVEL HIGHER

THAN THAT WHICH MIGHT OTHERWISE PREVAIL FOR A LIMITED PERIOD OF TIME

AFTER THE CLOSING DATE OF THE RELEVANT TRANCHE OF INSTRUMENTS.

HOWEVER, THERE IS NO OBLIGATION ON THE STABILISATION MANAGER(S) (OR

PERSON(S) ACTING ON BEHALF OF THE STABILISATION MANAGER(S)), TO DO THIS.

ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH

ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE RELEVANT

TRANCHE OF INSTRUMENTS IS MADE AND, IF BEGUN, MAY CEASE AT ANY TIME,

BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE

DATE OF THE RELEVANT TRANCHE OF INSTRUMENTS AND 60 DAYS AFTER THE

DATE OF THE ALLOTMENT OF THE RELEVANT TRANCHE OF INSTRUMENTS. ANY

STABILISATION ACTION OR OVERALLOTMENT MUST BE CONDUCTED BY THE

RELEVANT STABILISATION MANAGER(S) (OR PERSONS ACTING ON BEHALF OF ANY

STABILISATION MANAGER(S)) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND

RULES.

This Offering Circular does not describe all of the risks and investment considerations (including

those relating to each investor’s particular circumstances) of an investment in Instruments of a

particular issue. Each potential purchaser of Instruments should refer to and consider carefully the

relevant Pricing Supplement for each particular issue of Instruments, which may describe additional

risks and investment considerations associated with such Instruments. The risks and investment

considerations identified in this Offering Circular and the relevant Pricing Supplement are provided

as general information only. Investors should consult their own financial and legal advisers as to the

risks and investment considerations arising from an investment in an issue of Instruments and should

possess the appropriate resources to analyse such investment and the suitability of such investment

in their particular circumstances. Each person receiving this Offering Circular acknowledges that

such person has not relied on the Arrangers, the Dealers, the Trustee or the Agents or any of their

respective affiliates, directors, officers, employees, representatives, advisers or agents or any person

who controls any of them in connection with its investigation of the accuracy of such information or

its investment decision.

– v –

WARNING

The contents of this Offering Circular have not been reviewed by any regulatory authority of any

jurisdiction. You are advised to exercise caution in relation to the offering of the Instruments. If you

are in any doubt about any of the contents of this Offering Circular, you should obtain independent

professional advice.

INDUSTRY AND MARKET DATA

Market data and certain industry forecasts and statistics in this Offering Circular have been obtained

from both public and private sources, including market research, publicly available information and

industry publications. Although this information is believed to be reliable, it has not been

independently verified by the Issuer, the Guarantor, the Arrangers, the Dealers, the Trustee or the

Agents or any of their respective affiliates, directors, officers, employees, representatives, advisers

or agents or any person who controls any of them and none of the Issuer, the Guarantor, the

Arrangers, the Dealers, the Trustee or the Agents or any of their respective affiliates, directors,

officers, employees, representatives, advisers or agents or any person who controls any of them

makes any representation as to the accuracy or completeness of that information. Such information

may not be consistent with other information compiled within or outside the PRC. In addition, third

party information providers may have obtained information from market participants and such

information may not have been independently verified.

PRESENTATION OF FINANCIAL INFORMATION

The audited consolidated financial statements of the Guarantor as at and for the year ended 31

December 2020, which are included elsewhere in this Offering Circular, have been audited by

Zhongshenzhonghuan Certified Public Accountants (SGP) (“ZSZH”) (formerly known as Mazars

Certified Public Accountants (SGP)), and the audited consolidated financial statements of the

Guarantor as at and for the year ended 2021, which are included elsewhere in this Offering Circular,

have been audited by Dahua Certified Public Accountants (Special General Partnership) (“Dahua”)

(together the “Audited Consolidated Financial Statements”). The Audited Consolidated Financial

Statements were prepared and presented in accordance with the Accounting Standards for Business

Enterprises in China (“PRC GAAP”).

PRC GAAP is substantially in line with the International Financial Reporting Standards (“IFRS”),

except for certain modifications which reflect the PRC’s unique circumstances and environment.

Please see “Description of Certain Differences between PRC GAAP and IFRS” for details.

The scope of consolidation of the Audited Consolidated Financial Statements changes from time to

time. See “Notes to the Financial Statements – VII. Business Combination and Financial Statement

Consolidation” of the Guarantor’s audited consolidated financial statements as at and for the year

ended 31 December 2020 and “Notes to the Financial Statements – VII. Business Combination and

Financial Statement Consolidation” of the Guarantor’s audited consolidated financial statements as

at and for the year ended 31 December 2021. In addition, in 2017 and 2018, the Ministry of Finance

of the PRC promulgated certain new accounting standards and new requirements in relation to the

format of financial statements as well as classification and measurement of certain accounting items

(the “New Accounting Standards and Requirements”). The Audited Consolidated Financial

Statements were prepared and presented in accordance with the relevant applicable New Accounting

– vi –

Standards and Requirements. As a result, the presentation of certain accounting items in the Audited

Consolidated Financial Statements may not be comparable to the financial figures in the Guarantor’s

financial statements for the previous periods. For details of the New Accounting Standards and

Requirements and its impact on the Audited Consolidated Financial Statements, please see “Notes to

the Financial Statements – V Significant changes in accounting policies, accounting estimates and

correction of errors in prior periods – 1. Changes in accounting policies” of the Guarantor’s audited

consolidated financial statements as at and for the year ended 31 December 2020 and “Notes to the

Financial Statements – V Significant changes in accounting policies, accounting estimates and

correction of errors in prior periods” of the Guarantor’s audited consolidated financial statements as

at and for the year ended 31 December 2021.

Please also see “Risk Factors – Risks Relating to Financial and Other Information – Certain

accounting items in the Audited Consolidated Financial Statements may not be comparable to the

financial information in the Guarantor’s consolidated financial statements for the previous periods.”

for further information.

– vii –

EXCHANGE RATE INFORMATION

The consolidated financial statements of the Guarantor are presented in Renminbi. For convenience

only and unless otherwise noted, all translations from Renminbi into U.S. dollars in this Offering

Circular were made at the rate of RMB6.3726 to U.S.$1.00 (as the case may be), based on the noon

buying rate as set forth in the H.10 statistical release of the Federal Reserve Bank of New York on

30 December 2021. No representation is made that the Renminbi amounts referred to in this Offering

Circular could have been or could be converted into U.S. dollars at any particular rate or at all, and

vice versa.

ROUNDING

In this Offering Circular, where information has been presented in thousands or millions of units,

amounts may have been rounded up or down. Accordingly, totals of columns or rows of numbers in

tables or totals of numbers in charts or diagrams may not be equal to the apparent total of the

individual items and actual numbers may differ from those contained herein due to rounding.

References to information in billions of units are to the equivalent of a thousand million units.

Certain Definitions and Conventions

In this Offering Circular, unless otherwise specified or the context otherwise requires, references to

“China” or the “PRC” or the “Mainland” are to the People’s Republic of China and, for the purpose

of this Offering Circular only, excluding Hong Kong, the Macau Special Administrative Region of the

People’s Republic of China and Taiwan; references to “Hong Kong” are to the Hong Kong Special

Administrative Region of the People’s Republic of China; and references to the “United States” or

“U.S.” are to the United States of America.

In this Offering Circular, unless otherwise specified or the context otherwise requires, references to

“Renminbi”, “RMB” or “CNY” are to the lawful currency of the PRC; references to “Hong Kong

dollar” or “HK$” are to the lawful currency of Hong Kong; references to “EUR”, “euro” or “C” are

to the lawful currency of member states of the European Union that adopt the single currency

introduced in accordance with the Treaty on the Functioning of the European Community, as amended

from time to time; and references to “U.S. dollars” or “U.S.$” are to the lawful currency of the

United States of America.

The English names of the PRC nationals, entities, departments, facilities, laws, regulations,

certificates, titles and the like are translations of their Chinese names and are included for

identification purposes only.

In this Offering Circular, unless otherwise indicated or the context otherwise requires, references to:

? “CBIRC” refers to the China Banking and Insurance Regulatory Commission;

? “Leased asset scale” includes long-term receivables, long-term receivables due within one year,

book value of fixed assets and pre-payments for purchase of financial lease assets;

? “MOFCOM” refers to the Ministry of Commerce of the People’s Republic of China;

? “NDRC” refers to the National Development and Reform Commission of the PRC or its local

counterparts;

? “PBOC” refers to the People’s Bank of China, the central bank of the People’s Republic of

China;

? the “PRC government” refers to the central government of the People’s Republic of China and

its political subdivisions, including provincial, municipal and other regional or local

government entities, and instrumentalities thereof, or where the context requires, any of them;

– viii –

? “SAFE” refers to the State Administration of Foreign Exchange of the PRC or its local

branches;

? “SASAC” refers to the State-owned Assets Supervision and Administration Commission of the

State Council of the PRC or its successor; and

? “State Council” refers to the State Council of the People’s Republic of China.

– ix –

INFORMATION INCORPORATED BY REFERENCE AND

FINANCIAL INFORMATION

This Offering Circular should be read and construed in conjunction with:

(i) each relevant Pricing Supplement;

(ii) all amendments and supplements from time to time to this Offering Circular; and

(iii) any annual or interim financial statements (whether audited or unaudited) of the Guarantor that

are circulated with this Offering Circular and are dated as at a date, or for a period ending,

subsequent to those financial statements appearing elsewhere in this Offering Circular,

which shall be deemed to be incorporated in, and to form part of, this Offering Circular and which

shall be deemed to modify or supersede the contents of this Offering Circular.

Any statement contained in this Offering Circular or in a document incorporated by reference into

this Offering Circular will be deemed to be modified or superseded for purposes of this Offering

Circular to the extent that a statement contained in any such subsequent document modifies or

supersedes that statement. Any statement that is modified or superseded in this manner will no longer

be a part of this Offering Circular, except as modified or superseded.

Copies of all such documents which are so deemed to be incorporated in, and to form part of, this

Offering Circular will be available (upon written request) free of charge, during usual business hours

on any weekday (Saturdays, Sundays and public holidays excepted), for inspection at the specified

office of the Trustee set out at the end of this Offering Circular.

SUPPLEMENTAL OFFERING CIRCULAR

Each of the Issuer and the Guarantor has given an undertaking to the Dealers that the Issuer and the

Guarantor shall prepare and publish an amendment or supplement to this Offering Circular if at any

time during the duration of the Programme a significant new factor, material mistake or material

inaccuracy arises or is noted relating to the information included in this Offering Circular which is

capable of affecting an assessment by investors of the assets and liabilities, financial position, profits

and losses, and prospects of the Issuer and/or the Guarantor and/or of the rights attaching to the

Instruments and/or the Guarantee.

– x –

FORWARD-LOOKING STATEMENTS

Certain statements under “Risk Factors”, “Description of the Group” and elsewhere in this Offering

Circular constitute “forward-looking statements”. The words including “believe”, “expect”, “plan”,

“anticipate”, “intend”, “schedule”, “estimate”, “could”, “may”, “going forward” and similar words or

expressions identify forward-looking statements. In addition, all statements other than statements of

historical facts included in this Offering Circular, including, but without limitation, those regarding

the financial position, business strategy, prospects, capital expenditure and investment plans of the

Group and the plans and objectives of the Group’s respective management for their respective future

operations (including development plans and objectives relating to the Group’s respective

operations), are forward-looking statements. Such forward-looking statements involve known and

unknown risks, uncertainties and other factors which may cause actual results or performance of the

Group to differ materially from those expressed or implied by such forward-looking statements. Such

forward-looking statements are based on numerous assumption regarding the Group’s respective

present and future business strategies and the environment in which the Group will operate in the

future. These forward-looking statements reflect the views of the Issuer and the Guarantor with

respect to future events and are not a guarantee of future performance or developments. The Issuer

expressly disclaims any obligation or undertaking to release any updates or revisions to any

forward-looking statements contained herein to reflect any change in the Issuer’s, the Guarantor’s or

the Group’s expectations with regard thereto or any change of events, conditions or circumstances,

on which any such statements were based. This Offering Circular discloses, under “Risk Factors” and

elsewhere, important factors that could cause actual results to differ materially from the Issuer’s

expectations. All subsequent written and forward-looking statements attributable to the Issuer, the

Guarantor or persons acting on behalf of the Issuer and the Guarantor are expressly qualified in their

entirety by such cautionary statements.

– xi –

TABLE OF CONTENTS

SUMMARY OF THE PROGRAMME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

SUMMARY CONSOLIDATED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . 22

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

DESCRIPTION OF THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

DESCRIPTION OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

DIRECTORS OF THE GUARANTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

FORM OF PRICING SUPPLEMENT OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . 126

FORM OF PRICING SUPPLEMENT OF THE PERPETUAL CAPITAL

SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

TERMS AND CONDITIONS OF THE PERPETUAL CAPITAL SECURITIES . . . . . . . 201

SUMMARY OF PROVISIONS RELATING TO THE INSTRUMENTS WHILE IN

GLOBAL FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253

TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260

PRC REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274

PRC CURRENCY CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276

SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279

DESCRIPTION OF CERTAIN DIFFERENCES BETWEEN

PRC GAAP AND IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288

GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289

INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

– xii –

SUMMARY OF THE PROGRAMME

The following summary is qualified in its entirety by the remainder of this Offering Circular. This

summary must be read as an introduction to this Offering Circular and any decision to invest in the

Instruments should be based on a consideration of this Offering Circular as a whole, including any

information incorporated by reference. Phrases used in this summary and not otherwise defined shall

have the meanings given to them in the section entitled “Terms and Conditions of the Notes” and

“Terms and Conditions of the Perpetual Capital Securities”.

Issuer . . . . . . . . . . . . . . . . . . . . . Soar Wise Limited.

Guarantor. . . . . . . . . . . . . . . . . . AVIC International Leasing Co., Ltd.

Description . . . . . . . . . . . . . . . . . Guaranteed Medium Term Note and Perpetual Capital

Securities Programme.

Size . . . . . . . . . . . . . . . . . . . . . . . Up to U.S.$3,500,000,000 (or the equivalent in other currencies

at the date of issue) aggregate nominal amount of Instruments

outstanding at any one time. The Issuer and the Guarantor may

increase the aggregate nominal amount of the Programme in

accordance with the terms of the Dealer Agreement (as defined

in “Subscription and Sale”).

Risk Factors . . . . . . . . . . . . . . . . Investing in Instruments issued under the Programme involves

certain risks. The principal risk factors that may affect the

abilities of the Issuer and the Guarantor to fulfil their respective

obligations in respect of the Instruments are discussed under

“Risk Factors”.

Arrangers . . . . . . . . . . . . . . . . . . Agricultural Bank of China Limited Hong Kong Branch, Bank

of China Limited, BNP Paribas, BOCI Asia Limited, DBS Bank

Ltd., Haitong International Securities Company Limited, ICBC

International Securities Limited, Industrial and Commercial

Bank of China (Asia) Limited and Shanghai Pudong

Development Bank Co., Ltd., Hong Kong Branch.

Dealers . . . . . . . . . . . . . . . . . . . . Agricultural Bank of China Limited Hong Kong Branch, Bank

of China Limited, BNP Paribas, BOCI Asia Limited, DBS Bank

Ltd., Haitong International Securities Company Limited, ICBC

International Securities Limited, Industrial and Commercial

Bank of China (Asia) Limited and Shanghai Pudong

Development Bank Co., Ltd., Hong Kong Branch.

The Issuer and the Guarantor may from time to time terminate

the appointment of any Dealer under the Programme or appoint

Dealer(s) either in respect of one or more Tranches or in respect

of the whole Programme. References in this Offering Circular

to “Dealers” are to all persons appointed as a dealer in respect

of one or more Tranches or the Programme.

– 1 –

Certain Restrictions . . . . . . . . . . Each issue of Instruments denominated in a currency in respect

of which particular laws, guidelines, regulations, restrictions

or reporting requirements apply will only be issued in

circumstances which comply with such laws, guidelines,

regulations, restrictions or reporting requirements from time to

time (see “Subscription and Sale”) including the following

restriction applicable at the date of this Offering Circular.

Instruments having a maturity of less than one year

Instruments having a maturity of less than one year will, if the

proceeds of the issue are accepted in the United Kingdom,

constitute deposits for the purposes of the prohibition on

accepting deposits contained in Section 19 of the Financial

Services and Markets Act 2000 unless they are issued to a

limited class of professional investors and have a denomination

of at least ￡100,000 or its equivalent (see “Subscription and

Sale”).

Trustee . . . . . . . . . . . . . . . . . . . . DB Trustees (Hong Kong) Limited.

Principal Paying Agent,

Registrar and Transfer

Agent. . . . . . . . . . . . . . . . . . . .

Deutsche Bank AG, Hong Kong Branch.

CMU Lodging and Paying

Agent. . . . . . . . . . . . . . . . . . . .

Deutsche Bank AG, Hong Kong Branch.

Method of Issue . . . . . . . . . . . . . The Instruments will be issued on a syndicated or nonsyndicated basis. The Instruments will be issued in Series

having one or more issue dates and on terms otherwise identical

(or identical other than in respect of the first payment of interest

(in respect of the Notes) or the first payment of Distribution (as

defined in “Terms and Conditions of the Perpetual Capital

Securities”) (in respect of the Perpetual Capital Securities), as

applicable), the Instruments of each Series being intended to be

interchangeable with all other Instruments of that Series. Each

Series may be issued in Tranches on the same or different issue

dates. The specific terms of each Tranche (which will be

completed, where necessary, with the relevant terms and

conditions and, save in respect of the issue date, issue price,

first payment of interest (in respect of the Notes) or the first

payment of Distribution (in respect of the Perpetual Capital

Securities), as applicable, and nominal amount of the Tranche,

will be identical to the terms of other Tranches of the same

Series) will be set out in the relevant Pricing Supplement.

Issue Price . . . . . . . . . . . . . . . . . Instruments may be issued at their nominal amount or at a

discount or premium to their nominal amount. Partly Paid

Instruments may be issued, the issue price of which will be

payable in two or more instalments.

– 2 –

Form of Instruments . . . . . . . . . Instruments may be issued in bearer form or in registered form

as described in “Terms and Conditions of the Notes” and “Terms

and Conditions of the Perpetual Capital Securities”. Registered

Instruments will not be exchangeable for Bearer Instruments

and vice versa.

Each Tranche of Bearer Instruments will initially be in the form

of either a Temporary Bearer Global Instrument or a Permanent

Bearer Global Instrument, in each case as specified in the

relevant Pricing Supplement.

Each Global Instrument will be deposited on or around the

relevant issue date with a common depositary or sub-custodian

for Clearstream, Euroclear and/or, as the case may be, the CMU

and/or any other relevant clearing system. Each Temporary

Bearer Global Instrument will be exchangeable for a Permanent

Bearer Global Instrument or, if so specified in the relevant

Pricing Supplement, for Definitive Instruments. If the TEFRA

D rules are specified in the relevant Pricing Supplement as

applicable, certification as to non-U.S. beneficial ownership

will be a condition precedent to any exchange of an interest in

a Temporary Bearer Global Instrument or receipt of any

payment of interest (in respect of the Notes) or receipt of any

payment of Distribution (in respect of the Perpetual Capital

Securities) in respect of a Temporary Bearer Global Instrument.

Each Permanent Bearer Global Instrument will be exchangeable

for Definitive Instruments in accordance with its terms.

Definitive Instruments will, if interest-bearing (in respect of the

Notes), have Coupons (as defined in the Trust Deed) attached

and, if appropriate, a Talon (as defined in the Trust Deed) for

further Coupons.

Registered Instruments will initially be represented by Global

Certificates. Global Certificates representing Registered

Instruments will be registered in the name of a common

depositary or nominee for one or more of Euroclear,

Clearstream and the CMU.

Clearing Systems . . . . . . . . . . . . Clearstream, Euroclear, the CMU and, in relation to any

Tranche, such other clearing system as may be agreed between

the Issuer, the Guarantor, the Principal Paying Agent, the

Trustee, the Registrar and the relevant Dealer(s).

– 3 –

Initial Delivery of Instruments . On or before the issue date for each Series, the Global

Instrument representing the Bearer Instruments or the Global

Certificate representing Registered Instruments may be

deposited with a common depositary for Euroclear and

Clearstream or deposited with a sub-custodian for the Hong

Kong Monetary Authority as operator of the CMU. Global

Instruments or Global Certificates may also be deposited with

any other clearing system or may be delivered outside any

clearing system provided that the method of such delivery has

been agreed in advance by the Issuer, the Guarantor, the

Trustee, the Principal Paying Agent, if relevant, the Registrar

and the relevant Dealer(s). Registered Instruments that are to be

credited to one or more clearing systems on issue will be

registered in the name of, or in the name of a nominee or a

common nominee for, such clearing systems.

Currencies . . . . . . . . . . . . . . . . . Subject to compliance with all relevant laws, regulations and

directives, Instruments may be issued in any currency agreed

between the Issuer, the Guarantor, the Agents and the relevant

Dealer(s).

Maturities . . . . . . . . . . . . . . . . . . Subject to compliance with all relevant laws, regulations and

directives, any maturity as may be agreed between the Issuer,

the Guarantor and the relevant Dealer(s).

Specified Denomination . . . . . . . Definitive Instruments will be issued in such denominations as

may be agreed between the Issuer, the Guarantor and the

relevant Dealer(s) save that the minimum denomination of each

Instrument will be such as may be allowed or required from

time to time by the central banks (or equivalent body) or any

laws or regulations applicable to the relevant currency

(see “– Certain Restrictions” above).

Notes

Fixed Rate Notes . . . . . . . . . . . . Fixed interest will be payable in arrear on such date or dates as

may be agreed between the Issuer, the Guarantor and the

relevant Dealer(s) and on redemption and will be calculated on

the basis of such Day Count Fraction as may be agreed between

the Issuer and the relevant Dealer(s).

– 4 –

Floating Rate Notes . . . . . . . . . . Floating Rate Notes will bear interest determined separately for

each Series as follows:

(i) on the same basis as the floating rate under a notional

interest rate swap transaction in the relevant Specified

Currency governed by an agreement incorporating the

2006 ISDA Definitions (as published by the International

Swaps and Derivatives Association, Inc. and as amended

and updated as at the Issue Date of the first Tranche of the

Notes of the relevant Series); or

(ii) by reference to EURIBOR, HIBOR or CNH HIBOR (or

such other benchmark as may be specified in the relevant

Pricing Supplement) as adjusted for any applicable

margin; or

(iii) on such other basis as may be agreed between the Issuer,

the Guarantor and the relevant Dealer(s).

Interest periods will be specified in the relevant Pricing

Supplement.

Zero Coupon Notes . . . . . . . . . . Zero Coupon Notes may be issued at their nominal amount or at

a discount to it and will not bear interest.

Dual Currency Notes . . . . . . . . . Payments (whether in respect of principal or interest and

whether at maturity or otherwise) in respect of Dual Currency

Notes will be made in such currencies, and based on such rates

of exchange, as the Issuer, the Guarantor and the relevant

Dealer(s) may agree and as may be specified in the relevant

Pricing Supplement.

Index Linked Notes . . . . . . . . . . Payments of principal in respect of Index Linked Redemption

Notes or of interest in respect of Index Linked Interest Notes

will be calculated by reference to such index and/or formula or

to changes in prices of securities or commodities or to such

other factors as the Issuer, the Guarantor and the relevant

Dealer(s) may agree and as may be specified in the relevant

Pricing Supplement.

Interest Periods and Interest

Rates . . . . . . . . . . . . . . . . . . . .

The length of the interest periods for the Notes and the

applicable interest rate or its method of calculation may differ

from time to time or be constant for any Series. Floating Rate

Notes and Index Linked Interest Notes may also have a

maximum interest rate, a minimum interest rate, or both. The

use of interest accrual periods permits the Notes to bear interest

at different rates in the same interest period. All such

information will be set out in the relevant Pricing Supplement.

– 5 –

Redemption . . . . . . . . . . . . . . . . The relevant Pricing Supplement will indicate either that the

relevant Notes cannot be redeemed prior to their stated maturity

(other than in specified instalments, if applicable, or for

taxation reasons or following an Event of Default (as defined in

“Terms and Conditions of the Notes”)) or that such Notes will

be redeemable at the option of the Issuer and/or the Noteholders

upon giving notice to the Noteholders or the Issuer, as the case

may be, on a date or dates specified prior to such stated maturity

and at a price or prices and on such other terms as may be

agreed between the Issuer, the Guarantor and the relevant

Dealer(s). The relevant Pricing Supplement may provide that

Notes may be redeemable in two or more instalments of such

amounts and on such dates as are indicated in the relevant

Pricing Supplement.

Notes having a maturity of less than one year are subject to

restrictions on their denomination and distribution, see

“– Certain Restrictions – Instruments having a maturity of less

than one year” above.

Optional Redemption . . . . . . . . . Notes may be redeemed before their stated maturity at the

option of the Issuer (either in whole or in part) and/or the

Noteholders to the extent (if at all) specified in the relevant

Pricing Supplement.

Redemption for Change of

Control . . . . . . . . . . . . . . . . . .

The terms of the Notes may allow for the election in the Pricing

Supplement for the early redemption of the Notes at the option

of the holders thereof upon the occurrence of a Change of

Control as further described in Condition 6(d) of the Terms and

Conditions of the Notes.

Redemption for No Registration

Event . . . . . . . . . . . . . . . . . . . .

The terms of the Notes may allow for the election in the Pricing

Supplement for the early redemption of the Notes at the option

of the holders thereof upon the occurrence of a No Registration

Event as further described in Condition 6(e) of the Terms and

Conditions of the Notes.

Redemption for Taxation

Reasons . . . . . . . . . . . . . . . . . .

Notes may be redeemed at the Issuer’s option in whole, but not

in part, prior to maturity for taxation reasons as further

described in Condition 6(c) of the Terms and Conditions of the

Notes.

– 6 –

Status of Notes . . . . . . . . . . . . . . The Notes and the Receipts (as defined in the Trust Deed) and

the Coupons relating to them will constitute direct,

unsubordinated, unconditional and (subject to Condition 4(a) of

the Terms and Conditions of the Notes) unsecured obligations

of the Issuer and shall at all times rank pari passu and without

any preference among themselves. The payment obligations of

the Issuer under the Notes and the Receipts and the Coupons

relating to them shall, save for such exceptions as may be

provided by applicable legislation and subject to Condition 4(a)

of the Terms and Conditions of the Notes, at all times rank at

least equally with all other present and future unsecured and

unsubordinated indebtedness and monetary obligations of the

Issuer.

Status of the Guarantee . . . . . . . The payment obligations of the Guarantor under the Guarantee

shall, save for such exceptions as may be provided by

applicable legislation and subject to Condition 4(a) of the

Terms and Conditions of the Notes, at all times rank at least

equally with all other present and future unsecured and

unsubordinated indebtedness and monetary obligations of the

Guarantor.

Negative Pledge and other

Covenants . . . . . . . . . . . . . . . .

The Terms and Conditions of the Notes will contain a negative

pledge provision as further described in Condition 4(a) of the

Terms and Conditions of the Notes.

Covenant to Notify NDRC . . . . . The Terms and Conditions of the Notes will contain a provision

in relation to the notification to NDRC as described in

Condition 4(d) of the Terms and Conditions of the Notes.

Undertaking relating to the

Guarantee . . . . . . . . . . . . . . . .

The Terms and Conditions of the Notes will contain a provision

relating to the Guarantee as described in Condition 4(e) of the

Terms and Conditions of the Notes.

Events of Default . . . . . . . . . . . . The Terms and Conditions of the Notes will contain certain

events of defaults as described in Condition 10 of the Terms and

Conditions of the Notes.

Cross Default . . . . . . . . . . . . . . . The Terms and Conditions of the Notes will contain a cross

default provision as described in Condition 10(c) of the Terms

and Conditions of the Notes.

– 7 –

Withholding Tax. . . . . . . . . . . . . All payments of principal and interest by or on behalf of the

Issuer or the Guarantor in respect of the Notes, the Receipts and

the Coupons or under the Guarantee (as the case may be) will

be made free and clear of, and without set-off or counterclaim

and without withholding or deduction for, or on account of, any

taxes, duties, assessments or governmental charges of whatever

nature imposed, levied, collected, withheld or assessed by or

within the Cayman Islands or the PRC or, in each case, any

political subdivision or authority therein or thereof having

power to tax, unless such withholding or deduction is required

by law. In that event, the Issuer or, as the case may be, the

Guarantor will, subject to certain customary exceptions, pay

such additional amounts as will result in the receipt by the

Noteholders or Couponholders (as defined in “Terms and

Conditions of the Notes”) of such amounts as would have been

received by them had no such withholding or deduction been

required. See Condition 8 of the Terms and Conditions of the

Notes.

Perpetual Capital Securities

Maturities. . . . . . . . . . . . . . . . . . The Perpetual Capital Securities are perpetual securities in

respect of which there is no fixed redemption date and the

Issuer shall only have the right (but not the obligation) to

redeem or purchase them in accordance with the provisions of

the Terms and Conditions of the Perpetual Capital Securities.

Distribution Basis. . . . . . . . . . . . Perpetual Capital Securities may confer a right to receive

Distribution at fixed or floating rates.

Fixed Rate Perpetual Capital

Securities. . . . . . . . . . . . . . . . .

Fixed Rate Perpetual Capital Securities will confer a right to

receive Distribution at a fixed rate which will be payable in

arrear on specified dates. If so provided in the relevant Pricing

Supplement for the Fixed Rate Perpetual Capital Securities, the

Distribution Rate (as defined in “Terms and Conditions of the

Perpetual Capital Securities”) may be reset on such dates and

bases as may be set out in the relevant Pricing Supplement.

Floating Rate Perpetual Capital

Securities. . . . . . . . . . . . . . . . .

Floating Rate Perpetual Capital Securities will bear

Distribution determined separately for each Series as follows:

(i) on the same basis as the floating rate under a notional

interest rate swap transaction in the relevant Specified

Currency governed by an agreement incorporating the

2006 ISDA Definitions (as published by the International

Swaps and Derivatives Association, Inc. and as amended

and updated as at the Issue Date of the first Tranche of the

Perpetual Capital Securities of the relevant Series); or

– 8 –

(ii) by reference to EURIBOR, HIBOR or CNH HIBOR, (or

such other benchmark as may be specified in the relevant

Pricing Supplement) as adjusted for any applicable

margin; or

(iii) on such other basis as may be agreed between the Issuer,

the Guarantor and the relevant Dealer(s).

Distribution Periods and

Distribution Rates. . . . . . . . . .

Distribution Periods (as defined in “Terms and Conditions of

the Perpetual Capital Securities”) will be specified in the

relevant Pricing Supplement.

The length of the Distribution Periods for the Perpetual Capital

Securities and the applicable Distribution Rate or its method of

calculation may differ from time to time or be constant for any

Series. Perpetual Capital Securities may have a maximum

Distribution Rate, a minimum Distribution Rate, or both. The

use of Distribution Accrual Periods (as defined in “Terms and

Conditions of the Perpetual Capital Securities”) permits the

Perpetual Capital Securities to allow Distribution at different

rates in the same Distribution Period. All such information will

be set out in the relevant Pricing Supplement.

Distribution Discretion. . . . . . . . If Distribution Deferral is specified in the relevant Pricing

Supplement, the Issuer may, at its sole discretion, elect to defer

(in whole or in part) any Distribution which is otherwise

scheduled to be paid on a Distribution Payment Date to the next

Distribution Payment Date by giving notice to the Perpetual

Capital Securityholders (in accordance with Condition 15 of the

Terms and Conditions of the Perpetual Capital Securities) and

to the Trustee and the Principal Paying Agent in writing

(substantially in the form scheduled to the Trust Deed) not more

than ten Payment Business Days (as defined in “Terms and

Conditions of the Perpetual Capital Securities”) nor less than

five Payment Business Days prior to a scheduled Distribution

Payment Date. Any partial payment of any Distribution by the

Issuer shall be shared by the Perpetual Capital Securityholders

of all outstanding Perpetual Capital Securities on a pro-rata

basis.

– 9 –

Cumulative Deferral . . . . . . . . . If Cumulative Deferral is specified in the relevant Pricing

Supplement, any Distribution deferred pursuant to Condition

5(k) of the Terms and Conditions of the Perpetual Capital

Securities shall constitute “Arrears of Distribution”. The

Issuer may, at its sole discretion, elect (in the circumstances set

out in Condition 5(k)(i) of the Terms and Conditions of the

Perpetual Capital Securities) to further defer (in whole or in

part) any Arrears of Distribution by complying with the

foregoing notice requirement applicable to any deferral of an

accrued Distribution. The Issuer is not subject to any limit as to

the number of times Distributions and Arrears of Distribution

can or shall be deferred pursuant to Condition 5(k) of the Terms

and Conditions of the Perpetual Capital Securities except that

Condition 5(k)(v) of the Terms and Conditions of the Perpetual

Capital Securities shall be complied with until all outstanding

Arrears of Distribution and Additional Distribution Amount

have been paid in full.

Additional Distribution . . . . . . . If Additional Distribution is specified in the relevant Pricing

Supplement, each amount of Arrears of Distribution shall

accrue Distributions as if it constituted the principal of the

Perpetual Capital Securities at the prevailing Distribution Rate

and the amount of such Distribution (the “Additional

Distribution Amount”) with respect to Arrears of Distribution

shall be due and payable pursuant to Condition 5 of the Terms

and Conditions of the Perpetual Capital Securities and shall be

calculated by applying the applicable Distribution Rate to the

amount of the Arrears of Distribution and otherwise

mutatis mutandis as provided in Condition 5 of the Terms and

Conditions of the Perpetual Capital Securities. The Additional

Distribution Amount accrued up to any Distribution Payment

Date shall be added (for the purpose of calculating the

Additional Distribution Amount accruing thereafter) to the

amount of Arrears of Distribution remaining unpaid on such

Distribution Payment Date so that it will itself become Arrears

of Distribution.

Restrictions in the case of

Deferral. . . . . . . . . . . . . . . . . .

If Dividend Stopper is specified in the relevant Pricing

Supplement and on any Distribution Payment Date, payment of

all Distribution payments scheduled to be made on such date

(including any Distribution accrued but unpaid on the Perpetual

Capital Securities (including any Arrears of Distribution and

any Additional Distribution Amount)) is not made in full, each

of the Issuer and the Guarantor shall not:

– 10 –

(i) declare or pay any discretionary dividends or distributions

or make any other discretionary payment, and will procure

that no discretionary dividend, distribution or other

discretionary payment is made, in each case, on any Parity

Securities (as defined in “Terms and Conditions of the

Perpetual Capital Securities”) or Junior Securities

(as defined in “Terms and Conditions of the Perpetual

Capital Securities”) of the Issuer or the Guarantor (except

(1) in relation to the Parity Securities of the Issuer or the

Guarantor, as the case may be, on a pro-rata basis, or

(2) in connection with any employee benefit plan or

similar arrangements with or for the benefit of employees,

officers, directors or consultants of the Issuer or the

Guarantor, as the case may be); or

(ii) at its discretion redeem, reduce, cancel, buy-back or

otherwise acquire for any consideration any Parity

Securities or Junior Securities of the Issuer or the

Guarantor prior to its stated maturity (except (1) in

relation to the Parity Securities of the Issuer or the

Guarantor, as the case may be, on a pro-rata basis, or

(2) in connection with any employee benefit plan or

similar arrangements with or for the benefit of employees,

officers, directors or consultants of the Issuer or the

Guarantor, as the case may be, or (3) as a result of the

exchange or conversion of its Parity Securities for its

Junior Securities),

in each case, unless and until (x) the Issuer has satisfied in full

all outstanding Arrears of Distribution and the Additional

Distribution Amount; or (y) the Issuer is permitted to do so by

an Extraordinary Resolution (as defined in the Trust Deed

referred to in the Terms and Conditions of the Perpetual Capital

Securities) of the Perpetual Capital Securityholders.

For the avoidance of doubt, the Issuer’s right of optional

deferral pursuant to Condition 5(k)(i) of the Terms and

Conditions of the Perpetual Capital Securities will not be

affected solely as a result of the incurrence of any Parity

Securities or Junior Securities.

– 11 –

In addition, the incurrence of any senior indebtedness, Parity

Securities or Junior Securities itself will not constitute a

Compulsory Distribution Payment Event. A non-discretionary

payment on, or redemption of, Parity Securities or Junior

Securities (such as a scheduled payment of principal and

interest on such Parity or Junior Securities, which the Issuer

thereof has no right to defer) does not constitute a Compulsory

Distribution Payment Event.

Status of the Perpetual Capital

Securities. . . . . . . . . . . . . . . . .

All Perpetual Capital Securities and the Coupons relating to

them will constitute direct, unsubordinated, unconditional and

(subject to Condition 4(a) of the Terms and Conditions of the

Perpetual Capital Securities) unsecured obligations of the

Issuer and shall at all times rank pari passu and without any

preference among themselves as described in “Terms and

Conditions of the Perpetual Capital Securities – Guarantee and

Status – Status of Perpetual Capital Securities”.

Status of the Guarantee . . . . . . . The Guarantor has unconditionally and irrevocably guaranteed

the due payment of all sums expressed to be payable by the

Issuer under the Trust Deed, the Perpetual Capital Securities

and the Coupons. The payment obligations of the Guarantor

under the Guarantee shall, save for such exceptions as may be

provided by applicable legislation and subject to Condition 4(a)

of the Terms and Conditions of the Perpetual Capital Securities,

at all times rank at least equally with all other present and future

unsecured and unsubordinated indebtedness and monetary

obligations of the Guarantor as described in “Terms and

Conditions of the Perpetual Capital Securities – Guarantee and

Status – Guarantee”.

Negative Pledge . . . . . . . . . . . . . The Terms and Conditions of the Perpetual Capital Securities

will contain a negative pledge provision as further described in

Condition 4(a) of the Terms and Conditions of the Perpetual

Capital Securities.

Covenant to Notify NDRC . . . . . The Terms and Conditions of the Perpetual Capital Securities

will contain a provision in relation to the notification to NDRC

as described in Condition 4(d) of the Terms and Conditions of

the Perpetual Capital Securities.

Undertaking relating to the

Guarantee . . . . . . . . . . . . . . . .

The Terms and Conditions of the Perpetual Capital Securities

will contain a provision relating to the Guarantee as described

in Condition 4(e) of the Terms and Conditions of the Perpetual

Capital Securities.

– 12 –

Optional Redemption . . . . . . . . . The Pricing Supplement issued in respect of each issue of

Perpetual Capital Securities will state whether such Perpetual

Capital Securities may be redeemed or purchased prior to their

stated maturity at the option of the Issuer (either in whole or in

part) and if so the terms applicable to such redemption.

Redemption for Taxation

Reasons . . . . . . . . . . . . . . . . . .

The Perpetual Capital Securities may be redeemed at the option

of the Issuer in whole, but not in part, on any Distribution

Payment Date (if the relevant Pricing Supplement provides that

the Perpetual Capital Securities are either Floating Rate

Perpetual Capital Securities or an Index Linked Distribution

Perpetual Capital Securities) or, at any time (if the relevant

Pricing Supplement provides that the Perpetual Capital

Securities are neither Floating Rate Perpetual Capital Securities

nor an Index Linked Distribution Perpetual Capital Securities)

for taxation reasons as further described in Condition 6(b) of

the Terms and Conditions of the Perpetual Capital Securities.

Redemption for Change of

Control . . . . . . . . . . . . . . . . . .

The Perpetual Capital Securities may be redeemed at the option

of the Issuer in whole, but not in part, at any time on giving not

more than 60 nor less than 30 days’ notice to the Perpetual

Capital Securityholders (or such other notice period as may be

specified in the relevant Pricing Supplement) in accordance

with Condition 15 of the Terms and Conditions of the Perpetual

Capital Securities (which notice shall be irrevocable) and in

writing to the Trustee and the Principal Paying Agent, if a

Change of Control Event (as defined in “Terms and Conditions

of the Perpetual Capital Securities”) occurs as further described

in Condition 6(c) of the Terms and Conditions of the Perpetual

Capital Securities.

– 13 –

Redemption for Accounting

Reasons . . . . . . . . . . . . . . . . . .

The Perpetual Capital Securities may be redeemed at the option

of the Issuer in whole, but not in part, at any time on the Issuer

giving not more than 60 nor less than 30 days’ notice to the

Perpetual Capital Securityholders in accordance with Condition

15 of the Terms and Conditions of the Perpetual Capital

Securities (which notice shall be irrevocable) and in writing to

the Trustee and the Principal Paying Agent, at their principal

amount, together with Distribution accrued to but excluding the

date fixed for redemption (including any Arrears of Distribution

and any Additional Distribution Amount), if the Issuer satisfies

the Trustee immediately before giving such notice that as a

result of any changes or amendments to PRC GAAP or the

Relevant Accounting Standards (as defined in “Terms and

Conditions of the Perpetual Capital Securities”), or any change

or amendment to the application or interpretation of the

Relevant Accounting Standards, the Perpetual Capital

Securities must not or must no longer be recorded as “equity”

in the consolidated financial statements of the Guarantor

pursuant to the Relevant Accounting Standards.

Redemption on the Occurrence

of a Breach of Covenants

Event . . . . . . . . . . . . . . . . . . . .

The Perpetual Capital Securities may be redeemed at the option

of the Issuer in whole, but not in part, at any time, on giving not

more than 60 nor less than 30 days’ notice to the Perpetual

Capital Securityholders in accordance with Condition 15 of the

Terms and Conditions of the Perpetual Capital Securities

(which notice shall be irrevocable) and in writing to the Trustee

and the Principal Paying Agent at their principal amount

(together with any Distribution accrued to but excluding the

date fixed for redemption (including any Arrears of Distribution

and any Additional Distribution Amount)) upon the occurrence

of a Breach of Covenants Event (as defined in “Terms and

Conditions of the Perpetual Capital Securities”).

Redemption on the Occurrence

of a Relevant Indebtedness

Default Event . . . . . . . . . . . . .

The Perpetual Capital Securities may be redeemed at the option

of the Issuer in whole, but not in part, at any time, on giving not

more than 60 nor less than 30 days’ notice to the Perpetual

Capital Securityholders in accordance with Condition 15 of the

Terms and Conditions of the Perpetual Capital Securities

(which notice shall be irrevocable) and in writing to the Trustee

and the Principal Paying Agent at their principal amount

(together with any Distribution accrued to but excluding the

date fixed for redemption (including any Arrears of Distribution

and any Additional Distribution Amount)) upon the occurrence

of a Relevant Indebtedness Default Event (as defined in “Terms

and Conditions of the Perpetual Capital Securities”).

– 14 –

Redemption at the Option of

the Issuer . . . . . . . . . . . . . . . .

The Issuer may, on giving not less than 15 nor more than 30

days’ irrevocable notice to the Perpetual Capital

Securityholders (or such other notice period as may be specified

in the relevant Pricing Supplement) and in writing to the

Trustee and the Principal Paying Agent, elect to redeem all, but

not some only, of the Perpetual Capital Securities on any

Optional Redemption Date specified in the relevant Pricing

Supplement, as further described in Condition 6(g) of the Terms

and Conditions of the Perpetual Capital Securities.

Redemption for Minimum

Outstanding Amount . . . . . . .

The Perpetual Capital Securities may be redeemed at the option

of the Issuer in whole, but not in part, at any time, on giving not

more than 60 nor less than 30 days’ notice to the Perpetual

Capital Securityholders (or such other notice period as may be

specified in the relevant Pricing Supplement) in accordance

with Condition 15 of the Terms and Conditions of the Perpetual

Capital Securities (which notice shall be irrevocable) and in

writing to the Trustee and the Principal Paying Agent, at their

principal amount (together with any Distribution accrued to but

excluding the date fixed for redemption (including any Arrears

of Distribution and any Additional Distribution Amount)) if

prior to the date fixed for redemption at least 90 per cent. in

principal amount of the Perpetual Capital Securities originally

issued has already been redeemed or purchased and cancelled.

Redemption on the Occurrence

of a Dividend Stopper

Breach Event . . . . . . . . . . . . .

If Dividend Stopper is specified in the relevant Pricing

Supplement, the Perpetual Capital Securities may be redeemed

at the option of the Issuer in whole, but not in part, at any time

on giving not more than 60 nor less than 30 days’ notice to the

Perpetual Capital Securityholders in accordance with Condition

15 of the Terms and Conditions of the Perpetual Capital

Securities (which notice shall be irrevocable) and in writing to

the Trustee and the Principal Paying Agent, at their principal

amount (together with any Distribution accrued to but

excluding the date fixed for redemption (including any Arrears

of Distribution and any Additional Distribution Amount)) upon

the occurrence of a Dividend Stopper Breach Event (as defined

in “Terms and Conditions of the Perpetual Capital Securities”).

– 15 –

Limited right to institute

proceedings in relation to

Perpetual Capital Securities. .

Notwithstanding any of the provisions in Condition 10 of the

Terms and Conditions of the Perpetual Capital Securities, the

right to institute proceedings for Winding-Up (as defined in

“Terms and Conditions of the Perpetual Capital Securities”) of

the Issuer or the Guarantor is limited to circumstances where

payment in respect of the Perpetual Capital Securities has

become due. In the case of any Distribution, such Distribution

will not be due if the Issuer has elected to defer that

Distribution in accordance with Condition 5(k) of the Terms and

Conditions of the Perpetual Capital Securities. See “Terms and

Conditions of the Perpetual Capital Securities – Non-Payment”

for further details.

Proceedings for Winding-Up . . . (i) If there is a Winding-Up of the Issuer, or the Issuer shall

not make payment in respect of the Perpetual Capital

Securities or under the Trust Deed for a period of 14 days

or more after the date on which such payment is due, the

Issuer shall be deemed to be in default under the Trust

Deed and the Perpetual Capital Securities and the Trustee

may, subject to the provisions of Condition 10(d) of the

Terms and Conditions of the Perpetual Capital Securities,

institute proceedings for the Winding-Up of the Issuer

and/or prove in the Winding-Up of the Issuer and/or claim

in the liquidation of the Issuer for such payment.

(ii) If there is a Winding-Up of the Guarantor, or the

Guarantor shall not make payment in respect of the

Guarantee or under the Trust Deed for a period of 14 days

or more after the date on which such payment is due, the

Guarantor shall be deemed to be in default under the Trust

Deed and the Guarantee and the Trustee may, subject to

the provisions of Condition 10(d) of the Terms and

Conditions of the Perpetual Capital Securities, institute

proceedings for the Winding-Up of the Guarantor and/or

prove in the Winding-Up of the Guarantor and/or claim in

the liquidation of the Guarantor for such payment.

– 16 –

Withholding Tax. . . . . . . . . . . . . All payments of principal and Distribution by or on behalf of

the Issuer or the Guarantor in respect of the Perpetual Capital

Securities and the Coupons or under the Guarantee (as the case

may be) shall be made free and clear of, and without set-off or

counterclaim and without withholding or deduction for or on

account of, any taxes, duties, assessments or governmental

charges of whatever nature imposed, levied, collected, withheld

or assessed by or within the Cayman Islands or the PRC or, in

each case, any political subdivision or authority therein or

thereof having power to tax, unless such withholding or

deduction is required by law. In that event, the Issuer or, as the

case may be, the Guarantor will, subject to certain customary

exceptions, pay such additional amounts as will result in the

receipt by the Perpetual Capital Securityholders or

Couponholders (as defined in “Terms and Conditions of the

Perpetual Capital Securities”) of such amounts as would have

been received by them had no such withholding or deduction

been required. See Condition 8 of the Terms and Conditions of

the Perpetual Capital Securities for further details.

For both Notes and Perpetual Capital Securities

Governing Law and

Jurisdiction . . . . . . . . . . . . . . .

English law with the submission to the exclusive jurisdiction of

Hong Kong courts.

Listing and Admission to

Trading . . . . . . . . . . . . . . . . . .

Application has been made to the Hong Kong Stock Exchange

for the listing of the Programme under which Instruments may

be issued during the 12-month period after the date of this

Offering Circular on the Hong Kong Stock Exchange by way of

debt issues to Professional Investors only.

Instruments listed on the Hong Kong Stock Exchange will be

traded on the Hong Kong Stock Exchange in a board lot size of

at least HK$500,000 (or its equivalent in other currencies).

Separate application may be made for the listing of the

Instruments on the Hong Kong Stock Exchange. However,

unlisted Instruments and Instruments to be listed, traded or

quoted on or by any other competent authority, stock exchange

or quotation system may be issued pursuant to the Programme.

The relevant Pricing Supplement in respect of the issue of any

Instruments will specify whether or not such Instruments will

be listed on the Hong Kong Stock Exchange or listed, traded or

quoted on or by any other competent authority, exchange or

quotation system.

– 17 –

Selling Restrictions . . . . . . . . . . There are restrictions on the offer, sale and transfer of the

Instruments in the United States, the EEA, the United Kingdom,

Japan, Taiwan, Hong Kong, the PRC and Singapore and such

other restrictions as may be required in connection with the

offering and sale of a particular Tranche of Instruments. See

“Subscription and Sale”.

United States Selling

Restrictions . . . . . . . . . . . . . . .

Regulation S, Category 2.

Restriction . . . . . . . . . . . . . . . . . Pricing Supplement. TEFRA C, TEFRA D or TEFRA not

applicable, as specified in the relevant Pricing Supplement

“TEFRA not applicable” is only available for (i) Registered

Instruments or (ii) Bearer Instruments with a term of 365 days

or less (taking into account any unilateral rights to extend or

rollover the term).

Legal Entity Identifier . . . . . . . . The legal entity identifier of the Issuer is

2138001423MK8G3BNM68.

– 18 –

SUMMARY

The summary below is only intended to provide a limited overview of information described in more

detail elsewhere in this Offering Circular. As it is a summary, it does not contain all of the

information that may be important to investors and terms defined elsewhere in this Offering Circular

shall have the same meanings when used in this summary. Prospective investors should therefore read

this Offering Circular in its entirety.

DESCRIPTION OF THE ISSUER

The Issuer was incorporated as an exempted company with limited liability under the Companies

Law, as amended of the Cayman Islands on 9 August 2018 with company number 340929.

The share capital of the Issuer is U.S.$50,000, divided into 50,000 shares of par value U.S.$1.00

each. One share has been issued and paid up, which is owned by CAVIC Aviation Leasing (Ireland)

Co., Designated Activity Company. CAVIC Aviation Leasing (Ireland) Co., Designated Activity

Company is in turn wholly-owned by the Guarantor.

The Issuer was established for the purpose of issuing the Instruments and on-lending the proceeds to

the Guarantor or its subsidiaries. Since its incorporation, the Issuer has not engaged in any business

activity or any other activity whatsoever other than activities in connection with the establishment

and maintenance of the Programme, the offering, sale or issuance of the Instruments.

DESCRIPTION OF THE GROUP

The Group is principally engaged in the leasing business in the PRC and provides a diverse array of

financial leasing and operating leasing services, focusing on the aircraft, shipping, urban

infrastructure and equipment sectors. The Guarantor was one of the first PRC leasing companies

approved by MOFCOM and the State Administration of Taxation. As at 31 December 2021, the

Guarantor was one of the leading leasing companies in the PRC. In addition, the Guarantor believes

that the Group had one of the largest networks of airline customers in the PRC as at 31 December

2021.

As at 31 December 2021, AVIC indirectly held approximately 43.78 per cent. of the issued share

capital of the Guarantor. AVIC is one of the central state-owned enterprises directly supervised by

central SASAC, focusing on aerospace and defence. Through its subsidiaries and affiliates in the PRC

and overseas, AVIC’s businesses principally cover defence, transport aircraft, engines, helicopters,

avionics and systems, general aviation, aviation research, flight test, trade and logistics, asset

management, finance services, engineering planning and construction and automobile. As at 31

December 2021, AVIC’s group consisted of a number of listed companies. AVIC had been named in

the “Global 500” published by Fortune magazine for 13 consecutive years and ranked 140th on the

list in 2021. As at the date of this Offering Circular, AVIC ranks the fourth among the industrial

manufacturing enterprises owned by SASAC in the PRC. With its extensive customer base and

supplier network, established relationship with local governments and other state-owned enterprises,

in-depth industry knowledge, strong brand recognition and experienced management, AVIC provides

the Group with valuable support for the development of its business. As at 31 December 2021, the

Guarantor was the only leasing platform operating under the financial services business segment of

AVIC.

– 19 –

In December 2021, the Group’s leased asset scale exceeded RMB158 billion. As at 31 December

2021, the leased asset scale of the Group’s operating leasing business and the Group’s financial

leasing business amounted to approximately RMB19.69 billion and RMB138.56 billion, respectively.

In terms of leased asset scale, the Guarantor ranked first and eighth among the domestic leasing

companies (excluding Bohai Leasing Co., Ltd.) and all domestic and foreign leasing companies

(excluding Bohai Leasing Co., Ltd.), respectively, in the PRC as at 31 December 2021.

For the years ended 31 December 2019, 2020 and 2021, the Group reported total consolidated

revenue from operations of approximately RMB10,076.85 million, RMB10,125.86 million and

RMB10,303.45 million, respectively, and consolidated net profit of approximately RMB1,711.21

million, RMB1,974.09 million and RMB1,990.59 million, respectively. As at 1 January 2020,

1 January 2021 and 31 December 2021, the total consolidated assets of the Group amounted to

approximately RMB148,755.70 million, RMB158,759.96 million and RMB167,583.66 million,

respectively.

The Guarantor believes that the Group has the following competitive strengths:

? significant growth potential in the PRC financial leasing industry;

? strong shareholder support from AVIC and AVIC Industry-Finance Holdings Co., Ltd.;

? leading position in the PRC financial leasing industry with an extensive and diverse customer

base;

? diversified business portfolio;

? diverse aircraft leasing services;

? able to provide customised and integrated financial services to its customers;

? access to multiple financing channels, strong balance sheet and prudent financial management;

? comprehensive and robust risk management systems; and

? experienced management team.

The Guarantor intends to implement the following principal strategies to support the further

development of the Group’s business:

? to further strengthen the Group’s leading market position in the aircraft leasing industry by

acquiring aircraft in strong demand at competitive prices and by expanding its client base;

? to strive to be cost competitive and prudently promote its business in the ship leasing sub-sector;

? to continue to strengthen the Group’s market position in the equipment leasing sub-sector;

? to explore business opportunities in other industries in the PRC;

– 20 –

? to continue to diversify financing channels and optimise capital structure;

? to further leverage the Group’s relationship with AVIC and the Guarantor’s subsidiaries and

affiliates and the strong support from AVIC; and

? to continue to strengthen risk management and corporate governance capabilities.

RECENT DEVELOPMENTS

The outbreak of COVID-19.

The ongoing COVID-19 pandemic has caused substantial disruptions in the PRC and international

economies and markets which has resulted in additional uncertainties in the Group’s operating

environment, particularly with the emergence of new variants such as the Delta variant and the

Omicron variant. The Group has been closely monitoring the impact of the ongoing COVID-19

pandemic on the Group’s businesses and will keep its contingency measures and risk management

under review as the situation evolves. Please see “Risk Factors – Risks Relating to the Group – The

extent to which the COVID-19 pandemic will impact the Group’s business, financial condition, results

of operations and prospects is uncertain and cannot be predicted.” and “Risk Factors – Risks

Relating to the Group – The Group’s operations are subject to force majeure events, political unrest

or civil disobedience movements, natural disasters and outbreaks or pandemic of contagious diseases

and other disasters.” for further information.

Issue of debt instruments since 31 December 2021.

Since 31 December 2021, the Guarantor has issued onshore debt securities (excluding

perpetual securities) in an aggregate principal amount of approximately RMB7.9 billion, and the

Guarantor has issued perpetual securities in an aggregate principal amount of approximately RMB1.6

billion.

– 21 –

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The summary audited consolidated financial information of the Guarantor as at 1 January 2020,

1 January 2021 and 31 December 2021 and for the years ended 31 December 2019, 2020 and 2021

set forth below is derived from and should be read in conjunction with the Audited Consolidated

Financial Statements, including the notes thereto and the auditor’s reports in respect of the years

ended 31 December 2020 and 2021 included elsewhere in this Offering Circular.

The Audited Consolidated Financial Statements were prepared and presented in accordance with

PRC GAAP and have been audited by ZSZH and Dahua, respectively.

PRC GAAP is substantially in line with IFRS, except for certain modifications which reflect the PRC’s

unique circumstances and environment. Please see “Description of Certain Differences between PRC

GAAP and IFRS” for details.

The scope of consolidation of the Audited Consolidated Financial Statements changes from time to

time. See “Notes to the Financial Statements – VII. Business Combination and Financial Statement

Consolidation” of the Guarantor’s audited consolidated financial statements as at and for the year

ended 31 December 2020 and “Notes to the Financial Statements – VII. Business Combination and

Financial Statement Consolidation” of the Guarantor’s audited consolidated financial statements as

at and for the year ended 31 December 2021. In addition, in 2017 and 2018, the Ministry of Finance

of the PRC promulgated the New Accounting Standards and Requirements. The Audited Consolidated

Financial Statements were prepared and presented in accordance with the relevant applicable New

Accounting Standards and Requirements. As a result, the presentation of certain accounting items in

the Audited Consolidated Financial Statements may not be comparable to the financial figures in the

Guarantor’s financial statements for the previous periods. For details of the New Accounting

Standards and Requirements and its impact on the Audited Consolidated Financial Statements, please

see “Notes to the Financial Statements – V Significant changes in accounting policies, accounting

estimates and correction of errors in prior periods – 1. Changes in accounting policies” of the

Guarantor’s audited consolidated financial statements as at and for the year ended 31 December

2020 and “Notes to the Financial Statements – V Significant changes in accounting policies,

accounting estimates and correction of errors in prior periods” of the Guarantor’s audited

consolidated financial statements as at and for the year ended 31 December 2021.

Please also see “Risk Factors – Risks Relating to Financial and Other Information – Certain

accounting items in the Audited Consolidated Financial Statements may not be comparable to the

financial information in the Guarantor’s consolidated financial statements for the previous periods.”

for further information.

– 22 –

SUMMARY CONSOLIDATED INCOME STATEMENT

For the year ended 31 December

2019 2020 2021

1. Operating revenue ....................................................... 10,076,845,248.60 10,125,856,176.27 10,303,447,857.18

Inc: Operating revenue.................................................... 10,076,845,248.60 10,125,856,176.27 10,303,447,857.18

Interest revenue ....................................................... – – –

Earned Premium ...................................................... – – –

Fee and commission revenue........................................ – – –

2. Operating costs ........................................................... 7,016,546,547.65 6,772,685,794.02 6,874,503,191.67

Inc: Operating costs ....................................................... 5,703,618,487.96 5,386,090,034.00 6,522,046,981.12

Interest expense....................................................... – – –

Fee and commission expense ....................................... – – –

Surrender money ..................................................... – – –

Net compensation expenditure ...................................... – – –

Net amount of insurance liability reserve withdrawn ............ – – –

Expenditures dividend policy ....................................... – – –

Reinsurance expenses ................................................ – – –

Taxes and surcharges................................................. 157,159,301.81 81,242,652.75 69,694,524.82

Selling expenses ...................................................... 76,862,884.99 83,943,563.33 91,051,866.34

Administrative expenses ............................................. 1,167,804,183.60 1,276,577,245.87 284,263,826.08

Research and development expenses ............................... – – –

Finance expenses ..................................................... -88,898,310.71 -55,167,701.93 -92,554,006.69

Others .................................................................. – – –

Add: Other income ......................................................... 132,231,630.13 415,299,209.47 249,512,655.65

Income from investments (loss is listed as “-”)................... 136,169,694.19 25,571,108.89 50,015,840.48

Exchange gains (loss is listed as “-”) .............................. – – –

Gains or losses from net exposure hedging

(loss is listed as “-”) .............................................. – – –

Gains or losses from changes in fair values

(loss is listed as “-”) .............................................. 1,098,532.23 -37,898,604.42 -30,408,298.81

Credit impairment losses (loss is listed as “-”) ................... -1,403,871,392.61 -1,418,348,120.09 -1,225,550,235.51

Asset impairment losses (loss is listed as “-”) .................... 194,491.68 -912,160.06 -2,683,195.74

Gains or losses from asset disposals (loss is listed as “-”) ...... 214,627,218.25 176,653,362.48 12,818,688.61

3. Operating profit (loss is listed as “-”) ................................ 2,140,748,874.82 2,513,535,178.52 2,482,650,120.19

Add: Non-operating income ............................................... 77,894,964.37 23,619,037.90 72,281,674.73

Less: Non-operating expenses ............................................. 330,000.00 298,150.38 149,668.30

4. Profit before tax (loss is listed as “-”)................................ 2,218,313,839.19 2,536,856,066.04 2,554,782,126.62

Less: Income tax ............................................................ 507,106,554.62 562,770,616.77 564,196,018.20

5. Net profit (loss is listed as “-”) ........................................ 1,711,207,284.57 1,974,085,449.27 1,990,586,108.42

I. Net profit classified by ownership

Net profit attributable to parent company............................... 1,711,207,284.57 1,974,085,449.27 1,990,586,108.42

Net profit attributable to non-controlling interests..................... – – –

II. Net profit classified by going concern

Net profit from continuing operations .................................. 1,711,207,284.57 1,974,085,449.27 1,990,586,108.42

Net profit from discontinuing operations ............................... – – –

6. Other comprehensive income after tax ............................... -326,499.68 -221,249,974.38 -95,508,653.53

Other comprehensive income after tax attributable to

parent company ........................................................... -326,499.68 -221,249,974.38 -95,508,653.53

– 23 –

For the year ended 31 December

2019 2020 2021

(RMB) (RMB) (RMB)

(audited) (audited) (audited)

I. Items of other comprehensive income that will not be

reclassified to profit or loss .............................................. – – -2,610,234.28

i. Changes in remeasurement of defined benefit plans ................ – – –

ii. Other comprehensive income that cannot be transferred to

profit or loss under the equity method .............................. – – –

iii. Changes in fair value of investments in other equity

instruments............................................................... – – -2,610,234.28

iv. Changes in fair value of the Company’s own credit risk ......... – – –

v. Others .................................................................... – – –

II. Items of other comprehensive income that will be reclassified to

profit or loss................................................................ -326,499.68 -221,249,974.38 -92,898,419.25

i. Other comprehensive income that can be transferred to profit or

loss under the equity method .......................................... – – –

ii. Changes in fair value of other debt investments ................... – – –

iii. Changes in fair value of available-for-sale financial assets ...... – – –

iv. Amount of financial assets reclassified into other

comprehensive income.................................................. – – –

v. Gain or loss from held to maturity investment reclassified as

available for sale financial assets ..................................... – – –

vi. Provisions for credit impairment of other debt investments ..... – – –

vii. Cash flow hedging reserve (The effective portion of gains or

losses arising from cash flow hedging) .............................. – – –

viii. Translation differences arising from financial statements in

foreign currencies .......................................................

ix. Others ?Other comprehensive income attributable to non-controlling

interests after tax........................................................ – – –

7. Total comprehensive income ........................................... 1,710,880,784.89 1,752,835,474.89 1,895,077,454.89

Total comprehensive income attributable to parent company ........... 1,710,880,784.89 1,752,835,474.89 1,895,077,454.89

Total comprehensive income attributable to

non-controlling interests .................................................. – – –

8. Earnings per share....................................................... – – –

Basic earnings per share..................................................... – – –

Diluted earnings per share................................................... – – –

– 24 –

SUMMARY CONSOLIDATED BALANCE SHEET

As at

1 January 2020

As at

1 January 2021

As at

31 December 2021

(RMB) (RMB) (RMB)

(audited) (audited) (audited)

Current assets

Cash at bank and on hand ....................................... 5,182,579,787.85 5,894,354,119.70 5,900,643,933.96

Financial assets held for trading ................................ 328,295,226.85 1,374,754,554.90 1,984,831,586.71

Financial assets classified as measured at fair value and

the change of which shall be included in current

profit or loss .................................................... – – –

Derivative financial assets ....................................... – – –

Notes receivable .................................................. 19,763,620.92 33,111,076.66 38,609,013.37

Accounts receivable .............................................. 111,562,039.23 110,603,832.37 129,341,138.28

Accounts receivable financing................................... – – –

Prepayments ....................................................... 12,754,123.27 15,902,445.64 28,617,202.22

Other receivables ................................................. 721,241,687.60 421,929,445.07 20,035,154.00

Inc: Dividends receivable ........................................ – – –

Inventories ......................................................... 9,396,091.87 7,078,415.45 3,113,331.31

Contract assets .................................................... – – –

Held-for-sale assets ............................................... – – –

Current portion of non-current assets .......................... 32,621,434,004.98 36,659,172,956.46 39,013,333,443.91

Other current assets .............................................. 1,858,382,471.26 3,022,590,986.26 3,821,493,607.17

Total current assets ................................................ 40,865,409,053.83 47,539,497,832.51 50,940,018,410.93

Non-current assets

Debt investments.................................................. – – –

Available-for-sale financial assets .............................. – – –

Other debt investments........................................... – – –

Held to maturity investment ..................................... – – –

Long-term receivables............................................ 90,227,869,868.77 88,581,640,827.20 91,158,799,371.11

Long-term equity investments ................................... 123,833,400.00 20,000.00 744,163.34

Investment in other equity instruments......................... 5,000,000.00 444,302,351.49 21,419,846.54

Other non-current financial assets .............................. – 1,015,738,955.75 1,079,063,077.14

Investment properties............................................. 56,703,544.77 54,764,710.77 52,825,876.77

Fixed assets........................................................ 12,973,276,763.28 13,733,431,632.14 16,239,837,313.48

Construction in progress ......................................... 1,889,723,899.67 1,736,607,077.74 1,478,927,965.96

Productive biological assets ..................................... – – –

Oil and gas assets................................................. – – –

Right-of-use assets................................................ – 3,394,728,791.38 3,185,230,353.11

Intangible assets .................................................. 2,379,208.38 6,321,658.21 10,598,507.73

Development expenditure ........................................ – – –

Goodwill ........................................................... – – –

Long-term deferred expenses .................................... – – –

Deferred tax assets ............................................... 849,103,084.69 1,155,917,454.04 1,496,823,999.14

Other non-current assets ......................................... 1,762,405,519.34 1,096,983,971.50 1,919,371,664.24

Inc: Special reserve materials ................................... – – –

Total non-current assets........................................... 107,890,295,288.90 111,220,457,430.22 116,643,642,138.56

TOTAL ASSETS.................................................... 148,755,704,342.73 158,759,955,262.73 167,583,660,549.49

Current liabilities

Short-term borrowings ........................................... 10,528,365,458.29 9,983,188,635.53 6,671,444,259.15

Financial liabilities held for trading ............................ – – –

Financial liabilities classified as measured at fair value and

the change of which shall be included in current

profit or loss .................................................... – – –

– 25 –

As at

1 January 2020

As at

1 January 2021

As at

31 December 2021

(RMB) (RMB) (RMB)

(audited) (audited) (audited)

Derivative financial liabilities ................................... – – –

Notes payable ..................................................... – 151,500,000.00 508,750,000.00

Accounts payable ................................................. 110,478,461.06 109,521,633.55 237,483,220.78

Payments received in advance................................... 771,315,019.23 664,893,148.13 966,918,710.52

Contract liabilities ................................................ 2,202,184.92 2,370,064.73 4,487,154.00

Employee benefits payable ...................................... 8,309,274.80 16,613,582.01 25,848,524.60

Tax payables....................................................... 1,465,138,827.64 934,800,560.01 1,009,252,212.93

Other payables .................................................... 6,154,838,911.22 7,618,201,585.36 24,061,178,175.25

Held-for-sale liabilities........................................... – – –

Current portion of non-current liabilities ...................... 27,247,801,989.41 23,565,088,858.97 25,243,456,920.79

Other current liabilities .......................................... 4,255,488,505.73 12,798,259,452.04 5,697,259,945.21

Total current liabilities ............................................ 50,543,938,632.30 55,844,437,520.33 64,426,079,123.23

Non-current liabilities

Long-term borrowings............................................ 37,569,296,866.38 44,321,274,015.31 39,490,031,118.70

Bonds payable..................................................... 16,356,343,708.19 11,667,396,968.12 26,032,975,179.16

Lease liabilities ................................................... – 3,677,769,895.12 3,099,570,687.80

Long-term payables............................................... 11,813,465,130.07 7,295,979,813.75 5,573,418,077.04

Long-term employee benefits payable.......................... – – –

Provisions.......................................................... – – –

Deferred income .................................................. – – –

Deferred tax liabilities ........................................... 95,424,022.57 171,792,452.71 277,998,729.26

Other non-current liabilities ..................................... 11,240,954,394.31 10,769,602,686.68 2,413,234,176.60

Total non-current liabilities ...................................... 77,075,484,121.52 77,903,815,831.69 76,887,227,968.56

Total liabilities ...................................................... 127,619,422,753.82 133,748,253,352.02 141,313,307,091.79

Equity

Paid-in capital..................................................... 9,978,467,899.00 9,978,467,899.00 9,978,467,899.00

National Capital ............................................. – – –

National Legal Person Capital ............................. 9,978,467,899.00 9,978,467,899.00 9,978,467,899.00

Collective Capital ........................................... – – –

Private Capital ............................................... – – –

Foreign Capital .............................................. – – –

Less: capital returned............................................. – – –

Net Paid-in capital (or share capital) ........................... 9,978,467,899.00 9,978,467,899.00 9,978,467,899.00

Other equity instruments ......................................... 3,000,000,000.00 4,500,000,000.00 4,400,000,000.00

Capital reserves ................................................... 3,342,130,738.76 3,342,130,738.76 3,342,130,738.76

Less: Treasury stock.............................................. – – –

Other comprehensive income.................................... 15,968,007.73 -205,281,966.65 -300,790,620.18

Special reserves ................................................... – – –

Surplus reserve.................................................... 507,045,820.92 607,859,791.20 749,135,118.35

Retained earnings ................................................. 2,884,890,789.40 3,850,006,502.41 5,162,891,375.78

Equity attributable to parent company ......................... 19,728,503,255.81 22,073,182,964.72 23,331,834,511.71

Non-controlling interests......................................... 1,407,778,333.10 2,938,518,945.99 2,938,518,945.99

Total owners’ equity ............................................... 21,136,281,588.91 25,011,701,910.71 26,270,353,457.70

TOTAL LIABILITIES AND OWNERS’ EQUITY ............ 148,755,704,342.73 158,759,955,262.73 167,583,660,549.49

– 26 –

OTHER FINANCIAL DATA

As at 1 January 2020

or for the year ended

31 December 2019

As at 1 January 2021

or for the year ended

31 December 2020

As at or for

the year ended

31 December 2021

EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RMB8,959,977,663.67 RMB8,849,643,450.82 RMB9,198,446,381.23

EBITDA MARGIN(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.89 0.87 0.89

GROSS DEBT(3)(5)/EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.30 13.80 13.77

NET DEBT(4)(5)/EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.70 13.13 13.13

EBITDA Interest Coverage Ratio(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.50 1.67 1.70

GROSS DEBT(3)/CAPITALISATION(7) . . . . . . . . . . . . . . . . . . . . . . . . . 1.18 1.18 1.08

Notes:

(1) The Guarantor calculates EBITDA for any period as profit before tax for the period plus interest expenses,

amortisation and depreciation. EBITDA is not a standard measure under PRC GAAP or IFRS. EBITDA is a widely

used financial indicator of a company’s ability to service and incur debt. EBITDA should not be considered in isolation

or construed as an alternative to cash flows, net income or any other measure of performance or as an indicator of the

Group’s operating performance, liquidity, profitability or cash flows generated by operating, investing or financing

activities. In evaluating EBITDA, the Guarantor believes that investors should consider, among other things, the

components of EBITDA and the amount by which EBITDA exceeds capital expenditure and other charges. The

Guarantor has included EBITDA because it believes that it is a useful supplement to the cash flow data as a measure

of the Group’s performance and its ability to generate cash flow from operations to cover debt service and taxes.

EBITDA presented herein may not be comparable to similarly titled measures presented by other companies. Investors

should not compare the Group’s EBITDA to EBITDA presented by other companies because not all companies use the

same definitions.

(2) EBITDA Margin means EBITDA divided by total revenue from operations for the period.

(3) Gross Debt means the sum of long-term borrowings and short-term borrowings.

(4) Net Debt means Gross Debt less cash at bank and on hand.

(5) Gross Debt and Net Debt as calculated above, may not be comparable to similarly titled measures reported by other

companies.

(6) EBITDA Interest Coverage Ratio means EBITDA divided by gross interest expense for the period. Gross interest

expense includes the interest expenses capitalised in property, plant and equipment.

(7) Capitalisation means the sum of long-term borrowings and total owners’ equity.

– 27 –

RISK FACTORS

An investment in the Instruments is subject to a number of risks. Investors should carefully consider

all of the information in this Offering Circular and, in particular, the risks described below, before

deciding to invest in the Instruments. The following describes some of the significant risks that could

affect the Issuer, the Guarantor, the Group and the value of the Instruments. Some risks may be

unknown to the Issuer, the Guarantor and the Group and other risks, currently believed to be

immaterial, could in fact be material. Any of these could materially and adversely affect the business,

financial condition, results of operations and prospects of the Issuer, the Guarantor and the Group.

The market price of the Instruments could decline due to any of these risks, and investors may lose

part or all of their investment. This Offering Circular also contains forward-looking statements that

involve risks and uncertainties. The actual results of the Issuer, the Guarantor or the Group could

differ materially from those anticipated in these forward-looking statements as a result of certain

factors, including the risks described below and elsewhere in this Offering Circular. The Issuer, the

Guarantor and the Group may be affected materially by requirements and restrictions that arise

under PRC laws, regulations and government policies in nearly all aspects of its business in the PRC.

RISKS RELATING TO THE GROUP

Disruptions or volatility in global and domestic financial markets could adversely impact the

industries and markets in which the Group serves and operates.

The Group is a leasing company specialising in providing customised leasing services, including

aircraft leasing, ship leasing, urban infrastructure leasing and equipment leasing, and is largely

dependent on the growth of the Group’s target industries, including the aircraft, shipping, urban

infrastructure and equipment industries. The demand for the Group’s services is substantially

influenced by general global and domestic economic conditions. Global and domestic economic

conditions may cause volatility and disruptions in the capital and credit markets.

In Asia and other emerging markets, some countries are expecting increasing inflationary pressure as

a result of liberal monetary policy or excessive foreign fund inflow, or both. The United Kingdom’s

exit from the European Union (the “EU”) has resulted in volatility in global financial markets, and

it is expected to create mid-to long-term economic uncertainty to not only the economies of the

United Kingdom and the EU, but also globally. In addition, the U.S. government’s policies may create

uncertainty for the global economy and financial markets. The United States and the PRC have been

involved in controversy over trade barriers that have triggered the implementation or proposed

implementation of tariffs on certain imported products into the two countries. Geopolitical events

such as recent military conflicts in Ukraine, continued tensions in the Middle East and the Korean

peninsula, as well as the escalation of tensions between the United States and the PRC over trade

policies, political and other issues could significantly undermine the stability of the global economy

and financial markets.

The ongoing COVID-19 pandemic has adversely affected the global economy and financial markets.

The COVID-19 pandemic and policies implemented by governments to deter the spread of the disease

have had and may continue to have an adverse effect on consumer confidence and the general

economic conditions to which the Group’s business is subject. Despite the roll-out of mass

vaccination programmes, significant COVID-19 related restrictions, including those in response to

the relatively recent outbreaks of the Delta variant and subsequently the Omicron variant, have

– 28 –

continued and in some instances, have been significantly tightened, in a number of countries. The

COVID-19 pandemic continues to affect many countries globally and there remains significant

uncertainty as to when the pandemic will end and whether governments will implement further travel

restrictions or other restrictive measures to contain the COVID-19 pandemic. The resultant

disruptions to the supply chain and reduced levels of consumption, commercial activities and

industrial production in the affected countries may result in an economic slowdown in such

economies which, if prolonged, could cause a global recession. There have been resurgences of

COVID-19 outbreak in multiple cities in the PRC, and the local governments re-imposed certain

quarantine and other restrictive measures. There can be no assurance that the COVID-19 pandemic

will not further escalate in the PRC or elsewhere. As the situation of the COVID-19 pandemic is still

evolving, the heightened uncertainties surrounding the pandemic may pose a material adverse impact

on the Group’s business, financial condition, results of operations and prospects.

While central banks of various countries have implemented stimulus packages and national

governments have proposed or adopted various forms of economic relief to contain the economic

impacts of the COVID-19 pandemic and stabilise the markets, there can be no assurance that such

monetary and fiscal policy measures will have the intended effects or that a global economic

downturn will not occur or market volatilities will not persist. There can be no assurance that changes

in the economic, social and political conditions in the PRC or the global economy would not have

a material adverse effect on the Group’s business, financial condition, results of operations and

prospects. Please see “– The extent to which the COVID-19 pandemic will impact the Group’s

business, financial condition, results of operations and prospects is uncertain and cannot be

predicted.” and “– The Group’s operations are subject to force majeure events, political unrest or

civil disobedience movements, natural disasters and outbreaks or pandemic of contagious diseases

and other disasters.” below for further information.

The outlook for the global economy and financial markets remain uncertain. The PRC economy is

sensitive to global economic conditions, and it is impossible to predict how the PRC economy will

develop in the future and whether it may slow down due to a global crisis or experience a financial

crisis. In addition, instability in the global economy may materially and adversely affect the markets

in which the Group operates, which may lead to a decline in the general demand for the Group’s

services and products. If economic conditions were to worsen or if the economic recovery fails to

continue or if an economic slowdown were to return, the Group may have difficulty accessing the

financial markets, which could make it more difficult or expensive to obtain funding and, in addition,

there can be no assurance that the Group will be able to raise finance at a reasonable cost, or at all.

The Group may also be subject to solvency risks of banks and of its counterparties in its financial

arrangements and contracts. Therefore, changes in the economic, social and political conditions in the

PRC or the global economy could have a material adverse effect on the Group’s business, financial

condition, results of operations and prospects.

– 29 –

In addition, the extent of any impact on the Group’s ability to meet funding or liquidity needs would

depend on several factors, including its operating cash flows, the duration of any market disruptions,

changes in counterparty credit risk, the impact of government intervention in financial markets

including the effects of any programmes or legislation designed to increase or restrict liquidity in

certain areas of the market, general credit conditions, the volatility of equity and debt markets, any

credit ratings and the credit capacity of the Group and the costs of financing and other general

economic and business conditions. Market disruption and volatility may also lead to a number of

other risks, including but not limited to:

? market developments that may affect customer confidence, reduce the demand for financing

services or cause increases in delinquencies and default rates, which could increase the Group’s

write-offs and provisions for credit losses;

? the process the Group uses to estimate losses from its credit exposure requires a high degree of

management’s judgment regarding numerous subjective and qualitative factors, including

forecasts of economic conditions and how economic predictors might impair the ability of its

customers to perform their contractual obligations under the leases. Financial market disruption

and volatility may reduce the accuracy of the Group’s judgments;

? the Group’s ability to engage in routine funding transactions or borrow from other financial

institutions on acceptable terms, or at all, could be adversely affected by disruptions in the

capital markets or other events, including a deterioration in investor expectations; and

? the ability of the Group’ funding counterparties to provide funding could be adversely affected

by market volatility or disruptions in the equity and credit markets.

Therefore, any market disruption or volatility may materially and adversely affect the Group’s

business, financial condition and results of operations.

The Group’s substantial indebtedness and net current liabilities position expose the Group to

liquidity risk.

The Group currently has incurred a substantial amount of indebtedness. As at 31 December 2021, the

Group’s total interest-bearing indebtedness was approximately RMB126,690.48 million, representing

approximately 75.60 per cent. of the Group’s total assets.

Due to the capital-intensive nature of the Group’s business, the need to refinance maturing debt and

the Group’s strategy of expanding its aircraft portfolios, the Guarantor expects that the Group will

incur significant additional indebtedness in the future and continue to maintain high levels of

indebtedness. The Group’s high level of indebtedness:

? may cause a substantial portion of the Group’s cash flows from operations to be dedicated to

interest and principal payments and therefore is not available to fund the Group’s operations,

working capital, capital expenditure, expansion, acquisitions or general corporate or other

purposes;

– 30 –

? may impair the Group’s ability to obtain additional financing in the future;

? may limit the Group’s flexibility in planning for, or reacting to, changes in its business and

industry;

? may make the Group more vulnerable to downturns in its business, its industry or the economy

in general;

? may restrict the Group from pursuing strategic business opportunities; and

? may increase the Group’s exposure to interest rate fluctuations.

Furthermore, the Group’s current liabilities exceeded its current assets by approximately

RMB9,678.53 million, RMB8,304.94 million and RMB13,486.06 million as at 1 January 2020, 1

January 2021 and 31 December 2021, respectively. The net current liabilities position may expose the

Group to liquidity risk which could restrict the Group’s ability to make necessary capital expenditure

or develop business opportunities, and the Group’s business, operating results and financial condition

could be materially and adversely affected.

There can be no assurance that the Group will always be able to continue to obtain the required

financing in the future or that the Group would be able to arrange for re-financing its indebtedness

when they become due, repay its indebtedness or raise the necessary funding to finance its business

growth and its capital commitments.

Furthermore, there can be no assurance that the Group will be able to comply with all the

requirements or covenants under its financing agreements or other material contracts entered into

as part of its ordinary course of business or that the Group will be able to obtain any waiver if it fails

to comply with them. The Group has not received, during the three years ended 31 December 2021,

any notice of breach of any covenant or undertaking resulting in early termination or modification of

any contracts or agreements which are material to the Group’s business.

If the Group violates any of the undertakings or covenants, it could result in increase in the interest

rates, accelerated repayment of loans and interest, termination or delay in the relevant arrangements

or legal proceedings against the Group. Any of these incidents could have a material adverse effect

on the Group’s business, operating results, and financial condition. Furthermore, the Group’s

liquidity depends on the amount of cash generated from its operations and its access to further

financial resources, which could also be in turn affected by the Group’s future operating performance,

prevailing economic conditions, and other factors outside the Group’s control.

The extent to which the COVID-19 pandemic will impact the Group’s business, financial

condition, results of operations and prospects is uncertain and cannot be predicted.

The ongoing COVID-19 pandemic in the PRC and other parts of the world since late 2019 could

materially and adversely affect the overall business sentiment and environment in the PRC and in the

markets in which the Group operates, particularly with the emergence of new variants of COVID-19

such as Delta and Omicron. Since December 2019, the outbreak of COVID-19 has caused substantial

disruption in the PRC economies and markets. In particular, the administrative actions taken by local

governmental authorities to control the spread of the COVID-19 pandemic may have an adverse

impact on the Group’s businesses. For example, the ongoing COVID-19 pandemic may cause

disruptions to the Group’s leasing business. The Group’s businesses may also be adversely affected

– 31 –

by certain relief measures implemented by the PRC government. Although the Group has adopted

various measures to minimise the adverse impact of the ongoing COVID-19 pandemic on its

businesses and operations, there can be no assurance that remedial measures adopted by the Group

will have the intended effects or that the adverse impact of the ongoing COVID-19 pandemic on the

Group will not persist.

Substantially all of the Group’s operating revenue is derived from its operations in the PRC and any

labour shortages, material contraction in air travel within the PRC, Asia and globally or contraction

or slowdown in the growth of domestic consumption in the PRC as a result of the adverse impact of

the COVID-19 pandemic could materially and adversely affect the Group’s business, financial

condition, results of operations and prospects. In addition, if any of the Group’s management or

employees are affected by the COVID-19 pandemic, the Group may be required to close down its

offices, warehouses and facilities to prevent the spread of the pandemic. The ongoing COVID-19

pandemic in the PRC may also affect the operations and financial condition of the Group’s customers

and suppliers, which in turn could materially and adversely affect the Group’s business, financial

condition, results of operations and prospects. The ongoing COVID-19 pandemic in the PRC,

especially in the cities or provinces where the Group has operations, may also delay completion of

the Group’s projects as scheduled, causing substantial increase in development costs and/or late

delivery of projects, which may adversely affect the Group’s business, financial condition, results of

operations and prospects.

The ongoing COVID-19 pandemic is expected to have an adverse impact on the Group’s businesses

and it is impossible to predict the magnitude of such impact, which could vary based on the duration

of the outbreak and the ability of the global community to contain the disease and implement

economic stimulus measures. There are uncertainties as to how the COVID-19 pandemic will evolve

and there can be no assurance that the ongoing COVID-19 pandemic in the PRC and other parts of

the world would not have a material adverse effect on the Group’s business, financial condition,

results of operations, profitability and prospects.

The PRC government (including the central SASAC) has no obligation to repay any amount

under the Instruments or the Guarantee.

The PRC government (including the central SASAC) is not an obligor and shall under no

circumstances have any obligation arising out of or in connection with the Instruments or the

Guarantee. This position has been reinforced by the Circular of the Ministry of Finance on Issues

relevant to the Regulation on the Financing Activities Conducted by Financial Enterprises for Local

Governments and State-owned Enterprises (財政部關於規範金融企業對地方政府和國有企業投融資

行為有關問題的通知) (財金 [2018] 23 號) (the “MOF Circular”) promulgated on 28 March 2018 and

which took effect on the same day, and the Circular of the National Development and Reform

Commission and the Ministry of Finance on Improvement of Market Regulatory Regime and Strict

Prevention of Foreign Debt Risks and Local Government Indebtedness Risks (Fa Gai Wai Zi [2018]

No. 706) (國家發展改革委財政部關於完善市場約束機制嚴格防範外債風險和地方債務風險的通知)

(發改外資 [2018] 706 號) (the “Joint Circular”) promulgated on 11 May 2018 and which took effect

on the same day.

The repayment obligations under the Instruments and the Guarantee remain the sole obligation of the

Issuer or the Guarantor (as the case may be) and all obligations under the Instruments and the

Guarantee shall solely be fulfilled by the Issuer or the Guarantor (as the case may be) as an

independent legal person. The PRC government as the ultimate shareholder of the Guarantor only has

– 32 –

limited liability in the form of its equity contribution in the Guarantor. Each of the PRC government

(including the central SASAC) and Aviation Industry Corporation of China (“AVIC”) has no

obligation to repay any amount under the Instruments or the Guarantee. Investments in the

Instruments are relying solely on the credit risk of the Issuer and the guarantee to be provided by the

Guarantor. In the event the Issuer and the Guarantor do not fulfil their respective obligations under

the Instruments and the Guarantee (as the case may be), investors will only be able to claim as an

unsecured creditor against the Issuer, the Guarantor and their respective assets, and not any other

person including the PRC government, the central SASAC or any other local or municipal

government entities. As the MOF Circular and the Joint Circular are relatively new and given the

limited volume of published decisions related to these circulars, the interpretation and enforcement

of these laws and regulations involve uncertainties.

In addition, any ownership or control of the Group by the PRC government (including the central

SASAC) does not necessarily correlate to, or provide any assurance as to, the Issuer or the

Guarantor’s financial condition. If the Issuer and the Guarantor do not fulfil their respective

obligations under the Instruments and the Guarantee (as the case may be), investors will only have

recourse against the Issuer or the Guarantor (as the case may be), and not any other person including

the PRC government, the central SASAC or any other local or municipal government entities.

Therefore, in making an investment decision, investors must rely upon their own examination of the

financial condition of the Issuer, the Guarantor and the Group, the terms of the offering (including

the merits and risks involved) and the financial information of the Guarantor included in this Offering

Circular.

The Group’s operations are subject to force majeure events, political unrest or civil

disobedience movements, natural disasters and outbreaks or pandemic of contagious diseases

and other disasters.

Force majeure events, natural disasters, catastrophe or other events could result in severe personal

injury to the Group’s staff, property damage and environmental and other damage, which may curtail

the Group’s operations, cause delays in estimated completion dates for the Group’s projects and could

in turn materially and adversely affect the Group’s cash flows and accordingly, adversely affect its

ability to repay any debt.

A substantial part of the Group’s operations are based in the PRC, which is exposed to potential

natural disasters including, but not limited to, earthquakes, flooding, landslides, mudslides and

drought. If any of the Group’s developments are damaged by severe weather or any other disasters,

accidents, catastrophes or other events, the Group’s operations may be significantly interrupted. The

occurrence or continuance of any of such unforeseen events or similar events could increase the costs

associated with the Group’s operations and reduce its ability to operate its businesses effectively,

thereby reducing its operating income and profits.

In addition, the Group’s contracts with its suppliers and other counterparties may have force majeure

provisions that permit such parties to suspend, terminate or otherwise not perform their obligations

under the relevant contracts upon the occurrence of certain events such as strikes and other industrial

or labour disturbances, terrorism, restraints of government, civil protests, disobedience movements

or disturbances, or any natural disasters; all of which are beyond the control of the party asserting

such force majeure event. If one or more of the Group’s suppliers or other counterparties do not fulfil

their contractual obligations for any extended period of time due to a force majeure event or

otherwise, the Group’s results of operations and financial condition could be materially and adversely

affected.

– 33 –

Risks of substantial costs and liabilities are inherent in the Group’s principal operations and there can

be no assurance that significant costs and liabilities will not be incurred, including those relating to

claims for damages to property or persons. Insurance policies for civil liability and damages taken

out by the Group could prove to be significantly inadequate, and there can be no assurance that the

Group will always be able to maintain a level of cover at least equal to current cover levels and at

the same cost. The frequency and magnitude of natural disasters seen over the past few years could

have a significant impact on the capacities of the insurance and reinsurance market and on the costs

of civil liability and damages insurance cover for the Group. Please see “– The Group’s operations

may be adversely affected by operational risks, which may cause the Group to incur uninsured

losses.” for further information.

The Group’s operations and financial condition could also be materially and adversely affected by

any outbreak, epidemic and/or pandemic of (or the escalation and/or intensification of any outbreak,

epidemic and/or pandemic of) infectious or contagious diseases and/or other adverse public health

developments in the PRC or elsewhere. In particular, the ongoing COVID-19 pandemic in the PRC,

Hong Kong and other countries has led to business suspension, travel and other restrictions, labour

shortages and supply or delivery chain constraints in the PRC, Hong Kong and globally. It is difficult

to predict the level of impact of the ongoing COVID-19 pandemic on the PRC and global economies

and there can be no assurance that it would not have a material adverse effect on the Group’s

business, results of operations, financial condition and prospects.

The outbreak of severe acute respiratory syndrome (“SARS”) that began in the PRC and Hong Kong

in early 2003 had an adverse effect on all levels of business in Hong Kong and the PRC. There have

also been sporadic outbreaks of the H5N1 virus or “Avian Influenza A” among birds, in particular

poultry, as well as some isolated cases of transmission of the virus to humans. In 2009 and 2010, there

have also been global outbreaks among humans of the influenza A/H1N1 virus. Other recent

epidemics include the Middle East Respiratory Syndrome (MERS), the H5N1 avian flu, the H7N9

avian flu, the Ebola virus disease and the Zika virus disease. The ongoing COVID-19 pandemic and

outbreak of SARS and the influenza A/H1N1 virus led to a significant decline in travel volumes and

business activities throughout most of the Asian region as well as globally. The occurrence of another

outbreak of highly contagious disease or epidemic disease (whether known or unknown to the world)

(or the escalation and/or intensification of any outbreak, epidemic and/or pandemic of infectious

disease) in the PRC or elsewhere may result in another economic downturn and could adversely affect

the overall level of business and travel in the affected areas. There may also be significant disruption

to the Group’s business operations and consequently have an adverse effect on its financial condition

and results of operations. Please see “– The extent to which the COVID-19 pandemic will impact the

Group’s business, financial condition, results of operations and prospects is uncertain and cannot be

predicted.” for further information.

Certain affiliates of the Group have business activities in certain countries that are the subject

of economic sanctions.

Certain affiliates of the Group (the “Affiliates”) have business presence in a number of foreign

countries including certain countries that are the subject of economic sanctions regimes administered

or enforced by the United States, the United Nations, the EU and/or Her Majesty’s Treasury. The

Affiliates also have a large number of clients located worldwide, and engage in limited business

activities relating to countries that are the subject of various United States economic sanctions

regimes, and there can be no assurance that the Affiliates will cease to engage in business activities

relating to those countries in the foreseeable future. The interpretation or implementation of

government policy at the U.S. federal, state or local levels with respect to any current or future

– 34 –

activities by the Affiliates in countries that are the subject of U.S. sanctions or with sanctioned

individuals or entities is difficult to predict. As at the date of this Offering Circular, the Group has

not engaged in any business activities in any sanctioned countries. However, if the U.S. government

determines that the Affiliates engage in any sanctionable activity or activity that is contrary to U.S.

policy, the Affiliates may be subject to various sanctions, and the Group, as a result of the affiliate

relationship, may also be subject to various sanctions ranging from restrictions on U.S. exports or

bank financing to outright blocking of the sanctioned entities’ property within U.S. jurisdiction. If the

most extreme sanction, blocking, were applied to the Group’s property, including property of their

respective controlled subsidiaries, the Group could be prohibited from engaging in business activities

in the United States or with U.S. individuals or entities. If the Group is sanctioned, the Group could

also be prohibited from engaging in U.S. transactions in the Instruments and distributions to U.S.

individuals and entities with respect to the Instruments could also be prohibited. As a result, the

market price of the Instruments may be adversely affected, and the Instrumentholders might be unable

to sell, or receive distributions with respect to, the Instruments. In addition, the Group may also be

subject to negative media or investor attention, which may distract management, consume internal

resources and affect investors’ perception of the Group. There can be no assurance that the Group will

not be the subject of sanctions in the future due to the Affiliates’ activities.

The Guarantor’s controlling shareholder, AVIC, is subject to certain Executive Orders issued by

the United States.

Since 2018, the U.S.-China trade war has brought uncertainty to global markets and to a certain

extent, impacted businesses and financial market sentiment, influenced financial market volatility,

and slowed investment and trade. The continued intensification of tensions between the United States

and China has caused the U.S. government to focus on national security concerns and increase

scrutiny of foreign businesses such as AVIC, which indirectly held approximately 43.78 per cent. of

the issued share capital of the Guarantor as at 31 December 2021.

On 12 November 2020 and 3 June 2021, the U.S. President issued Executive Order 13959,

“Addressing the Threat From Securities Investments That Finance Communist Chinese Military

Companies”, and Executive Order 14032, “Addressing the Threat From Securities Investments That

Finance Certain Companies of the People’s Republic of China” (“E.O. 14032”) (together, the

“Orders”), respectively. The present effect of the Orders is that U.S. Persons (as defined in the

Orders) are prohibited, as of 2 August 2021, from buying and selling (subject to a divestment period)

any publicly traded securities, or any publicly traded securities that are derivative of such securities

or are designed to provide investment exposure to such securities, of any company listed in the Annex

to E.O. 14032 (the “Annex”) or of any person determined by the U.S. Secretary of the Treasury, in

consultation with the U.S. Secretary of State, to operate or have operated in the “defense and related

materiel sector or the surveillance technology sector of the economy of the PRC” or to own or control

or be owned or controlled by a person who operates or has operated in that sector. The definition of

U.S. Persons in the Orders (including any United States citizen, permanent resident alien, entity

organised under the laws of the United States or any jurisdiction within the United States (including

foreign branches), or any person in the United States) is different from the definition of a U.S. person

under Regulation S of the Securities Act. E.O. 14032 includes a 10-month wind down period where

purchases for value or sales made within the prescribed period by U.S. persons solely to divest, in

whole or in part, from such restricted securities are permitted. The Orders are a form of U.S.

sanctions. Investors are responsible for ensuring that they comply with applicable provisions of

Executive Order 14032. Investors who are considered U.S. persons for purposes of the Orders should

consider whether this is an appropriate investment.

– 35 –

As at the date of this Offering Circular, to the knowledge of the Issuer and the Guarantor, AVIC is

one of the companies listed on the Annex. The Guarantor and other members of the Group have

engaged in, and will continue to engage in, various dealings and transactions with AVIC and other

companies that are listed on the Annex and/or subject to the prohibitions stipulated by the Orders

from time to time. As at the date of this Offering Circular, the prohibitions stipulated by the Orders

do not extend to the publicly traded securities of the Issuer and the Guarantor, as neither the Issuer

nor the Guarantor are named on the U.S. Department of the Treasury’s Office of Foreign Assets

Control’s Non-SDN Chinese Military Companies List (“NS-CMIC List”). Although as at the date of

this Offering Circular, the Issuer and the Guarantor are not named on the NS-CMIC List, the U.S.

Secretary of the Treasury is authorised under the Orders to include additional entities that are owned

or controlled by an entity subject to the Orders to the NS-CMIC List. Therefore, there can be no

assurance that the Issuer and/or the Guarantor will not be subject to the Orders in the future.

The inclusion of AVIC in the Annex and the fact that AVIC is subject to the prohibitions stipulated

by the Orders may result in negative media and investor attention targeted at AVIC and/or the Group,

which may cause their business partners to re-evaluate the risk of transacting with AVIC and/or the

Group, in particular in light of ongoing U.S.-China tensions. In addition, if the U.S. Secretary of the

Treasury ultimately determines that any of the Issuer, the Guarantor or other member of the Group

is named as an entity subject to the Orders, investors who are U.S. Persons will be prohibited (subject

to divestment periods) from entering into certain transactions in the relevant entity’s publicly traded

securities (which may include the Instruments and/or the Guarantee). In such case, the market

liquidity of the Instruments may be materially and adversely affected. Instrumentholders who are

U.S. Persons may also be required to divest their holdings in the Instruments and may have to do so

at a loss. The inclusion of AVIC in the Annex and the fact that AVIC is subject to the prohibitions

stipulated by the Orders may also affect AVIC and/or the Group’s businesses in the overseas markets

(including the United States). Although the Group’s overall operations and activities in the United

States and the Group’s business with individuals or entities in the United States represent only a small

percentage of the Group’s consolidated total revenue, such operations and activities of the Group may

be materially and adversely affected as tensions between the United States and China intensify.

In the future, any further escalation of the U.S.-China tensions may cause the U.S. government to

impose further sanctions and/or restrictions on AVIC and/or the Group, which could include measures

with a range of severity, including possible prohibition of transactions by the sanctioned entity

through the U.S. financial system and blocking sanctions. The Group has been closely monitoring the

development of the Orders and actively implementing corresponding mitigation measures in response

to the latest development of such situations. However, there can be no assurance that any potential

restrictions or sanctions on AVIC, the Group and/or any affiliates of the Guarantor will not materially

and adversely affect the business, prospects, financial condition and results of operations of AVIC,

the Group or the relevant affiliates and their future business expansion in the overseas markets

(including the United States).

The Group operates in an increasingly competitive market.

The PRC financial leasing industry is becoming increasingly competitive, and there can be no

assurance that the Group will be able to sustain its competitive advantage or maintain its market

position or effectively implement its business strategies. The Group faces competition from both

international and domestic players (including the financing divisions of vendors, manufacturers of

aircraft, vessels, urban infrastructure equipment and other equipment, financial institutions including

– 36 –

banks and other leasing companies) in its business, and competes with them in capturing new

business opportunities. Some of the Group’s competitors may have significant financial resources,

marketing and other capabilities, more extensive know-how and business relationships and longer

operating track records. Leveraging AVIC’s aircraft manufacturing business and industry expertise

within the aviation industry, the Group competes with its competitors on the basis of availability of

the aircraft types or product types that meet customers’ needs and the ability to provide customised

and integrated services to its customers. The Group’s revenue is affected by these competitive factors

and its success depends on its ability to compete effectively. Competition from such entities may

result in, among others, downward competitive pressure on interest rates charged to customers,

adoption by the Group’s competitors of innovative financial services or comparatively effective

branding efforts, any of which may have a material adverse effect on the Group’s business, financial

condition and results of operations.

Upon the PRC’s accession to the World Trade Organisation in 2001, the PRC financial leasing

industry entered a phase of rapid development and the number of both foreign and domestic investors

participating in the industry has increased. In order to fulfil its commitment to liberalise the PRC

financial leasing market, MOFCOM implemented several policies to develop further the financial

leasing industry and encourage additional investment. For instance, the Measures on the

Administration of Foreign Investment in the Leasing Industry was promulgated in 2005 and permitted

the incorporation of foreign investment leasing companies either through the establishment of

wholly-owned or joint venture financial leasing companies. In order to encourage participation by

domestic investors, the “Circular on Issues in Connection with the Engagement in Financial Leasing

Business” was jointly promulgated by MOFCOM and the State Administration of Taxation. This

notice permitted the establishment of domestic pilot financial leasing companies. Pursuant to the

Decision of the State Council of PRC on the Fifth Batch of Administrative Examination and Approval

Matters to be Cancelled or Delegated to Subordinate Authorities (國務院關於第五批取消和下放管理

層級行政審批專案的決定) promulgated and effected on 4 July 2010, approval for the establishment

or modification of foreign invested enterprises engaged in financial leasing with a total investment

amount of U.S.$300 million or less can be approved by provincial-level governmental authorities

instead of those at the national level. The Guarantor believes that these measures are likely to further

increase competition in the PRC financial leasing industry. If the Group is unable to compete

successfully against current and future participants in the industry and maintain its competitive

advantage and market share, its business, results of operations and financial condition may be

materially and adversely affected.

The industries in which the Group is engaged are cyclical.

The aviation industry is cyclical. Demand for passenger and cargo air transportation services and, in

turn, demand for passenger and cargo aircraft has a strong positive correlation with economic growth.

Decline in economic activity adversely affects demand for business travel and air cargo services. In

addition, economic contraction may also impact leisure travel as discretionary income is reduced. The

ongoing COVID-19 pandemic, as well as the financial crisis in Europe and the United States and,

together with slowing or contracting economies worldwide, may develop into a severe or prolonged

global recession that could result in lower demand for passenger and air cargo services, lower lease

rates for the Group’s aircraft, higher default rates among its customers and a decline in the value of

its portfolio of aircraft. Such developments would materially and adversely affect the Group’s

business, financial condition and results of operations, including its ability to meet its financial

obligations.

– 37 –

In addition, a proportion of the Group’s net lease receivables relates to the shipping industry. The

shipping industry is highly cyclical and is affected by factors such as global and regional economic

and political conditions, changes in regulatory regimes, strikes or armed conflicts, extreme weather

conditions and piracy. Likewise, in relation to the Group’s equipment leasing business, the industries

in which the Group’s customers are engaged can be very cyclical and are dependent on factors

including global and regional economic and political conditions and changes in regulatory regimes.

These factors are beyond the Group’s control and the nature, timing and degree of changes in industry

conditions are largely unpredictable. Any downturn in the shipping industry could result in extensive

customer defaults, decreased revenue, which in turn could materially and adversely affect the Group’s

business, financial condition and results of operations.

The Group is exposed to risks associated with entering into contracts with public organisations,

and its performance may be significantly affected by changes in government policies.

The Group’s customers, in particular in its urban infrastructure leasing business, include agencies and

entities owned, controlled by or otherwise associated with local governments. The revenue

contributed by these customers accounts for a substantial part of the Group’s total revenue. Any

changes in the government’s budget or other policy considerations may result in reduced demand for

the Group’s urban infrastructure leasing business, and to the extent that the Group’s customers are

funded or supported by the government, may lead to customer defaults or contract termination, which

would adversely affect the Group’s business, financial position and results of operations, which in

turn may potentially affect the Group’s ability to meet its financial obligations.

The Group is subject to various PRC and overseas regulatory requirements and the Group’s

failure to comply with such requirements, could materially and adversely affect its business,

financial condition, results of operations and reputation.

Certain members of the Group are the pilot domestic financial leasing enterprises approved by

MOFCOM and are subject to regulation by various PRC authorities including MOFCOM and the

State Administration of Taxation. On 8 May 2018, the General Office of MOFCOM issued the Notice

on Matters about the Rearrangement of Supervisory Responsibilities over Finance Leasing

Companies, Factoring Companies and Pawnshops (商務部辦公廳關於融資租賃公司、商業保理公司

和典當行管理職責調整有關事宜的通知) (the “2018 Notice”), according to which the authority of

rule-making on operation and regulation of finance leasing companies, factoring companies and

pawnshops shall be transferred to CBIRC. From time to time, weaknesses in certain areas of the

Group’s operations, such as risk management and internal controls may be identified, which may

result in sanctions, fines or penalties being imposed on the Group. There can be no assurance that the

Group will be able to comply with all such requirements and guidelines at all time or that the Group

will not be subject to sanctions, fines or other penalties in the future as a result of non-compliance.

If sanctions, fines and other penalties are imposed on the Group for its non-compliance, the Group’s

business, financial condition, results of operations and reputation may be materially and adversely

affected.

Also, there can be no assurance that existing policies, laws and regulations governing the financial

leasing industry will not change in the future or that any such changes will not materially and

adversely affect the Group’s business, financial condition and results of operations nor can there be

any assurance that the Group will be able to adapt to all such changes on a timely basis.

– 38 –

In addition, the aviation industry, in which many of the Group’s customers operate, and the operation

of aircraft are subject to domestic and international regulatory controls as well as additional controls

that various national or federal civil aviation authorities may impose, including the airworthiness

directives for aircraft operated by airlines within the jurisdiction of such authorities. The regulatory

authorities can suspend or revoke the licence granted to the Group’s airline customers to operate an

aircraft for failure to comply with these regulations, resulting in the grounding of aircraft. If the

business activities of any of the Group’s lessees are disrupted due to failure to meet regulatory

requirements, the ability of such lessees to meet their lease obligations towards the Group may be

adversely affected.

Regulatory approvals are required for the import, re-export, deregistration or registration of the

aircraft in various jurisdictions. Certain jurisdictions set maximum age limits for aircraft being

imported or registered. Subsequent changes in applicable laws may modify such requirements, or

approvals previously granted may be withdrawn. These changes may adversely affect the ability of

the Group to sell these aircraft and may impair the values of these aircraft and thus have an adverse

effect on the Group’s financial performance and its ability to meet its financial obligations.

The Group is subject to risks related to default payments and breaches by its lessees or other

contractual counterparties.

The Group’s business, financial condition and results of operations are to a certain extent dependent

upon the ability of its lessees to perform their contractual obligations under the leases. The ability

of each lessee to perform its contractual obligations is, in turn, dependent on its financial condition

and cash flow. If a lessee defaults, there can be no assurance that any security deposits paid under

the lease will be adequate to cover the lessee’s unpaid lease obligations, or that the maintenance

reserves collected during the lease term will be sufficient to cover the Group’s maintenance expenses

or the costs of re-leasing the aircraft.

Any deficiencies in the Group’s risk management and internal control systems may materially

and adversely affect the Group’s financial condition and results of operations.

The Group has implemented an integrated and prudent risk management system to protect the

long-term interests of its shareholders, customers and employees. However, the Group’s risk

management systems and internal control policies may not be effective in mitigating its exposure to

all types of risk, including unidentified or unanticipated risks. Some risk management and control

methods are based upon historical market behaviour and past events. As such, the Group may not be

able to adequately identify or estimate future risk exposures, which could be significantly greater

than the levels indicated by measures based on historical data. Other risk management methods

depend on evaluation of information regarding markets, customers or other relevant matters, which

may be inaccurate, incomplete, obsolete or improperly evaluated. For instance, the information

infrastructure in the PRC is still under development and there is no extensive and unified nationwide

credit information system. As such, risk assessment may not be based on complete, accurate,

up-to-date or reliable information. Furthermore, as the Group enters into new industry sectors,

expands into new customer segments or develops additional product and service offerings, it may not

be in a position to adequately identify, predict and manage future risk exposures.

In addition, management of operational, legal or regulatory risks requires various sets of policies and

procedures in order to accurately record and verify a large number of transactions and events. Such

policies and procedures may not be fully effective. Any failure of the Group’s risk management

procedures or any failure to identify applicable risks may have a material adverse effect on its results

of operations and financial condition.

– 39 –

The Group’s financial leasing businesses are capital intensive with long payback periods and the

Group may not be able to maintain sufficient liquidity to meet its business needs.

The Group is primarily engaged in aircraft leasing, ship leasing, urban infrastructure leasing and

large-scale equipment leasing, which typically require significant initial cash outlays and have long

payback periods. For example, the Group is typically required to deposit a portion of the purchase

price of the aircraft or vessel (as the case may be) to the vendor as pre-delivery payment and pay the

remaining balance of the purchase price at the time of delivery. As at 31 December 2021, the lease

term for the Group’s leasing businesses ranged from three to 12 years depending on the type of

leasing, during which the Group typically receives monthly, quarterly or semi-annual rental payments

from its lessees.

Although the Group generally generates significant funds from its operations, its ability to continue

to meet its cash requirements over the long-term requires substantial liquidity and access to sources

of funds. The Group has financed its businesses through a combination of borrowings from financial

institutions, such as commercial banks, and the issuance of onshore asset back securities as well as

onshore and offshore debt securities, but there can be no assurance that the Group is able to secure

adequate financing for its business operations.

In addition, the Group may require additional financing to fund working capital requirements, grow

its business and refinance existing debt obligations. There can be no assurance that additional

financing, either on a short-term or a long-term basis, will be made available or, if available, such

financing will be obtained on favourable terms.

Any decrease in the residual value of the aircraft, vessels, urban infrastructure equipment or

other equipment that the Group finances could adversely affect its business, financial condition

and results of operations.

Any decline in the residual value of the aircraft, vessels, urban infrastructure equipment or other

equipment financed by the Group may reduce the Group’s earnings. The Group recognises the

residual value of leased aircraft and vessel (as the case may be) based on the estimated future market

value of the leased asset at the maturity of the lease. The Group estimates the residual value of leased

asset at the inception of a lease based on a number of factors, including historical sale prices,

management’s experience and any known significant market and product trends. If the estimated

market value of the Group’s leased assets declines significantly due to economic factors,

obsolescence or other adverse circumstances, the Group may not realise the expected residual value

of the leased asset, which could adversely affect the Group’s business, financial condition and results

of operations.

The Group has pledged certain lease receivables to secure its borrowings.

The Group has pledged certain of its lease receivables to secure some of its bank loans. If the Group

defaults on such bank loans, the lenders may foreclose such leased receivables which the Group has

pledged, which may disrupt and adversely affect the Group’s business. Although the terms of the

Group’s indebtedness may limit the Group’s ability to create certain security over its assets, there can

be no assurance that the Group will not pledge its leased receivables to secure its borrowings in the

future. There can also be no assurance that the Group will not default on any of its borrowings in the

future. As at 31 December 2021, a substantial portion of the Group’s lease receivables with total

carrying values of approximately RMB60.73 billion were pledged to secure its bank loans amounting

to approximately RMB42.91 billion.

– 40 –

The value of collateral or guarantees securing the Group’s leases and the assets underlying its

leases which are disposed of upon repossession may be inadequate to cover related lease

receivables.

As at 31 December 2021, a considerable part of the Group’s leases was secured by collaterals or

provided with guarantees. To mitigate credit risks of its leases, the Group may request the lessees to

provide guarantees and/or collaterals for the leases. Such guarantees and/or collaterals are typically

negotiated on a case-by-case basis, depending on the nature of the business of the relevant lessee. In

the event of any material default on the lease payment terms, the Group is contractually entitled to

enforce its security rights over any guarantee or collateral, and/or repossess and dispose of the assets

underlying its leases to realise their value. However, the value of such collateral and/or assets

underlying such leases to be disposed of may decline and may be materially and adversely affected

by a number of factors, such as any damage, loss, oversupply, devaluation or reduced market demand.

Similarly, any significant deterioration in the financial condition or creditworthiness of guarantors

under the Group’s guaranteed leases could significantly decrease any amounts which the Group may

be able to recover under such guarantees.

The Group’s policies require periodic internal re-evaluation of collaterals, guarantees and assets

underlying its leases for impairment testing purposes. If the value of such collaterals, guarantees or

assets underlying the Group’s leases proves to be inadequate to cover the related lease receivables,

the Group may need to obtain additional security from its customers or other sources, but there can

be no assurance that it will be able to do so. Any decline in the value of such collaterals, guarantees

or assets underlying the Group’s leases or the Group’s inability to obtain additional security may

result in impairment losses and require the Group to make additional impairment provisions against

its lease receivables, which may in turn materially and adversely affect its business, financial

condition and results of operations.

The Group may not be able to successfully enforce its rights to the underlying collateral or

guarantees to its leases, or enforce its rights to repossess leased assets.

In the PRC, the procedures for liquidating or otherwise realising the collateral value of tangible assets

and the procedures for enforcing the Group’s rights to a guarantee or to repossess and dispose of the

asset underlying its leases could be time-consuming and in practice it may be difficult to realise such

collateral value, enforce the guarantee or repossess and dispose of assets underlying the Group’s

leases. Although the Group could apply to a PRC court in accordance with the PRC Civil Procedure

Law (中華人民共和國民事訴訟法) for the attachment or disposal of any underlying collateral, the

enforcement of a guarantee or the repossession of the assets underlying the Group’s leases upon

default, it is uncertain whether any judgment made by local courts would be enforceable due to

uncertainties of the PRC legal system governing such enforcement. In addition, under PRC law, the

Group’s rights to any collateral securing its leases may be subordinated to other claims. For example,

according to the PRC Enterprise Bankruptcy Law (中華人民共和國企業破產法), claims for the

amount that a company in bankruptcy owed its employees prior to 27 August 2006 (being the date

of publication of the PRC Enterprise Bankruptcy Law), including but not limited to salaries, medical

insurance and pension benefits, will have priority over the rights of such company’s creditors to

collateral, if not adequately provided for in liquidation proceedings. Therefore, upon any default of

any lessee or any guarantor under the Group’s lease, if the Group is unable to successfully enforce

its right in respect of any collateral or any guarantee related to any assets underlying its leases to be

repossessed and disposed of on a timely basis, the Group’s asset quality, business, financial condition

or results of operations may be materially and adversely affected.

– 41 –

The Group’s provisions for impairment losses on lease receivables may not be adequate to cover

future credit losses, and may have a material adverse impact on the Group’s business, financial

condition and results of operations.

The Group makes provisions for impairment losses on lease receivables in accordance with PRC

GAAP. As at 1 January 2020, 1 January 2021 and 31 December 2021, the Group’s consolidated

impairment provision on lease receivables were approximately RMB2.50 billion, RMB3.24 billion

and RMB4.11 billion, respectively, and the accumulated impairment provision represented

approximately 2.00 per cent., 2.52 per cent. and 3.06 per cent. of the Group’s net lease receivables,

respectively. This reflected both the growth of the Group’s business operations and its approach to

provisions in view of the macroeconomic environment. The amount of provisions for impairment

losses on the Group’s lease receivables is determined on the basis of its internal provisioning

procedures and guidelines taking into account a number of factors, such as the nature and

industry-specific characteristics of the Group’s customers and their creditworthiness, economic

conditions and trends, write-off experience, delinquencies and the value of underlying collateral and

guarantees. As the Group’s provisions require significant judgment and estimation, its allowance for

impairment losses may not always be adequate to cover actual credit losses in its business operations.

The Group’s allowance may prove to be inadequate if unforeseen or adverse changes occur in the

PRC economy or other economies in which the Group operates or if other events adversely affect

specific customers, industries or markets. As at 1 January 2020, 1 January 2021 and 31 December

2021, the Group’s non-performing lease receivable was approximately RMB1.60 billion, RMB1.66

billion and RMB1.68 billion, respectively, the Group’s non-performing lease receivable rates were

approximately 1.27 per cent., 1.29 per cent. and 1.25 per cent., respectively, and the Group’s

allowance coverage ratios for non-performing lease receivable were approximately 156.66 per cent.,

195.62 per cent. and 244.32 per cent., respectively. The Group may need to make additional

provisions for its lease receivables, which could significantly reduce its profit and may materially and

adversely affect its business, financial condition, results of operations and prospects.

The Group may not be able to sell the aircraft, vessel, urban infrastructure equipment or other

equipment upon termination or expiry of an existing lease.

Upon termination or expiry of an existing lease, the Group needs to sell the aircraft, vessel, urban

infrastructure equipment or other equipment (as the case may be). There can be no assurance that the

Group can sell the aircraft, vessel, urban infrastructure equipment or other equipment (as the case

may be) at a price favourable to the Group or at all.

Factors that could affect the Group’s ability to sell the aircraft, vessel, urban infrastructure equipment

or other equipment include business cycles in the relevant industry, global and domestic financial

market conditions and market disruption risks which could adversely affect the liquidity, interest

rates, the availability of funding sources and natural or man-made calamities. Failure by the Group

to sell the relevant asset at a favourable price may result in losses incurred by the Group which may

have a material adverse effect on the Group’s financial condition and profitability.

– 42 –

The Group may not be able to successfully identify, acquire, invest in or operate suitable

investment projects, acquisition targets or businesses.

There can be no assurance that the Group will be able to identify suitable investments and acquisition

targets, complete the investments and acquisitions on satisfactory terms or, if at all, if any such

investments and acquisitions are consummated, satisfactorily integrate the acquired businesses and

investments. Any failure of the Group to implement its expansion plans through investments and

acquisitions could have a material adverse effect on the Group’s business, financial position and

results of operations, as well as its future prospects.

In addition, the Group’s subsidiaries operating in different business segments may determine that it

is in their shareholders’ interests to pursue new business ventures. There can be no assurance that

such business ventures will be successful or generate the synergies expected, if any. The successful

completion of this type of transaction will depend on several factors, including satisfactory due

diligence findings and the receipt of necessary regulatory approval, among others. If the Group fails

to complete such business ventures or such ventures prove to be unsuccessful, the Group’s operating

segments involved may be adversely affected.

There are risks associated with any material acquisitions by the Group in the future.

The Group may consider expanding its business by acquiring certain interests in other companies.

During the course of these transactions, the Group will conduct due diligence investigations with

respect to the target companies, but such due diligence conducted with respect to any acquisition

opportunity may not reveal all relevant facts that are necessary or useful in evaluating such

opportunity, which could subject the Group to unknown financial, legal and other risks and liabilities.

When determining the consideration for any acquisition, the Group will consider various factors,

including but not limited to the quality of the target business, estimated costs associated with the

acquisition and the management of the target business, prevailing market conditions and intensity of

competition. The Group will also face various issues arising from the acquisition after the relevant

transaction is completed, such as integration of the business into its operations and allocation of

internal resources. There can be no assurance that the Group will be able to address these issues

effectively.

In addition, any major acquisition or transaction of similar nature may consume substantial

management attention and financial resources of the Group or even cause the Group to incur

significant indebtedness. Any material decrease in its financial resources may limit the Group’s

ordinary operating activities and increase pressure on its liquidity, and in turn could adversely affect

its business, financial condition and results of operations.

The Group is unable to predict whether there will be any target suitable for acquisition or when any

suitable acquisition opportunities could arise. In the event that the Group enters into any letter of

intent or agreement for any material acquisition after the issue of the Instruments, the market price

and the trading volume of the Instruments may be adversely affected.

– 43 –

The Group may not be able to execute successfully or fully its business strategy with respect to

assets, projects or subsidiaries in which the Guarantor has minority interests (if any).

The Group may not be able to execute successfully or fully its business strategy with respect to assets,

projects or subsidiaries in which the Guarantor has minority interests (if any). The Group may also

fail to manage such assets, projects or subsidiaries successfully. The Group’s involvement with such

assets, projects and subsidiaries is generally subject to the terms of applicable agreements and

arrangements. The Guarantor may not have any board representation, veto power or power to exercise

control over the management, policies, business and affairs of certain of its subsidiaries in which the

Guarantor does not have majority interests.

The Group may encounter difficulties in executing its growth strategy and integrating its

expansion plans which may have a material adverse impact on its growth prospects, business

and results of operations.

As part of the Group’s business strategy, it plans to continue to explore growth opportunities within

other target industries in the PRC, Asia and overseas with high growth potential to complement its

existing businesses. The Group may achieve this through acquisitions, expansion, alliances, joint

ventures or partnerships, where suitable opportunities arise and under appropriate market conditions.

While the Group did not have any existing timetable to expand into these new industries as at the date

of this Offering Circular and it has not engaged in any related negotiations or entered into any

agreements with any acquisitions, alliances, joint ventures or partnerships, the Group may engage in

such transactions in the near future. However, there can be no assurance that the Group will be able

to identify any suitable target industries, investment projects or business partners in the near future.

In addition, any failure to effectively manage the Group’s expansion plans may lead to increased

costs, impaired growth and reduced profitability for the Group. Even upon completion of investments

or partnerships, the Group may experience difficulties in integrating such businesses into its existing

business model, and may incur higher costs than initially anticipated. All of the above factors may

materially and adversely affect the Group’s business, financial position and results of operations. The

shares of the Issuer, the Guarantor or one or more of its subsidiaries may become listed on one or

more stock exchanges. As a result of this, the entering into of certain transactions by the Issuer, the

Guarantor or any such subsidiary may be subject to various regulatory restrictions. Intra-group

transactions may also be subject to applicable listing requirements, such as the issuance of press

notices, the obtaining of independent shareholders’ approval at general meetings and disclosure in

annual reports and accounts. As a result, subsidiaries with funding needs may not be able to obtain

financial support from the Group in a timely manner, or at all.

– 44 –

The Group may engage in related party transactions with its affiliates and joint ventures from

time to time which may create potential conflicts of interest.

The Group may engage in a variety of transactions with its affiliates and joint ventures, which may

include providing guarantees. There can be no assurance that those transactions would be deemed as

arm’s length or the Group’s related parties will not take actions that favour their interests over the

Group’s. There can be no assurance that conflicts of interests will not arise between the Group and

its affiliates and joint ventures pursuant to such related party transactions. If a borrower defaults on

any borrowings guaranteed by the relevant Group’s member, the relevant lender may exercise its right

under the guarantee to demand repayment from the Group, which may result in a funding shortage

at the Group level. The internal control regarding the management of various related party

transactions can also be challenging and demanding for the Group. Failure to adequately control and

manage its related party transaction could have an adverse effect on the Group’s business, financial

condition or results of operations.

The Group may be exposed to credit risk relating to guarantees.

The Group may from time to time provide guarantees in respect of indebtedness of entities which

were not members of the Group. If there is a downturn in the general economic conditions in the PRC

and globally or other adverse factors causing a deterioration of the financial condition of the

guaranteed entities and the guaranteed entities are unable to fulfil their obligations under their

respective indebtedness as a result of which the Group is required to pay the outstanding debt

obligations on behalf of the guaranteed entities, the Group’s financial condition, results of operations

and prospects could be materially and adversely affected.

The Group’s ability to generate cash to service its indebtedness depends on many factors

beyond its control.

The Group’s ability to make payments on and to refinance its indebtedness, including the

Instruments, and to fund planned capital expenditures will depend on the Group’s ability to generate

cash. This, to a certain extent, is subject to general economic or financial conditions, competitive,

legislative, regulatory environment and other factors that are beyond the Group’s control. There can

be no assurance that the Group may generate sufficient cash flow from its operations to enable it to

pay its indebtedness, including the Instruments, or to fund the Group’s other liquidity needs. The

Group may need to refinance all or a portion of its indebtedness, including the Instruments, on or

before maturity. However, the Group might not be able to refinance any of its indebtedness, including

the Instruments, on commercially reasonable terms or at all. If the Group is unable to service its

indebtedness or obtain refinancing on terms acceptable to the Group, it may be forced to adopt an

alternative strategy that may include reducing or delaying capital expenditures, selling assets or

seeking equity capital. These strategies may not be instituted on satisfactory terms, if at all.

– 45 –

Changes in interest rates and currency exchange rates could have an adverse effect on the

Group’s business, financial condition and results of operations.

The Group’s business is affected by interest rates, including both the interest rates charged to its

financial leasing customers and the interest rates it pays under its loans and other financing

obligations. In order to remain responsive to changing interest rates and to manage the Group’s

interest rate exposure, the Group has implemented measures to adjust the structure of its assets and

liabilities based on an assessment of the sensitivity of projected net interest income under various

interest rate scenarios. However, an increase in interest rates, or the perception that such an increase

may occur, could adversely affect the Group’s ability to obtain bank loans at favourable interest rates,

its ability to maximise its interest income, its ability to originate new leases and its ability to grow.

In addition, changes in interest rates or in the relationships between short-term and long-term interest

rates or between different interest rate indices (i.e., basis risk) could affect the interest rates received

on interest-earning assets differently from the interest rates paid on interest-bearing liabilities, which

could, in turn, result in an increase in interest expense or a decrease in net interest income (which

is the Group’s interest income minus the Group’s interest expense). In addition, the Group’s net

interest income is also impacted by whether it can adjust the interest rates it charges its customers

in response to fluctuations in interest rates for the Group’s interest-bearing bank borrowings to

maintain its net interest spread and its net interest margin. If the Group fails to appropriately adjust

the interest rates of its lease contracts in a timely manner, its net interest spread and its net interest

margins may decrease, and as a result, its profitability and results of operations would be adversely

impacted. Any increase in the Group’s interest expense or decrease in its net interest income could

have a material adverse effect on its business, results of operations and financial condition.

In addition, fluctuations in exchange rates may also reduce the Group’s earnings and cash flow or

adversely affect the Group’s financial condition. Although the Group manages interest rate and

exchange rate risks with a variety of techniques, including the selective use of interest swaps and

cross-currency swaps, there can be no assurance that fluctuations in interest rates and currency

exchange rates will not have an adverse effect on the Group’s earnings and cash flows. If any of the

variety of instruments and strategies the Group uses to hedge its exposure to these various types of

risk are ineffective, the Group may incur losses.

The Group depends on its key senior management members and key senior officers and may

have difficulty attracting and retaining skilled employees.

The Group’s financial leasing business is a highly specialised area which requires professional

knowledge and know-how in business areas including, but not limited to, finance, accounting,

international trade, insurance, the aviation, shipping and other related industries and various areas of

law. The Group’s success depends, to a significant extent, upon the abilities, expertise and dedication

of its key senior management members, senior officers and skilled employees. There is significant

competition in the PRC for such talent. If such key personnel leaves the Group to join other

employers, including the Group’s competitors, the Group may face difficulties employing and

assimilating suitable replacement personnel in the short term. Failure to recruit, train, develop and

retain personnel with the necessary qualifications may have a material adverse effect on the Group’s

business, financial condition, results of operations and prospects.

– 46 –

The Group’s business is dependent on the proper functioning of its information technology

systems.

The success of the Group’s operations is highly dependent on the ability of its information technology

systems to accurately process a large number of transactions and information in a timely manner. The

proper functioning of the Group’s financial control, risk management, accounting, customer service

and other data processing systems is critical to its business and its ability to compete effectively. If

the Group’s systems cannot cope with increased demand or otherwise fail to perform, the Group could

experience unanticipated business disruptions, slower response times and limitation on its ability to

monitor and manage data and risk exposure, control financial and operation conditions, and keep

accurate records. These consequences could result in operating outages, poor operating performance,

financial losses and potential intervention by regulatory authorities.

Although the Group has established its own internal back-up systems to carry on principal functions

in the event of system failures, there can be no assurance that its operations will not be materially

disrupted if any of the Group’s systems fail due to, among other things, fire, natural disasters, power

loss, software faults, computer virus attacks, conversion errors due to system upgrades, or security

breaches. The internal safety measures may not be effective in preventing any harm or damage

resulting from risks threatening the Group’s information technology systems. Any disruption to any

of the Group’s information technology systems could have a material adverse effect on its operations,

business and financial condition.

Although the Group’s systems had not experienced major system failures and delays in the past, there

can be no assurance that the Group’s systems would not experience future system failures and delays,

or the measures taken by the Group to reduce the risk of system disruptions are effective or adequate.

If internet traffic and communication volume increase unexpectedly or other unanticipated events

occur, the Group may need to expand and upgrade the Group’s technology, systems and network

infrastructure. There can be no assurance that the Group will be able to accurately project the rate,

timing or cost of any increases, or expand and upgrade the Group’s systems and infrastructure to

accommodate any increases in a timely manner.

The Group may not be able to detect and prevent fraud or other misconducts committed by its

officers, employees representatives, agents, customers or other third parties.

Following the 18th Chinese Communist Party Congress in 2012 and the wide-reaching anticorruption campaign in the PRC, the Central Leading Group for Inspection Work (the “Inspection

Leading Group”), a coordination body set up under the Central Committee of the Chinese

Communist Party for the purpose of managing party disciplinary inspections nationwide, has

dispatched inspection teams to provinces and central government organs such as ministries and

state-owned enterprises in the PRC to conduct inspection work on party disciplinary enforcement.

While the Guarantor is not aware of any inspections or actions against the Group or its officers or

employees by the Inspection Leading Group as at the date of this Offering Circular, there can be no

assurance that there will not be any such inspections or actions by the Inspection Leading Group or

other governmental authorities or that any such inspections or actions would not affect the Group as

a result.

– 47 –

In addition, the Group may be exposed to fraud or other misconducts committed by its former or

current officers, employees, representatives, agents, customers or other third parties that could

subject the Group to financial losses and sanctions imposed by governmental authorities, which in

turn affects its reputation. In particular, the Group’s operations are large in scale, which may render

fraudulent or accidental transactions difficult to detect.

These misconducts could include:

? hiding unauthorised or unsuccessful activities, resulting in unknown and unmanaged risks or

losses;

? intentionally concealing material facts, or failing to perform necessary due diligence procedures

designed to identify potential risks, which are material to the Group in deciding whether to make

investments or dispose of assets;

? improperly using or disclosing confidential information;

? recommending products, services or transactions that are not suitable for the Group’s customers;

? misappropriation of funds;

? conducting transactions that exceed authorised limits;

? engaging in misrepresentation or fraudulent, deceptive or otherwise improper activities when

marketing or selling products;

? engaging in unauthorised or excessive transactions to the detriment of the Group’s customers;

? making or accepting the bribery activities;

? conducting any inside dealing; or

? otherwise not complying with applicable laws or the Group’s internal policies and procedures.

In particular, the Group is required to comply with applicable anti-money laundering, anti-terrorism

laws and other regulations in the PRC and other relevant jurisdictions. The Group seeks to comply

fully with all applicable legislations in the PRC and other relevant jurisdictions such as the U.S.

Foreign Corrupt Practices Act, the UK Bribery Act and any applicable sanctions.

The Group’s internal control procedures are designed to monitor its operations and ensure overall

compliance. In particular, the Group has adopted policies and procedures aimed at detecting and

preventing the use of its business platforms to facilitate money laundering activities and terrorist acts.

However, such internal control procedures may be unable to identify all incidents of non-compliance

or suspicious transactions in a timely manner if at all.

– 48 –

In addition, fraud or other misconducts by employees (such as unauthorised business transactions and

breaches of its internal policies and procedures) or third parties (such as breach of law) may be

difficult to detect and prevent and could subject the Group to financial loss, sanctions imposed by

governmental authorities and seriously harm its reputation. The Group’s risk management systems,

information technology systems and internal control procedures are designed to monitor its

operations and overall compliance. However, there can be no assurance that it will be able to identify

all non-compliance or suspicious transactions in a timely manner or at all. Furthermore, it is not

always possible to detect and prevent fraud or other misconducts and the precautions undertaken by

the Group to prevent and detect such activities may not be effective. Hence, it is possible that fraud

or other misconducts may have previously occurred but was undetected, or that fraud or other

misconducts may occur in the future. If such fraud or any other misconduct does occur, it may cause

negative publicity as a result and the relevant government agencies may freeze its assets or impose

fines or other penalties on the Group. Any of these may materially and adversely affect the Group’s

reputation, business, financial condition and results of operations.

The Group is subject to additional operating costs.

The Group may incur other operational costs upon a lessee’s default or where the terms of the lease

require the Group to pay a portion of additional operating costs. Such costs, which can be substantial,

include:

(a) the costs of casualty, liability or war risk insurance and the liability costs or losses when

insurance coverage has not been or cannot be obtained as required or is insufficient in amount

or scope;

(b) the costs of licensing, exporting or importing an aircraft, costs of storing and operating an

aircraft, airport taxes, custom duties, air navigation charges, landing fees and similar

governmental or quasi-governmental impositions; and

approvals.

The failure to pay some of these costs can result in liens on the aircraft or a loss of insurance. Any

of these events could result in the grounding of the aircraft and prevent the sale or other use of the

aircraft until the problem is resolved. This could adversely affect the Group’s business, financial

condition and results of operations.

The Group is exposed to interest rate risk.

Interest rate fluctuations may influence the Group’s financial performance. Any changes in the

prevailing interest rates may impact the Group’s borrowing costs as a portion of the Group’s

borrowings bear floating interest rates. The Group may be susceptible to interest rate volatility if it

is unable to match its floating rate liabilities with floating rate payments or secure appropriate hedges

for the same.

While the Group’s exposure to interest rate volatility may be hedged through the use of interest rate

swaps and interest caps, the magnitude of the final exposure depends on the effectiveness of the

hedge. There can be no assurance that fluctuations in interest rates will not have an adverse effect on

the Group’s earnings or cash flows. If any of the various instruments and strategies which the Group

uses to hedge its exposure to interest rate risk are or become ineffective, the Group may incur

significant losses, which could have a material adverse effect on the Group’s financial position and

results of operations.

– 49 –

The Group may be subject to legal, litigation and regulatory proceedings.

The Group may be involved, from time to time, in legal proceedings arising in the ordinary course

of its operations. Please see “Description of the Group – Legal and Regulatory Proceedings” for

further information. Litigation arising from any failure, injury or damage from the Group’s operations

may result in the relevant member of the Group being named as defendant in lawsuits asserting large

claims against such member of the Group or subject such member of the Group to significant

regulatory penalties. These risks often may be difficult to assess or quantify and their existence and

magnitude often remain unknown for a substantial period of time. Actions brought against the Group

may result in settlements, injunctions, fines, penalties or other sanctions adverse to the Group’s

reputation, financial condition and results of operations. Even if the Group is successful in defending

against these actions, the costs associated with the Group’s defence may be significant. When the

market experiences a downturn, the number of legal claims and amount of damages sought in

litigations and regulatory proceedings may increase. A significant judgment, arbitration award or

regulatory action against the Group, or a disruption in the Group’s business arising from adverse

adjudications in proceedings against the Group’s director(s), senior management or key employees,

would materially and adversely affect the Group’s liquidity, business, financial condition, reputation,

results of operations and prospects.

The Group’s operations may be adversely affected by operational risks, which may cause the

Group to incur uninsured losses.

The Group faces various operational risks in connection with its business, including but not limited

to:

? interruptions caused by operational errors, electricity outages, raw material shortages, the

failure of equipment and other operational risks;

? operating limitations imposed by environmental or other regulatory requirements;

? work-related personal injuries;

? on-site occupational accidents;

? economic loss due to product reclaim;

? credit risks relating to the performance of customers or other contractual third parties;

? disruption in the global capital markets and the economy in general;

? loss on investments;

? environmental or industrial accidents; and

? catastrophic events such as fires, earthquakes, explosions, floods or other natural disasters.

– 50 –

These operational risks may be beyond the control of the Group and could cause significant business

interruptions, property damages, personal injuries and property or environmental damage. The

occurrence of any of these events, and the consequences resulting from them, may not be covered

adequately, or at all, by the Group’s insurance policies. In addition, certain types of risks are not

insured in the PRC because they are either uninsurable or not economically insurable, such as risks

from wars, acts of terrorism or acts of God, business interruption, property risks and third party

(public) liability. To the extent that the Group suffers loss or damage that is not covered by insurance

or that exceeds the limit of its insurance coverage, its business, financial condition, results of

operations, prospects and cash flow may be materially and adversely affected.

The Group may not be able to adequately protect its intellectual property, which could

adversely affect its business operations.

The Group relies on a combination of patents, copyrights, trademarks and contractual rights to protect

its intellectual property. There can be no assurance that any protective measures adopted by the Group

will be sufficient to prevent any misappropriation of the Group’s intellectual property. The legal

regime governing intellectual property in the PRC is still evolving and the level of protection

afforded in respect of intellectual property rights in the PRC differs from those in other jurisdictions.

In the event that the measures taken by the Group and the protection afforded by law do not

adequately safeguard the Group’s proprietary technology or property, the Group could suffer

significant losses due to the sales of competing products or services that appoints the Group’s

intellectual property which in turn could adversely affect its business, financial condition and results

of operations.

There might be claims asserted against the Group.

Although under some of its leases the Group does not control the operation of its leased assets such

as aircraft, vessels, urban infrastructure equipment and other equipment, its ownership of the assets

could give rise, in some jurisdictions, to strict liability for losses resulting from their operation.

Lessees of the Group are normally required under the leases to indemnify the Group for, and insure

against, amongst others, liabilities arising out of the use and operation of the assets, including

third-party claims for death or injury to persons and damage to property for which the Group may be

deemed liable. The lessees are also typically required to maintain public liability, property damage

and all risks and war risks insurance on the leased assets at agreed upon levels.

There can be no assurance that the lessee’s insurance, and any contingent insurance undertaken by

the Group, will be adequate or sufficient to cover all types of claims that may be asserted against the

Group. Any insurance coverage shortfall or default by lessees to fulfil their indemnification or

insurance obligations, as well as the lack of available insurance, could reduce the proceeds upon an

event of loss and could subject the Group to uninsured liabilities, any of which could have an adverse

impact on the Group’s financial performance and its ability to meet its financial obligations.

– 51 –

Failure to obtain, renew, or retain licences, permits or approvals or failure to comply with

applicable laws and regulations may affect the Group’s ability to conduct its business.

The Group is subject to rules and regulations and is required to hold various licences, permits and

approvals issued by relevant authorities for the operation of its businesses. Any infringement of legal

or regulatory requirements, or any suspension or revocation of these licences, permits and approvals

may have a material adverse impact on the Group’s business and operations. In addition, the

regulatory and licensing requirements within the PRC financial leasing industry are constantly

evolving and the Group may be subject to more stringent regulatory requirements due to changes in

the political or economic policies in the PRC. There can be no assurance that the Group will be able

to satisfy such regulatory requirements or it will be able to retain, obtain or renew relevant licences,

permits or approvals in the future. Any failure to comply with the regulatory and legal requirements

may hinder the Group’s business operations and materially and adversely affect its results of

operations and financial condition.

Uncertainties and changes in the PRC’s legal framework for finance leasing and factoring businesses

could also materially and adversely affect the Group’s business. On 8 May 2018, the General Office

of MOFCOM issued the 2018 Notice, according to which the authority of rule-making on operation

and regulation of finance leasing companies, factoring companies and pawnshops shall be transferred

to CBIRC, which is a new department organ established on 21 March 2018 to combine and replace

the functions and authorities of the previous China Banking Regulatory Commission and China

Insurance Regulatory Commission. Detailed implementing measures of the 2018 Notice have not

been promulgated. In the event that other regulatory policies changes or stricter rules are promulgated

and implemented, the Group will be required to comply with further requirements and adjust its

business accordingly, and this may have a material adverse effect on the Group’s business, financial

condition and results of operations.

Changes in the organisational structure of the Group or the Guarantor’s shareholders may

affect the Group’s financial condition and results of operations.

The Group or the Guarantor’s shareholders may undergo certain organisational restructuring from

time to time which may affect whether certain subsidiaries of the Guarantor will be consolidated in

the Guarantor’s consolidated financial statements or, as the case may be, whether the Guarantor will

be consolidated in the consolidated financial statements of the Guarantor’s shareholders. In addition,

the Guarantor may issue shares to entities other than the existing shareholders which would in turn

dilute the existing shareholders’ shareholding in the Guarantor’s registered share capital. There can

also be no assurance that any such organisational restructuring or changes in the Guarantor’s

shareholding structure will not have a material adverse effect on the Group’s business, financial

condition, results of operations and prospects.

The Group relies on government support to a certain extent and a reduction or discontinuance

of government support could materially and adversely affect the financial condition and results

of operations of the Group.

Given the Guarantor’s exclusive position as the only aviation leasing company with state-owned

background, the Group has in the past received support (but not including credit support) from the

PRC government in the form of governmental subsidies and preferential tax treatment to support its

investment and operation of its businesses. For example, for the years ended 31 December 2019, 2020

and 2021, the Group received government grants of approximately RMB70.09 million, RMB22.85

million and RMB72.28 million, respectively.

– 52 –

There can be no assurance that the PRC government or the central SASAC will continue to provide

support to the Group or that the governmental subsidies, preferential tax treatment or other types of

government support will not be reduced, adjusted or terminated due to changes in government policy

or otherwise. If the favourable governmental subsidies, preferential tax treatment or other incentives

which are currently available to the Group are reduced or eliminated in the future, the viability of the

Group’s businesses may be affected and the financial condition and results of operations of the Group

will be materially and adversely affected.

RISKS RELATING TO CONDUCTING BUSINESS IN THE PRC

The Group’s business, financial condition, results of operations and prospects could be

adversely affected by slowdown in the PRC economy.

A substantial part of the Group’s revenue is derived from the PRC. The Group relies, to a significant

degree, on its domestic operations to achieve revenue growth. Domestic demand for leasing services

is materially affected by growth of private consumption and overall economic growth in the PRC.

Therefore, the performance of the PRC economy affects, to a significant degree, the Group’s

business, prospects, financial condition and results of operations.

In recent years, as a result of recurring liquidity tightening in the banking system, alternative lending

and borrowing outside of traditional banking practices, generally known as “shadow banking”, has

grown to become an integral and significant aspect of the PRC economy. Such alternative lending is

loosely regulated and has led to an increase in the PRC’s debt levels leading to concerns over rising

bad debts and financial problems. As some of the funds obtained from shadow banking are being used

for investments in speculative and risky products, should a widespread default on such investments

occur, this could harm the growth prospects of the PRC economy. There were reports of a number of

shadow banking defaults in the PRC resulting in increased scrutiny and oversight by regulators who

have proposed draft rules to control the industry. Even if the PRC government increases regulation

over such alternative lending and borrowing, there can be no assurance that such regulations will be

successful, or that they would not have an adverse impact on the overall loan markets and liquidity

in the PRC, which will materially and adversely impact the PRC economy. Although the PRC

government has taken several measures with the intention of increasing investor confidence in the

PRC economy, there can be no assurance that such measures will be effective. There can be no

assurance that the PRC government will not implement any reforms which may conflict with such

targeted growth. The Group’s business, financial conditions and results of operations could be

adversely affected by the PRC government’s inability to effect timely economic reforms.

The future performance of the PRC economy is also exposed to material changes in global economic

and political environments as well as the performance of certain major developed economies in the

world, such as the United States, the United Kingdom and the EU. Effective on 31 January 2020, the

United Kingdom has officially exited from the EU. There remains significant uncertainty as to its

impact on the economic conditions of other parts of the world, such as the PRC, including but not

limited to further decreases in global stock exchange indices, increased foreign exchange volatility

(in particular a further weakening of the pound sterling and euro against other leading currencies) and

a possible economic recession involving more countries and areas. Concerns over possible inflation

or deflation, uncertainty relating to currency exchange rates and interest rates, the availability and

cost of credit, volatility in commodity and oil prices, geopolitical issues, and unstable financial

markets and the global housing and mortgage markets, have contributed to increased market

volatility, weakened business and consumer confidence and diminished expectations for economic

growth around the world. The outlook for the global economy and financial markets remains

– 53 –

uncertain. From time to time, the PRC and other countries may adopt, adjust or withdraw their

macroeconomic measures, monetary policies and economic stimulus packages, which further

increases the difficulty in predicting the outlook for the global economy and financial markets.

Economic conditions in the PRC are sensitive to global economic conditions and it is impossible to

predict how the PRC economy will develop in the future and whether it might slow down due to the

global crisis or experience a financial crisis in a manner and scale similar to that in the United States

and the European countries between 2008 and 2011.

In addition, the PRC government continues to play a significant role in regulating the development

of industries in the PRC by imposing top-down policies. It also exercises significant control over

PRC economic growth through the allocation of resources, controlling the payment of foreign

currency denominated obligations, setting monetary policy and providing preferential treatment to

particular industries or companies. Furthermore, many of the economic reforms carried out by the

PRC government are unprecedented or experimental and are expected to be refined and improved

over time. This refining and adjustment process may not necessarily have positive effects on the

Group’s operations and business development. Other political, economic and social factors may also

lead to further adjustments of the reform measures. Other factors or events, such as the ongoing

COVID-19 pandemic, which has occurred in the PRC and other countries since late 2019, may also

have a significant adverse impact on the PRC’s political, economic and social conditions, which in

turn may materially and adversely affect the Group’s business, financial condition, results of

operations and prospects. There can be no assurance that future changes in the PRC’s political,

economic and social conditions, laws, regulations and policies will not have a material adverse effect

on the Group’s current or future business and financial condition.

Any slowdown in the PRC economy may increase the Group’s exposure to material losses from its

investments, decrease the opportunities for developing the Group’s businesses, create a credit

tightening environment, increase the Group’s financing costs, or reduce government subsidies to the

Group, any of which may result in a material adverse effect on the Group’s business, results of

operations and financial condition.

The future performance of the PRC economy is not only affected by the economic and monetary

policies of the PRC government, but has been, and will in the future continue to be, materially

affected by global or regional geopolitical, economic and market conditions, including factors such

as the liquidity of the global financial markets, the level and volatility of debt and equity prices,

interest rates, currency and commodities prices, investor sentiment, inflation and the availability and

cost of capital and credit. Please see “– Risks Relating to the Group – Disruptions or volatility in

global and domestic financial markets could adversely impact the industries and markets in which the

Group serves and operates.” for further information.

Turmoil in the financial markets could increase the Group’s cost of borrowing and impede

access to or increase the cost of financing the Group’s operations and investments.

The availability of credit to entities operating within emerging markets, including the Guarantor, is

significantly influenced by levels of investor confidence in such markets as a whole. Any factors that

may affect market confidence could affect the costs or availability of funding for entities within

emerging markets. Historically, challenging market conditions in emerging markets have resulted in

reduced liquidity, widening of credit spreads, lack of price transparency in credit markets, a reduction

in available financing and a tightening of credit terms. Significant fluctuations in the financial

markets in the PRC and globally may cause adverse effects on the Group’s business operations and

investments as a whole.

– 54 –

The PRC’s economic, political and social conditions, as well as government policies in the PRC,

could affect the Group’s businesses.

A substantial part of the Group’s businesses, assets and operations is located in the PRC. Accordingly,

the Group’s business prospects, financial condition and results of operations are, to a significant

degree, subject to the economic, political and legal developments in the PRC. The PRC economy

differs from the economies of developed countries in many respects, including, among other things,

level of government involvement, level of economic development, growth rate, foreign exchange

controls and resources allocation.

The PRC economy is in the process of transitioning from a centrally planned economy to a more

market-oriented economy. For more than four decades, the PRC government has implemented

economic reform measures to utilise market forces in the development of the PRC economy.

Economic reform measures, however, may be adjusted, modified or applied inconsistently from

industry to industry or across different regions of the country. As a result, the Group may not continue

to benefit from all, or any, of these measures in the future. In addition, the PRC government continues

to play a significant role in regulating industries and the economy through policy measures. The

Group cannot predict whether changes in PRC economic, political or social conditions and in PRC

laws, regulations and policies will adversely affect its business, financial condition or results of

operations.

In addition, many of the economic reforms carried out by the PRC government are unprecedented or

experimental and are expected to be refined and improved over time. Other political, economic and

social factors may also lead to further adjustments of the reform measures. This refining and

adjustment process may not necessarily have a positive effect on the Group’s operations and business

development.

The Group’s business, financial condition and results of operations may be adversely affected by:

? changes in PRC political, economic and social conditions;

? changes in policies of the PRC government, including changes in policies in relation to the

Group’s business segments;

? changes in laws and regulations or the interpretation of laws and regulations;

? measures that may be introduced to control inflation or deflation;

? changes in the rate or method of taxation;

? the imposition of additional restrictions on currency conversion and remittances abroad; and

? a reduction in tariff protection and other import restrictions.

If the PRC’s economic growth slows down or if the PRC economy experiences a recession, the

Group’s business, results of operations and financial condition could be materially and adversely

affected.

– 55 –

Uncertainty with respect to the PRC legal system could affect the Group.

As a substantial part of the Group’s businesses is conducted, and a substantial part of the Group’s

assets is located, in the PRC, the Group’s operations are governed principally by, and subject to, PRC

laws and regulations. The PRC legal system is based on written statutes. Published court opinions are

limited. Prior court decisions may be cited for reference. Since 1979, PRC laws and regulations

dealing with economic matters such as the issuance and trade of securities, foreign investment,

corporate organisation and governance, commerce, taxation, foreign exchange and trade, with a view

to developing a comprehensive system of commercial law, have significantly enhanced the

protections afforded to market participants in the PRC. However, the PRC has not developed a fully

integrated legal system and recently enacted laws and regulations may not sufficiently cover all

aspects of economic activities in the PRC. In particular, because these laws and regulations (including

the MOF Circular promulgated on 28 March 2018 and which took effect on the same day and the Joint

Circular promulgated on 11 May 2018 and which took effect on the same day) are relatively new, and

because of limited volume of published decisions, the interpretation and enforcement of these laws

and regulations involve uncertainties, as compared to other more developed jurisdictions. The PRC

legal system is also based, in part, on government policies and internal rules (some of which are not

published on a timely basis or at all) that may have a retroactive effect. As a result, in certain cases,

the Group may not be aware of the Group’s violation of these policies and rules until sometime after

the violation. In addition, any litigation in the PRC may be protracted and result in substantial costs,

diversion of the Group’s resources and management’s attention and it may be difficult to obtain a

swift and equitable enforcement of laws in the PRC, or the enforcement of judgments by a court of

another jurisdiction. Such uncertainty may impede the Group’s ability to enforce contracts that the

Group has entered into with its investors, creditors, customers, suppliers and business partners. The

Group cannot predict the effect of future developments in the PRC legal system or the integration of

such developments under the legal systems of other jurisdictions, including the promulgation of new

laws, changes to existing laws or the interpretation or enforcement thereof, the pre-emption of local

regulations by national laws, or the overturn of local government’s decisions by itself, provincial or

national governments. Such uncertainty in interpretation, implementation and enforcement may limit

legal protections available to or against the Group. In addition, any bankruptcy proceeding relating

to the Group would likely involve PRC bankruptcy laws. The procedural and substantive provisions

of PRC bankruptcy laws may differ from comparable provisions of the local insolvency laws of

jurisdictions with which the Instrumentholders are familiar. All of the above could have a material

adverse effect on the Group’s business, prospects, financial condition and results of operations.

Certain PRC regulations governing PRC companies are less developed than those applicable to

companies incorporated in more developed countries.

Most of the members of the Group are established in the PRC and are subject to PRC regulations

governing PRC companies. These regulations contain certain provisions that are required to be

included in the joint venture contracts, articles of association and all other major operational

agreements of these PRC companies and are intended to regulate the internal affairs of these

companies. These regulations in general, and the provisions for protection of shareholders’ rights and

access to information in particular, are less developed than those applicable to companies

incorporated in Hong Kong, the United States, the United Kingdom and other developed countries or

regions.

– 56 –

There may be difficulties in effecting service of legal process and enforcing judgments against

the Guarantor or its directors or members of the Guarantor’s senior management who reside

in the PRC in connection with judgments obtained in non-PRC courts.

The Guarantor is a company incorporated under the laws of the PRC, and a substantial part of the

Group’s businesses, assets and operations is located in the PRC. In addition, a majority of the

Guarantor’s directors, supervisors and executive officers reside in the PRC, and substantially all of

their assets may be located in the PRC. As a result, it may not be possible for investors to effect

service of process upon the Guarantor or its directors or members of its senior management inside

the PRC. The PRC has not entered into treaties or arrangements providing for the recognition of

judgment made by courts of most other jurisdictions. On 14 July 2006, Hong Kong and the PRC

entered into the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and

Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative

Region Pursuant to Choice of Court Agreements Between Parties Concerned (關於內地與香港特別行

政區法院相互認可和執行當事人協議管轄的民商事案件判決的安排) (the “Choice of Court

Arrangement”), pursuant to which a party with a final court judgment rendered by a Hong Kong

court requiring payment of money in a civil and commercial case according to a “choice of court”

agreement in writing may apply for recognition and enforcement of the judgment in the PRC.

Similarly, a party with a final court judgment rendered by a PRC court requiring payment of money

in a civil and commercial case pursuant to a “choice of court” agreement in writing may apply for

recognition and enforcement of such judgment in Hong Kong. A “choice of court” agreement in

writing is defined as any agreement in writing entered into between parties after the effective date

of the Choice of Court Arrangement in which a Hong Kong court or a PRC court is expressly

designated as the court having sole jurisdiction for the dispute. Therefore, it is not possible to enforce

a judgment rendered by a Hong Kong court in the PRC if the parties in dispute do not enter into a

“choice of court” agreement in writing. As a result, it may be difficult or impossible for investors to

effect service of process against the Guarantor, the Group’s assets or the Guarantor’s directors or

members of its senior management in the PRC and/or to seek recognition and enforcement for foreign

judgments in the PRC. On 18 January 2019, Hong Kong and the PRC entered into the Arrangement

on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters between

the Courts of the Mainland and of the Hong Kong Special Administrative Region (關於內地與香港

特別行政區法院相互認可和執行民商事案件判決的安排) (the “2019 Arrangement”), which seeks to

establish a bilateral legal mechanism with greater clarity and certainty for recognition and

enforcement of judgments in a wider range of civil and commercial matters between the courts of

Hong Kong and the PRC. The 2019 Arrangement will be implemented by local legislation in Hong

Kong and will take effect after both Hong Kong and the PRC have completed the necessary

procedures to enable implementation and shall apply to judgments made by the courts of Hong Kong

and the PRC on or after the date of the commencement of the 2019 Arrangement. Upon

commencement of the 2019 Arrangement, the Choice of Court Arrangement shall be terminated,

except for “choice of court” agreements in writing made between parties before the commencement

of the 2019 Arrangement, in which case the Choice of Court Arrangement shall continue to apply.

However, the recognition and enforcement of judgments rendered by a Hong Kong court in the PRC

are subject to the provisions, limits, procedures and other terms and requirements of the 2019

Arrangement. There can be no assurance that investors can successfully effect service of process

against the Guarantor or the Guarantor’s directors or members of its senior management in the PRC

and/or to seek recognition and enforcement for judgments rendered by a Hong Kong court in the PRC.

– 57 –

Furthermore, the PRC does not have treaties or agreements providing for the reciprocal recognition

and enforcement of judgments awarded by courts of the United States, the United Kingdom, or most

other European countries or Japan. Hence, the recognition and enforcement in the PRC of judgment

of a court in any of these jurisdictions in relation to any matter not subject to a binding arbitration

provision may be difficult or even impossible.

Increases in the costs of labour may have an adverse impact on the Group’s results of

operations.

The PRC Labour Contract Law (中華人民共和國勞動合同法) became effective on 1 January 2008,

and it was amended on 28 December 2012, which has taken effect on 1 July 2013. The current PRC

Labour Contract Law has imposed greater liabilities on employers and significantly increased the cost

of an employer’s decision to reduce its workforce. Further it requires certain terminations to be based

upon seniority instead of merit. In the event that the Group decides to significantly change or

decrease the Group’s workforce within the PRC, the PRC Labour Contract Law could adversely affect

the Group’s financial condition and results of operations. In addition, the PRC government has

continued to introduce various new labour-related regulations after the promulgation of the PRC

Labour Contract Law. Among other things, the Paid Annual Leave Provisions (職工帶薪年休假條例),

which became effective on 1 January 2008, stipulated that employees who have served more than one

year with an employer are entitled to a paid vacation from five to 15 days, depending on their length

of service. Subject to certain exceptions, employees who waive such vacation time at the request of

employers shall be compensated at three times their normal salaries for each waived vacation day.

Under the National Tourism and Leisure Outline 2013-2020 (國民旅遊休閒綱要2013-2020年), which

became effective on 2 February 2013, regulations on paid annual leave of employees shall have been

implemented on a general basis by 2020.

On 28 October 2010, the Standing Committee of the National People’s Congress promulgated the

PRC Social Insurance Law (中華人民共和國社會保險法) which has taken effect on 1 July 2011, and

it was amended on 29 December 2018, which has taken effect on the same day. According to the PRC

Social Insurance Law, employees will participate in pension insurance, work-related injury insurance,

medical insurance, unemployment insurance and maternity insurance and the employers must,

together with their employees or separately, pay for the social insurance premiums for such

employees.

To further strengthen the protection on labour remuneration, rest and vacations, social insurance and

other basic rights and interests of labourers, the Opinion of the Central Committee of the Communist

Party of China and the State Council on Building Harmonious Labour Relationships (中共中央、國

務院關於構建和諧勞動關係的意見) was issued on 21 March 2015, which acts as a guideline on PRC

labour legislation.

As a result of the implementation of these and any future rules and regulations designed to enhance

the standard for labour protection, the Group’s labour costs may continue to increase. If the costs of

labour increase significantly, and the Group cannot offset such increase by reducing other costs or

cannot pass on such increase to for example, the buyers or tenants of its commercial properties in the

PRC, its business, the Group’s results of operations and financial position may be materially and

adversely affected.

– 58 –

In addition, a labour shortage or increase in costs of raw materials and other components required for

the Group’s business operation may cause similar adverse effects, particularly if the Group is unable

to identify and employ other appropriate means to reduce the costs. In such circumstances, the profit

margin may decrease and the financial results may be adversely affected. Inflation in the PRC has

also increased in recent years. Inflation in the PRC increases the costs of labour and the costs of raw

materials the Group must purchase for production. Rising labour costs may increase the Group’s

operating costs and partially erode the cost advantage of the Group’s PRC-based operations and

therefore materially and adversely impact the Group’s profitability.

The payment of dividends by the Guarantor’s operating subsidiaries in the PRC is subject to

restrictions under PRC law.

Part of the Group’s businesses are operated by the Guarantor’s operating subsidiaries in the PRC.

PRC laws require that dividends be paid only out of net profit, calculated according to the PRC

accounting principles, which differ from generally accepted accounting principles in other

jurisdictions. In addition, PRC law requires enterprises set aside part of their net profit as statutory

reserves before distributing the net profit for the current financial year. These statutory reserves are

not available for distribution as cash dividends. Since the availability of funds to fund the Guarantor’s

operations and to service its indebtedness depends upon dividends received from these subsidiaries

to a certain extent, any legal restrictions on the availability and usage of dividend payments from the

Guarantor’s subsidiaries may impact the Guarantor’s ability to fund its operations and to service its

indebtedness.

The Group is subject to restrictions on the remittance of Renminbi into and out of the PRC and

governmental controls on currency conversion, and may be affected by the risks relating to

fluctuations in exchange rates in the future.

The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and

the remittance of currency out of PRC. A portion of the Group’s operating revenue is denominated

in Renminbi, which may need to be converted into other currencies in order to meet the Group’s

foreign currency obligations, such as payments of principal and interests or Distribution under the

Instruments or other foreign currency denominated debt, if any.

Under the existing PRC laws and regulations on foreign exchange, payments of current account

items, including profit distributions, interest payments and trade and service related foreign exchange

transactions, can be made in foreign currencies without prior approval from SAFE provided that

certain procedural requirements are complied with. Approval from or registration with competent

government authorities is required where Renminbi is to be converted into foreign currency and

remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in

foreign currencies. The PRC government may, at its discretion, take measures to restrict access to

foreign currencies for current account and capital account transactions under certain circumstances.

If the foreign exchange control system prevents the Group from obtaining sufficient foreign

currencies to satisfy the Group’s foreign currency demands, the Group may not be able to pay

interests and/or principal to holders of the Instruments or other foreign currency denominated debt,

if any. In addition, there can be no assurance that new laws or regulations will not be promulgated

in the future that would have the effect of further restricting the remittance of Renminbi into or out

of the PRC.

– 59 –

The value of Renminbi against U.S. dollar and other foreign currencies is subject to changes in the

PRC’s policies, as well as international economic and political developments. On 21 July 2005, the

PRC government adopted a more flexible managed floating exchange rate system to allow the value

of Renminbi to fluctuate within a regulated band that is based on market supply and demand with

reference to a basket of currencies. From 21 July 2005 to 17 March 2014, the floating band of

interbank spot foreign exchange market trading price of Renminbi against U.S. dollar was gradually

widened from 0.3 per cent. to 2 per cent. On 11 August 2015, PBOC adjusted the mechanism for

market makers to form the central parity rate by requiring them to consider the closing exchange rate

of the last trading date, the supply and demand of foreign exchange and the rate change at primary

international currencies. On 11 December 2015, the China Foreign Exchange Trade System, a

sub-institutional organisation of PBOC, published the China Foreign Exchange Trade System

(CFETS) Renminbi exchange rate index for the first time which weighs Renminbi based on 13

currencies, to guide the market in order to measure the Renminbi exchange rate from a new

perspective. Starting from 1 October 2016, Renminbi has been added to the Special Drawing Rights

basket created by the International Monetary Fund. There can be no assurance that the PRC

government will continue to gradually liberalise the control over cross-border Renminbi remittances

in the future, that any pilot schemes for Renminbi cross-border utilisation will not be discontinued

or that new PRC regulations will not be promulgated in the future which have the effect of restricting

the remittance of Renminbi into or outside the PRC.

In addition, the value of Renminbi has depreciated significantly against U.S. dollar since the end of

2015 and there can be no assurance that Renminbi will not experience significant depreciation or

appreciation against U.S. dollar or against any other currency in the future. The exchange rate

between Renminbi and U.S. dollar experienced further fluctuation between 1 January 2016 and the

date of this Offering Circular. On 5 August 2019, PBOC set the Renminbi’s daily reference rate above

7 per U.S. dollar for the first time in over a decade amidst an uncertain trade and global economic

climate. There remains significant international pressure on the PRC government to adopt an even

more flexible currency policy, which could result in further and more significant appreciation of

Renminbi against U.S. dollar. If further reforms are implemented and result in devaluation of

Renminbi against U.S. dollar, the Group’s business, financial condition, results of operations and

prospects could be adversely affected because of the Group’s U.S. dollar denominated indebtedness

and other obligations. Such devaluation could also adversely affect the value, translated or converted

into U.S. dollars or otherwise, of the Group’s earnings and ability to satisfy its obligations under the

Instruments.

Furthermore, members of the Group may be required to obtain SAFE’s approval before converting

significant amounts of Renminbi into or out of foreign currencies. In the future, it is possible that the

PRC government could adopt a more flexible currency policy, which could result in further and more

significant revaluations of Renminbi against any foreign currency. Any future exchange rate volatility

relating to Renminbi or any significant revaluation of Renminbi may materially and adversely affect

earnings and financial position of the Group.

– 60 –

There is foreign exchange control in the PRC.

The Group’s PRC subsidiaries are subject to PRC laws and regulations on currency conversion. In the

PRC, SAFE regulates the conversion of Renminbi into foreign currencies. Currently, foreign-invested

enterprises (“FIEs”) are required to apply to local banks designated by SAFE for foreign exchange

registration after receiving their business licences. With such registration certifications, FIEs are

allowed to open foreign currency accounts including the “basic account” and “capital account”.

Currently, conversion within the scope of the “basic account” for current account type purposes such

as the remittance of foreign currencies for payment of dividends, can be effected without the approval

of SAFE. However, the conversion of currency in the “capital account,” for capital items such as

direct investments, loans and securities, still requires the approval of SAFE.

The Group has PRC subsidiaries that are FIEs and the ability of these subsidiaries to pay dividends

or make other distributions to the Group may be restricted by, among other things, the availability

of funds, and statutory and other legal restrictions including PRC foreign exchange control

restrictions. To the extent that the ability of the Group’s subsidiaries to distribute to the Group is

restricted, it may have an adverse effect on the Group’s cash flows.

The operations of the Group may be affected by inflation and deflation within the PRC.

Economic growth in the PRC had historically been accompanied by periods of high inflation.

Increasing inflation rates were due to many factors beyond the Group’s control, such as rising food

prices, rising production and labour costs, high lending levels, PRC and foreign government policies

and regulations as well as movements in exchange rates and interest rates. It is impossible to

accurately predict future inflationary trends. If inflation rates rise beyond the Group’s expectations,

the Group may be unable to increase the prices of its services and products in amounts that are

sufficient to cover its increasing operating costs. Further inflationary pressures within the PRC may

have a material adverse effect on the Group’s business, financial condition or results of operations.

Recently, concerns have arisen over deflationary pressures in the PRC as a result of weak domestic

demand and slow economy. A prolonged period of deflation may result in falling profits, closure of

plants and shrinking employment and incomes by companies and individuals, any of which could

adversely affect the Group’s business, financial condition or results of operations.

RISKS RELATING TO FINANCIAL AND OTHER INFORMATION

The Guarantor’s independent auditors, ZSZH, may be involved in investigations initiated by

relevant PRC authorities from time to time.

ZSZH, the Guarantor’s independent auditors, is a registered accounting firm in the PRC supervised

by the PRC courts and other relevant PRC regulatory agencies, including China Securities Regulatory

Commission (“CSRC”).

In recent years, ZSZH was involved in investigations initiated by relevant PRC authorities and

received administrative and rectification orders and warnings from CSRC or its local branches. In

particular, ZSZH was issued warning letters and administrative and rectification orders by CSRC in

recent years for, among other things, its defects in audit and verification procedures and failure to

identify internal control defects relating to the preparation of the audit reports of a number of

companies listed on the stock exchanges in the PRC.

– 61 –

As confirmed by ZSZH, the companies involved in the administrative and regulatory actions

mentioned above are unrelated to the Group and the audit work performed by ZSZH for the Group

is not affected by the above incidents. ZSZH also confirmed that the auditor’s reports for the Audited

Consolidated Financial Statements included elsewhere in this Offering Circular remain valid and

effective. ZSZH also confirmed that its ability to provide comfort letters in respect of the offering of

the Instruments and the qualification of the auditors and independent accountants involved in the

offering of the Instruments are not affected by such administrative and regulatory actions. However,

there can be no assurance that the relevant PRC regulatory agencies would not carry out any review

of ZSZH’s audit and/or other assurance work conducted in relation to other companies. There can also

be no assurance that ZSZH’s involvement in such administrative and regulatory actions or any

negative publicities about ZSZH would not affect investors’ confidence in companies and financial

statements audited or reviewed by it or have a material adverse effect on the Group. Prospective

investors should consider these factors prior to making any investment decision.

The Audited Consolidated Financial Statements have been prepared and presented in

accordance with PRC GAAP, which is different from IFRS.

The Audited Consolidated Financial Statements included elsewhere in this Offering Circular have

been prepared and presented in accordance with PRC GAAP. PRC GAAP is substantially in line with

IFRS, except for certain modifications which reflect the PRC’s unique circumstances and

environment. Please see “Description of Certain Differences between PRC GAAP and IFRS” for

details. Each investor should consult its own professional advisers for an understanding of the

differences between PRC GAAP and IFRS and/or between PRC GAAP and other generally accepted

accounting principles, and how those differences might affect the financial information contained

herein.

Historical consolidated financial information of the Group may not be indicative of its current

or future results of operations.

The historical financial information of the Group included in this Offering Circular is not indicative

of its future financial results. Such financial information is not intended to represent or predict the

Group’s results of operations of any future periods. The Group’s future results of operations may

change materially if its future growth deviates from the historical trends for various reasons,

including factors beyond its control, such as changes in economic environment, PRC environmental

rules and regulations and the competitive landscape of the industries in which the Group operates its

businesses. The Group may also acquire businesses or companies or dispose of its subsidiaries or

assets from time to time in accordance with the Group’s business objectives. Period-to-period

comparisons of the Group’s historical operating results must be evaluated in light of the impact of

any such transactions.

Certain accounting items in the Audited Consolidated Financial Statements may not be

comparable to the financial information in the Guarantor’s consolidated financial statements

for the previous periods.

The scope of consolidation of the Audited Consolidated Financial Statements changes from time to

time. See “Notes to the Financial Statements – VII. Business Combination and Financial Statement

Consolidation” of the Guarantor’s audited consolidated financial statements as at and for the year

ended 31 December 2020 and “Notes to the Financial Statements – VII. Business Combination and

Financial Statement Consolidation” of the Guarantor’s audited consolidated financial statements as

at and for the year ended 31 December 2021. In addition, in 2017 and 2018, the Ministry of Finance

of the PRC promulgated the New Accounting Standards and Requirements. The Audited Consolidated

Financial Statements were prepared and presented in accordance with the relevant applicable New

– 62 –

Accounting Standards and Requirements. As a result, the presentation of certain accounting items in

the Audited Consolidated Financial Statements may not be comparable to the financial figures in the

Guarantor’s financial statements for the previous periods. For details of the New Accounting

Standards and Requirements and its impact on the Audited Consolidated Financial Statements, please

see “Notes to the Financial Statements – V Significant changes in accounting policies, accounting

estimates and correction of errors in prior periods – 1. Changes in accounting policies” of the

Guarantor’s audited consolidated financial statements as at and for the year ended 31 December 2020

and “Notes to the Financial Statements – V Significant changes in accounting policies, accounting

estimates and correction of errors in prior periods” of the Guarantor’s audited consolidated financial

statements as at and for the year ended 31 December 2021.

There can be no assurance that the Ministry of Finance of the PRC will not promulgate other new

accounting standards or requirements in relation to financial statements which may affect the

Guarantor’s accounting policies or the presentation of the Guarantor’s financial statements.

Accordingly, potential investors must exercise caution and consult its financial advisors if necessary

when using the consolidated financial information of the Group to evaluate its financial performance.

The Guarantor published and may continue to publish periodical financial information in the

PRC pursuant to applicable PRC regulatory rules. Investors should be cautious and not place

any reliance on the financial information other than that disclosed in this Offering Circular.

The Guarantor from time to time issues mid-term or short-term bonds and commercial papers in the

domestic capital markets in the PRC. For so long as any Instruments remains outstanding, the

Guarantor is obligated by the terms of the Instruments, among others, to provide holders of the

Instruments with its audited financial statements and certain unaudited periodical financial

statements. The periodical financial information published by the Group in the PRC may not be

audited or reviewed by independent auditors. As such, such financial information published in the

PRC does not form part of this Offering Circular and should not be referred to or relied upon by

potential investors to provide the same quality of information associated with any audited or reviewed

financial information. The published financial information in the PRC may be adjusted or restated to

address subsequent changes in accordance with the accounting standards, the Guarantor’s accounting

policies and/or applicable laws and regulations affecting the Guarantor’s financial reporting or to

reflect the subsequent comments given by the independent auditors during the course of such

auditors’ audit or review. Such adjustment or restatement may cause discrepancies between the

financial information with respect to a particular period or date contained in the Guarantor’s

management accounts published in the PRC and the Audited Consolidated Financial Statements. The

Guarantor is not responsible to holders of the Instruments for the unaudited and unreviewed financial

information from time to time published in the PRC and therefore investors should not place any

reliance on any such financial information.

Certain facts and statistics in this Offering Circular are derived from publications not

independently verified by the Issuer, the Guarantor, the Arrangers, the Dealers, the Trustee, the

Agents or their respective advisers.

This Offering Circular contains facts and statistics relating to the economy of the PRC and the

industries in which the Group operates. While each of the Issuer and the Guarantor has taken

reasonable care to select reliable information sources and ensure that the facts and statistics relating

to the PRC’s economy and the industries in which the Group operates presented are accurately

extracted from such sources, such facts and statistics have not been independently verified by the

Issuer, the Guarantor, the Arrangers, the Dealers, the Trustee or the Agents or any of their respective