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OVERVIEW

We are the sole leasing business platform and one of the key strategic business segmentsof CDB, dedicated to providing comprehensive leasing services to high-quality customers inindustries including aviation, infrastructure, shipping, commercial vehicle and constructionmachinery. We are a pioneer and a leader in the PRC leasing industry. Founded in 1984, we wereone of the first leasing companies in the PRC and one of the first CBRC-regulated leasingcompanies. According to Frost & Sullivan, we were the largest CBRC-regulated leasingcompany in the PRC in terms of total revenue in 2013 and 2014 and the nine months endedSeptember 30, 2015, respectively. Our business segments are:

• Aircraft Leasing: we mainly engage in the acquisition, leasing, management anddisposal of commercial aircraft;

• Infrastructure Leasing: we mainly engage in the leasing of transportation, urban andenergy infrastructure;

• Ship, Commercial Vehicle and Construction Machinery Leasing: we mainly engagein the leasing of vessels, commercial vehicles and construction machinery; and

• Other Leasing Business: we mainly engage in the leasing of commercial property andmanufacturing equipment in various sectors such as chemicals, papermaking, textile,coal and steel.

In the nine months ended September 30, 2015, our Aircraft Leasing, Infrastructure Leasing,Ship, Commercial Vehicle and Construction Machinery Leasing and Other Leasing Businesscontributed 43.4%, 32.8%, 11.2% and 12.6% of our revenue and other income, respectively.

As one of the first leasing companies in the PRC, we have witnessed and participated in thedevelopment of the PRC leasing industry. With a more diverse range of leasing products and acontinuously improving regulatory environment, the leasing industry has been playing a moreimportant role in the PRC financial system. We have weathered economic and industry cyclesand regulatory reforms, and gained experience through continuous improvement in our businessoperations, product innovation and exploration of new sectors. We have identified key sectors,namely the aircraft and infrastructure leasing businesses, which have well-developed businessmodel, good asset quality and growth potential, and key customer groups, namely large andmedium-sized, high-quality corporate customers, as the primary focus of our business.

The continued market-based reform of the PRC financial industry, increasing demand forcustomized leasing services, the internationalization of the Renminbi and national policyinitiatives such as “One Belt, One Road” (“一帶一路”) and the “Going Out” (“走出去”) strategyhave brought by important opportunities in the leasing industry. We believe that our marketleading position, long operating history, well-developed business model and premier brand namewill enable us to seize such opportunities. The extensive experience we gained through economicand industry cycles in the PRC enables us to achieve sustained growth in the next stage ofChina’s economic transformation and continue to maintain our leading position in the fastdeveloping PRC leasing industry. In addition, we have higher international credit ratings than alllisted leasing companies globally, and one of the highest international credit ratings among PRCfinancial institutions. Our superior funding capabilities provide strong support to our businessdevelopment and help us generate attractive financial returns.

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We have a market leading position and a premier brand. In recognition of our expertise andexperience earned from over 30 years in the leasing business, we have received a number ofawards, including:

Year Awards Organizers/Media

2015 Most Innovative Leasing Company of the Year(年度最具創新力租賃公司)

Institute of Finance and Banking, ChineseAcademy of Social Sciences(中國社會科學院金融研究所) and Financial News(金融時報)

Industrial Promotion Award of the China AirFinance Wan Hu Awards (中國航空金融萬戶獎 –產業促進獎)

General Aviation Committee of China AirTransportation Association (中國航空運輸協會通用航空委員會) and Tianjin Dongjiang Free TradePort Management Committee (天津東疆保稅港區管理委員會)

Ship Leasing Deal of the Year Marine Money

2014 PRC Financial Leasing Company of the Year (中國融資租賃年度公司)

China Financial Leasing Annual Conference (中國融資租賃年會)

30-Year Award for Contribution to the FinancialLeasing Industry (融資租賃30年最佳行業貢獻獎)

Financial News (金融時報)

China Aircraft Leasing International FinancingStructure Innovation Award (中國飛機租賃國際融資結構創新獎)

General Aviation Committee of China AirTransportation Association (中國航空運輸協會通用航空委員會) and Tianjin Dongjiang Free TradePort Management Committee (天津東疆保稅港區管理委員會)

2013 PRC Financial Leasing Company of the Year (中國融資租賃年度公司)

China Financial Leasing Annual Conference (中國融資租賃年會)

Outstanding Financial Leasing Company of theYear (年度卓越金融租賃公司)

People.cn (人民網)

Most Influential Financial Leasing Company ofthe Year (年度最具影響力金融租賃公司)

Institute of Finance and Banking, ChineseAcademy of Social Sciences(中國社會科學院金融研究所) and Financial News(金融時報)

COMPETITIVE STRENGTHS

We are a pioneer and a leader in the PRC leasing industry and the sole leasing businessplatform of CDB, dedicated to providing comprehensive leasing services to high-qualitycustomers in aviation, infrastructure and other industries.

We are a pioneer in the PRC leasing industry, with a leading market position and a premierbrand name

We are one of the largest leasing companies in the PRC. According to Frost & Sullivan,we were the largest leasing company in the PRC both in terms of total revenue in 2013 and 2014and the nine months ended September 30, 2015 and in terms of operating lease assets as ofDecember 31, 2013 and 2014 and September 30, 2015, respectively.

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We were one of the first companies to engage in the leasing business in the PRC. We wereestablished in 1984. Shenzhen Leasing Company Limited, our predecessor, was one of the firstcompanies to conduct leasing business in the PRC and also one of the first leasing companies toobtain the “financial permit” in the PRC. We were also one of the first CBRC-regulated leasingcompanies in the PRC. Since our inception in 1984, we have witnessed and participated in thedevelopment of the PRC leasing industry. With a more diverse range of leasing products and acontinuously improving regulatory environment, the leasing industry has been playing anincreasingly important role in the PRC financial system.

We are a pioneer in the leasing industry in the PRC. Through navigating industry andmacroeconomic cycles and regulatory reforms, we have maintained our market leading positionand gained experiences by continued innovation and exploration. In this process, we have beenplaying an important role in driving the development of the PRC leasing industry. We haveachieved a number of “firsts” in our operating history, including but not limited to:

• the first CBRC-regulated leasing company to lease aircraft under finance andoperating leases, respectively;

• the first CBRC-regulated leasing company to set up an overseas business platform toconduct overseas aircraft leasing;

• the first CBRC-regulated leasing company to conduct the leasing of toll roads and railtransit; and

• the first CBRC-regulated leasing company to launch commercial vehicle leasingthrough the manufacturer credit model.

We have a well-established business presence built around our core strengths. Throughcontinuous improvement in our business operations and product innovation, we expanded ourbusiness scope to new sectors and identified several growth sectors as our focus. We have fourbusiness segments and primarily focus on Aircraft Leasing and Infrastructure Leasing, whichhave well-established business model, good asset quality and strong growth potential. We alsoopportunistically grow our Ship, Commercial Vehicle and Construction Machinery Leasing andOther Leasing Business. We have one of the broadest geographic coverage among PRC leasingcompanies. As of September 30, 2015, our assets in the Aircraft Leasing, Infrastructure Leasing,and Ship, Commercial Vehicle and Construction Machinery Leasing business accounted for37.4%, 35.5% and 13.8% of our total segment assets, respectively. As of September 30, 2015,the balance of our leased assets located in the PRC and overseas accounted for 75.7% and 24.3%,respectively, of our total assets. Our business in the PRC covers 29 provinces, direct-controlledmunicipalities and autonomous regions, and our overseas business covers 24 countries andregions.

We have a market leading position and a premier brand. Our expertise and experience inthe leasing business have been well recognized. We have received a variety of awards, includingthe “PRC Financial Leasing Company of the Year (中國融資租賃年度公司)” by the ChinaFinancial Leasing Annual Conference (中國融資租賃年會) for three consecutive years from2012 to 2014, and the “Most Innovative Leasing Company of the Year (年度最具創新力租賃公司)” by the Financial News (金融時報) in 2015. We possess a premier brand name in the PRCand our brand is an important intangible asset that is not replicable by our competitors.

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The continued market-based reform of the PRC financial industry, increasing demand forcustomized leasing products and services, internationalization of the Renminbi and nationalpolicy initiatives such as “One Belt, One Road” (“一帶一路”) and the “Going Out” (“走出去”)strategies have brought by important opportunities in the leasing industry. We believe that ourmarket leading position, long operating history, well-developed business model and premierbrand name will enable us to seize such opportunities. In addition, the extensive experience wegained through economic and industry cycles in the PRC enables us to achieve sustained growthin the next phase of China’s economic transformation and continue to maintain our leadingposition in the fast developing PRC leasing industry.

We have an industry leading, highly specialized Aircraft Leasing business with stableprofitability

We have the largest aircraft fleet, in terms of net book value, under operating leases amongthe PRC leasing companies and one of the largest aircraft leasing businesses in the PRC with aglobal presence. As of December 31, 2014, the leased assets of our owned aircraft portfolioamounted to US$6.3 billion (or RMB38.5 billion, as calculated by the exchange rate publishedby PBOC on December 31, 2014), ranking tenth among global aircraft leasing companies,according to Frost & Sullivan. As of September 30, 2015, our customer base included 40 airlines,comprising 12 airlines in the PRC and 28 airlines overseas. Furthermore, we have professionalaircraft leasing business platforms around the world to support our international businessdevelopment, including our headquarters in Shenzhen, as well as business platforms in theTianjin Free Trade Zone, the Shanghai Free Trade Zone, Xiamen Area of the Fujian Free TradeZone, Ireland and the Cayman Islands.

We focus on building and maintaining a portfolio of young, modern and fuel-efficientcommercial aircraft. As of September 30, 2015, our Airbus A320 family and Boeing 737-800aircraft accounted for a majority of our owned portfolio of commercial aircraft by number ofaircraft. Airbus A320 family and Boeing 737 are both narrow-body aircraft that are broadlyappealing to airlines around the world, and are considered to offer higher liquidity in aircrafttransactions. In addition, as of September 30, 2015, we had 181 aircraft on order, including 128Airbus 320 family and Boeing 737 aircraft that were scheduled for delivery from 2015 to 2021,providing strong support to our future business development. As of September 30, 2015, theaverage age of our owned aircraft on operating lease was only 4.4 years.

We have an experienced and dedicated aircraft leasing team and a sound organizationalstructure for our aviation department. Employees in our aviation department come from a widerange of professional backgrounds, including airlines, aircraft manufacturers, aircraftmaintenance service providers and other aircraft leasing companies, and had on average ten yearsof work experience as of the Latest Practicable Date. In more than ten years of aircraft leasingoperations, we have acquired aircraft through direct orders from manufacturers, sale-and-leaseback transactions and portfolio acquisitions, and have also executed a range of aircrafttransactions including lease extensions, re-leases and aircraft disposals. Our aviation departmentcomprises marketing, structured finance, technology, assets management and risk managementdivisions, which together manage the full “life cycle” of our aircraft leasing business, includingthe purchase, leasing and disposal of aircraft. In addition, we use the globally renowned ICMSaircraft leasing management system, which significantly enhanced the efficiency andeffectiveness of our aircraft asset management.

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Our leading aircraft leasing capabilities, extensive customer relationships and dedicatedprofessionals have contributed to a 100% fleet utilization and no unscheduled lease terminations,delivery failures or credit losses during the Track Record Period, bringing us a stable andpredictable source of income and profit. During the Track Record Period, the pre-tax return onassets of our Aircraft Leasing business increased from 1.39% in 2013 to 1.87% in 2014, andfurther to an annualized rate of 1.90% in the nine months ended September 30, 2015. As ofSeptember 30, 2015, the average lease term remaining on the operating leases in our ownedportfolio was 5.3 years. We receive fixed lease payments under a majority of our aircraftoperating leases, and the substantial majority of the corresponding liabilities are on fixed interestrates or hedged through interest rate swaps. In addition, we adopt a prudent aircraft depreciationaccounting policy, which helps lower the residual value risk of our aircraft.

We have strong capabilities in our Infrastructure Leasing business, focusing on sectors inwhich CDB specializes

CDB, our Controlling Shareholder, is the world’s largest development finance institution.It is also a major bank in PRC infrastructure financing. As the sole leasing business platform andone of the key strategic business segments of CDB, we have inherited high-quality resources andprofessional expertise in infrastructure financing from CDB. Similar to CDB, we serve theinfrastructure sectors that are of national strategic significance.

We have extensive experience in providing leasing services involving a wide range ofinfrastructure assets in both sale-and-leaseback and direct finance leasing transactions. We havea broad customer base across infrastructure industry sectors. As of September 30, 2015, in termsof assets, our transportation, urban and energy infrastructure leasing accounted for 68.0%, 22.6%and 9.4% of our Infrastructure Leasing business, respectively. We operate our infrastructureleasing business on a nationwide basis. As of September 30, 2015, our leased assets located inYangtze River Delta, Pearl River Delta, Bohai Rim, Western China, Central China andNortheastern China accounted for 14.2%, 6.6%, 2.6%, 39.4%, 35.6% and 1.6% of our totalleased assets in the PRC, respectively.

We have gained extensive experience in infrastructure leasing and have industry leadingcapabilities. We have achieved a number of industry “firsts” in terms of business structuring,including the first toll road and rail transit financial leasing projects in the PRC. Our expertisein business structuring enables us to provide our customers with more customized leasingservice. We also provide our customers with comprehensive consulting services, especially onoverall financing arrangement for infrastructure project. In addition, in terms of customeracquisition, we are a well recognized brand name and have established cooperative relationshipswith government authorities at various levels. As of September 30, 2015, we have establishedcooperative relationships with 24 enterprises controlled by the central government, provincialgovernments, provincial capital cities and cities specifically designated in the state plan (計劃單列市).

We conduct our Infrastructure Leasing business in collaboration with CDB regionalbranches and benefit from CDB’s resources in terms of customer selection, marketing, duediligence and projects review. Our collaboration with CDB in providing infrastructure leasingservices also facilitates CDB’s fulfillment of its promise of “comprehensive financial services”to its customers and enhances customer loyalty, creating a win-win situation.

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We have effectively managed the risks associated with our Infrastructure Leasing business,and there were no non-performing assets in our Infrastructure Leasing business during the TrackRecord Period. We believe our strong infrastructure leasing capabilities distinguish us from otherleasing companies and financial institutions.

Our unique business model focuses on high-quality, large and medium-sized enterprisesboth in China and globally

We focus on establishing cooperative relationships with high-quality, large and medium-sized enterprises both in China and globally. In view of the brand image, operational excellence,managerial efficiency and manageable risks of this target customer segment, we have built acustomer base comprising many high-quality, large and medium-sized enterprises and identifiedtheir demand for leasing services in collaboration with CDB in customer development andretention. The number of our corporate customers grew by 9.6% from 260 as of December 31,2013 to 285 as of September 30, 2015. The average leased assets balance of our corporatecustomers was RMB441.9 million as of September 30, 2015.

As of September 30, 2015, we had 171 corporate customers with a leased assets balance ofRMB100.0 million or above, representing 60.0% of all our corporate customers. As of the samedate, our leased assets with a balance of RMB1.0 billion or above accounted for 61.5% of ourtotal leased assets and had an average balance of RMB2.0 billion. We seek to enter intolong-term lease contracts with our customers.

We have a large number of corporate customers with a leading market position in theirrespective industries, including but not limited to:

• Aircraft Leasing: our PRC airline customers include China Southern Airlines, AirChina, Hainan Airlines, China Eastern Airlines, and our overseas customers includeflag carriers such as Emirates, Air France and Singapore Airlines, as well as leadinglocal budget airlines such as IndiGo, Cebu Pacific and Pegasus;

• Infrastructure Leasing: our customers include large state-owned enterprises such asFujian Funing Highway Co., Ltd. (福建省福寧高速公路有限責任公司), Hubei Inter-city Railway Co., Ltd. (湖北城際鐵路有限責任公司), Shaanxi CommunicationConstruction Group (陜西省交通建設集團公司), Ningbo Metro Group Co., Ltd. (寧波市軌道交通集團有限公司) and CGN Lufeng Nuclear Power Co., Ltd. (中廣核陸豐核電有限公司). As of September 30, 2015, in terms of leased asset balance, leasingprojects directly or indirectly owned or with financial support provided by provincialgovernments, governments of provincial capital cities and cities specificallydesignated in the state plan and enterprises controlled by the central governmentaccounted for 68.2% of our Infrastructure Leasing business; and

• Ship, Commercial Vehicle and Construction Machinery Leasing: our customersinclude well-known international corporations such as Costamare Inc., and PRCenterprises controlled by the central government, state-owned enterprises and theirsubsidiaries, such as China COSCO Shipping Corporation Limited (中國遠洋海運集團有限公司), Sinotrans & CSC Holdings Co., Ltd. (中國外運長航集團有限公司), BeiqiFoton Motor Co., Ltd. (北汽福田汽車股份有限公司), FAW Jie Fang Automobile Co.,Ltd. (一汽解放汽車有限公司), XCMG Construction Machinery Co., Ltd. (徐州工程機械集團有限公司) and Sany Heavy Industry Co., Ltd. (三一重工股份有限公司).

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We have established an effective customer acquisition, services, management and retentionmechanism that focuses on large and medium-sized enterprises. This business model has savedus the setup costs and high operating expenses associated with a large number of businessoutlets, and enhanced the efficiency of our business operations. We believe that we enjoy asignificant advantage over other financial institutions in terms of cost-income ratio. Benefitingfrom this unique business and customer service model, we are able to achieve economies of scaleand long-term and sustainable growth, ensure the quality of our assets and effectively reduceoverall risks.

We have higher international credit ratings than all listed leasing companies globally, aswell as strong funding capabilities

We have “quasi-sovereign” level international credit ratings, namely, “A+” by Standard &Poor’s, “A1” by Moody’s and “A+” by Fitch, and are one of the PRC financial institutions withthe highest international credit ratings. Our international credit ratings surpass those of any listedleasing company in the world. Our superior creditworthiness enabled us to lower our financingcosts and further diversify our financing channels, ensuring our liquidity.

We have the ability to access a diverse range of funding sources, including interbankmarket, bank credit facilities, asset financing, syndicated loans and bonds. As of September 30,2015, we had RMB92.9 billion of bank borrowings, RMB13.5 billion of notes payable, RMB4.2billion of financial assets sold under repurchase agreements and RMB3.0 billion of due to banksand other financial institutions. We have established cooperative relationships with most of themajor banks in the PRC and many major international banks. As of December 31, 2015, we hadbusiness relationships with approximately 80 banks, which provided a total of approximatelyRMB280 billion of uncommitted bank facilities, in which approximately RMB170 billion wasunutilized. As of December 31, 2015, the bank borrowings from our largest lending bank onlyaccounted for 15.7% of our total bank borrowings.

In addition to our bank financings, we have also achieved a number of industry “firsts” inthe course of diversifying our financing channels. For example, we were the first CBRC-regulated leasing company to issue bonds on the international markets on the strength of our owncredit ratings.

We have a global funding management system at the group level, where we centrallymanage the financings of our global SPCs. We have two overseas funding platforms in HongKong and Ireland, which support our international operations.

We enjoy considerable advantages in financing cost based on our good creditworthiness,prudent planning and effective liability management. The average cost of our interest-bearingliabilities decreased from 5.02% in 2013 to an annualized 4.48% in the nine months endedSeptember 30, 2015.

Our strengths in credit ratings, sources of funding and liability management capabilitiesenabled us to maintain adequate liquidity and gain access to funds at lower cost and with higherstability, which supports the continuous development of our business, enhances thecompetitiveness of our product offerings and improves our overall profitability.

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As the sole leasing business platform and one of the key strategic business segments of CDB,we enjoy strong shareholder support

As the sole leasing business platform and one of the key strategic business segments ofCDB, we enjoy strong support from CDB. Our overall business positioning and developmentstrategies are fully backed by CDB. As China’s premier development finance institution, CDBis able to participate in the formulation of the development plans at national, provincial and locallevels, which informs the development strategies of CDB and its subsidiaries, including us. Inaddition, CDB also provides us with important support in terms of customer management,balance sheet management and risk management.

We gain access to customer resources more efficiently through collaboration with CDBheadquarters and its local branches. We have established strategic cooperative relationships withindustry-leading customers, most of which have business relationships with CDB. In terms ofproject selection and review, we maintain an independent decision-making process and alsobenefit from the support and advice from CDB.

CDB’s sovereign-level credit rating and liquidity commitment to us per regulatoryrequirement enable us to better manage our balance sheet. Our international credit ratingsbenefits considerably from the sovereign-level credit rating of CDB. In the early stage of ourAircraft Leasing business, CDB extended a significant amount of loan to us, which ensured therapid development of our aircraft fleet. As of September 30, 2015, the funding support wereceived from CDB amounted to RMB21.1 billion, consisting of RMB11.7 billion of bankborrowings and RMB9.4 billion of bond guarantee. According to regulatory requirement and ourArticles of Association, CDB is required to provide us with liquidity support and capitalinjection under certain circumstances specified by the CBRC.

We are well-positioned to draw on CDB’s wealth of experiences in managing the risks inlarge and medium-sized, medium and long-term financing projects in the PRC. As the majorbank providing infrastructure financing in China, CDB is privy to the fiscal condition ofgovernments at various levels in China. In terms of project review and approval, advice fromCDB is valuable to the development and risk management of our Infrastructure Leasing business.

We have prudent and robust internal control and risk management systems

We began to develop our comprehensive risk management system in 2010. We strive tobalance business development, risk management and operation efficiency. Meanwhile, weprioritize risk control and implement independent risk management at each stage of our businessoperations.

We proactively identify and control potential risks in Aircraft Leasing and InfrastructureLeasing, two of our core business segments. In our Aircraft Leasing business, we mitigateresidual value risk by carefully managing the key terms of the aircraft leasing contracts, such asleasing rate, leasing term, maintenance cost, security deposit and insurance, and monitoring thefinancial condition and creditworthiness of our airline customers. In addition, we appraise thefair market value of our aircraft and conduct impairment tests in each fiscal year. In ourInfrastructure Leasing business, we focus on cash flow risk management. We carefully analyzethe expected cash flow of each infrastructure project to ensure that the expected cash flow issufficient to cover the lease payments and other debt repayment obligations that the lessee maybe subject to. In addition, we have rich experience in forecasting cash flows and scheduling leasepayments, which include principal and interest.

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We attach great importance to the development of risk management systems and the use ofrisk management instruments. We have established a comprehensive, three-level riskmanagement system at the level of the Board of Directors, the senior management and businessdepartments. Meanwhile, we have adopted stringent risk management standards. As a financialinstitution regulated by the CBRC, we have implemented risk guidelines and rules with standardshigher than or equal to those applicable to commercial banks.

In respect of credit risk management, we assess the credit risks of our lessees by usingCDB’s quantitative credit risk rating model, and implemented a five-category asset classificationmethod in our business operations. In addition, we are one of the first CBRC-regulated leasingcompanies to connect to the Credit Reference System of the PBOC (中國人民銀行徵信系統),according to Frost & Sullivan. In respect of market risk, we have hedged most of our exchangerate and interest rate exposures by using derivative instruments. For liquidity risk, we haveintroduced various risk control instruments to continuously monitor our risk exposures. We haveincorporated risk-related indicators into our employee appraisal system, which is linked to theirevaluation and compensation, and enhanced our employees’ risk management awareness.

We continuously improve our risk management and internal control system, which areintegral to our prudent operations and provide adequate safeguard to our business growth.

We have a visionary, highly effective and market-oriented management team

Throughout our over 30 years of development, our management team has adhered to marketprinciples, cultivated our core competitiveness and strengthened our risk management. Thevisionary, holistic, systematic approach of our management has made us a large financial leasingcompany focusing on aircraft and infrastructure leasing businesses, and firmly established ourposition as a pioneer and leader in the PRC leasing industry.

Led by Mr. Wang Xuedong (王學東先生), our Chairman, and Mr. Fan Xun (范珣先生), ourVice Chairman and President, our senior management team has a wealth of experience in thebanking, leasing and securities sectors, and covers front, middle and back office managementfunctions. Our senior management team has on average more than 20 years of experience in thefinancial sectors. Both Mr. Wang and Mr. Fan have held important positions in key departmentsin CDB, which laid a solid foundation for the deepening of our comprehensive cooperation withCDB and the strengthening of our comprehensive resources advantages.

Our mid-level management team, which consists of the head of each of our businessdepartments, has on average more than 15 years of experience in the financial and leasingsectors. These employees are well grounded in economic and financial theories and policies, andhave strong management capabilities in areas such as industry research, business planning anddevelopment, financing, asset liability management, internal control and risk management andhuman resources. They lead the formulation and innovation of our business models and areinstrumental in the sustainable development of our business and the improvement of ourcustomer services.

We have a highly effective professional team. In 2014, our net profit per employee was overRMB10.0 million, ranking us first among the CBRC-regulated leasing companies.

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BUSINESS STRATEGIES

Our vision is to become an international leading leasing company based in the PRC market.Building on our competitive advantages accumulated from the leasing industry, we strive tostrengthen our specialties and business development capabilities. Leveraging the newopportunities arising from the transformation and upgrade of the Chinese economy and from theindustries in which China enjoys leading positions in international markets, we plan tocontinuously optimize our business mix, solidify our leading position in the PRC and enhanceour presence in international leasing markets, in order to achieve sustained and rapid growth andgenerate greater shareholder return.

Seize opportunities in the golden age of the fast developing PRC leasing market byleveraging our leading market position

The PRC leasing industry is in a stage of rapid development. In September 2015, the StateCouncil promulgated the Guidance on Promoting the Healthy Development of the FinancialLeasing Industry (國務院辦公廳關於促進金融租賃行業健康發展的指導意見), which set out thenational strategy to encourage the development of the leasing businesses in areas such as aircraft,infrastructure, shipping and construction machinery. We believe that both the PRC and the globalaircraft leasing markets will maintain positive momentum, which will enable the continuedgrowth of our Aircraft Leasing business. Meanwhile, as PRC local governments’ financingchannels become more market oriented, it is expected that a lot of opportunities will arise fromthe financing needs of high-quality infrastructure assets. We intend to seize favorable industrytrends to strengthen our leading market position through the following initiatives:

• Focus on the placement of our committed portfolio of 181 aircraft. We primarily targetflag carriers, mainstream airlines and leading low-cost airlines around the globe as ourprospective lessees, by strengthening existing customers relationships and developingnew customers;

• Strengthen our advantage in transportation, urban and energy infrastructure leasing,and prudently explore new and emerging sub-sectors. We will primarily focus on theleasing business in relation to rail transit, urban pipeline networks, water treatment andclean energy infrastructure;

• Seize opportunities that may arise from the expected recovery in the internationalshipping market by focusing on vessel types with higher market demand andprofitability; further our cooperation with large and medium-sized commercial vehicleand construction machinery manufacturers and actively develop the leasing ofnew-energy buses; and

• Adjust our business mix and customers positioning, optimize our credit enhancementmeasures and explore new growth opportunities with respect to our Other LeasingBusiness.

Expand our business scale through both organic growth and acquisitions, and continue toenhance our international operational capabilities

In our primary business areas such as aircraft and infrastructure leasing, we plan tocontinuously improve our expertise and capabilities, and grow our business scale organically. Atthe same time, we seek to identify and acquire undervalued assets or assets that hold the potentialof generating superior risk-adjusted returns. In addition to continuously strengthening ourcompetitive advantage in the PRC market, we also intend to enhance our internationaloperations. Specific strategies include:

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• Continue to rely on organic growth. In our Aircraft Leasing business, we intend tobuild overseas teams and enhance our capabilities in lease extensions, re-leases andother aircraft transactions. In our Infrastructure Leasing business, we intend to explorenew transaction structures and optimize our cooperation with CDB, in line withgovernment-promoted financing reform. In our Ship Leasing business, we intend toleverage the advantageous position of the shipbuilding industry in China and otherAsian countries, and expand our business through closer cooperative relationship withshipbuilders. In our manufacturer leasing business model, we intend to initiatecooperation with insurance companies to improve credit enhancement measures; and

• In terms of asset acquisition, prioritize and focus on asset types with high liquidity,especially aircraft and vessels. We intend to acquire aircraft and vessels that are in linewith our business strategies, risk preferences and customer portfolio, in order tooptimize the structure of our aircraft and vessel portfolios.

Further enhance our management of leased assets, particularly, leased asset tradingcapabilities, provide value-added services and increase the proportion of revenue fromintermediary businesses

We intend to improve our leased assets management capabilities and provide value-addedservices. With the effective management of our capital, we intend to generate revenue fromintermediary services in our core business areas and increase our overall earning capacity.Specific initiatives include:

• Actively engage in aircraft acquisition and sale in the PRC and globally, enhance themanagement of our aircraft portfolio, and generate revenue by providing value-addedservices;

• Engage in the sale of assets to small- and medium-sized leasing companies and otherinvestors which often have limited asset acquisition channels in the infrastructureleasing area, and gradually establish our position as a primary provider of wholesaleservices in the infrastructure leasing market in China;

• Explore strategies of keeping assets off our balance sheet by such means as assetsecuritization; and

• Increase our fee income by enhancing our ability to provide customers withcomprehensive and value-added services in our core business areas, includingadvisory services in fleet management, infrastructure management and infrastructureasset restructuring.

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Further expand our financing channels and reduce financing costs

Considering the ongoing financing needs of our business, we plan to further diversify oursources of funding and reduce our financing costs by leveraging our superior international creditratings and utilizing a wider range of financial instruments. Specific strategies include:

• Further expand financing channels through the issue of domestic financial institutionbonds;

• Raise our profile in international capital markets and establish reliable overseas bondissue channels to support the international development of our business, following thestrengthening of our capital base pursuant to the Global Offering;

• Further our cooperation with a diverse range of PRC and global financial institutionsand utilize more diversified financial instruments, such as export credit agencyfinancing, tax structured financing and asset securitization; and

• Optimize the management of our financing costs by closely monitoring and forecastingdomestic and global interest rate trends.

Continue to enhance our risk management capabilities

We will continuously improve our management of credit risk, market risk and liquidity riskand place risk management at the center of our business operations. We will continue to increaseour investment in information technologies related to risk management and internal controls.Main measures include:

• Further enhance the management of risks associated with our leased assets, inparticular, improve the management of the valuation and disposal of leased assets, andmitigate credit risk;

• Improve the quantitative management of credit risk and ensure the efficacy of ourmedium-to-long term credit risk management by improving our risk-based pricingcapabilities. Building on our current customer credit rating system, we plan toestablish a quantitative, post-lease risk monitoring system, conduct regular stress testson our main financial and business parameters, and adjust our business strategies andpricings according to the results of the stress tests;

• For market risk management, continue to use derivative instruments such as interestrate and exchange rate swaps to hedge against the volatility in market rates; maintainrelatively prudent accounting policies with respect to operating lease assets, monitorvolatilities in the market value of operating lease assets and reduce residual valuerisks;

• For liquidity risk management, increase the percentage of long-term debt and optimizethe duration match between our assets and liabilities and reduce liquidity riskexposures through new financing channels; and

• We are in the process of setting up a specialized division responsible for post-leasemanagement, including the centralized management of our creditor rights andownership with respect to leased assets.

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Establish a high-performing and professional team through an effective incentivemechanism

To build a first-tier team of professionals and ensure the sustainable development of ourbusiness, we will further optimize our human resources management by introducing a long-term,market-based incentive mechanism, which is more closely linked to performance.

• Improve our appraisal and performance review, make our remuneration system moremarket based, and gradually establish a long-term, performance-linked incentivemechanism;

• Improve our human resource management and continue to select, develop, motivateand retain a talented and professional workforce; and

• Build a professional and international team with a diverse range of professional andeducational background, and in particular, recruit and retain talented professionalstrained in the aircraft and infrastructure related industries.

OUR BUSINESS

We provide a wide range of leasing services to our clients in the PRC and globally. Ourprincipal business segments are:

Business Segments Business Areas

Aircraft Leasing • Aircraft

Infrastructure Leasing • Transportation infrastructure (toll roads,rail transit)

• Urban infrastructure (municipalfacilities, affordable housing)

• Energy infrastructure (energy andelectric power equipment)

Ship, Commercial Vehicle and ConstructionMachinery Leasing

• Ship• Commercial vehicle• Construction machinery

Other Leasing Business • Manufacturing equipment• Commercial property

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The following table sets forth our segment revenue and other income for the periodsindicated:

Year ended December 31, Nine months ended September 30,

2013 2014 2014 2015

(RMB in millions, except percentages )

(Unaudited)Revenue and other

incomeAircraft Leasing . . . . . 3,834.3 32.8% 4,607.8 39.6% 3,333.9 39.1% 3,515.2 43.4%Infrastructure Leasing . 4,469.3 38.3% 4,087.4 35.0% 3,002.8 35.2% 2,655.7 32.8%Ship, Commercial

Vehicle andConstructionMachinery Leasing. . 1,266.4 10.8% 1,404.2 12.0% 1,035.7 12.2% 908.0 11.2%

Other LeasingBusiness . . . . . . . . . 2,107.2 18.1% 1,565.7 13.4% 1,148.0 13.5% 1,021.6 12.6%

Total . . . . . . . . . . . . . 11,677.2 100.0% 11,665.1 100.0% 8,520.4 100.0% 8,100.5 100.0%

Finance Lease and Operating Lease

Leases are classified as finance leases when the terms of the lease transfer substantially allthe risks and rewards of ownership to the lessee. Leases are classified as operating leases whensubstantially all the risks and rewards of ownership remain with the lessor.

During the Track Record Period, we derived finance lease income from all of our businesssegments. Our finance lease contracts are generally priced at an interest rate floating at apredetermined spread over a base interest rate. The base interest rate references PBOCbenchmark interest rates or LIBOR, and the predetermined spread is negotiated on acase-by-case basis with the specific customer based on its risk profile. Our finance leasecontracts typically have monthly, quarterly or semi-annual payment periods. The floating interestrate is typically reset based on the then prevailing benchmark interest rates. In 2013 and 2014and the nine months ended September 30, 2015, our finance lease income was RMB6,679.4million, RMB7,014.9 million and RMB4,595.3 million, respectively. As of December 31, 2013and 2014 and September 30, 2015, our total finance lease related assets were RMB85,595.7million, RMB90,953.4 million and RMB83,964.5 million, respectively.

During the Track Record Period, we derived our operating lease income primarily from ourAircraft Leasing business, and to a much lesser extent, from our urban infrastructure leasing andOther Leasing Business. Under an operating lease, the lessee is responsible for the maintenanceand servicing of the leased asset during the lease term and the lessor receives the benefit, andassumes the risk, of the residual value of the leased asset at the end of the lease. We generallyreceive fixed lease payments under operating lease contracts, and set accounting policy for therecognition and depreciation of operating lease assets based on asset class. In 2013 and 2014 andthe nine months ended September 30, 2015, our operating lease income was RMB4,370.0million, RMB4,310.0 million and RMB3,401.2 million, respectively. As of December 31, 2013and 2014 and September 30, 2015, our total operating lease assets were RMB32,158.7 million,RMB36,385.4 million and RMB39,435.2 million, respectively.

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Direct Lease and Sale-and-Leaseback

We offer two types of leasing services: (i) direct leases; and (ii) sale-and-leasebacks.

Direct lease

In a direct lease, we purchase a specific asset from the equipment supplier. We then leasethe asset to our customer for use in return for periodic lease payments. A typical direct leasingtransaction is a tri-party arrangement that involves a lessor, a lessee and an equipment supplier.The following diagrams illustrate the relationship among the three parties:

Under finance leases:

Our Group

(Lessor)

Equipment

Supplier

Customer

(Lessee)

(1) Selection of supplier and equipment

(3) Delivery of equipment

(2) Payment of

equipment price(4) Lease payment

(5) Transfer of

ownership upon

expiry of

lease term

Under operating leases:

Our Group

(Lessor)

Equipment

Supplier

Customer

(Lessee)

(1) Selection of supplier

and equipment

(2) Payment of

equipment price

(3) Delivery of equipment

(4) Transfer the right to

use the equipment at

the commencement

of lease term

(5) Lease payment

(6) Return the equipment

upon expiry of

lease term

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Sale-and-leaseback

In a sale-and-leaseback transaction, our customer sells the relevant asset to us for anegotiated purchase price, and we then lease the asset back to our customer in return for periodiclease payments, so that our customer may cover its funding needs and continue to use the assetas a lessee. A typical sale-and-leaseback transaction involves a lessor and a lessee. The followingdiagram illustrates the relationship between the two parties:

Our Group

(Lessor)

(1) Transfer of ownership

(2) Payment for equipment

(3) Lease payment

(4) Transfer of ownership

upon expiry of lease term

(under finance leases)

Customer

(Lessee)

Aircraft Leasing

Overview

We have a leading global aircraft leasing business focused on acquiring, leasing, managingand selling commercial aircraft. We focus on building and maintaining a portfolio of young,modern and fuel-efficient commercial aircraft, with the objective of maximizing long-termearnings growth and delivering superior risk-adjusted returns through the aviation industrycycle. Since our inception, we have continuously expanded our owned aircraft portfolio andgrown our business scale, customer network and industry experience. As of December 31, 2013and 2014 and September 30, 2015, the aggregate leased assets of our owned aircraft portfoliowas RMB34,758.9 million, RMB38,546.9 million and RMB41,920.0 million, respectively.

As of September 30, 2015, our owned, managed and committed portfolio consisted of 371aircraft, including 179 owned aircraft, 11 managed aircraft and 181 committed aircraft.According to Frost & Sullivan, as of December 31, 2014, our owned portfolio of 169 aircraft wasthe tenth largest fleet globally by net book value. Our owned portfolio consists primarily ofnarrow-body aircraft, including the Airbus A320 family and the Boeing 737-800, and selectwide-body aircraft, including the Airbus A330 and the Boeing 777. As of September 30, 2015,our committed portfolio included 68 Airbus A320 and 60 Boeing 737 aircraft. We select aircraftthat we believe will retain a high residual value and will be less susceptible to asset impairmentrisk. As of December 31, 2013 and 2014 and September 30, 2015, the average age of our ownedaircraft fleet on operating lease was 3.4, 4.1 and 4.4 years, respectively.

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We lease the majority of our aircraft to airlines under long-term operating leases, whichprovide a high level of predictability and stability to revenues. As of September 30, 2015, theaverage lease term remaining on the operating leases in our owned portfolio was 5.3 years. In2013 and 2014 and the nine months ended September 30, 2015, the revenue and other incomegenerated from our Aircraft Leasing business was RMB3,834.3 million, RMB4,607.8 million andRMB3,515.2 million, respectively. Payments under our lease contracts are predominantly in USdollars, the same currency used in our aircraft acquisition and disposal transactions.

We commenced our aircraft leasing business in 2002 and, in particular, our aircraftoperating leasing business in 2006. Since CDB became our Controlling Shareholder in 2008, ourowned portfolio has experienced rapid growth, from 28 aircraft as of December 31, 2008 to 179aircraft as of September 30, 2015. We operate our business on a global basis, leasing aircraft toairlines both in the PRC and elsewhere in Asia, Europe, South America and Africa. In additionto our Shenzhen headquarters, we have five aircraft leasing business platforms in the TianjinFree Trade Zone, the Shanghai Free Trade Zone, Xiamen Area of the Fujian Free Trade Zone,Ireland and the Cayman Islands. As of September 30, 2015, our customer base included 12airlines in the PRC and 28 airlines in 22 other countries and regions.

We believe that by applying our expertise through an integrated business model, we will beable to identify and execute on a broad range of market opportunities that may arise in theaircraft life cycle. We have the infrastructure, expertise and resources to execute diverse aircrafttransactions in a variety of market conditions. We use multiple aircraft acquisition channels,including direct orders from manufacturers, sale-and-leaseback transactions and portfolioacquisition from other lessors to grow our business. We maintain relationship with airlines,aircraft leasing companies and aircraft investors globally and seek to sell assets strategically tooptimize our portfolio in response to market conditions. We have a team of professionalsdedicated to our Aircraft Leasing business. The combination of a young and modern aircraftportfolio, proven industry expertise and robust risk management has contributed to a 100% fleetutilization and no unscheduled lease terminations, delivery failures or credit losses during theTrack Record Period.

Aircraft Portfolio

As of December 31, 2013 and 2014 and September 30, 2015, we owned 155, 169 and 179aircraft, respectively, and managed 8, 11 and 11 aircraft, respectively.

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The following table provides details regarding our aircraft portfolio by type as of September30, 2015. In terms of net book value, Airbus and Boeing aircraft accounted for 91.1% of ourowned portfolio.

Owned portfolioManagedportfolio

Committedportfolio

Owned,managed

andcommittedportfolio

Net book value

Aircraft type Number PercentageOperating

lease(8)Financelease(9) Total Percentage Number Number Number

(RMB in millions)

AirbusA320 family . 50(1) 27.9% 9,985.8 813.3 10,799.1 25.8% 1 68(2) 119A330 family . 25(3) 14.0% 11,306.0 893.8 12,199.8 29.1% 1 – 26

Subtotal . . . . . 75 41.9% 21,291.8 1,707.1 22,998.9 54.9% 2 68 145Boeing

737 . . . . . . 42(4) 23.5% 9,904.6 524.9 10,429.5 24.9% 9(5) 60(6) 111747-400SF . . 3 1.7% – 498.7 498.7 1.2% – – 3777-300ER . . 5 2.7% 4,241.8 – 4,241.8 10.1% – – 5

Subtotal . . . . . 50 27.9% 14,146.4 1,023.6 15,170.0 36.2% 9 60 119Embraer

E190-100LR . 20 11.2% 3,502.5 – 3,502.5 8.4% – – 20Bombardier

C Series . . . . – – – – – – – 15 15Global 6000 . – – – – – – – 3 3

Subtotal . . . . . – – – – – – – 18 18COMAC

ARJ21 . . . . . – – – – – – – 20 20C919. . . . . . – – – – – – – 15 15

Subtotal . . . . . – – – – – – – 35 35Others(7) . . . . 34 19.0% – 248.6 248.6 0.5% – – 34

Total . . . . . . . 179 100.0% 38,940.7 2,979.3 41,920.0 100.0% 11 181 371

(1) Consisting of seven A319-100, 39 A320-200 and four A321-200.

(2) Consisting of 23 A320ceo and 45 A320neo.

(3) Consisting of eight A330-200 and 17 A330-300.

(4) Consisting of 42 737-800.

(5) Consisting of two 737-700 and seven 737-800.

(6) Consisting of 30 737-800 and 30 737 Max.

(7) Consisting of 33 Diamond trainers (two DA20, 26 DA40 and five DA42) and one Dassault Falcon 7X business jet. All 34aircraft here were under finance leases.

(8) Net book value of operating leased assets represents carrying amount of equipment held for operating lease business.

(9) Net book value of finance leased assets represents carrying amount of accounts receivable – advance for finance lease projectsand finance leases receivables.

As of December 31, 2013 and 2014 and September 30, 2015, 114, 125 and 136 of our ownedaircraft were held under operating leases, respectively, and 41, 44 and 43 of our owned aircraftwere under finance leases.

Aircraft on Order

Our aircraft on order mainly comprise aircraft ordered from Airbus and Boeing. In March2014, we entered into an agreement with Airbus to purchase 70 aircraft, with a total catalog priceof US$6.8 billion. Two such aircraft had been delivered as of September 30, 2015. In March2014, we also entered into agreements with Boeing to purchase 60 aircraft with a total catalogprice of US$5.8 billion.

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The following table sets forth the scheduled delivery dates for our Airbus and Boeingaircraft on order as of September 30, 2015:

Aircraft type 2015 2016 2017 2018 2019 2020 2021 Total

A320ceo . . . . . 2 12 9 – – – – 23A320neo. . . . . – – – 6 11 14 14 45B737-800 . . . . – 9 12 9 – – – 30B737 Max . . . – – – 2 16 12 – 30

Total . . . . . . . 2 21 21 17 27 26 14 128

The delivery schedule was determined based on our discussion with the relevant aircraftmanufacturer, and careful analysis and forecast of the development trend of the aviation industryand aircraft demand was performed by a third-party commercial advisor engaged by us in theprocess of determining this delivery schedule.

In addition, we have ordered 20 ARJ21 and 15 C919 aircraft from COMAC, and 15Bombardier C Series aircraft and three Bombardier Global 6000 business jets. As of the LatestPracticable Date, the delivery schedules of these aircraft have yet to be determined.

Key Terms of Aircraft Purchase Agreements

The key terms of an aircraft purchase agreement include the purchase price, the scheduleddelivery timetable, the delivery conditions and the consequences in the event of manufacturer’sdelay in delivery. Our major obligations as a purchaser under an aircraft purchase agreement areto make the payments and to take delivery of the aircraft delivered by manufacturers inaccordance with the agreement.

Aircraft purchase price is usually paid to manufacturers in installments before delivery ofthe aircraft, and the purchaser will obtain the title to an aircraft upon payment of the finalinstallment of the purchase price to the manufacturer. Aircraft manufacturers periodicallyannounce the catalog price of certain models of aircraft manufactured by them, and on the basisof the catalog price manufacturers also adjust the purchase price of aircraft based on the changeof the relevant consumer price index or other variables, and the detailed price adjustmentmechanism is set out in the aircraft purchase agreement. In addition, depending on the actualorder and the then prevailing market conditions, the purchaser and the manufacturer may agreeon other adjustments to the aircraft purchase price.

Aircraft manufacturing is a complex process and may involve hundreds of suppliers ofmaterials, parts and components. Aircraft manufacturers usually differentiate delivery delayscaused by factors beyond their control from other delays. The aircraft purchase agreementsbetween us and Airbus and Boeing have each provided for delays that may arise and the rightsand remedies available to us as the purchaser in the event of such delays.

Aircraft Acquisitions

We originate acquisitions through well-established relationships with aircraftmanufacturers, airlines, other aircraft lessors, financial institutions and brokers, as well as othersources. We believe that sourcing such transactions both globally and through multiple channelsprovides us with a broad and relatively consistent set of opportunities.

Our portfolio consists of aircraft ordered directly from manufacturers, aircraft acquiredthrough sale-and-leaseback transactions and aircraft portfolios purchased from other lessors.

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Direct Orders from Manufacturers

As of September 30, 2015, our committed portfolio included 23 Airbus A320ceo, 45 AirbusA320neo, 30 Boeing 737-800 and 30 Boeing 737 MAX aircraft, which were scheduled fordelivery between 2015 and 2021. These orders are strategically important as they give us accessto highly sought-after, next generation, fuel-efficient aircraft. We anticipate strong leasingdemand from airlines due to the attractiveness of these aircraft. We believe these delivery slotsare strategically timed and have the potential to generate significant returns for us. Direct orderacquisitions typically require significantly longer lead times than sale-and-leasebacktransactions, generally ranging from one to seven years from the time of order to the scheduleddelivery of the aircraft.

Sale-and-leaseback

In a typical sale-and-leaseback transaction, we commit to acquire new aircraft that anairline has ordered directly from the manufacturer, and then lease the aircraft to the airline. Thesale-and-leaseback transactions help us achieve higher transaction certainty and minimizeplacement risk. This channel also provides us with flexibility to manage cyclical risk and beresponsive to market opportunities and conditions. Sale-and-leaseback transactions are generallycompleted within two to 12 months from the contract signing date to the scheduled delivery ofthe aircraft. During the Track Record Period, our sale-and-leaseback transactions achieved a100% success rate of deliveries, which demonstrated our creditworthiness.

Portfolio Acquisitions

Portfolio acquisitions typically involve multiple aircraft and multiple airlines and, as such,the transactions are more diversified than single sale-and-leaseback opportunities. Moreover,because the aircraft are already on lease or committed for near-term delivery on lease, suchtransactions typically generate cash flow more quickly than aircraft acquired through newsale-and-leaseback or direct order channels. We commenced our portfolio acquisition fromGECAS in 2009, which was the first time that a PRC leasing company acquired on-lease aircraftportfolios, with all lessees from outside of the PRC and through an Ireland SPC.

We have mainly relied on sale-and-leaseback transactions and portfolio acquisitions in theearly development stage of our Aircraft Leasing business, as these two channels enable us toquickly grow our fleet. In recent years and with more experience, we have focused more ondirect orders from aircraft manufacturers, which provide us with more flexibility in managing themix of our aircraft fleet and customers. With direct orders from aircraft manufacturers, wetypically secure lease commitment for an aircraft at least 12 months prior to its scheduleddelivery.

Due Diligence Prior to Leasing and Portfolio Acquisition

Before making any decision to lease an aircraft, we perform a review of the prospectivelessee, which generally includes reviewing financial statements, business plans, cash flowprojections, maintenance records (if applicable), operational performance histories and relevantregulatory approvals and documentation. We also perform credit reviews for prospective lesseeswhich typically include extensive discussions with the prospective lessee’s management beforewe enter into a new lease. Depending on the credit quality and financial condition of the lessee,we may require the lessee to obtain guarantees or other financial support from an acceptablefinancial institution or other third parties.

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Before making any decision to purchase aircraft portfolios, in addition to conducting duediligence on the prospective lessees, we also conduct due diligence on the aircraft and leasingcontracts, including performing technical inspections on the use and maintenance of the aircraftand reviewing the aircraft leasing contracts.

Aircraft Leases and Transactions

Over the life of the aircraft, we manage a range of aspects of the aircraft lease, such ascertificates, lease rates, maintenance costs, security deposits and insurance, and seek to ensurethat the aircraft, engines and related equipment are continuously maintained in proper condition.In the meantime, we actively reach out to potential aircraft buyers and realize returns on ouraircraft investments by strategically timing their sale.

We lease the majority of our aircraft under operating leases. Under an operating lease, thelessee is responsible for the maintenance and servicing of the equipment during the lease termand the lessor receives the benefit, and assumes the risk, of the residual value of the equipmentat the end of the lease. Rather than purchasing their aircraft, many airlines operate their aircraftunder operating leases because operating leases reduce their capital requirements and costs andallow them to manage their fleet more efficiently. Over the past 20 years, the world’s airlineshave increasingly turned to operating leases to meet their aircraft needs.

Our dedicated portfolio management group consists of marketing, commercial, technical,financing and risk management professionals. Prior to a purchase, this group considers a varietyof aspects, including the aircraft’s price, fit within our portfolio, specification and configuration,maintenance history and condition, the existing lease terms, financial condition andcreditworthiness of the existing lessee, the jurisdiction of the lessee, industry trends, financingarrangements and the aircraft’s redeployment potential and value, among other factors.

Key Terms of Aircraft Leasing Agreements

• Lease term and lease rate

All our aircraft lease agreements are for fixed terms generally ranging from eight to 12years. We typically require our lessees to pay rent monthly or quarterly. In leasing our aircraft,we receive fixed lease payments under a majority of our operating leases, and adopt floatinginterest rates in the pricing of our finance leases.

• Security deposit

During the lease term, our aircraft lessees are required to maintain a security deposit withus in the form of cash deposit or letter of credit and in an amount equivalent to one to threemonths’ lease payment.

• Aircraft operation and maintenance

Our aircraft lease agreements require lessees to be responsible for the costs and expensesrelating to aircraft operation, and for the maintenance, repairs and overhauls of the leased aircraftin accordance with the maintenance program approved by the aviation authorities and theairframe and engine manufacturers’ guidelines. We have the right to inspect the leased aircraftat reasonable periodic intervals. We require our lessees to comply with the airworthinessrequirements of the FAA, the EASA or other applicable aviation authorities.

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• Maintenance reserve

Based on the credit quality of the lessee, we require some of our lessees to pay maintenancereserve, in the form of cash or letter of credit, to cover scheduled major component maintenancecosts. The amount of the maintenance reserve is generally determined with reference to theutilization of the leased aircraft. In most lease contracts not requiring the payment ofmaintenance reserve, the lessee is required to redeliver the aircraft in a similar maintenancecondition as when accepted under the lease. To the extent that the redelivery condition isdifferent from the acceptance condition, there is normally an end-of-lease compensationadjustment for the difference at redelivery.

• Aircraft registration and registration of interests

The lessee is required to ensure that the aircraft is registered with the applicable aviationauthority, typically the aviation authority in the country of the lessee. To the extent practicable,we also require the lessee to register the ownership, interests of the lessors under the aircraftlease agreement or the lease agreement itself in accordance with applicable laws andinternational conventions.

• Tax obligations

Our aircraft lease agreements generally require lessees to gross up lease payments to covertax withholdings or other tax obligations that may be applicable.

• Aircraft re-delivery

Our aircraft lease agreements contain specific provisions regarding the required conditionof the aircraft upon its redelivery by the lessee at the end of the lease term. Redelivery conditioncovers various aspects, including the exterior and interior condition of the airframe, technicalcondition and airworthiness.

• Remedies and rights in case of lessee default

Our leases contain provisions on our rights and remedies in case of default by the lessee,including the right to terminate the lease and repossess the aircraft.

• Lease restructuring and repossession of aircraft

During the term of our leases, some of our lessees may experience financial difficultiesresulting in the need to restructure their leases. Generally, restructurings involve a number ofpossible changes to the lease’s terms, including rescheduling of lease payments, change of leasepayment amount or exchange of lease payments for other consideration.

If restructuring is not an option, we will seek to terminate the lease, take repossession ofthe aircraft and re-market the aircraft. Under most circumstances, the repossession will beconducted through negotiations with lessees. In the event that the lessee is uncooperative, wemay have to take legal actions for the repossession. In connection with the repossession of anaircraft, we may be required to settle claims on the aircraft or to which the lessee is subject,including outstanding liens on the repossessed aircraft.

Lease Extensions and Re-leases

We generally seek to reduce our leasing transaction costs and minimize off-lease time byentering into lease extensions. The terms of our lease extensions reflect market conditions at thetime the lease extension is signed and typically contain different terms than the original lease.

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Upon expiration of an operating lease, where the lease term is not extended, we takeredelivery of the aircraft, remarket and re-lease it to new lessees. Typically, we re-lease ourleased aircraft well in advance of the expiration of the then-current lease and deliver the aircraftto a new lessee immediately following redelivery by the prior lessee.

We typically perform routine inspections and maintenance necessary to place the aircraft inthe required condition for delivery and, in some cases, make modifications requested by our nextlessee.

Our extensive experience, global reach and operating capabilities allow us to rapidlycomplete aircraft transactions, which enables us to increase the returns on our aircraftinvestments and reduce the time that our aircraft are not generating revenue for us.

Lease Expiration

As of September 30, 2015, the average lease term remaining on the operating leases in ourowned portfolio was 5.3 years. Among the 136 aircraft under operating leases in our ownedportfolio, the leases of 75 aircraft are expected to expire by the end of 2020 and the leases of131 aircraft are expected to expire by the end of 2025, according to the lease expiration schedule(for the minimum non-cancellable period which does not include contracted unexercised leaseextension options) of our operating lease portfolio.

Aircraft Sale

We aim to develop and maintain a diverse and stable aircraft portfolio. We review ourportfolio periodically, and sell our aircraft opportunistically to optimize the composition of ourportfolio and capture gains.

Aircraft sales facilitate management of portfolio concentrations, provide ongoing liquidityof the portfolio, enable us to monetize value in our aircraft, help us maintain visibility andmomentum with our customers and are a tool for effectively managing both asset residual valueand re-lease risk. We have a dedicated team of experienced professionals focused on aircraftsales, which allows us to sell aircraft and to recycle and redeploy capital to fund further growth.The buyers of our aircraft include airlines, financial investors and other aircraft leasingcompanies. During the Track Record Period, we executed four aircraft sales. We aim to achievethe following objectives through aircraft sales: (i) maintaining a portfolio of young, modern andfuel efficient commercial aircraft; (ii) managing concentration in terms of customer type, regionand lease expiration dates; (iii) managing default risk and residual value risk; and (iv) capturinggains when opportunities arise.

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Our Lessees

The majority of our lessees are flag carriers and major airlines of their respective countries,with good credit record and cooperative relationships with us.

The following table provides information regarding the percentage of our total aircraft leaserevenue attributable to the indicated lessees of our aircraft in the nine months endedSeptember 30, 2015:

Lessee

Percentage of leaserevenue in the nine

months endedSeptember 30,

2015

China Southern Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1%Air China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6%IndiGo (India) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8%Emirates (UAE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3%Hainan Airlines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8%Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.4%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0%

We lease our aircraft to lessees located in diverse geographical regions around the globe.As of September 30, 2015, out of our 179 owned aircraft, 105 were leased to PRC clients and74 were leased to overseas clients. The following table sets forth the percentage of our totalaircraft lease revenue by region of lessee in which we lease our aircraft in the nine months endedSeptember 30, 2015:

Region

Percentage of leaserevenue in the nine

months endedSeptember 30,

2015

PRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46.2%Asia Pacific (excluding the PRC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.5%Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.0%Middle East and Africa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5%Latin America. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0%

We have active relationships with airlines globally, which helps us place new aircraft,re-market end-of-lease aircraft and source transactions to grow our fleet through multipleacquisition channels. In addition to actively maintaining existing customer relationships, we alsoseek to find new customers through participation in major aviation industry conferences,referrals by aircraft manufacturers as well as internet platforms.

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Relationship with Airbus, Boeing and Other Manufacturers

We maintain cooperative relationships with aircraft manufacturers such as Airbus andBoeing, and engine manufacturers such as CFM International, International Aero Engines andPratt & Whitney. These extensive manufacturer relationships and the scale of our business enableus to place large orders with favorable terms and conditions, including pricing and deliveryterms.

We are actively involved with consultative bodies, events and forums that have been formedby the aircraft and major engine manufacturers to engage with the industry on the developmentand design of new products. Our membership of these groups provides us with multipleopportunities to share opinions and seek to influence technology development and designactivity to align with customer requirements and drive future growth.

Organizational Structure

Consistent with industry practice, we use SPCs established in China and overseas to enterinto aircraft leasing agreements with our aircraft leasing customers. As of September 30, 2015,we had established 47, 16, 2, 38 and 12 SPCs in the Tianjin Free Trade Zone, the Shanghai FreeTrade Zone, Xiamen Area of the Fujian Free Trade Zone, Ireland and the Cayman Islands,respectively. Each of our SPCs may own or lease one or multiple aircraft. The SPCs are usefulin ring-fencing the liabilities associated with ownership of aircraft, facilitating the financingand/or refinancing by enhancing the bankruptcy remoteness, and enhancing the transferability ofaircraft assets. We also benefit from favorable tax treatment in the regions where our SPCs areresident. For example, our Ireland SPCs are subject to the 12.5% corporate tax on tradingincome. SPCs enable us to better meet customer demand and enhance our overallcompetitiveness in the aircraft leasing market.

Infrastructure Leasing

Overview

Our Infrastructure Leasing business comprises:

• Transportation infrastructure leasing (toll roads, rail transit)

• Urban infrastructure leasing (municipal facilities, affordable housing)

• Energy infrastructure leasing (energy and electric power equipment)

In 2013 and 2014 and the nine months ended September 30, 2015, the revenue and otherincome generated from our Infrastructure Leasing business was RMB4,469.3 million,RMB4,087.4 million and RMB2,655.7 million, respectively. As of December 31, 2013 and 2014and September 30, 2015, the total assets of our Infrastructure Leasing business wereRMB59,639.7 million, RMB51,995.4 million and RMB49,386.4 million, respectively.

We operate our Infrastructure Leasing business on a nationwide basis in the PRC andmanage our Infrastructure Leasing business by geographical regions. Since CDB became ourControlling Shareholder in 2008, by leveraging our brand name, expertise and capabilities, wehave established good cooperative relationships with local governments, a broad and stablecustomer base and an effective business model. CDB is the largest bank for infrastructurefinancing in the PRC. We actively collaborate with CDB’s regional branches in our InfrastructureLeasing business and thereby benefiting from CDB’s strong support in customer development,project information management, risk management and account monitoring.

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Our Infrastructure Leasing business, which is mostly under finance leases, is primarilyconducted through sale-and-leaseback transactions. In our Infrastructure Leasing business, wegenerally require that the leased asset or the lessee has a stable cash flow sufficient to cover thelease payments and other debt repayment obligations that the leased asset or the lessee may besubject to, and such cash flow may include funds that the lessee expects to receive in governmentprocurement. Our lease contracts are generally priced based on a floating interest rate, which isset at a predetermined spread over the PBOC benchmark loan interest rate of the same period.

Our Infrastructure Leasing customers are mainly large state-owned enterprises that operatetransportation, urban and energy infrastructure. Our infrastructure leasing services have thefollowing features: (i) we provide financing to our customers through the sale and leaseback ofcompleted infrastructure assets; (ii) we generally provide greater flexibility on the use of thefunds that we provide to our customers; (iii) our finance leases are long-term and generally rangefrom five to 15 years; (iv) a considerable portion of our leased assets are well developed andgenerating stable cash flow; and (v) certain funds that constitute the source of lease paymentshave been included in the fiscal budgets of local governments as the relevant projects are closelyrelated to public welfare.

As a result of the foregoing, our infrastructure leasing services are capable of meetingcustomer demand where commercial bank loans are not an ideal option for our customers. At thesame time, our infrastructure leasing services provide us with a stable and predictable source ofincome. We have effectively mitigated uncertainties associated with infrastructure constructionand managed the credit risks associated with the Infrastructure Leasing business, and as a result,there were no non-performing assets in our Infrastructure Leasing business during the TrackRecord Period. Our collaboration with CDB in providing infrastructure leasing services alsofacilitates CDB’s fulfillment of its promise of “comprehensive financial services” to itscustomers and enhances customer loyalty.

Transportation Infrastructure Leasing

Our transportation infrastructure leasing business primarily comprises the leasing of tollroads and rail transit equipment.

Toll Roads

We commenced our toll road leasing business in 2003. According to Frost & Sullivan, wewere the first CBRC-regulated leasing company in the PRC to provide toll road leasing servicesand a leading toll road leasing company in the PRC. The main business model of toll road leasingrelies on the leasing of highways, toll roads and bridges (including ancillary facilities andexcluding the underlying land) that have a steady cash flow in the form of toll revenue. Wetypically require the lessee to pledge the toll-collecting rights as a security to us. The lease termof toll road projects is capped by toll-collecting period and generally ranges from 7 to 12 years.

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As of September 30, 2015, we provided leasing services for 17 toll roads in 11 provincesof the PRC. Our toll road customers are mainly state-owned highway operating companies, suchas Fujian Funing Highway Co., Ltd. (福建省福寧高速公路有限責任公司), Henan HighwayTreasury Center (河南省收費還貸高速公路管理中心) and Hubei Transport Investment Co., Ltd.(湖北省交通投資有限公司).

The table below sets forth our five largest toll road leasing projects in terms of leased assetsbalance as of September 30, 2015:

Project Province

Balance of leasedassets as of

September 30, 2015Lease expiration

time

(RMB in millions)

G15 Shenyang – Haikou Expressway,Fuding-Ningde section

Fujian 3,054.4 December 2023

G4 Beijing-Hong Kong-Macau Expressway, Hubeinorth section

Hubei 2,605.6 June 2022

G4 Beijing-Hong Kong-Macau Expressway,Xinxiang – Zhengzhou section

Henan 2,419.5 June 2022

Guiyang – Xinzhai Expressway,Guiyang – Duyun section

Guizhou 2,244.4 December 2020

Kunming – Songming Expressway Yunnan 2,156.5 November 2025

As of September 30, 2015, the assets related to our toll road leasing business wereRMB26,003.6 million, representing 52.7% of the segment assets of our Infrastructure Leasingbusiness.

Rail Transit

We commenced our rail transit leasing business in 2007. According to Frost & Sullivan, wewere the first CBRC-regulated company in the PRC to provide rail transit leasing services. Themain business model of rail transit leasing is the sale-and-leaseback of fixed assets, such as railequipment and ancillary facilities. Rail transit leases are serviced by government fiscal support,tickets, advertising, real estate rental incomes and other rail transit management-related income.The lease term of our rail transit leasing projects generally ranges from five to 15 years.

As of September 30, 2015, we provided finance leasing services for rail transit companiesin four cities in the PRC, namely Tianjin, Wuhan, Ningbo and Kunming. Our rail transitcustomers are mainly state-owned urban rail transit operating companies, such as Wuhan MetroGroup Co., Ltd. (武漢地鐵集團有限公司).

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The following chart sets forth our five largest rail transit leasing projects in terms of leasedassets balance as of September 30, 2015:

Project Province



time

(RMB in millions)Wuhan Metro Hubei 2,753.6 December 2026Kunming Metro Yunnan 2,041.6 December 2027Ningbo Metro Zhejiang 1,656.0 December 2026Tianjin Metro Tianjin 286.5 December 2019Hubei Inter-city Railway Hubei 282.1 September 2030

As of September 30, 2015, the assets related to our rail transit leasing business wasRMB7,570.1 million, representing 15.3% of the segment assets of our Infrastructure Leasingbusiness.

Urban Infrastructure Leasing

Our urban infrastructure leasing business primarily comprises the leasing of municipalfacilities and affordable housing.

Municipal Facilities

We are one of the leading companies in providing municipal facilities leasing services inthe PRC. We conduct our municipal facilities leasing business primarily through sale-and-leaseback transactions. Our municipal facilities leases are serviced mainly by revenues from theoperation of municipal facilities. We also require the lessees to pledge the collecting rights ofreceivables in government procurement as a security to us, and/or require companies owned orcontrolled by the government to provide joint liability guarantee. The lease term of ourmunicipal facilities projects generally ranges from five to 13 years.

As of September 30, 2015, we offered leasing services for water, gas, heating, pipelines andother municipal facilities in several provinces and direct-controlled municipalities in the PRC,such as Hunan, Jiangsu, Tianjin, Yunnan and Chongqing.

The following table sets forth our five largest municipal facilities leasing projects in termsof leased assets balance as of September 30, 2015:

Project Province



time

(RMB in millions)Changde water facility Hunan 768.3 June 2025Chenzhou wind-solar hybrid street light system Hunan 555.6 December 2019Changzhou drainage pipeline network and sewage

treatment plant equipmentJiangsu 401.1 November 2019

Xiangtan municipal sewage pipeline network andrainwater pipe network

Hunan 381.9 August 2022

Ji County reservoir facility, water supply anddrainage pipeline network and heating system

Tianjin 322.1 March 2020

As of September 30, 2015, the assets related to our municipal facilities leasing business wasRMB3,458.1 million, representing 7.0% of the segment assets of our Infrastructure Leasingbusiness.

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Affordable Housing

The development of affordable housing has been a policy priority of the PRC government.We commenced our affordable housing leasing business in 2011. We carry out our affordablehousing leasing business primarily through sale-and-leaseback transactions. Affordable housingleases are serviced mainly by rents and government fiscal support. To mitigate credit risk, weusually enter into repurchase agreements with the local governments where the lessees arelocated, under which the local governments agree to repurchase our leased affordable housing inthe event of default. The leasing term of our affordable housing projects generally ranges fromsix to 15 years.

As of September 30, 2015, we collaborated with local governments in affordable housingleasing services in a number of provinces, autonomous regions and direct-controlledmunicipalities, providing financing for an aggregate of over 50,000 affordable housingproperties. Our affordable housing properties are mainly located in Chongqing, Anhui, Jiangsu,Yunnan and Liaoning.

The following table sets forth our five largest affordable housing projects in terms of leasedassets balance as of September 30, 2015:

Project Province



time

(RMB in millions)Wuhu affordable housing project Anhui 1,522.4 October 2024Liangjiang New District affordable housing project

AChongqing 1,032.9 December 2026

Liangjiang New District affordable housing projectB

Chongqing 844.5 June 2027

Hechuan District affordable housing project Chongqing 793.0 November 2023Kunming affordable housing project Yunnan 678.9 June 2027

As of September 30, 2015, the assets related to our affordable housing leasing business wasRMB7,712.1 million, representing 15.6% of the segment assets of our Infrastructure Leasingbusiness.

Energy Infrastructure Leasing

Building on our experience in providing equipment leasing services to traditional powerenterprises in China, in recent years, we have increased our presence in providing leasingservices to clean energy enterprises with good growth potential, which is in line with the nationalpolicy of energy structure optimization of the PRC.

We conduct our energy and electric power equipment leasing business primarily throughsale-and-leaseback transactions. Electric power equipment leases are serviced mainly byrevenues from electricity fees. We typically require lessees to pledge electricity fee collectingrights as security to us. The lease term of our energy infrastructure projects generally rangesfrom five to 15 years.

As of September 30, 2015, we provided energy and electric power equipment leasingservices to a number of electric power enterprises, primarily in Jiangsu, Xinjiang, Yunnan, Gansuand Inner Mongolia.

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The following chart sets forth our five largest energy and electric power equipment projectsin terms of leased assets balance as of September 30, 2015:

Project Province



time

(RMB in millions)

Zhangjiagang 2×1,000MW coal-fired generatingunits

Jiangsu 1,001.5 June 2026

Zhaotong 2×600MW coal and electricity integrationpower plant

Yunnan 836.7 November 2019

Changji Hui Autonomous Prefecture (Manas County)2×300MW generating units

Xinjiang 302.6 November 2019

Yulin City (Dingbian County) 50MW PV groundpower plant(1)

Shaanxi 275.6 December 2024

Sunan 50MW PV power plant(1) Gansu 265.5 September 2024

(1) This is a clean energy project.

As of September 30, 2015, the assets related to our energy and electric power equipmentleasing business were RMB4,642.5 million, representing 9.4% of the segment assets of ourInfrastructure Leasing business.

Ship, Commercial Vehicle and Construction Machinery Leasing

Overview

We conduct Ship, Commercial Vehicle and Construction Machinery Leasing business in thePRC and other countries around the world. In 2013 and 2014 and the nine months endedSeptember 30, 2015, the revenue and other income generated from our Ship, Commercial Vehicleand Construction Machinery Leasing business was RMB1,266.4 million, RMB1,404.2 millionand RMB908.0 million, respectively. As of December 31, 2013 and 2014 and September 30,2015, the total assets of our ship, commercial vehicle and construction machinery business wereRMB20,659.0 million, RMB21,038.1 million and RMB19,157.1 million, respectively.

Ship Leasing

We commenced our Ship Leasing business in 2008 and were one of the first leasingcompanies in the PRC to provide Ship Leasing services. We provide Ship Leasing services ona bareboat charter basis to ship operators under finance leases. As of September 30, 2015, weowned and leased 41 vessels, including 14 container ships, 12 bulk carriers, five oil tankers, fourchemical tankers, three dredgers and three liquefied gas carriers. As of September 30, 2015, theaverage age of our owned vessel fleet was 7.0 years. We strategically select vessels with strongmarket demand and profitability. In addition, we also provide leasing services for certainshipping related assets, such as shipbuilding equipment and containers.

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The following table provides details regarding our vessel fleet by type of vessel as ofSeptember 30, 2015:

Vessel type NumberPercentage by

number

Container ship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14(1) 34.1%Bulk carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 29.3%Oil tanker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 12.2%Chemical tanker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 9.8%Dredger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 7.3%Liquefied gas carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 7.3%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 100.0%

(1) Five container ships are still under construction and are expected to be completed and commence leasing between May andSeptember 2016.

We lease vessels to 31 customers both in the PRC and globally in Europe and the MiddleEast. We have established SPCs in Hong Kong to conduct our Ship Leasing business. Our leasedvessels are mainly constructed by shipbuilders in the PRC, and to a lesser extent, by shipbuildersin South Korea and Japan. As of September 30, 2015, the assets related to our Ship Leasingbusiness were RMB9,446.0 million, representing approximately 49.3% of the segment assets ofour Ship, Commercial Vehicle and Construction Machinery Leasing business.

During the Track Record Period, all of our Ship Leasing business was on finance leases,including direct finance leasing and sale-and-leaseback. As of the Latest Practicable Date, wehave also commenced a small amount of operating leasing business.

Our ship leasing terms generally range from five to 12 years, and the lessee makes leasepayments on a monthly or quarterly basis. We typically require the lessee to maintain a securitydeposit with us in an amount equivalent to one to three months’ lease payment, and provideadditional security such as guarantee provided by the actual controlling party, joint and severalliability guarantee provided by individuals, fixed asset mortgage and transfer of insuranceinterest. During the Track Record Period, our finance lease contracts were priced at a floatinginterest rate.

Leveraging our expertise in the shipping industry and extensive relationships with reputableshipbuilders around the world, we provide customized ship financing services and reliablefunding support for our Ship Leasing customers. Our specialized sales team is capable ofproviding comprehensive financing solutions and professional advisory services for ourcustomers who require financing proposal at the time they purchase vessels. We believe that ourprovision of integrated and customized financial services to our Ship Leasing customers hasenhanced our customers’ trust and confidence in our services and enabled us to establish ourbrand name in the international ship leasing market.

Due to the international nature of the shipping industry, our shipbuilding contracts andleasing contracts are generally denominated in US dollars. To mitigate foreign exchange risk, thecorresponding loans or financings are also generally made in US dollars.

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As a representative deal of our global Ship Leasing business, we leased to Costamare Inc.,a leading international owner of container ships, three 9,400 TEU new energy-saving largecontainer ships, which earned us the 2014 Leasing Deal of the Year Award by Marine Money, andfive 14,000 TEU new energy-saving large container ships. Our PRC customers includesubsidiaries of large shipping corporations such as China COSCO Shipping Corporation Limited(中國遠洋海運集團有限公司) and Sinotrans & CSC Holdings Co., Ltd. (中國外運長航集團有限公司), and other large corporations such as Sinochem Group (中國中化集團公司).

We acquire new customers and originate new businesses through active participation inmajor shipping industry conferences, referrals by shipbuilders and ship brokers, as well as otherchannels.

According to Frost & Sullivan, in terms of ship prices and freight rates, the shippingindustry is currently at a historical low point and is expected to have considerable potential forrecovery. We maintain a disciplined approach to portfolio and risk management, and adjust ourbusiness strategies and risk management policies in accordance with prevailing marketconditions and industry cycles.

Commercial Vehicle and Construction Machinery Leasing

We were one of the first CBRC-regulated leasing companies in the PRC to providecustomized finance leasing solutions to manufacturers and distributors of commercial vehiclesand construction machinery. We are one of the major players in the PRC commercial vehicle andconstruction machinery leasing market, and our end-user customers include urban publictransport companies, large engineering corporations, small and medium enterprises andindividuals across China.

We provide two types of “wholesale” services in our Commercial Vehicle and ConstructionMachinery Leasing business:

• Under the manufacturer credit model, we extend a credit line to a manufacturer, whichprovides a repurchase guarantee for each lease made with end-user customers underthe credit line. The majority of our commercial vehicle and construction machineryleases employ this model. In some cases, the manufacturer may share its credit linewith its preferred distributors to promote product sales, and we either collect a certainamount of security deposit from such distributors or the distributors provide a jointand several liability guarantee or a repurchase guarantee;

• Under the distributor credit model, we provide a credit line to a regional distributorrecommended by a manufacturer, and the distributor provides a joint and severalliability guarantee for each lease made under the credit line.

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The following chart sets forth the typical structure of our Commercial Vehicle andConstruction Machinery Leasing business:

Manufacturer/

Distributor

Our Group

(Lessor)

End-user

customers

Third-party professional

management agency

Business referral

Payment ofequipment value

Leasing contract

Daily operation monitoring

Assistance in respect ofmarketing, screening oflessees and leasemanagement

Cooperationagreement

Down paymentof equipmentvalue

Delivery ofLeased Asset

Lease payment,security deposit,insurance, operationand maintenance

In a typical manufacturer leasing transaction, we provide a certain amount of credit line toa manufacturer based on its credit rating, and the manufacturer is then entitled to select end-usercustomers, or lessees, of the vehicles or equipment, within the credit line. The lessee chooses thespecific type of vehicle or equipment, and we purchase such vehicle or equipment from themanufacturer and lease it back to the lessee. During the lease term, we retain ownership of theleased asset, while the lessee operates the leased asset and assumes responsibility for themaintenance and insurance of the leased asset. Upon expiry of the lease term, the lessee mayacquire the ownership of the leased vehicle or equipment at a nominal price.

In our cooperation with selected manufacturers and distributors, we are assisted by twothird-party professional management agencies, one for each of our Commercial Vehicle andConstruction Machinery Leasing business, in various aspects of our wholesale leasing service,including marketing, selection of end-user customers, and lease management. The third-partyprofessional management agencies are capable of processing transactions involving a largenumber of end-user customers through standardized operational modules, allowing ourwholesale leasing service to achieve significant scale.

Our commercial vehicle and construction machinery lease contracts are generally pricedbased on a floating interest rate, which is set at a predetermined spread over the PBOCbenchmark interest rate. The leasing term is generally not more than five years, and the lesseemakes lease payments on a monthly or quarterly basis.

We launched our commercial vehicle and construction machinery manufacturer leasingservices in 2009 and 2011, respectively. We have established long-term cooperative relationshipswith major commercial vehicle and construction machinery manufacturers in the PRC, and thefunds we provided enabled these manufacturers to allocate more resources to product researchand development and other areas that are key to their businesses. This wholesale leasing model,coupled with robust risk management, allowed us to deliver financial leasing services to a largenumber of small and micro enterprises efficiently.

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Commercial Vehicle

Commercial vehicles are used for carrying goods or fare-paying passengers (with nine seatsor more). As of September 30, 2015, we provided services to 15 commercial vehiclemanufacturers and 29 distributors, leasing 12,619 vehicles under 3,892 leasing contracts. As ofSeptember 30, 2015, the assets related to our Commercial Vehicle Leasing business wereRMB1,405.1 million, representing 7.3% of the segment assets in our Ship, Commercial Vehicleand Construction Machinery Leasing business. In terms of asset balance as of September 30,2015, the manufacturer credit model and the distributor credit model accounted for 84.8% and15.2% of our Commercial Vehicle Leasing business, respectively.

In terms of the balance of leased assets as of September 30, 2015, our largestmanufacturer-customers were Beiqi Foton Motor Co., Ltd. (北汽福田汽車股份有限公司) andTangshan Yate Special Vehicles Co., Ltd. (唐山亞特專用汽車有限公司).

Construction Machinery

The construction machinery leased by us include lifting, earthwork, piling, concrete, road,transportation and agricultural machinery. As of September 30, 2015, we provided services to 13construction machinery manufacturers, two distributors and two construction enterprises, leasing14,040 sets of equipment under 12,605 leasing contracts. As of September 30, 2015, the assetsrelated to our Construction Machinery Leasing business were RMB8,306.0 million, representing43.4% of the segment assets in our Ship, Commercial Vehicle and Construction MachineryLeasing business. In terms of asset balance as of September 30, 2015, the manufacturer creditmodel and the distributor credit model accounted for 93.7% and 2.5% of our ConstructionMachinery Leasing business, respectively.

In terms of the balance of leased assets as of September 30, 2015, our largestmanufacturer-customers were XCMG Construction Machinery Co., Ltd. (徐州工程機械集團有限公司) and Sany Heavy Industry Co., Ltd. (三一重工股份有限公司).

Other Leasing Business

Prior to 2012, we focused primarily on Aircraft Leasing and Infrastructure Leasing andestablished a market leading position and competitive advantages in those areas. In addition, wehave been focusing on cultivating business relationships with large and medium-sizedenterprises since our inception. In order to mitigate the impact from adverse policy changes anddiversify our customer base and business mix and capture growth opportunities, we began toselectively expand our leasing business to other sectors in 2012, including manufacturingequipment leasing for enterprises engaged in chemical, papermaking and other industries, as wellas commercial property leasing, and we gradually expanded our customer base to include SMEs.

However, our established business model, management experience and risk managementmeasures were under continuous improvement and were not fully adapted to manage thesenewly-entered sectors and deal with SMEs, resulting in an increased exposure to credit risk. Alsoattributable to the slowdown of the PRC economy and challenging business environment incertain traditional manufacturing industries in recent years, the non-performing assets of ourOther Leasing Business increased substantially during the Track Record Period. For details, see“Financial Information – Asset Quality.”

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Since 2014, we have recognized the risks associated with our Other Leasing Business andadopted more stringent risk management policies. In principle, we ceased to provide leasingservices to prospective lessees engaging in the “Cautious” sectors designated by our riskmanagement policy, unless the lessee is a large state-owned enterprise or its subsidiary, a leaderin a particular industry or a high-quality listed company. For details, see “Risk Management.”Going forwards, we intend to continue to focus on Aircraft Leasing and Infrastructure Leasing,and for our Other Leasing Business, we intend to gradually reduce our existing leased assetbalance relating to industries with relatively high credit risk. In terms of sector selection, weprefer manufacturing enterprises engaging in emerging sectors with strategic importance, suchas advanced manufacturing, and environment-friendly sectors as well as sectors encouraged bythe NDRC. In terms of customer selection, we prefer a lessee that is a large state-ownedenterprise or its subsidiary, a leader in a particular industry or a high-quality listed company.

In addition, to further control and reduce the non-performing assets in our Other LeasingBusiness, we intend to further strengthen our management of credit risk by improving creditenhancement measures and enhancing our macroeconomic and industrial research, post-leasemanagement, collateral management and risk mitigation at various stages of our business. Wealso actively explore alternatives measure, such as the disposal of non-performing assets.

In 2013 and 2014 and the nine months ended September 30, 2015, the revenue and otherincome generated from our Other Leasing Business was RMB2,107.2 million, RMB1,565.7million and RMB1,021.6 million, respectively.

The following table sets forth a breakdown of our Other Leasing Business by sector as ofSeptember 30, 2015:

SectorNumber of

leasesBalance of

leased assets Percentage

(RMB in millions)Manufacturing equipment leasing

– Chemical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2,034.2 11.2%– Papermaking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1,880.9 10.4%– Textiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 1,428.6 7.9%– Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1,157.4 6.4%– Steel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1,082.7 6.0%– Others(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 3,631.7 19.9%

Subtotal 89 11,215.5 61.8%Commercial property leasing . . . . . . . . . . . . . . . . . . . . . 20 6,941.0 38.2%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 18,156.5 100.0%

(1) Other sectors mainly comprise: building materials, electronics, agriculture, oil and gas, mechanical equipment and carmanufacturing.

Our Other Leasing Business is mainly conducted through sale-and-leaseback transactionsunder finance leases.

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Manufacturing Equipment Leasing

We lease equipment to manufacturing enterprises engaged in a wide variety of sectors, suchas chemical, papermaking, textile, coal and steel. Our manufacturing equipment leases areprimarily serviced by the revenue generated by the lessor’s business and the leased assets. As ofSeptember 30, 2015, we had 89 manufacturing equipment leases with total leased assets ofRMB11,215.5 million.

The non-performing asset ratio of our manufacturing equipment leasing was 14.86% as ofSeptember 30, 2015. Lessee defaults were primarily due to one or a combination of the followingfactors:

• production overcapacity in certain traditional manufacturing industries;

• industry-wide financing difficulties faced by the lessee and the resulting lack ofliquidity; or

• operating and financial difficulties that resulted partly from the slowdown of the PRCeconomy.

In addition, we also provided manufacturing equipment leasing to certain SMEs guaranteedby SME guarantors in China whereby we select SME guarantors based on their creditworthinessand financial resources and the SME guarantors are responsible for finding and recommendingprospective lessees to us, and we provide leasing services to a lessee once the SME guarantorwe selected is able to act as the unconditional guarantor for the lessee. The slowdown of the PRCeconomy has led to operational difficulties and even closure of a number of our SME lesseesguaranteed by SME guarantors and certain SME guarantors were poorly managed and unable toperform their obligation as guarantors. As a result, we experienced increasing SME customerdefaults in 2013 and 2014. Since the second half of 2014, we ceased to provide leasing servicesto SMEs guaranteed by SME guarantors.

To mitigate the adverse impact of the lessee defaults, we have been actively workingtogether with defaulting lessors and their guarantors as well as regional CDB branch where thedefaulting lessor is located. We have also taken legal actions against certain lessees. We may alsoconsider disposing of certain non-performing assets.

Commercial Property Leasing

Commercial properties that we lease mainly include plants, offices, hotels and shops. Ourcommercial property leases are primarily serviced by rental income generated by the leasedproperties.

As of September 30, 2015, the balance of our leased commercial properties wasRMB6,941.0 million, and we had 22 leased commercial properties, which are mainly located inBeijing, Chongqing, Jiangxi, Sichuan, Guangdong, Shandong and Tianjin.

As of September 30, 2015, the non-performing asset ratio of our commercial propertyleasing projects was 6.23%, which was primarily due to (i) a downturn in the real estate industry,especially in the third- and fourth-tier cities in China, where most of the non-performing projectsare located; (ii) over-optimism in the assessment of our lessees’ creditworthiness; and (iii) ourlack of experience in the commercial property leasing market.

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Since the second half of 2014, we have suspended commercial property leasing, and haveno intention to resume such services until the commercial real estate market in China improvessubstantially. To mitigate the adverse impact of existing lessee defaults, we have adopted a rangeof measures such as asset evaluation, negotiation with lessees on deferred paymentarrangements, taking legal action or seeking potential buyers for non-performing assets.

INFORMATION TECHNOLOGY

Our information technology (IT) systems are integral to many aspects of our businessoperations and perform a crucial function in creating and maintaining scalable, cost-effective andsustainable operating models for our business. We have built, and continue to enhance, our ITsystems in order to create competitive advantages for our organization, and to achieve andmaintain optimum levels of operational efficiency as well as risk and financial managementcapabilities. The major functions of our IT systems include screening of potential projects andlessees, post-lease management, asset management, data management and risk and financialmanagement.

We have the following principal IT systems and platforms for our business operations, riskcontrols and management purposes:

• Full life cycle leasing business management system. We began to develop thisproprietary system in 2011 and have been continuously developing new modules andenhancing its capabilities. The full life cycle system covers all of our leasing projectsexcept for our Aircraft Leasing and Commercial Vehicle and Construction MachineryLeasing businesses. The system helps us to efficiently manage the key information ofour leasing business, including customers, leased assets, projects, contracts,counterparties, lease payments, among others. In addition, the system standardizes ourbusiness review and approval process through increased controls and consistency ofdata management across business segments.

• ICMS aircraft leasing management system. We purchased the ICMS aircraft leasingmanagement system for our Aircraft Leasing business from AMT-SYBEX Aviation inJuly 2012. The ICMS system is a widely used asset management systeminternationally. The ICMS system provides scalable and extendable contractmanagement and asset management functionalities through a range of business supporttools, thereby enhancing the efficiency and effectiveness of our aviation assetmanagement.

• Commercial vehicle and construction machinery leasing business management system.This system allows us to record and manage the information of our customers, assets,projects, contracts and lease payments, among others, for our Commercial Vehicle andConstruction Machinery Leasing business. The system helps us to streamline ouroperations and digitalize the review and approval process of our Commercial Vehicleand Construction Machinery Leasing business.

Our advanced IT infrastructure is vital for us to properly manage all categories of risksbased on an enterprise-wide approach. We monitor our various leasing activities in each businesssegment on a real-time basis, and monitor post-lease transactions and risk control indicators tomanage our risks. For example, we have connected our IT system to the enterprise creditreporting system of the PBOC, which has substantially enhanced our risk managementcapabilities. In addition, we have developed an asset classification module for our full life cycleleasing business management system, which automates and enhances the efficiency of our assetclassification.

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We devote substantial resources each year to optimizing and upgrading our IT systems, andin particular, the integration of our full life cycle leasing business management system and ouraircraft leasing and commercial vehicle and construction machinery leasing managementsystems, to provide secure and stable technology services and to support our growing businessoperations. As of September 30, 2015, our IT department comprised six technicians who areresponsible for technical development as well as operations and maintenance.

MAJOR CUSTOMERS AND SUPPLIERS

We serve a diverse set of customers across a spectrum of sectors. Our customer base mainlycomprises commercial airlines, companies that operate transportation, urban and energyinfrastructure and are owned, controlled or otherwise associated with PRC governments, shipoperators, manufacturers and dealers of commercial vehicles and construction machinery andSMEs.

In 2013 and 2014 and the nine months ended September 30, 2015, revenue attributable toour five largest customers accounted for less than 30.0% of our total revenue. To the bestknowledge of our Directors, none of our directors, supervisors and their respective associates orany shareholders holding more than 5.0% of our issued share capital has any interests in any ofour five largest customers as of the Latest Practicable Date.

We have no major suppliers due to the nature of our business. During the Track RecordPeriod, we purchased aircraft primarily from Airbus, Boeing and GECAS, among other aircraftmanufacturers and aircraft leasing companies.

MARKET AND COMPETITION

The aircraft leasing industry is highly competitive. We compete in leasing, re-leasing,purchasing and selling our aircraft with other aircraft leasing companies, including ICBCFinancial Leasing Co., Ltd., BOC Aviation Pte. Ltd., AerCap Holdings N.V., GE Capital AviationServices, Inc., Avolon Holdings Limited and Aircastle Limited. We may also encountercompetition from other entities that selectively compete with us, including airlines, financialinstitutions and aircraft brokers. We believe we compete favorably due to our strong industryrelationships, the attractiveness of our fleet and our rigorous and proactive risk managementpolicies.

In our leasing businesses other than Aircraft Leasing, we mainly compete with otherCBRC-regulated leasing companies, such as ICBC Financial Leasing Co., Ltd., MinshengFinancial Leasing Co., Ltd., Bank of Communications Financial Leasing Co., Ltd., CMBFinancial Leasing Co., Ltd. and CCB Financial Leasing Corporation, and to a lesser extent, withcommercial banks and other financial institutions that provide leasing services. According toFrost & Sullivan, as of December 31, 2014, there were 32 CBRC-regulated leasing companiesin the PRC. According to Frost & Sullivan, as of December 31, 2014, in terms of total revenue,total assets and operating lease assets, we ranked first, second and first among CBRC-regulatedleasing companies in the PRC, respectively, with market shares of 13.9%, 11.0% and 34.3%,respectively. For more details on the competitive landscape of the industries that we operate in,see “Industry Overview.”

Some of our competitors may enjoy certain competitive advantages, including greaterfinancial resources, more sophisticated management experience and more advanced informationtechnology systems, wider geographic coverage and the ability to offer more financial products

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and services than us. We believe that the leasing industry in China is becoming increasinglycompetitive, which will accelerate the innovation and differentiated development of PRC leasingcompanies. See “Risk Factors – Risks Relating to Our Business and Industry – The industries inwhich we participate are increasingly competitive.”

INTELLECTUAL PROPERTY RIGHTS

As of the Latest Practicable Date, we have registered two domain names in China and onedomain name in Ireland, and are in the process of applying for the registration of eighttrademarks in Hong Kong, which include names such as “CDB Leasing” and its Chinesecounterparts (including variations). For additional information, see “Appendix VI – Statutoryand General Information – 2. Further Information about Our Business – B. Our IntellectualProperty Rights.” We have not been subject to any material infringement of our intellectualproperty rights or allegations of infringement by third parties during the Track Record Period.

INSURANCE

Our aircraft lessees are required to carry insurance for any liabilities arising out of theoperation of our aircraft or engines, including any liabilities for death or injury to persons anddamages to property that ordinarily would attach to the operator of the aircraft. In addition, ourlessees are required to carry other types of insurance that are customary in the air transportationindustry, including hull all risks insurance and hull war risks insurance, aircraft spares insuranceand aircraft third party liability insurance. In addition to the coverage maintained by our lessees,we maintain contingent liability insurance and contingent hull insurance with respect to ouraircraft. Such contingent insurance is intended to provide coverage in the event that theinsurance maintained by any of our lessees should not be available for our benefit as requiredpursuant to the terms of the lease.

Lessees of our Ship Leasing business are required to carry insurance that are customary inthe vessel transportation industry, including hull and machinery insurance, war risks insuranceand protection and indemnity insurance.

For our finance leases, we generally maintain insurance, typically property all risksinsurance, for leased assets to cover any loss or damage to such assets during the lease period,with the insured amount generally greater than the amount of financing. The insurance premiumsare generally paid in accordance with the terms of the finance lease where our customers bearthe insurance premium, with us or a third party designated by us, usually the finance provider,as the insurance beneficiary.

We maintain insurance coverage for certain of our assets, including motor vehicles.Consistent with customary industry practice in the PRC, we do not maintain any businessinterruption insurance.

We believe that we have maintained such insurance coverage as we consider necessary andsufficient for our operations and customary for the industry in which we operate. Moreover, ourpolicies are subject to standard deductibles, exclusions and limitations. Therefore, insurancemight not necessarily cover all losses incurred by us and we cannot provide any assurance thatwe will not incur losses or suffer claims beyond the limits of, or outside the relevant coverageof, our insurance policies. See “Risk Factors – Risks Relating to Our Business and Industry –Our insurance coverage may not be sufficient to cover potential liabilities or losses.”

Our insurance policies are generally underwritten with reputable insurance providers andwe review our insurance policies annually.

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EMPLOYEES

We believe that our professional workforce is the foundation of our long-term growth. Asof September 30, 2015 and the Latest Practicable Date, we had 200 and 204 employees,respectively. The following table sets forth a breakdown of our employees by business functionas of the Latest Practicable Date:

Number ofEmployees Percentage

Management and administration . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 20.1%Aircraft Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 17.2%Infrastructure Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 11.8%Ship, Commercial Vehicles and Construction Machinery Leasing and

Other Leasing Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 11.8%Legal, compliance and risk management . . . . . . . . . . . . . . . . . . . . . 42 20.6%IT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.9%Finance, accounting and internal audit . . . . . . . . . . . . . . . . . . . . . . . 32 15.7%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204 100.0%

The following table sets forth a breakdown of our employees by geographic region as of theLatest Practicable Date:

Number ofEmployees Percentage

Shenzhen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 90.7%Other provinces in the PRC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 4.9%Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4.4%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204 100.0%

As of the Latest Practicable Date, 188 employees had bachelor’s degrees or above,accounting for 92.2% of our employees, and 84 employees obtained relevant professionalqualifications, accounting for 41.6% of our employees.

We are committed to establishing a competitive and fair remuneration and benefits system.We adjust remuneration and benefits of our employees based on the business performance anddevelopment of each segment every year, so that our employees receive more competitiveremuneration packages. We have formed a multi-tiered and flexible remuneration structure. Inorder to effectively motivate our business development through remuneration incentives, wecontinue to refine our remuneration and incentive policies. We are also refining our long-termincentive plan for employees and optimization of their remuneration structure in order to link theinterests of employees with our overall business operation and enhance the loyalty of employees.

In accordance with applicable PRC laws and regulations, we provide our employees withbasic pension insurance, basic medical insurance, workplace injury insurance, unemploymentinsurance, maternity insurance and housing providence funds. We pay great attention to ouremployee welfare, and continuously improve our welfare system. We offer employees additionalbenefits such as annual leave, stipend, supplementary medical insurance, annuity, healthexaminations and medical insurance for family members.

As of the Latest Practicable Date, we also employed 18 dispatched workers (勞務派遣員工)from an employment agency in China to assume administrative and back-office functions.According to the relevant labor dispatch contracts, our employment agency is required to bearthe costs of salaries, social insurance and housing provident funds or other employee benefits ofthese dispatched workers, while we are mainly responsible for paying service fees to theemployment agency.

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In order to improve the professional skills of our employees, we have established acomprehensive and diverse training system, providing our employees with both internal andexternal training programs. Our training programs primarily consist of (i) training in generalknowledge and skills; (ii) training in various aspects of the leasing business, such as businessdevelopment, business review and approval, and risk management; and (iii) training inoperations management and internal control. We also work closely with CDB headquarters toprovide tailored, live or video training programs to our employees. These training programsmainly take the form of hosting lectures by experts from CDB and sending employees to attendtraining programs held at CDB or at overseas financial institutions.

During the Track Record Period, there were no strikes, protests or other material laborconflicts that materially impaired our business and image. We have established a labor union andbelieve that we have maintained a good relationship with our employees, who are valued at alltimes.

PROPERTIES

Our corporate headquarters is located at 50-52/F, New World Center, 6009 Yitian Road,Shenzhen, Guangdong Province, China. As of the Latest Practicable Date, we owned 32properties in the PRC with an aggregate gross floor area of approximately 6,863.8 square metersand five parcels of land with an aggregate gross floor area of approximately 28,583.0 squaremeters. In addition, we leased 47 properties with an aggregate gross floor area of approximately11,797.6 square meters, and one parcel of land with an aggregate gross floor area ofapproximately 3,000.0 square meters.

As of September 30, 2015, the carrying value of our property held for administrativepurposes represented 0.25% of our total assets and no single property accounted for 15% or moreof our total assets by book value. Accordingly, this document is exempt from the requirementunder Chapter 5 of the Hong Kong Listing Rules and section 342(1)(b) of the Companies(Winding Up and Miscellaneous Provisions) Ordinance to include all interests in land orbuildings in a valuation report as described under paragraph 34(2) of the Third Schedule to theCompanies (Winding Up and Miscellaneous Provisions) Ordinance.

Owned Properties

As of the Latest Practicable Date, among our 32 owned properties in the PRC, we haveobtained complete and valid building ownership certificates and land use rights certificates for14 properties with an aggregate gross floor area of approximately 5,875.6 square meters,representing 85.6% of the aggregate gross floor area of the properties that we owned. Our PRClegal advisors confirmed that we have the legal ownership of these properties and therefore havethe right to occupy, use, transfer, lease, mortgage or otherwise dispose of such properties.

As of September 30, 2015, among the properties we owned, we had not obtained properbuilding ownership certificates and land use rights certificates for 18 properties in the PRC withan aggregate gross floor area of approximately 988.2 square meters, representing 14.4% of theaggregate gross floor area of our owned properties. We purchased these properties from theFutian District Housing and Construction Bureau (福田區住房和建設局) and the ShenzhenHousing and Construction Bureau (深圳市住房和建設局) as government-subsidized residencesfor our employees. Pursuant to relevant affordable housing and favorable enterprise employeeshousing regulations and rules promulgated by Shenzhen local governments, companies that

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purchase such properties are entitled to “limited ownership” (有限產權), which means that theymay legally occupy and use, but may not freely transfer, mortgage, or dispose of these properties.We have been advised by our PRC legal advisors that we can legally occupy and use these 18properties. In addition, our Directors are of the view that these properties are generally in goodcondition and are safe for us to use.

Owned Land

As of the Latest Practicable Date, we owned five parcels of land with a total site area of28,583.0 square meters. We have used them mainly for business and office, as well as industrialpurposes. As advised by our PRC legal advisors, we have obtained valid land use rights for thesefive parcels.

As of the Latest Practicable Date, of the five parcels of our owned land, we owned oneparcel of land with a site area of approximately 5,500.1 square meters, upon which to constructour new headquarters building with a planned gross floor area of 83,247.9 square meters. Asadvised by our PRC legal advisors, we have obtained the relevant land use right certificate andthe planning and construction permit required under PRC laws. As of the Latest Practicable Date,construction of this property is ongoing. We have been advised by our PRC legal advisors thatupon completion of the construction and inspection of the property, there would be no materiallegal impediment for us to obtain the relevant building ownership certificate.

As of the Latest Practicable Date, we lease one parcel of land with a total site area of3,000.0 square meters from the Shenzhen Urban Planning, Land and Resources Commission (深圳市規劃和國土資源委員會). We have used this parcel of land to store the construction materialsand to house the construction workers in relation to the construction of our new headquarters ona temporary basis, with the lease expiring in April 2016.

Leased Properties

As of the Latest Practicable Date, we leased 46 properties in the PRC with an aggregategross floor area of approximately 11,752.1 square meters. 15 of our leased properties are usedfor business and office purposes, with a gross floor area at approximately 1,908.1 square metersand 7,220.4 square meters, respectively. The other 31 properties are primarily used forresidential purposes, with a gross floor area ranging from approximately 52.5 square meters to126.2 square meters.

For 28 leased properties with an aggregate gross floor area of approximately 10,491.1square meters, representing 89.3% of the aggregate gross floor area of the buildings we leased,our landlords had obtained the relevant building ownership certificates. Our PRC legal advisorsare of the view that the landlords of these 28 leased properties are the owners of, or authorizedpersons to lease or sublease, the respective properties. The landlords have obtained valid title tothe respective leased properties and the lease agreements are legally effective.

For the remaining 18 leased properties with an aggregate gross floor area of approximately1,261.0 square meters, representing 10.7% of the aggregate gross floor area of the buildings weleased, our landlords, the Shenzhen Housing and Construction Bureau (深圳市住房和建設局)and the Futian District Housing and Construction Bureau (福田區住房和建設局), had notprovided the relevant building ownership certificates. As advised by our PRC legal advisors, theleases of these 18 properties are valid and binding.

As of the Latest Practicable Date, we leased one property with a gross floor area of 45.5square meters in Ireland. We use this property as office space, and its lease agreement has beenentered into in accordance with local legal requirements and is valid and binding.

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LEGAL AND REGULATORY

Licensing Requirements

We conduct our business mainly in China and are, therefore, subject to the relevantrestrictions of the PRC regulatory requirements. Our Directors and PRC legal advisors confirmedthat, during the Track Record Period and up to the Latest Practicable Date, we have compliedwith the relevant PRC regulatory requirements and guidelines in all material respects andobtained all important permits and licenses necessary for our operations in accordance with thePRC laws and regulations. In 2008, we first obtained the required financial permit issued by theCBRC for our operations. Pursuant to relevant laws, financial permits will be effective for anindefinite term absent a change of business address or a change of name, in which cases we arerequired to renew our permit. In September 2015, we renewed our financial permit upon a changeof our corporate name.

Legal Proceedings

We are a party to a number of legal proceedings arising in the ordinary course of ourbusiness. A majority of these legal proceedings involve claims initiated by us, as plaintiff, torecover lease payments from our customers. As of the Latest Practicable Date, we were notinvolved in any outstanding legal proceeding as a defendant with a potential claim against us ofRMB10.0 million or above. However, we are aware of the following circumstances which maysubject us to a potential criminal prosecution as co-defendant:

In late 2007 and early 2008, before CDB became our Controlling Shareholder, Mr. WangChong (王翀), then-president of Shenzhen Financial Leasing Company Limited, our predecessor,allegedly paid bribes in the aggregate of HK$400,000 to a former employee of one of ourcustomers. Although Mr. Wang was removed from his position in May 2015, because we are thesuccessor of Shenzhen Financial Leasing Company Limited, we were also a suspect under thisinvestigation. As advised by our special counsel, Yingke Law Firm Shenzhen Office, as of theLatest Practicable Date, the Anti-Corruption and Bribery Bureau of the Shenzhen People’sProcuratorate (深圳市人民檢察院反貪污賄賂局) had concluded the investigation and internallytransferred the file, along with its prosecution recommendation (起訴意見書), to the prosecutiondepartment of the Shenzhen People’s Procuratorate, which is deliberating and is expected todetermine, within the first quarter of 2016, whether to bring charges against us.

We expect to defend ourselves vigorously if any charge is eventually brought against us atcourts as a co-defendant. As advised by our special counsel, Yingke Law Firm Shenzhen Office,if such charges were brought against us and the court ruled adversely against us, we may besubject to a monetary criminal penalty, but, according to the relevant PRC laws, there is nomaximum amount of penalty applies and the court has sole discretion over such matter, therebyrendering the accurate prediction of such amount impracticable. Solely based on the professionalexperience of the special counsel and judicial practices, our special counsel also advised us thatsuch penalty would probably range between 20% and 30% of the amount of the alleged bribesand normally would not exceed the amount of the alleged bribes. Our PRC legal advisors haveadvised that, in the event that the applicable PRC regulatory authorities became aware of apotentially adverse court ruling, such discovery would be past the two-year time limit specifiedunder the PRC Administrative Penalty Law (《中華人民共和國行政處罰法》), and noadministrative penalty would be imposed on us as a result. Based on the advice of our PRC legaladvisors and our special counsel, our Directors have confirmed that they do not expect that anadverse court ruling would have a material and adverse effect on our business operations or

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financing activities, although our reputation may be harmed as a result. See “Risk Factors –Risks Relating to Our Business and Industry – We may not be able to detect or prevent fraud orother misconduct committed by our employees or third parties.”

The alleged bribery took place before CDB became our Controlling Shareholder. SinceCDB became our Controlling Shareholder in April 2008, we have implemented a number ofmeasures and significantly strengthened our anti-corruption mechanism, risk management andinternal controls. Specifically, such measures include: (i) we designated a discipline inspectionsecretary, expanded our discipline inspection committee, established an independent disciplineinspection and supervision office, and appointed part-time discipline inspection and supervisioncommissioners to our key departments; (ii) we standardized project selection and reviewprocesses; (iii) we formulated internal rules and regulations aimed at strengthening ouranti-corruption mechanism, risk management and internal controls; (iv) we ensured that ourinternal controls cover each individual project; (v) we required our senior management andemployees to attend anti-corruption educational sessions, such as seminars and moviescreenings; and (vi) since 2015, we engaged two internal control consultants to conductcomprehensive review of our internal control mechanism and make proposals for improvement.As of the Latest Practicable Date, our Directors confirmed that we had not received anyregulatory warning or penalty from the Shenzhen CBRC or other applicable regulatoryauthorities in connection with the aforementioned potential lawsuit.

Our Directors and PRC legal advisors confirmed that, as of the Latest Practicable Date,other than the aforementioned potential lawsuit, there was no legal proceeding pending orthreatened against us or our Directors that could, individually or in the aggregate, have a materialadverse effect on our business, financial condition or results of operations.

Regulatory Non-compliance Incidents

We are subject to a number of regulatory requirements and guidelines issued by theregulatory authorities in China and other jurisdictions where we operate (including, but notlimited to, the CBRC, the PBOC, the SAFE and their respective local branches and offices).During the Track Record Period and up to the Latest Practicable Date, neither we nor ouremployees have been involved in material regulatory non-compliance incidents that have led toregulatory fines.

However, during the Track Record Period, we had failed to meet certain CBRCrequirements but, due to our timely rectification of such matters, we had not received anyregulatory penalties as a result. On August 29, 2014, the Shenzhen CBRC issued a regulatoryopinion to us, indicating that our balance of finance lease related assets attributable to HNAGroup, one of our shareholders, exceeded its capital contribution to us, which was a violation ofthe regulatory requirement on related party transactions. According to the Measures on FinancialLeasing Companies issued and effective on March 13, 2014, which replaced the previousmeasures issued in January 2007, the total balance of lease financing (which is, the balance offinance lease related assets) to a CBRC-regulated leasing company’s shareholder along with allof its related parties shall not exceed the capital contribution of such shareholder to the leasingcompany. The previous CBRC measures did not impose a limit on the balance of lease financingfrom a CBRC-regulated leasing company to any of its shareholders in relation to their capitalcontribution, and therefore we had not monitored whether our balance of finance lease relatedassets attributable to any shareholder and its related parties exceeded its capital contributionprior to the promulgation of the revised Measures on Financial Leasing Companies. The

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Shenzhen CBRC required us to rectify this non-compliance incident within a reasonable periodof time, and after receiving the regulatory opinion in question, we worked closely with theShenzhen CBRC and reached a resolution with HNA Group by terminating certain of our financelease agreements with HNA Group and its related parties in December 2015. As of December 31,2015 and the Latest Practicable Date, the balance of our finance lease related assets attributableto HNA Group and its related parties was below its capital contribution to us.

Regulatory Inspections

Regulatory authorities including the CBRC, the PBOC, the SAFE and their respective localbranches and offices carry out periodic or ad hoc inspections, examinations and inquiries inrespect of our compliance with the laws, regulations, guidelines and regulatory requirementsapplicable to us and our business.

During the Track Record Period and up to the Latest Practicable Date, the Shenzhen CBRCcarried out routine or ad hoc inspections on us, covering various aspects such as corporategovernance, capital requirement, risk management and business operations. Although nosignificant risks or non-compliance incidents were identified during such inspections, and nofines or other penalties were imposed on us as a result, certain inspections revealed certaindeficiencies and weaknesses in our business operations, risk management and internal control,and we took immediate remedial measures in response to the notifications from the ShenzhenCBRC and submitted remediation reports. As of the Latest Practicable Date, we had not receivedfrom the Shenzhen CBRC any further comments on the remedial measures proposed in ourremediation reports or on our execution, or any requests for additional remedial measures. TheShenzhen CBRC conducted on-site inspections of our operations from April 2013 to May 2013and in November 2014. Below we set forth a number of key issues and remedial measures inresponse to these inspections.

Major Issues and Major Guidance Opinions Our Major Remedial Measures

Related transaction management in violation of the regulatory requirements

• failure to effectively identify eachrelated party

• lack of an effective management systemfor related party transactions

• self-checked for deficiencies in relatedparty transaction management

• determined the scope of related parties,and specified the responsibilityallocation among departments forinformation collection

• established pricing standards for relatedparty transactions

• standardized the approval procedures forrelated party transactions

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Lease financing to local government financing vehicles above the regulatory limit

• failure to maintain the balance of leasefinancing to local government financingvehicles below the required limit

• researched on transferring finance leaseprojects with the local governmentfinancing vehicles, and activelynegotiated with such clients for thepossibility of early repayment

Inappropriate leased assets, such as highway and rail transit, in certain sale-and-leasebackprojects

• problematic assets held under financeleases with an unclear ownership statusand an insufficient right of disposal,which are also not suitable for sale dueto its purpose to serve public welfare

• engaged legal professionals toindependently conduct research on thelegal issues relating to highway and railtransit leasing under finance leases, thereport of which opines that in the eventthat the law is silent on the ownershipof public roads, the property rightshould be determined only inaccordance with the general principlesof property ownership under the PRCProperty Law (《中華人民共和國物權法》), and that the infrastructure leasingunder finance leases is consistent withthe inherent characteristics of theinfrastructure industry

• along with the research report, improvedour credit enhancement measures tominimize credit risk associated with theleased assets through additional duediligence on lessees and the leasedassets, sales of leased assets, requestsfor early repayment of the leaseprincipal and enhanced projectmanagement

Lack of adequate advance payment management system

• inappropriate accounting treatment ofadvance payments in the InfrastructureLeasing business

• making premature advance payments tolessees before relevant conditions aremet

• adjusted the accounts for advancepayments

• disposed of projects with advancepayments, and ceased to enter into newsale-and-leaseback projects withadvance payments

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Lack of prudence in developing leasing projects with SME guarantors

• lack of adequate due diligence on theidentification of clients, the qualificationof entities receiving the lease financing,and their financial condition

• insufficient risk warning from theAppraisals Department regarding leasesto SME guarantors

• ceased to provide financing to SMEguarantors

• improved our business model and creditenhancement measures, increased effortson industry survey and research,business model design and riskprevention and control measures, andconducted in-depth analysis on localeconomies and industry cycles

• strengthened the overall risk preventionand control capabilities, furtherimproved the risk control procedures,such as our review and examinationguidelines, clarified the qualificationsfor business partners and businessdevelopment procedures, enhanced duediligence and post-lease management,closely monitored and mitigatedpotential risks in a timely manner

• prior to commencing a new business orservice, increased efforts in marketresearch and business model design,established effective risk prevention andcontrol measures in line with the newbusiness, increased manpower andimproved professional training, andenhanced the compliance examination ofthe new business

Improvement needed for asset quality classification management

• delayed re-classification of asset qualityfor certain assets

• improved the management of assetquality classification and the standardsof the five-category asset qualityclassification system

• checked lease payment status on amonthly basis, and monitored real-timeasset quality adjustments

• established a risk warning system,continuously gathered and identified risksignals, and issue risk warning in atimely manner

• expanded the professional teamspecialized for asset qualityclassification

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Lack of risk control regarding certain finance leasing projects

• lack of due diligence on customers’information that led to underestimationof risks

• lack of prudence in evaluating therepayment ability of lessees

• failure to reveal risk during the pre-lease project examination phase

• insufficient follow-up of post-leasemanagement, failure to record andeffectively analyze changes to thelessees’ condition in a timely manner

• amended the project examinationmanagement system

• streamlined and optimized the projectreview process, strictly applied ourproject examination guidelines toprojects, improved risk identificationand analysis of projects, andstrengthened risk management at allstages of business

• established rating and pricing systemsand a two-dimensional rating systemregarding credit rating and debt rating

• improved the professional skills of ourproject examination staff and enhancedinternal and external trainings for them,kept in touch with and learned from theexperts of CDB and promptly gatheredand understood industry and marketinformation

• strengthened the awareness ofresponsibility of project examinationstaff, and enhanced the assessment oftheir job performance

Our Directors have confirmed that, there were no other material regulatory inspectionissues or material incidents of regulatory non-compliance during the Track Record Period and upto the Latest Practicable Date.

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