Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities.

This announcement does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or with any securities regulatory authority of any state of the United States or other jurisdiction. The securities are being offered and sold outside the United States in reliance on Regulation S under the Securities Act and may not be offered or sold within the United States absent registration or an exemption from registration under the Securities Act. No public offering of the securities will be made in the United States or in any other jurisdiction where such an offering is restricted or prohibited.

This announcement and the listing documents referred to herein have been published for information purposes only as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and do not constitute an offer to sell nor a solicitation of an offer to buy any securities. Neither this announcement nor anything referred to herein (including the listing documents referred to herein) forms the basis for any contract or commitment whatsoever. For the avoidance of doubt, the publication of this announcement and the listing documents referred to herein shall not be deemed to be an offer of securities made pursuant to a prospectus issued by or on behalf of the Issuer (as defined below) for the purposes of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) nor shall it constitute an advertisement, invitation or document containing an invitation to the public to enter into or offer to enter into an agreement to acquire, dispose of, subscribe for or underwrite securities for the purposes of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).

Notice to Hong Kong investors: The Issuer and the Guarantor (as defined below) confirm that the Notes (as defined below) are intended for purchase by Professional Investors (as defined in Chapter 37 of the Listing Rules) only and have been listed on The Stock Exchange of Hong Kong Limited on that basis. Accordingly, the Issuer and the Guarantor confirm that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

PUBLICATION OF THE OFFERING CIRCULAR AND PRICING SUPPLEMENT

Soar Wise Limited (the “Issuer”)

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

U.S.$300,000,000 1.65 per cent. Guaranteed Notes due 2024 (the “Notes”) (Stock Code: 40874)

issued under the U.S.$3,500,000,000 Guaranteed Medium Term Note and Perpetual

Capital Securities Programme (the “Programme”)

Unconditionally and Irrevocably Guaranteed by

AVIC International Leasing Co., Ltd.

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

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

Please refer to the offering circular dated 20 September 2021 (the “Offering Circular”)

relating to the Programme and the pricing supplement dated 28 September 2021 (the “Pricing

Supplement”) relating to the issuance of the Notes each appended hereto. As disclosed in

the Offering Circular and the Pricing Supplement, the Notes were intended for purchase by

Professional Investors (as defined in Chapter 37 of the Listing Rules) only and have been

listed on The Stock Exchange of Hong Kong Limited on that basis.

The Offering Circular and the Pricing Supplement do not constitute a prospectus, notice,

circular, brochure or advertisement offering to sell any securities to the public in any

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

securities, nor is it circulated to invite offers by the public to subscribe for or purchase any

securities.

The Offering Circular and the Pricing Supplement must not be regarded as an inducement to

subscribe for or purchase any securities, and no such inducement is intended. No investment

decision should be made based on the information contained in the Offering Circular or the

Pricing Supplement.

11 October 2021 As at the date of this announcement, the directors of the Issuer are Zhou Yong, Tom Geary and Laura Morgan. As at the date of this announcement, the directors of the Guarantor are Zhou Yong, Zhou Qinye, Cai Mingsheng, Zhao Zhuping, Li Tianshu, Wu Liang and Liu Xinfeng.

TABLE OF CONTENTS

APPENDIX 1 – OFFERING CIRCULAR DATED 20 SEPTEMBER 2021 APPENDIX 2 – PRICING SUPPLEMENT DATED 28 SEPTEMBER 2021

APPENDIX 1 – OFFERING CIRCULAR DATED 20 SEPTEMBER 2021

IMPORTANT NOTICE

THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE NON-U.S. PERSONS OUTSIDE OF THEUNITED STATES.

IMPORTANT: You must read the following disclaimer before continuing. The following disclaimer applies to theattached offering circular (the “Offering Circular”). You are advised to read this disclaimer carefully before accessing,reading or making any other use of the attached Offering Circular. In accessing the attached Offering Circular, you agree tobe bound by the following terms and conditions, including any modifications to them from time to time, each time youreceive any information from the company as a result of such access. In order to be eligible to view the attached OfferingCircular or make an investment decision with respect to the securities, investors must be non-U.S. persons outside the UnitedStates.

Confirmation of Your Representation: The attached Offering Circular is being sent to you at your request and by acceptingthe e-mail and accessing the attached Offering Circular, you shall be deemed to represent to Soar Wise Limited (the“Issuer”), AVIC International Leasing Co., Ltd. (the “Guarantor”) and each of Agricultural Bank of China Limited HongKong Branch, Bank of China Limited, BNP Paribas, BOCI Asia Limited, DBS Bank Ltd., Haitong International SecuritiesCompany Limited, ICBC International Securities Limited, Industrial and Commercial Bank of China (Asia) Limited andShanghai Pudong Development Bank Co., Ltd., Hong Kong Branch (together the “Arrangers” or “Dealers”, each an“Arranger” or a “Dealer”) that (1) you and any customers you represent are non-U.S. persons outside the United States andthat the e-mail address that you gave us and to which this e-mail has been delivered is not located in the United States, itsterritories or possessions, and (2) you consent to delivery of the attached Offering Circular and any amendments orsupplements thereto by electronic transmission.

The materials relating to the offering of securities to which this Offering Circular relates do not constitute, and may not beused in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If ajurisdiction requires that the offering be made by a licensed broker or dealer and the Dealers or any affiliate of the Dealersis a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the Dealers or such affiliateon behalf of the Issuer and the Guarantor (as defined in this Offering Circular) in such jurisdiction.

The attached Offering Circular has been made available to you in electronic form. You are reminded that documentstransmitted via this medium may be altered or changed during the process of transmission and, consequently, none of theIssuer, the Guarantor, the Arrangers, the Dealers, the Trustee or the Agents (each as defined in the attached Offering Circular)or any of their respective affiliates, directors, officers, employees, representatives, advisers or agents or any person whocontrols any of them accepts any liability or responsibility whatsoever in respect of any discrepancies between the documentdistributed to you in electronic format and the hard copy version available to you upon request from any of the Issuer, theGuarantor, the Arrangers or the Dealers.

Restrictions: The attached Offering Circular is being furnished in connection with an offering in offshore transactions tonon-U.S. persons outside the United States in compliance with Regulation S under the U.S. Securities Act of 1933, asamended (the “Securities Act”) solely for the purpose of enabling a prospective investor to consider the purchase of thesecurities described herein.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE INTHE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THESECURITIES AND THE GUARANTEE HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THESECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHERJURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, ORTO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, SUBJECT TO CERTAIN EXCEPTIONS. THEOFFERING IS MADE SOLELY TO NON-U.S. PERSONS OUTSIDE THE UNITED STATES IN OFFSHORETRANSACTIONS PURSUANT TO REGULATION S UNDER THE SECURITIES ACT. IN CERTAINCIRCUMSTANCES, THE SECURITIES ARE SUBJECT TO U.S. TAX LAW REQUIREMENTS.

You are reminded that you have accessed the attached Offering Circular on the basis that you are a person into whosepossession the attached Offering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in whichyou are located and you may not, nor are you authorised to, deliver this document, electronically or otherwise, to any otherperson. If you have gained access to this transmission contrary to the foregoing restrictions, you are not allowed to purchaseany of the securities described in the attached Offering Circular.

Actions that You May Not Take: If you receive this document by e-mail, you should not reply by e-mail to this document,and you may not purchase any securities by doing so. Any reply e-mail communications, including those you generate byusing the “Reply” function on your e-mail software, will be ignored or rejected.

YOU ARE NOT AUTHORISED TO AND YOU MAY NOT FORWARD OR DELIVER THE ATTACHED OFFERINGCIRCULAR, ELECTRONICALLY OR OTHERWISE, TO ANY OTHER PERSON OR REPRODUCE SUCHOFFERING CIRCULAR IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION ORREPRODUCTION OF THE ATTACHED OFFERING CIRCULAR IN WHOLE OR IN PART IS UNAUTHORISED.FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT ORTHE APPLICABLE LAWS OF OTHER JURISDICTIONS.

You are responsible for protecting against viruses and other destructive items. If you receive this document by e-mail,your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from virusesand other items of a destructive nature.

Strictly Confidential

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

unconditionally and irrevocably guaranteed by

AVIC International Leasing Co., Ltd.(a company incorporated in the People’s Republic of China with limited liability)

U.S.$3,500,000,000Guaranteed Medium Term Note and Perpetual Capital Securities Programme

Under the U.S.$3,500,000,000 Guaranteed Medium Term Note and Perpetual Capital Securities Programme described in this Offering Circular (the “Programme”), Soar Wise Limited (the “Issuer”), subject tocompliance with all relevant laws, regulations and directives, may from time to time issue medium term notes (the “Notes”) or perpetual capital securities (the “Perpetual Capital Securities” and, together with theNotes, the “Instruments”) unconditionally and irrevocably guaranteed (the “Guarantee”) by AVIC International Leasing Co., Ltd. (the “Guarantor”). The Issuer is a wholly-owned subsidiary of the Guarantor. Theaggregate nominal amount of Instruments outstanding will not at any time exceed U.S.$3,500,000,000 (or the equivalent in other currencies), subject to increase as further described in “Summary of the Programme”.Application has been made to The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) for the listing of the Programme under which Instruments may be issued by way of debt issues toprofessional investors (as defined in Chapter 37 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Professional Investors”)) only during the 12-month period afterthe date of this Offering Circular on the Hong Kong Stock Exchange. This document is for distribution to Professional Investors only.Notice to Hong Kong investors: The Issuer and the Guarantor confirm that the Instruments are intended for purchase by Professional Investors only and, with respect to Instruments to be listed on the Hong KongStock Exchange, will be listed on the Hong Kong Stock Exchange on that basis. Accordingly, the Issuer and the Guarantor confirm that the Instruments are not appropriate as an investment for retail investors inHong Kong. Investors should carefully consider the risks involved.The Hong Kong Stock Exchange has not reviewed the contents of this document, other than to ensure that the prescribed form disclaimer and responsibility statements and a statement limiting distributionof this document to Professional Investors only have been reproduced in this document. Listing of the Programme and the Instruments on the Hong Kong Stock Exchange is not to be taken as an indicationof the commercial merits or credit quality of the Programme, the Instruments or the Issuer or the Guarantor or the Group or quality of disclosure in this document. Hong Kong Exchanges and ClearingLimited and the Hong Kong Stock Exchange take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever forany loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.Notice of the aggregate nominal amount of Instruments, interest (if any) payable in respect of Instruments, the issue price of Instruments and any other terms and conditions not contained herein which are applicableto each Tranche (as defined in “Terms and Conditions of the Notes” and “Terms and Conditions of the Perpetual Capital Securities” and each term therein, a “Condition”) of Instruments will be set out in a pricingsupplement (each a “Pricing Supplement”) which, with respect to Instruments to be listed on the Hong Kong Stock Exchange, will be delivered to the Hong Kong Stock Exchange on or before the date of issueof the Instruments of such Tranche.Instruments may be issued in bearer or registered form. The Instruments of each Series (as defined in “Terms and Conditions of the Notes” and “Terms and Conditions of the Perpetual Capital Securities”) issuedin bearer form (“Bearer Instruments”) will be represented on issue by a temporary global instrument in bearer form (each a “Temporary Global Instrument”) or a permanent global instrument in bearer form (eacha “Permanent Global Instrument”) (collectively, the “Global Instruments”). Instruments in registered form (“Registered Instruments”) will be represented by registered certificates (each a “Certificate”), oneCertificate being issued in respect of each Noteholder’s (as defined in “Terms and Conditions of the Notes”) or Perpetual Capital Securityholder’s (as defined in “Terms and Conditions of the Perpetual CapitalSecurities”) (each, an “Instrumentholder’s”) entire holding of Registered Instruments of one Series. The Instruments of each Series in registered form will initially be represented by a global certificate (each a “GlobalCertificate”). Global Instruments and Global Certificates may be deposited on the relevant issue date with a common depositary on behalf of Euroclear Bank SA/NV (“Euroclear”) and/or Clearstream Banking S.A.(“Clearstream”), or with a sub-custodian for the Central Moneymarkets Unit Service operated by the Hong Kong Monetary Authority (the “CMU”). In relation to Global Instruments issued in compliance with TEFRAD as indicated in the relevant Pricing Supplement, interests in the Temporary Global Instrument will be exchangeable for interests in a Permanent Global Instrument or, if so provided in the relevant Pricing Supplement,for Definitive Instruments (as defined in “Summary of Provisions Relating to the Instruments while in Global Form”), on or after a date which is expected to be the first day following the period of 40 days fromthe issue date of the relevant tranche of Instruments upon certification as to non-U.S. beneficial ownership. The provisions governing the exchange of interests in Global Instruments for other Global Instrumentsor Definitive Instruments or Global Certificates for Certificates are described in “Summary of Provisions Relating to the Instruments while in Global Form”.The Instruments and the Guarantee have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold or, in case of BearerInstruments, delivered, in the United States or to, or for the account or benefit of, U.S. persons, subject to certain exceptions. There will be no public offer of securities in the United States. The Instruments are beingoffered to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act (“Regulation S”). Bearer Instruments are subject to U.S. tax law requirements. See “Subscription and Sale”.Where the Circular on Promoting the Reform of the Administrative System on the Issuance by Enterprises of Foreign Debt Filings and Registrations (國家發展改革委關於推進企業發行外債備案登記制管理改革的通知(發改外資[2015] 2044號)) issued by the National Development and Reform Commission of the PRC or its local counterparts (“NDRC”) and which came into effect on 14 September 2015, and any implementationrules or applicable policies in relation thereto as issued by NDRC from time to time (the “NDRC Circular”) apply, for the benefit of the Instruments to be issued in accordance with the Terms and Conditions ofthe Notes (in relation to Notes) and the Terms and Conditions of the Perpetual Capital Securities (in relation to Perpetual Capital Securities), with respect to the offering of a particular tranche of Instruments, theGuarantor undertakes to make the required filing with NDRC within the period prescribed in the NDRC Circular and provide the Trustee (as defined in “Terms and Conditions of the Notes” and “Terms and Conditionsof the Perpetual Capital Securities”) with the relevant certificate of any registration or amended registration (where applicable) with respect to the offering of the Instruments.EU MiFID II product governance/target market – The Pricing Supplement in respect of any Instruments may include a legend entitled “EU MiFID II Product Governance” which will outline the target marketassessment in respect of the Instruments and which channels for distribution of the Instruments are appropriate. Any person subsequently offering, selling or recommending the Instruments (a “distributor”) shouldtake into consideration the target market assessment; however, a distributor subject to Directive 2014/65/EU (as amended, “MiFID II”) is responsible for undertaking its own target market assessment in respect ofthe Instruments (by either adopting or refining the target market assessment) and determining appropriate distribution channels.A determination will be made in relation to each issue about whether, for the purpose of the MiFID Product Governance rules under EU Delegated Directive 2017/593 (the “MiFID Product Governance Rules”),any Dealer subscribing for any Instruments is a manufacturer in respect of such Instruments, but otherwise neither the Arrangers nor the Dealers nor any of their respective affiliates will be a manufacturer for thepurpose of the EU MiFID Product Governance Rules.UK MiFIR product governance/target market – The Pricing Supplement in respect of any Instruments may include a legend entitled “UK MiFIR Product Governance” which will outline the target market assessmentin respect of the Instruments and which channels for distribution of the Instruments are appropriate. Any person subsequently offering, selling or recommending the Instruments (a “distributor”) should take intoconsideration the target market assessment; however, a distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook (the “UK MiFIR Product Governance Rules”) is responsiblefor undertaking its own target market assessment in respect of the Instruments (by either adopting or refining the target market assessment) and determining appropriate distribution channels.A determination will be made in relation to each issue about whether, for the purpose of the UK MiFIR Product Governance Rules, any Dealer subscribing for any Instruments is a manufacturer in respect of suchInstruments, but otherwise neither the Arrangers nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the MiFIR Product Governance Rules.PRIIPS/IMPORTANT – EEA RETAIL INVESTORS – If the Pricing Supplement in respect of any Instruments includes a legend entitled “Prohibition of Sales to EEA Retail Investors”, the Instruments are notintended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (the “EEA”). For these purposes, a “retailinvestor” means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; (ii) a customer within the meaning of Directive (EU) 2016/97 (the “Insurance DistributionDirective”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (the “ProspectusRegulation”). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Instruments or otherwise making them availableto retail investors in the EEA has been prepared and therefore offering or selling the Instruments or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.IMPORTANT – UK RETAIL INVESTORS – If the Pricing Supplement in respect of any Instruments includes a legend entitled “Prohibition of Sales to UK Retail Investors”, The Instruments are not intended tobe offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom (“UK”). For these purposes, a “retail investor” means a personwho is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”);(ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (“FSMA”) and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where thatcustomer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investoras defined in Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the EUWA. Consequently no key information document required by Regulation (EU) No 1286/2014 as it formspart of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Instruments or otherwise making them available to retail investors in the UK has been prepared and thereforeoffering or selling the Instruments or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.Singapore SFA Product Classification: In connection with Section 309B of the Securities and Futures Act (Chapter 289) of Singapore (the “SFA”) and the Securities and Futures (Capital Markets Products) Regulations2018 of Singapore (the “CMP Regulations 2018”), unless otherwise specified before an offer of Instruments, the Issuer has determined and hereby notifies all relevant persons (as defined in Section 309A(1) of theSFA), that the Instruments are “prescribed capital markets products” (as defined in the CMP Regulations 2018) and are Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Saleof Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).The Instruments may be issued on a continuing basis to one or more of the Dealers specified under “Summary of the Programme” and any additional Dealer appointed under the Programme from time to time bythe Issuer (each a “Dealer” and together the “Dealers”), which appointment may be for a specific issue or on an ongoing basis. References in this Offering Circular to the “relevant Dealer” shall, in the case ofan issue of Instruments being (or intended to be) subscribed by more than one Dealer, be to all Dealers agreeing to subscribe such Instruments.Investing in Instruments issued under the Programme involves certain risks and may not be suitable for all investors. Investors should have sufficient knowledge and experience in financial and businessmatters to evaluate the information contained in this Offering Circular and in the relevant Pricing Supplement and the merits and risks of investing in a particular issue of Instruments in the context oftheir financial position and particular circumstances. Investors also should have the financial capacity to bear the risks associated with an investment in Instruments. Investors should not purchaseInstruments unless they understand and are able to bear risks associated with Instruments. Prospective investors should have regard to the factors described under the section headed “Risk Factors” inthis Offering Circular. Investors should be aware that the Perpetual Capital Securities are perpetual and have no fixed redemption date, and there are various other risks relating to the Perpetual CapitalSecurities, the Issuer, the Guarantor, the Group and their respective business and jurisdiction of operations which investors should familiarise themselves with before making an investment in the PerpetualCapital Securities. See “Risk Factors” in relation to the perpetual features of the Perpetual Capital Securities beginning on page 28 of this Offering Circular.The Programme is rated “A-” by Fitch Ratings Ltd. (“Fitch”). The rating assigned to the Programme is applicable to the senior unsecured notes issued under the Programme; ratings in respect of the Perpetual CapitalSecurities issued may be separately obtained. This rating is only correct as at the date of this Offering Circular. Tranches of Instruments to be issued under the Programme will be rated or unrated. Where a Trancheof Instruments is to be rated, such rating will not necessarily be the same as the ratings assigned to the Programme. A rating is not a recommendation to buy, sell or hold securities and may be subject to suspension,reduction, revision or withdrawal at any time by the assigning rating agency.

ArrangersAgricultural

Bank of China LimitedHong Kong Branch

Bank of China BNPPARIBAS

DBSBank Ltd.

HaitongInternational

ICBCInternational

ICBC (Asia) Shanghai PudongDevelopment BankHong Kong Branch

DealersAgricultural

Bank of China LimitedHong Kong Branch

Bank of China BNPPARIBAS

DBSBank Ltd.

HaitongInternational

ICBCInternational

ICBC (Asia) Shanghai PudongDevelopment BankHong Kong Branch

Offering Circular dated 20 September 2021

NOTICE TO INVESTORS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

considered in connection with an investment in the Instruments.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

– i –

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

laws and regulations.

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

Instruments under the Programme.

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

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

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

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

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

EU MiFID II product governance/target market – The Pricing Supplement in respect of any

Instruments may include a legend entitled “EU MiFID II Product Governance” which will outline the

target market assessment in respect of the Instruments and which channels for distribution of the

Instruments are appropriate. Any distributor should take into consideration the target market

assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target

market assessment in respect of the Instruments (by either adopting or refining the target market

assessment) and determining appropriate distribution channels.

A determination will be made in relation to each issue about whether, for the purpose of the MiFID

Product Governance rules under the MiFID Product Governance Rules, any Dealer subscribing for

any Instruments is a manufacturer in respect of such Instruments, but otherwise neither the Arrangers

nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the

EU MiFID Product Governance Rules.

UK MiFIR product governance/target market – The Pricing Supplement in respect of any

Instruments may include a legend entitled “UK MiFIR Product Governance” which will outline the

target market assessment in respect of the Instruments and which channels for distribution of the

Instruments are appropriate. Any distributor should take into consideration the target market

assessment; however, a distributor subject to the UK MiFIR Product Governance Rules is responsible

for undertaking its own target market assessment in respect of the Instruments (by either adopting or

refining the target market assessment) and determining appropriate distribution channels.

– ii –

A determination will be made in relation to each issue about whether, for the purpose of the UK

MiFIR Product Governance Rules, any Dealer subscribing for any Instruments is a manufacturer in

respect of such Instruments, but otherwise neither the Arrangers nor the Dealers nor any of their

respective affiliates will be a manufacturer for the purpose of the MiFIR Product Governance Rules.

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

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

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

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

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

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

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

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

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

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

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

EEA may be unlawful under the PRIIPs Regulation.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

unlawful under the UK PRIIPs Regulation.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

– iii –

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

– iv –

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

tax, legal and business advisers as it deems necessary.

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

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

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

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

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

THE INSTRUMENTS AND THE GUARANTEE HAVE NOT BEEN AND WILL NOT BEREGISTERED UNDER SECURITIES ACT OR WITH ANY SECURITIES REGULATORYAUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, ANDTHE INSTRUMENTS MAY INCLUDE BEARER INSTRUMENTS THAT ARE SUBJECT TOU.S. TAX LAW REQUIREMENTS. SUBJECT TO CERTAIN EXCEPTIONS, THEINSTRUMENTS MAY NOT BE OFFERED, SOLD, OR, IN CASE OF BEARERINSTRUMENTS, DELIVERED, WITHIN THE UNITED STATES OR TO, OR FOR THEACCOUNT OR BENEFIT OF, U.S. PERSONS. REGISTERED INSTRUMENTS ARESUBJECT TO CERTAIN RESTRICTIONS, SEE “SUBSCRIPTION AND SALE”.

IN CONNECTION WITH THE ISSUE OF ANY TRANCHE OF INSTRUMENTS, THEDEALER OR DEALERS (IF ANY) NAMED AS THE STABILISATION MANAGER(S) (THE“STABILISATION MANAGER(S)”) (OR PERSON(S) ACTING ON BEHALF OF ANYSTABILISATION MANAGER(S)) IN THE RELEVANT PRICING SUPPLEMENT MAYOVER-ALLOT INSTRUMENTS OR EFFECT TRANSACTIONS WITH A VIEW TOSUPPORTING THE MARKET PRICE OF THE INSTRUMENTS AT A LEVEL HIGHERTHAN THAT WHICH MIGHT OTHERWISE PREVAIL FOR A LIMITED PERIOD OF TIMEAFTER THE CLOSING DATE OF THE RELEVANT TRANCHE OF INSTRUMENTS.HOWEVER, THERE IS NO OBLIGATION ON THE STABILISATION MANAGER(S) (ORPERSON(S) ACTING ON BEHALF OF THE STABILISATION MANAGER(S)), TO DO THIS.ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICHADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE RELEVANT

– v –

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

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

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

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

STABILISATION ACTION OR OVERALLOTMENT MUST BE CONDUCTED BY THE

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

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

RULES.

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

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

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

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

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

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

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

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

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

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

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

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

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

its investment decision.

– vi –

WARNING

The contents of this Offering Circular have not been reviewed by any regulatory authority of anyjurisdiction. You are advised to exercise caution in relation to the offering of the Instruments. If youare in any doubt about any of the contents of this Offering Circular, you should obtain independentprofessional advice.

INDUSTRY AND MARKET DATA

Market data and certain industry forecasts and statistics in this Offering Circular have been obtainedfrom both public and private sources, including market research, publicly available information andindustry publications. Although this information is believed to be reliable, it has not beenindependently verified by the Issuer, the Guarantor, the Arrangers, the Dealers, the Trustee or theAgents or any of their respective affiliates, directors, officers, employees, representatives, advisersor agents or any person who controls any of them and none of the Issuer, the Guarantor, theArrangers, the Dealers, the Trustee or the Agents or any of their respective affiliates, directors,officers, employees, representatives, advisers or agents or any person who controls any of themmakes any representation as to the accuracy or completeness of that information. Such informationmay not be consistent with other information compiled within or outside the PRC. In addition, thirdparty information providers may have obtained information from market participants and suchinformation may not have been independently verified.

PRESENTATION OF FINANCIAL INFORMATION

The audited consolidated financial statements of the Guarantor as at and for the years ended 31December 2019 and 2020 (the “Audited Consolidated Financial Statements”), which are includedelsewhere in this Offering Circular, have been audited by Zhongshenzhonghuan Certified PublicAccountants (SGP) (“ZSZH”) (formerly known as Mazars Certified Public Accountants (SGP)). TheAudited Consolidated Financial Statements were prepared and presented in accordance with theAccounting Standards for Business Enterprises in China (“PRC GAAP”).

The reviewed but unaudited consolidated financial statements of the Guarantor as at and for the sixmonths ended 30 June 2021 (the “Reviewed Consolidated Interim Financial Statements”), whichare included elsewhere in this Offering Circular, have been reviewed by Dahua Certified PublicAccountants (Special General Partnership) (“Dahua”). The Reviewed Consolidated Interim FinancialStatements were prepared and presented in accordance with PRC GAAP. As the ReviewedConsolidated Interim Financial Statements have not been audited by any independent auditors, theyshould not be relied upon by potential investors to provide the same quality of information associatedwith information that has been subject to an audit. None of the Arrangers, the Dealers, the Trusteeor the Agents or any of their respective affiliates, directors, officers, employees, representatives,advisers or agents or any person who controls any of them makes any representation or warranty,express or implied, regarding the accuracy, completeness and sufficiency of the ReviewedConsolidated Interim Financial Statements for an assessment of, and potential investors must exercisecaution when using such data to evaluate the Guarantor’s financial condition and results ofoperations. The Reviewed Consolidated Interim Financial Statements should not be taken as anindication of the expected financial condition and results of operations of the Guarantor for the fullfinancial year ending 31 December 2021.

PRC GAAP is substantially in line with the International Financial Reporting Standards (“IFRS”),except for certain modifications which reflect the PRC’s unique circumstances and environment.Please see “Description of Certain Differences between PRC GAAP and IFRS” for details.

– vii –

Since 2017, the Ministry of Finance of the PRC promulgated certain new accounting standards and

new requirements in relation to the format of financial statements as well as classification and

measurement of certain accounting items (the “New Accounting Standards and Requirements”).

The Audited Consolidated Financial Statements and the Reviewed Consolidated Interim Financial

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

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

Consolidated Financial Statements and the Reviewed Consolidated Interim Financial Statements, as

the case may be, may not be comparable to the financial figures in the Guarantor’s financial

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

and its impact on the Audited Consolidated Financial Statements and the Reviewed Consolidated

Interim Financial Statements, please see “Notes to the Financial Statements – V Significant changes

in accounting policies, accounting estimates and correction of errors in prior periods – 1. Changes

in accounting policies” of the Guarantor’s audited consolidated financial statements as at and for the

year ended 31 December 2019, “Notes to the Financial Statements – V Significant changes in

accounting policies, accounting estimates and correction of errors in prior periods – 1. Changes in

accounting policies” of the Guarantor’s audited consolidated financial statements as at and for the

year ended 31 December 2020 and “Notes to the Financial Statements – V Significant changes in

accounting policies, accounting estimates and correction of errors in prior periods” of the Reviewed

Consolidated Interim Financial Statements, respectively.

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

accounting items in the Audited Consolidated Financial Statements and the Reviewed Consolidated

Interim Financial Statements may not be comparable to the financial information in the Guarantor’s

consolidated financial statements for the previous periods.” for further information.

– viii –

EXCHANGE RATE INFORMATION

The consolidated financial statements of the Guarantor are presented in Renminbi. For convenienceonly and unless otherwise noted, all translations from Renminbi into U.S. dollars in this OfferingCircular were made at the rate of RMB6.4566 to U.S.$1.00 (as the case may be), based on the noonbuying rate as set forth in the H.10 statistical release of the Federal Reserve Bank of New York on30 June 2021. No representation is made that the Renminbi amounts referred to in this OfferingCircular could have been or could be converted into U.S. dollars at any particular rate or at all, andvice versa.

ROUNDING

In this Offering Circular, where information has been presented in thousands or millions of units,amounts may have been rounded up or down. Accordingly, totals of columns or rows of numbers intables or totals of numbers in charts or diagrams may not be equal to the apparent total of theindividual items and actual numbers may differ from those contained herein due to rounding.References to information in billions of units are to the equivalent of a thousand million units.

Certain Definitions and Conventions

In this Offering Circular, unless otherwise specified or the context otherwise requires, references to“China” or the “PRC” or the “Mainland” are to the People’s Republic of China and, for the purposeof this Offering Circular only, excluding Hong Kong, the Macau Special Administrative Region of thePeople’s Republic of China and Taiwan; references to “Hong Kong” are to the Hong Kong SpecialAdministrative Region of the People’s Republic of China; and references to the “United States” or“U.S.” are to the United States of America.

In this Offering Circular, unless otherwise specified or the context otherwise requires, references to“Renminbi”, “RMB” or “CNY” are to the lawful currency of the PRC; references to “Hong Kongdollar” or “HK$” are to the lawful currency of Hong Kong; references to “EUR”, “euro” or “C” areto the lawful currency of member states of the European Union that adopt the single currencyintroduced in accordance with the Treaty on the Functioning of the European Community, as amendedfrom time to time; and references to “U.S. dollars” or “U.S.$” are to the lawful currency of theUnited States of America.

The English names of the PRC nationals, entities, departments, facilities, laws, regulations,certificates, titles and the like are translations of their Chinese names and are included foridentification purposes only.

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

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

• “Leased asset scale” includes long-term receivables, long-term receivables due within one year,book value of fixed assets and pre-payments for purchase of financial lease assets;

• “LIBOR” refers to the London Interbank Offered Rate;

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

• “NDRC” refers to the National Development and Reform Commission of the PRC or its localcounterparts;

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

– ix –

• the “PRC government” refers to the central government of the People’s Republic of China andits political subdivisions, including provincial, municipal and other regional or localgovernment entities, and instrumentalities thereof, or where the context requires, any of them;

• “SAFE” refers to the State Administration of Foreign Exchange of the PRC or its localbranches;

• “SASAC” refers to the State-owned Assets Supervision and Administration Commission of theState Council of the PRC or its successor; and

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

– x –

INFORMATION INCORPORATED BY REFERENCE ANDFINANCIAL INFORMATION

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

(i) each relevant Pricing Supplement;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SUPPLEMENTAL OFFERING CIRCULAR

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

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

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

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

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

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

Instruments and/or the Guarantee.

– xi –

FORWARD-LOOKING STATEMENTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

entirety by such cautionary statements.

– xii –

TABLE OF CONTENTS

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

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

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

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

CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

DESCRIPTION OF THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

DESCRIPTION OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

DIRECTORS OF THE GUARANTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

FORM OF PRICING SUPPLEMENT OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . 122

FORM OF PRICING SUPPLEMENT OF THE PERPETUAL CAPITAL

SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152

TERMS AND CONDITIONS OF THE PERPETUAL CAPITAL SECURITIES . . . . . . . 197

SUMMARY OF PROVISIONS RELATING TO THE INSTRUMENTS WHILE IN

GLOBAL FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248

TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255

PRC REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269

PRC CURRENCY CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271

SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274

DESCRIPTION OF CERTAIN DIFFERENCES BETWEEN

PRC GAAP AND IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283

GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284

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

– xiii –

SUMMARY OF THE PROGRAMME

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

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

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

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

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

“Terms and Conditions of the Perpetual Capital Securities”.

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

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

Description . . . . . . . . . . . . . . . . . Guaranteed Medium Term Note and Perpetual CapitalSecurities Programme.

Size . . . . . . . . . . . . . . . . . . . . . . . Up to U.S.$3,500,000,000 (or the equivalent in other currenciesat the date of issue) aggregate nominal amount of Instrumentsoutstanding at any one time. The Issuer and the Guarantor mayincrease the aggregate nominal amount of the Programme inaccordance with the terms of the Dealer Agreement (as definedin “Subscription and Sale”).

Risk Factors . . . . . . . . . . . . . . . . Investing in Instruments issued under the Programme involvescertain risks. The principal risk factors that may affect theabilities of the Issuer and the Guarantor to fulfil their respectiveobligations in respect of the Instruments are discussed under“Risk Factors”.

Arrangers . . . . . . . . . . . . . . . . . . Agricultural Bank of China Limited Hong Kong Branch, Bankof China Limited, BNP Paribas, BOCI Asia Limited, DBS BankLtd., Haitong International Securities Company Limited, ICBCInternational Securities Limited, Industrial and CommercialBank of China (Asia) Limited and Shanghai PudongDevelopment Bank Co., Ltd., Hong Kong Branch.

Dealers . . . . . . . . . . . . . . . . . . . . Agricultural Bank of China Limited Hong Kong Branch, Bankof China Limited, BNP Paribas, BOCI Asia Limited, DBS BankLtd., Haitong International Securities Company Limited, ICBCInternational Securities Limited, Industrial and CommercialBank of China (Asia) Limited and Shanghai PudongDevelopment Bank Co., Ltd., Hong Kong Branch.

The Issuer and the Guarantor may from time to time terminatethe appointment of any Dealer under the Programme or appointDealer(s) either in respect of one or more Tranches or in respectof the whole Programme. References in this Offering Circularto “Dealers” are to all persons appointed as a dealer in respectof one or more Tranches or the Programme.

– 1 –

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

of which particular laws, guidelines, regulations, restrictions

or reporting requirements apply will only be issued in

circumstances which comply with such laws, guidelines,

regulations, restrictions or reporting requirements from time to

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

restriction applicable at the date of this Offering Circular.

Instruments having a maturity of less than one year

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

proceeds of the issue are accepted in the United Kingdom,

constitute deposits for the purposes of the prohibition on

accepting deposits contained in Section 19 of the Financial

Services and Markets Act 2000 unless they are issued to a

limited class of professional investors and have a denomination

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

Sale”).

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

Principal Paying Agent,Registrar and TransferAgent . . . . . . . . . . . . . . . . . . . .

Deutsche Bank AG, Hong Kong Branch.

CMU Lodging and PayingAgent . . . . . . . . . . . . . . . . . . . .

Deutsche Bank AG, Hong Kong Branch.

Method of Issue . . . . . . . . . . . . . The Instruments will be issued on a syndicated or non-

syndicated basis. The Instruments will be issued in Series

having one or more issue dates and on terms otherwise identical

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

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

defined in “Terms and Conditions of the Perpetual Capital

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

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

interchangeable with all other Instruments of that Series. Each

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

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

completed, where necessary, with the relevant terms and

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

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

payment of Distribution (in respect of the Perpetual Capital

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

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

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

– 2 –

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

discount or premium to their nominal amount. Partly Paid

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

payable in two or more instalments.

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

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

and Conditions of the Perpetual Capital Securities”. Registered

Instruments will not be exchangeable for Bearer Instruments

and vice versa.

Each Tranche of Bearer Instruments will initially be in the form

of either a Temporary Bearer Global Instrument or a Permanent

Bearer Global Instrument, in each case as specified in the

relevant Pricing Supplement.

Each Global Instrument will be deposited on or around the

relevant issue date with a common depositary or sub-custodian

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

and/or any other relevant clearing system. Each Temporary

Bearer Global Instrument will be exchangeable for a Permanent

Bearer Global Instrument or, if so specified in the relevant

Pricing Supplement, for Definitive Instruments. If the TEFRA

D rules are specified in the relevant Pricing Supplement as

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

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

a Temporary Bearer Global Instrument or receipt of any

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

payment of Distribution (in respect of the Perpetual Capital

Securities) in respect of a Temporary Bearer Global Instrument.

Each Permanent Bearer Global Instrument will be exchangeable

for Definitive Instruments in accordance with its terms.

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

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

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

further Coupons.

Registered Instruments will initially be represented by Global

Certificates. Global Certificates representing Registered

Instruments will be registered in the name of a common

depositary or nominee for one or more of Euroclear,

Clearstream and the CMU.

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

Tranche, such other clearing system as may be agreed between

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

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

– 3 –

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

Instrument representing the Bearer Instruments or the Global

Certificate representing Registered Instruments may be

deposited with a common depositary for Euroclear and

Clearstream or deposited with a sub-custodian for the Hong

Kong Monetary Authority as operator of the CMU. Global

Instruments or Global Certificates may also be deposited with

any other clearing system or may be delivered outside any

clearing system provided that the method of such delivery has

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

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

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

credited to one or more clearing systems on issue will be

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

common nominee for, such clearing systems.

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

directives, Instruments may be issued in any currency agreed

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

Dealer(s).

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

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

the Guarantor and the relevant Dealer(s).

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

may be agreed between the Issuer, the Guarantor and the

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

Instrument will be such as may be allowed or required from

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

laws or regulations applicable to the relevant currency

(see “– Certain Restrictions” above).

Notes

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

may be agreed between the Issuer, the Guarantor and the

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

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

the Issuer and the relevant Dealer(s).

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

each Series as follows:

– 4 –

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

interest rate swap transaction in the relevant Specified

Currency governed by an agreement incorporating the

2006 ISDA Definitions (as published by the International

Swaps and Derivatives Association, Inc. and as amended

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

Notes of the relevant Series); or

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

HIBOR (or such other benchmark as may be specified in

the relevant Pricing Supplement) as adjusted for any

applicable margin; or

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

the Guarantor and the relevant Dealer(s).

Interest periods will be specified in the relevant Pricing

Supplement.

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

a discount to it and will not bear interest.

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

whether at maturity or otherwise) in respect of Dual Currency

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

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

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

Pricing Supplement.

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

Notes or of interest in respect of Index Linked Interest Notes

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

to changes in prices of securities or commodities or to such

other factors as the Issuer, the Guarantor and the relevant

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

Pricing Supplement.

Interest Periods and InterestRates . . . . . . . . . . . . . . . . . . . .

The length of the interest periods for the Notes and the

applicable interest rate or its method of calculation may differ

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

Notes and Index Linked Interest Notes may also have a

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

use of interest accrual periods permits the Notes to bear interest

at different rates in the same interest period. All such

information will be set out in the relevant Pricing Supplement.

– 5 –

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

relevant Notes cannot be redeemed prior to their stated maturity

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

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

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

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

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

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

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

agreed between the Issuer, the Guarantor and the relevant

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

Notes may be redeemable in two or more instalments of such

amounts and on such dates as are indicated in the relevant

Pricing Supplement.

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

restrictions on their denomination and distribution, see

“– Certain Restrictions – Instruments having a maturity of less

than one year” above.

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

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

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

Pricing Supplement.

Redemption for Change ofControl . . . . . . . . . . . . . . . . . .

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

Supplement for the early redemption of the Notes at the option

of the holders thereof upon the occurrence of a Change of

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

Conditions of the Notes.

Redemption for No RegistrationEvent . . . . . . . . . . . . . . . . . . . .

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

Supplement for the early redemption of the Notes at the option

of the holders thereof upon the occurrence of a No Registration

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

Conditions of the Notes.

Redemption for TaxationReasons . . . . . . . . . . . . . . . . . .

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

in part, prior to maturity for taxation reasons as further

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

Notes.

– 6 –

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

the Coupons relating to them will constitute direct,

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

the Terms and Conditions of the Notes) unsecured obligations

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

any preference among themselves. The payment obligations of

the Issuer under the Notes and the Receipts and the Coupons

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

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

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

least equally with all other present and future unsecured and

unsubordinated indebtedness and monetary obligations of the

Issuer.

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

shall, save for such exceptions as may be provided by

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

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

equally with all other present and future unsecured and

unsubordinated indebtedness and monetary obligations of the

Guarantor.

Negative Pledge and otherCovenants . . . . . . . . . . . . . . . .

The Terms and Conditions of the Notes will contain a negative

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

Terms and Conditions of the Notes.

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

in relation to the notification to NDRC as described in

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

Undertaking relating to theGuarantee . . . . . . . . . . . . . . . .

The Terms and Conditions of the Notes will contain a provision

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

Terms and Conditions of the Notes.

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

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

Conditions of the Notes.

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

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

and Conditions of the Notes.

– 7 –

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

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

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

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

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

taxes, duties, assessments or governmental charges of whatever

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

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

political subdivision or authority therein or thereof having

power to tax, unless such withholding or deduction is required

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

Guarantor will, subject to certain customary exceptions, pay

such additional amounts as will result in the receipt by the

Noteholders or Couponholders (as defined in “Terms and

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

received by them had no such withholding or deduction been

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

Notes.

Perpetual Capital Securities

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

respect of which there is no fixed redemption date and the

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

redeem or purchase them in accordance with the provisions of

the Terms and Conditions of the Perpetual Capital Securities.

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

Distribution at fixed or floating rates.

Fixed Rate Perpetual CapitalSecurities. . . . . . . . . . . . . . . . .

Fixed Rate Perpetual Capital Securities will confer a right to

receive Distribution at a fixed rate which will be payable in

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

Supplement for the Fixed Rate Perpetual Capital Securities, the

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

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

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

Floating Rate Perpetual CapitalSecurities. . . . . . . . . . . . . . . . .

Floating Rate Perpetual Capital Securities will bear

Distribution determined separately for each Series as follows:

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

interest rate swap transaction in the relevant Specified

Currency governed by an agreement incorporating the

2006 ISDA Definitions (as published by the International

Swaps and Derivatives Association, Inc. and as amended

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

Perpetual Capital Securities of the relevant Series); or

– 8 –

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

HIBOR, (or such other benchmark as may be specified in

the relevant Pricing Supplement) as adjusted for any

applicable margin; or

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

the Guarantor and the relevant Dealer(s).

Distribution Periods andDistribution Rates. . . . . . . . . .

Distribution Periods (as defined in “Terms and Conditions of

the Perpetual Capital Securities”) will be specified in the

relevant Pricing Supplement.

The length of the Distribution Periods for the Perpetual Capital

Securities and the applicable Distribution Rate or its method of

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

Series. Perpetual Capital Securities may have a maximum

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

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

Conditions of the Perpetual Capital Securities”) permits the

Perpetual Capital Securities to allow Distribution at different

rates in the same Distribution Period. All such information will

be set out in the relevant Pricing Supplement.

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

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

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

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

Distribution Payment Date by giving notice to the Perpetual

Capital Securityholders (in accordance with Condition 15 of the

Terms and Conditions of the Perpetual Capital Securities) and

to the Trustee and the Principal Paying Agent in writing

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

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

Conditions of the Perpetual Capital Securities”) nor less than

five Payment Business Days prior to a scheduled Distribution

Payment Date. Any partial payment of any Distribution by the

Issuer shall be shared by the Perpetual Capital Securityholders

of all outstanding Perpetual Capital Securities on a pro-rata

basis.

– 9 –

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

Supplement, any Distribution deferred pursuant to Condition

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

Securities shall constitute “Arrears of Distribution”. The

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

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

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

part) any Arrears of Distribution by complying with the

foregoing notice requirement applicable to any deferral of an

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

the number of times Distributions and Arrears of Distribution

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

and Conditions of the Perpetual Capital Securities except that

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

Capital Securities shall be complied with until all outstanding

Arrears of Distribution and Additional Distribution Amount

have been paid in full.

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

Supplement, each amount of Arrears of Distribution shall

accrue Distributions as if it constituted the principal of the

Perpetual Capital Securities at the prevailing Distribution Rate

and the amount of such Distribution (the “AdditionalDistribution Amount”) with respect to Arrears of Distribution

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

and Conditions of the Perpetual Capital Securities and shall be

calculated by applying the applicable Distribution Rate to the

amount of the Arrears of Distribution and otherwise

mutatis mutandis as provided in Condition 5 of the Terms and

Conditions of the Perpetual Capital Securities. The Additional

Distribution Amount accrued up to any Distribution Payment

Date shall be added (for the purpose of calculating the

Additional Distribution Amount accruing thereafter) to the

amount of Arrears of Distribution remaining unpaid on such

Distribution Payment Date so that it will itself become Arrears

of Distribution.

Restrictions in the case ofDeferral . . . . . . . . . . . . . . . . . .

If Dividend Stopper is specified in the relevant Pricing

Supplement and on any Distribution Payment Date, payment of

all Distribution payments scheduled to be made on such date

(including any Distribution accrued but unpaid on the Perpetual

Capital Securities (including any Arrears of Distribution and

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

of the Issuer and the Guarantor shall not:

– 10 –

(i) declare or pay any discretionary dividends or distributions

or make any other discretionary payment, and will procure

that no discretionary dividend, distribution or other

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

Securities (as defined in “Terms and Conditions of the

Perpetual Capital Securities”) or Junior Securities

(as defined in “Terms and Conditions of the Perpetual

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

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

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

(2) in connection with any employee benefit plan or

similar arrangements with or for the benefit of employees,

officers, directors or consultants of the Issuer or the

Guarantor, as the case may be); or

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

otherwise acquire for any consideration any Parity

Securities or Junior Securities of the Issuer or the

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

relation to the Parity Securities of the Issuer or the

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

(2) in connection with any employee benefit plan or

similar arrangements with or for the benefit of employees,

officers, directors or consultants of the Issuer or the

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

exchange or conversion of its Parity Securities for its

Junior Securities),

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

all outstanding Arrears of Distribution and the Additional

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

an Extraordinary Resolution (as defined in the Trust Deed

referred to in the Terms and Conditions of the Perpetual Capital

Securities) of the Perpetual Capital Securityholders.

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

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

Conditions of the Perpetual Capital Securities will not be

affected solely as a result of the incurrence of any Parity

Securities or Junior Securities.

– 11 –

In addition, the incurrence of any senior indebtedness, Parity

Securities or Junior Securities itself will not constitute a

Compulsory Distribution Payment Event. A non-discretionary

payment on, or redemption of, Parity Securities or Junior

Securities (such as a scheduled payment of principal and

interest on such Parity or Junior Securities, which the Issuer

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

Distribution Payment Event.

Status of the Perpetual CapitalSecurities. . . . . . . . . . . . . . . . .

All Perpetual Capital Securities and the Coupons relating to

them will constitute direct, unsubordinated, unconditional and

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

Perpetual Capital Securities) unsecured obligations of the

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

preference among themselves as described in “Terms and

Conditions of the Perpetual Capital Securities – Guarantee and

Status – Status of Perpetual Capital Securities”.

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

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

Issuer under the Trust Deed, the Perpetual Capital Securities

and the Coupons. The payment obligations of the Guarantor

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

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

of the Terms and Conditions of the Perpetual Capital Securities,

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

unsecured and unsubordinated indebtedness and monetary

obligations of the Guarantor as described in “Terms and

Conditions of the Perpetual Capital Securities – Guarantee and

Status – Guarantee”.

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

will contain a negative pledge provision as further described in

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

Capital Securities.

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

will contain a provision in relation to the notification to NDRC

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

the Perpetual Capital Securities.

Undertaking relating to theGuarantee . . . . . . . . . . . . . . . .

The Terms and Conditions of the Perpetual Capital Securities

will contain a provision relating to the Guarantee as described

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

Capital Securities.

– 12 –

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

Perpetual Capital Securities will state whether such Perpetual

Capital Securities may be redeemed or purchased prior to their

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

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

Redemption for TaxationReasons . . . . . . . . . . . . . . . . . .

The Perpetual Capital Securities may be redeemed at the option

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

Payment Date (if the relevant Pricing Supplement provides that

the Perpetual Capital Securities are either Floating Rate

Perpetual Capital Securities or an Index Linked Distribution

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

Pricing Supplement provides that the Perpetual Capital

Securities are neither Floating Rate Perpetual Capital Securities

nor an Index Linked Distribution Perpetual Capital Securities)

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

the Terms and Conditions of the Perpetual Capital Securities.

Redemption for Change ofControl . . . . . . . . . . . . . . . . . .

The Perpetual Capital Securities may be redeemed at the option

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

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

Capital Securityholders (or such other notice period as may be

specified in the relevant Pricing Supplement) in accordance

with Condition 15 of the Terms and Conditions of the Perpetual

Capital Securities (which notice shall be irrevocable) and in

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

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

of the Perpetual Capital Securities”) occurs as further described

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

Capital Securities.

– 13 –

Redemption for AccountingReasons . . . . . . . . . . . . . . . . . .

The Perpetual Capital Securities may be redeemed at the option

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

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

Perpetual Capital Securityholders in accordance with Condition

15 of the Terms and Conditions of the Perpetual Capital

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

the Trustee and the Principal Paying Agent, at their principal

amount, together with Distribution accrued to but excluding the

date fixed for redemption (including any Arrears of Distribution

and any Additional Distribution Amount), if the Issuer satisfies

the Trustee immediately before giving such notice that as a

result of any changes or amendments to PRC GAAP or the

Relevant Accounting Standards (as defined in “Terms and

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

or amendment to the application or interpretation of the

Relevant Accounting Standards, the Perpetual Capital

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

in the consolidated financial statements of the Guarantor

pursuant to the Relevant Accounting Standards.

Redemption on the Occurrenceof a Breach of CovenantsEvent . . . . . . . . . . . . . . . . . . . .

The Perpetual Capital Securities may be redeemed at the option

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

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

Capital Securityholders in accordance with Condition 15 of the

Terms and Conditions of the Perpetual Capital Securities

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

and the Principal Paying Agent at their principal amount

(together with any Distribution accrued to but excluding the

date fixed for redemption (including any Arrears of Distribution

and any Additional Distribution Amount)) upon the occurrence

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

Conditions of the Perpetual Capital Securities”).

Redemption on the Occurrenceof a Relevant IndebtednessDefault Event . . . . . . . . . . . . .

The Perpetual Capital Securities may be redeemed at the option

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

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

Capital Securityholders in accordance with Condition 15 of the

Terms and Conditions of the Perpetual Capital Securities

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

and the Principal Paying Agent at their principal amount

(together with any Distribution accrued to but excluding the

date fixed for redemption (including any Arrears of Distribution

and any Additional Distribution Amount)) upon the occurrence

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

and Conditions of the Perpetual Capital Securities”).

– 14 –

Redemption at the Option ofthe Issuer . . . . . . . . . . . . . . . .

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

days’ irrevocable notice to the Perpetual Capital

Securityholders (or such other notice period as may be specified

in the relevant Pricing Supplement) and in writing to the

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

not some only, of the Perpetual Capital Securities on any

Optional Redemption Date specified in the relevant Pricing

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

and Conditions of the Perpetual Capital Securities.

Redemption for MinimumOutstanding Amount . . . . . . .

The Perpetual Capital Securities may be redeemed at the option

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

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

Capital Securityholders (or such other notice period as may be

specified in the relevant Pricing Supplement) in accordance

with Condition 15 of the Terms and Conditions of the Perpetual

Capital Securities (which notice shall be irrevocable) and in

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

principal amount (together with any Distribution accrued to but

excluding the date fixed for redemption (including any Arrears

of Distribution and any Additional Distribution Amount)) if

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

principal amount of the Perpetual Capital Securities originally

issued has already been redeemed or purchased and cancelled.

Redemption on the Occurrenceof a Dividend StopperBreach Event . . . . . . . . . . . . .

If Dividend Stopper is specified in the relevant Pricing

Supplement, the Perpetual Capital Securities may be redeemed

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

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

Perpetual Capital Securityholders in accordance with Condition

15 of the Terms and Conditions of the Perpetual Capital

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

the Trustee and the Principal Paying Agent, at their principal

amount (together with any Distribution accrued to but

excluding the date fixed for redemption (including any Arrears

of Distribution and any Additional Distribution Amount)) upon

the occurrence of a Dividend Stopper Breach Event (as defined

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

– 15 –

Limited right to instituteproceedings in relation toPerpetual Capital Securities . .

Notwithstanding any of the provisions in Condition 10 of the

Terms and Conditions of the Perpetual Capital Securities, the

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

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

the Issuer or the Guarantor is limited to circumstances where

payment in respect of the Perpetual Capital Securities has

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

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

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

Conditions of the Perpetual Capital Securities. See “Terms and

Conditions of the Perpetual Capital Securities – Non-Payment”

for further details.

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

not make payment in respect of the Perpetual Capital

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

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

Issuer shall be deemed to be in default under the Trust

Deed and the Perpetual Capital Securities and the Trustee

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

Terms and Conditions of the Perpetual Capital Securities,

institute proceedings for the Winding-Up of the Issuer

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

in the liquidation of the Issuer for such payment.

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

Guarantor shall not make payment in respect of the

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

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

Guarantor shall be deemed to be in default under the Trust

Deed and the Guarantee and the Trustee may, subject to

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

Conditions of the Perpetual Capital Securities, institute

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

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

the liquidation of the Guarantor for such payment.

– 16 –

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

the Issuer or the Guarantor in respect of the Perpetual Capital

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

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

counterclaim and without withholding or deduction for or on

account of, any taxes, duties, assessments or governmental

charges of whatever nature imposed, levied, collected, withheld

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

each case, any political subdivision or authority therein or

thereof having power to tax, unless such withholding or

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

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

exceptions, pay such additional amounts as will result in the

receipt by the Perpetual Capital Securityholders or

Couponholders (as defined in “Terms and Conditions of the

Perpetual Capital Securities”) of such amounts as would have

been received by them had no such withholding or deduction

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

the Perpetual Capital Securities for further details.

For both Notes and Perpetual Capital Securities

Governing Law andJurisdiction . . . . . . . . . . . . . . .

English law with the submission to the exclusive jurisdiction of

Hong Kong courts.

Listing and Admission toTrading . . . . . . . . . . . . . . . . . .

Application has been made to the Hong Kong Stock Exchange

for the listing of the Programme under which Instruments may

be issued during the 12-month period after the date of this

Offering Circular on the Hong Kong Stock Exchange by way of

debt issues to Professional Investors only.

Instruments listed on the Hong Kong Stock Exchange will be

traded on the Hong Kong Stock Exchange in a board lot size of

at least HK$500,000 (or its equivalent in other currencies).

Separate application may be made for the listing of the

Instruments on the Hong Kong Stock Exchange. However,

unlisted Instruments and Instruments to be listed, traded or

quoted on or by any other competent authority, stock exchange

or quotation system may be issued pursuant to the Programme.

The relevant Pricing Supplement in respect of the issue of any

Instruments will specify whether or not such Instruments will

be listed on the Hong Kong Stock Exchange or listed, traded or

quoted on or by any other competent authority, exchange or

quotation system.

– 17 –

Selling Restrictions . . . . . . . . . . There are restrictions on the offer, sale and transfer of the

Instruments in the United States, the EEA, the United Kingdom,

Japan, Taiwan, Hong Kong, the PRC and Singapore and such

other restrictions as may be required in connection with the

offering and sale of a particular Tranche of Instruments. See

“Subscription and Sale”.

United States SellingRestrictions . . . . . . . . . . . . . . .

Regulation S, Category 2.

Restriction . . . . . . . . . . . . . . . . . Pricing Supplement. TEFRA C, TEFRA D or TEFRA not

applicable, as specified in the relevant Pricing Supplement

“TEFRA not applicable” is only available for (i) Registered

Instruments or (ii) Bearer Instruments with a term of 365 days

or less (taking into account any unilateral rights to extend or

rollover the term).

Legal Entity Identifier . . . . . . . . The legal entity identifier of the Issuer is

2138001423MK8G3BNM68.

– 18 –

SUMMARY

The summary below is only intended to provide a limited overview of information described in more

detail elsewhere in this Offering Circular. As it is a summary, it does not contain all of the

information that may be important to investors and terms defined elsewhere in this Offering Circular

shall have the same meanings when used in this summary. Prospective investors should therefore read

this Offering Circular in its entirety.

DESCRIPTION OF THE ISSUER

The Issuer was incorporated as an exempted company with limited liability under the Companies

Law, as amended of the Cayman Islands on 9 August 2018 with company number 340929.

The share capital of the Issuer is U.S.$50,000, divided into 50,000 shares of par value U.S.$1.00

each. One share has been issued and paid up, which is owned by CAVIC Aviation Leasing (Ireland)

Co., Designated Activity Company. CAVIC Aviation Leasing (Ireland) Co., Designated Activity

Company is in turn wholly-owned by the Guarantor.

The Issuer was established for the purpose of issuing the Instruments and on-lending the proceeds to

the Guarantor or its subsidiaries. Since its incorporation, the Issuer has not engaged in any business

activity or any other activity whatsoever other than activities in connection with the establishment

and maintenance of the Programme, the offering, sale or issuance of the Instruments.

DESCRIPTION OF THE GROUP

The Group is principally engaged in the leasing business in the PRC and provides a diverse array of

financial leasing and operating leasing services, focusing on the aircraft, shipping, urban

infrastructure and equipment sectors. The Guarantor was one of the first PRC leasing companies

approved by MOFCOM and the State Administration of Taxation. As at 30 June 2021, the Guarantor

was one of the leading leasing companies in the PRC. In addition, the Guarantor believes that the

Group had one of the largest networks of airline customers in the PRC as at 30 June 2021.

As at 30 June 2021, AVIC indirectly held approximately 44.03 per cent. of the issued share capital

of the Guarantor. AVIC is one of the central state-owned enterprises directly supervised by central

SASAC, focusing on aerospace and defence. Through its subsidiaries and affiliates in the PRC and

overseas, AVIC’s businesses principally cover defence, transport aircraft, engines, helicopters,

avionics and systems, general aviation, aviation research, flight test, trade and logistics, asset

management, finance services, engineering planning and construction and automobile. As at 30 June

2021, AVIC’s group consisted of a number of listed companies. AVIC had been named in the “Global

500” published by Fortune magazine for 13 consecutive years and ranked 140th on the list in 2021.

As at the date of this Offering Circular, AVIC ranks the fourth among the industrial manufacturing

enterprises owned by SASAC in the PRC. With its extensive customer base and supplier network,

established relationship with local governments and other state-owned enterprises, in-depth industry

knowledge, strong brand recognition and experienced management, AVIC provides the Group with

valuable support for the development of its business. As at 30 June 2021, the Guarantor was the only

leasing platform operating under the financial services business segment of AVIC.

– 19 –

In June 2021, the Group’s leased asset scale exceeded RMB160 billion. As at 30 June 2021, the leased

asset scale of the Group’s operating leasing business and the Group’s financial leasing business

amounted to approximately RMB18.87 billion and RMB142.46 billion, respectively. In terms of

leased asset scale, the Guarantor ranked first and eighth among the domestic leasing companies

(excluding Bohai Leasing Co., Ltd.) and all domestic and foreign leasing companies (excluding

Bohai Leasing Co., Ltd.), respectively, in the PRC as at 30 June 2021.

For the years ended 31 December 2018, 2019 and 2020 and the six months ended 30 June 2020 and

2021, the Group reported total consolidated revenue from operations of approximately RMB7,164.06

million, RMB10,076.85 million, RMB10,125.86 million, RMB4,850.42 million and RMB4,678.59

million, respectively, and consolidated net profit of approximately RMB1,262.39 million,

RMB1,711.21 million, RMB1,974.09 million, RMB965.11 million and RMB995.66 million,

respectively. As at 1 January 2019, 31 December 2019, 31 December 2020 and 30 June 2021, the total

consolidated assets of the Group amounted to approximately RMB133,121.80 million,

RMB148,755.70 million, RMB158,749.48 million and RMB171,611.70 million, respectively.

The Guarantor believes that the Group has the following competitive strengths:

• significant growth potential in the PRC financial leasing industry;

• strong shareholder support from AVIC and AVIC Industry-Finance Holdings Co., Ltd.;

• leading position in the PRC financial leasing industry with an extensive and diverse customer

base;

• diversified business portfolio;

• diverse aircraft leasing services;

• able to provide customised and integrated financial services to its customers;

• access to multiple financing channels, strong balance sheet and prudent financial management;

• comprehensive and robust risk management systems; and

• experienced management team.

The Guarantor intends to implement the following principal strategies to support the further

development of the Group’s business:

• to further strengthen the Group’s leading market position in the aircraft leasing industry by

acquiring aircraft in strong demand at competitive prices and by expanding its client base;

• to strive to be cost competitive and prudently promote its business in the ship leasing sub-sector;

• to continue to strengthen the Group’s market position in the equipment leasing sub-sector;

• to explore business opportunities in other industries in the PRC;

– 20 –

• to continue to diversify financing channels and optimise capital structure;

• to further leverage the Group’s relationship with AVIC and the Guarantor’s subsidiaries and

affiliates and the strong support from AVIC; and

• to continue to strengthen risk management and corporate governance capabilities.

RECENT DEVELOPMENTS

The outbreak of COVID-19.

The global outbreak of COVID-19 has caused substantial disruptions in the PRC and international

economies and markets as well as additional uncertainties in the Group’s operating environment. The

Group has been closely monitoring the impact of the outbreak and continued escalation of COVID-19

on the Group’s businesses and will keep its contingency measures and risk management under review

as the situation evolves. Please see “Risk Factors – Risks Relating to the Group – The global outbreak

of the contagious COVID-19 may have an adverse effect on the Group’s business, financial condition

and results of operations.” and “Risk Factors – Risks Relating to the Group – The Group’s operations

are subject to force majeure events, political unrest or civil disobedience movements, natural

disasters, outbreaks of contagious diseases and other disasters.” for further information.

Issue of debt instruments since 30 June 2021.

Since 30 June 2021, the Guarantor has issued onshore debt securities in an aggregate principal

amount of approximately RMB5.9 billion. It is also expected that the Guarantor will issue onshore

debt securities in an aggregate principal amount of RMB900 million on or about 22 September 2021.

In addition, the Issuer issued EUR200,000,000 0.95 per cent. guaranteed notes due 2022 under the

Programme which are unconditionally and irrevocably guaranteed by the Guarantor in August 2021.

– 21 –

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The summary audited consolidated financial information of the Guarantor as at 1 January 2019,

31 December 2019 and 31 December 2020 and for the years ended 31 December 2018, 2019 and

2020 set forth below is derived from and should be read in conjunction with the Audited Consolidated

Financial Statements, including the notes thereto and the auditor’s reports in respect of the years

ended 31 December 2019 and 2020 included elsewhere in this Offering Circular.

The summary reviewed but unaudited consolidated financial information of the Guarantor as at and

for the six months ended 30 June 2020 and 2021 set forth below is derived from and should be read

in conjunction with the Reviewed Consolidated Interim Financial Statements, including the notes

thereto and the review report in respect of the six months ended 30 June 2021 included elsewhere in

this Offering Circular.

The Audited Consolidated Financial Statements were prepared and presented in accordance with

PRC GAAP and have been audited by ZSZH. The Reviewed Consolidated Interim Financial

Statements were prepared and presented in accordance with PRC GAAP and were reviewed by

Dahua.

PRC GAAP is substantially in line with IFRS, except for certain modifications which reflect the PRC’s

unique circumstances and environment. Please see “Description of Certain Differences between PRC

GAAP and IFRS” for details.

Since 2017, the Ministry of Finance of the PRC promulgated the New Accounting Standards and

Requirements. The Audited Consolidated Financial Statements and the Reviewed Consolidated

Interim Financial Statements were prepared and presented in accordance with the relevant applicable

New Accounting Standards and Requirements. As a result, the presentation of certain accounting

items in the Audited Consolidated Financial Statements and the Reviewed Consolidated Interim

Financial Statements, as the case may be, may not be comparable to the financial figures in the

Guarantor’s financial statements for the previous periods. For details of the New Accounting

Standards and Requirements and its impact on the Audited Consolidated Financial Statements and

the Reviewed Consolidated Interim Financial Statements, please see “Notes to the Financial

Statements – V Significant changes in accounting policies, accounting estimates and correction of

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

financial statements as at and for the year ended 31 December 2019, “Notes to the Financial

Statements – V Significant changes in accounting policies, accounting estimates and correction of

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

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

Statements – V Significant changes in accounting policies, accounting estimates and correction of

errors in prior periods” of the Reviewed Consolidated Interim Financial Statements, respectively.

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

accounting items in the Audited Consolidated Financial Statements and the Reviewed Consolidated

Interim Financial Statements may not be comparable to the financial information in the Guarantor’s

consolidated financial statements for the previous periods.” for further information.

– 22 –

SUMMARY CONSOLIDATED INCOME STATEMENT

For the year ended 31 December For the six months ended 30 June

2018 2019 2020 2020 2021

(RMB) (RMB) (RMB) (RMB) (RMB)(audited) (audited) (audited) (unaudited) (unaudited)

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,164,056,286.00 10,076,845,248.60 10,125,856,176.27 4,850,422,218.53 4,678,594,935.87Less: Operating cost . . . . . . . . . . . . . . . . . . . . . . . . . 4,118,281,374.60 5,703,618,487.96 5,386,090,034.00 2,833,992,532.96 2,486,262,051.10

Taxes and surcharges . . . . . . . . . . . . . . . . . . . 38,201,847.34 157,159,301.81 81,242,652.75 23,244,093.92 19,335,702.01Selling and distribution expenses . . . . . . . 58,343,687.44 76,862,884.99 83,943,563.33 43,174,449.59 47,847,641.21General and administrative expenses . . . . 965,032,017.07 1,167,804,183.60 1,276,577,245.87 567,679,473.21 697,646,187.51Research and development expense . . . . . – – – – –Financial expenses . . . . . . . . . . . . . . . . . . . . . . 47,553,774.05 -88,898,310.71 -55,167,701.93 -48,497,423.40 -59,126,835.04

Add: Other income . . . . . . . . . . . . . . . . . . . . . . . . . . 126,520,611.60 132,231,630.13 415,299,209.47 342,730,777.59 2,664,896.74Investment income +/loss – . . . . . . . . . . . . . 19,792,087.50 136,169,694.19 25,571,108.89 3,110,194.43 28,127,653.69Inc: Income from investment in

joint ventures and joint ventures. . . . . . – – – – –Recognized Income of Termination of

Financial Assets Measured atAmortized Cost +/loss – . . . . . . . . . . . . . . – – – – –

Net Open Hedging Return +/loss – . . . . . – – – – –Profit arising from changes in

fair value +/loss – . . . . . . . . . . . . . . . . . . . – 1,098,532.23 -37,898,604.42 5,853,773.09 1,856,946.28Credit impairment losses +/loss – . . . . . . . – -1,403,871,392.61 -1,418,348,120.09 -628,371,089.71 -310,246,392.22Asset impairment losses+/loss – . . . . . . . . -705,028,700.02 194,491.68 -912,160.06 332,932.04 -460,255.30Asset disposal income +/loss – . . . . . . . . . 257,684,938.38 214,627,218.25 176,653,362.48 101,674,652.44 66,029,293.87

Operating profit +/loss – . . . . . . . . . . . . . . . . . . . . . 1,635,612,522.96 2,140,748,874.82 2,513,535,178.52 1,256,160,332.13 1,274,602,332.14Add: Non-operating income . . . . . . . . . . . . . . . . . 20,740,523.03 77,894,964.37 23,619,037.90 10,112,262.35 30,006,595.38

Government grants . . . . . . . . . . . . . . . . . . . . . . 6,203,263.73 – – – –Less: Non-operating expenses . . . . . . . . . . . . . . . . 486,135.81 330,000.00 298,150.38 120,000.00 29,668.30Total profit +/loss – . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,655,866,910.18 2,218,313,839.19 2,536,856,066.04 1,266,152,594.48 1,304,579,259.22Less: Income tax expenses . . . . . . . . . . . . . . . . . . . 393,474,530.92 507,106,554.62 562,770,616.77 301,037,953.44 308,917,524.93Net profit +/loss –. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,262,392,379.26 1,711,207,284.57 1,974,085,449.27 965,114,641.04 995,661,734.29

(1) Continuous operating net profit+/loss – . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,262,392,379.26 1,711,207,284.57 1,974,085,449.27 965,114,641.04 995,661,734.29

(2) Termination of net profit +/loss – . . . . . – – – – –Other comprehensive income, net of tax . . . . . -3,863,138.09 -326,499.68 -221,249,974.38 45,170,775.25 -37,289,657.60Including: Attributable to equity holders of

the Company, net of tax . . . . . . . . . -3,863,138.09 -326,499.68 -221,249,974.38 45,170,775.25 -37,289,657.60Other comprehensive income that

will not be reclassified to profitor loss . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – – –Gains (losses) on remeasurement

of net defined benefitliabilities or assets . . . . . . . . . . . . . – – – – –

Share of OCI of associates andjoint ventures accounted forusing equity method that willnot be reclassified to profitor loss . . . . . . . . . . . . . . . . . . . . . . . . . – – – – –

– 23 –

For the year ended 31 December For the six months ended 30 June

2018 2019 2020 2020 2021

(RMB) (RMB) (RMB) (RMB) (RMB)(audited) (audited) (audited) (unaudited) (unaudited)

Changes in Fair Value ofInvestment in Other EquityInstruments . . . . . . . . . . . . . . . . . . . . – – – – –

Fair Value Change ofEnterprise’s Credit Risk . . . . . . . – – – – –

Other items . . . . . . . . . . . . . . . . . . . . . . – – – – –Other comprehensive income that

will be reclassified to profitor loss . . . . . . . . . . . . . . . . . . . . . . . . . . . -3,863,138.09 -326,499.68 -221,249,974.38 45,170,775.25 -37,289,657.60Other comprehensive income of

convertible profits and lossesunder the equity method . . . . . . . – – – – –

Gains (losses) on change of fairvalue of available-for-salefinancial assets . . . . . . . . . . . . . . . . -35,881,014.75 – – – –

Changes in fair value of otherdebt investments . . . . . . . . . . . . . . . – – – – –

The amount of financial assetsreclassified into othercomprehensive income. . . . . . . . . – – – – –

Credit impairment reserve forother creditor’s rightsinvestment . . . . . . . . . . . . . . . . . . . . . – – – – –

Gains (losses) on effective partof cash flow hedges . . . . . . . . . . . – – – – –

Exchange differences ontranslation . . . . . . . . . . . . . . . . . . . . . 32,017,876.66 -326,499.68 -221,249,974.38 45,170,775.25 -37,289,657.60

Other items . . . . . . . . . . . . . . . . . . . . . . – – – – –Total comprehensive income . . . . . . . . . . . . . . . . . . 1,258,529,241.17 1,710,880,784.89 1,752,835,474.89 1,010,285,416.29 958,372,076.69Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – – –

Basic earnings per share . . . . . . . . . . . . . . . . . . . . . – – – – –Diluted earnings per share . . . . . . . . . . . . . . . . . . . – – – – –

– 24 –

SUMMARY CONSOLIDATED BALANCE SHEET

As at 1 January As at 31 December As at 30 June

2019 2019 2020 2021

(RMB) (RMB) (RMB) (RMB)(audited) (audited) (audited) (unaudited)

Current assetsCash at bank and on hand. . . . . . . . . . . . . . . . 5,778,242,686.90 5,182,579,787.85 5,894,354,119.70 6,954,094,170.76Financial assets held for trading . . . . . . . . 777,111,295.00 328,295,226.85 1,374,754,554.90 1,304,571,438.99Derivative financial assets . . . . . . . . . . . . . . . – – – –Notes receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . 21,140,179.21 19,763,620.92 33,111,076.66 33,630,584.38Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . 283,126,116.78 111,562,039.23 110,603,832.37 134,701,890.37Receivable financing. . . . . . . . . . . . . . . . . . . . . . – – – –Advances to suppliers . . . . . . . . . . . . . . . . . . . . 19,060,614.65 12,754,123.27 15,902,445.64 19,335,986.60Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 59,664,654.92 721,241,687.60 421,929,445.07 231,829,371.44Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,074.70 9,396,091.87 7,078,415.45 6,905,173.62

Inc: Raw Material . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – –Stock goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – –Contractual assets . . . . . . . . . . . . . . . . . . . . . . . . . – – – –Assets classified as held for sale . . . . . . . . – – – –Current portion of non-current assets . . . 29,885,175,373.10 32,621,434,004.98 36,659,172,956.46 40,992,125,858.99Other current assets . . . . . . . . . . . . . . . . . . . . . . . 1,067,247,287.03 1,858,382,471.26 3,022,590,986.26 3,587,257,455.72

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 37,900,768,282.29 40,865,409,053.83 47,539,497,832.51 53,264,451,930.87Non-current assets

Debt investment . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – –Available-for-sale financial assets . . . . . . . – – – –Other investment on bonds. . . . . . . . . . . . . . . – – – –Long-term receivables . . . . . . . . . . . . . . . . . . . . 83,311,508,418.43 90,227,869,868.77 88,581,640,827.20 93,625,899,972.39Long-term equity investments . . . . . . . . . . . – 123,833,400.00 20,000.00 406,832.37Investment in other equity instruments . – 5,000,000.00 444,302,351.49 444,302,351.49Other non-current financial assets. . . . . . . – – 1,015,738,955.75 1,028,331,458.21Investment properties . . . . . . . . . . . . . . . . . . . . . 40,390,057.96 56,703,544.77 54,764,710.77 53,795,293.77Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,338,800,685.77 12,973,276,763.28 17,117,687,124.66 15,134,288,618.67Construction in progress . . . . . . . . . . . . . . . . . 1,428,084,786.12 1,889,723,899.67 1,736,607,077.74 1,918,332,039.94Bearer biological assets . . . . . . . . . . . . . . . . . . – – – –Oil and gas assets . . . . . . . . . . . . . . . . . . . . . . . . . – – – –Right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . – – – 3,286,421,994.33Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,070,057.74 2,379,208.38 6,321,658.21 5,702,415.73Development costs . . . . . . . . . . . . . . . . . . . . . . . . – – – –Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – –Long-term prepaid expenses . . . . . . . . . . . . . – – – –Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . 767,424,194.90 849,103,084.69 1,155,917,454.04 1,319,534,112.50Other non-current assets. . . . . . . . . . . . . . . . . . 1,967,084,361.01 1,762,405,519.34 1,096,983,971.50 1,530,232,947.24

Total non-current assets . . . . . . . . . . . . . . . . . . . 94,854,362,561.93 107,890,295,288.90 111,209,984,131.36 118,347,248,036.64TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,755,130,844.22 148,755,704,342.73 158,749,481,963.87 171,611,699,967.51Current liabilities

Short-term borrowings . . . . . . . . . . . . . . . . . . . . 13,088,634,366.79 10,528,365,458.29 9,983,188,635.53 15,714,741,722.20Financial liabilities held for trading . . . . – – – –Derivative financial liabilities . . . . . . . . . . . – – – –Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 151,500,000.00 280,500,000.00Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . 378,237,149.17 110,478,461.06 109,521,633.55 76,351,080.12Advances from customers . . . . . . . . . . . . . . . . 287,078,553.97 771,315,019.23 664,893,148.13 585,798,586.32Contractual liability . . . . . . . . . . . . . . . . . . . . . . . – 2,202,184.92 2,370,064.73 5,905,797.13Employee benefits payable . . . . . . . . . . . . . . . 506,913.52 8,309,274.80 16,613,582.01 7,159,368.26

– 25 –

As at 1 January As at 31 December As at 30 June

2019 2019 2020 2021

(RMB) (RMB) (RMB) (RMB)(audited) (audited) (audited) (unaudited)

Taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 526,212,877.65 1,465,138,827.64 934,800,560.01 514,734,759.03Other payables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,418,006,994.67 6,154,838,911.22 7,618,201,585.36 8,266,991,776.65Cession insurance premiums payable . . . – – – –Provision for insurance contracts. . . . . . . . – – – –Funds received as agent of stock

exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – –Funds received as stock underwrite . . . . . – – – –Liabilities classified as held for sale. . . . – – – –Current portion of non-current

liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,253,687,236.50 27,247,801,989.41 23,561,356,308.45 30,369,670,964.84Other current liabilities . . . . . . . . . . . . . . . . . . . 7,245,907,298.32 4,255,488,505.73 12,798,259,452.04 11,204,356,767.12

Total current liabilities . . . . . . . . . . . . . . . . . . . . 41,198,271,390.59 50,543,938,632.30 55,840,704,969.81 67,026,210,821.67Non-current liabilities

Long-term borrowings . . . . . . . . . . . . . . . . . . . . 38,882,719,030.91 37,569,296,866.38 44,321,274,015.31 44,369,263,074.61Debentures payable . . . . . . . . . . . . . . . . . . . . . . . 13,639,599,520.02 16,356,343,708.19 11,667,396,968.12 13,103,733,321.00Lease liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – 4,239,285,970.55Long-term payables . . . . . . . . . . . . . . . . . . . . . . . 10,247,014,601.08 11,813,465,130.07 10,967,008,960.53 6,336,583,964.07Accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . – – – –Deferred income. . . . . . . . . . . . . . . . . . . . . . . . . . . – – – –Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . 41,751,232.00 95,424,022.57 171,792,452.71 222,132,353.28Other non-current liabilities . . . . . . . . . . . . . 14,113,321,409.12 11,240,954,394.31 10,769,602,686.68 10,157,571,573.30

Inc: Special Reserve Fund . . . . . . . . . . . . . . . . . . – – – –Total non-current liabilities . . . . . . . . . . . . . . . 76,924,405,793.13 77,075,484,121.52 77,897,075,083.35 78,428,570,256.81Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,122,677,183.72 127,619,422,753.82 133,737,780,053.16 145,454,781,078.48Owners’ equity

Paid-in capital(or share capital) . . . . . . . . . 8,722,186,493.00 9,978,467,899.00 9,978,467,899.00 9,978,467,899.00Other equity instruments . . . . . . . . . . . . . . . . . 1,500,000,000.00 3,000,000,000.00 4,500,000,000.00 5,400,000,000.00Including: preferred shares . . . . . . . . . . . . . . – – – –

Perpetual bonds . . . . . . . . . . . . . . 1,500,000,000.00 3,000,000,000.00 4,500,000,000.00 5,400,000,000.00Capital surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,098,412,144.76 3,342,130,738.76 3,342,130,738.76 3,342,130,738.76Less: treasury shares . . . . . . . . . . . . . . . . . . . . . . – – – –Other comprehensive income . . . . . . . . . . . . 16,294,507.41 15,968,007.73 -205,281,966.65 -242,571,624.25Specialized reserve. . . . . . . . . . . . . . . . . . . . . . . . – – – –Surplus reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404,677,360.82 507,045,820.92 607,859,791.20 607,859,791.20Undistributed profits . . . . . . . . . . . . . . . . . . . . . . 1,890,883,154.51 2,884,890,789.40 3,850,006,502.41 3,932,513,138.33Total owners’ equity belongs to parent

company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,632,453,660.50 19,728,503,255.81 22,073,182,964.72 23,018,399,943.04Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . – 1,407,778,333.10 2,938,518,945.99 3,138,518,945.99

Total owners’ equity. . . . . . . . . . . . . . . . . . . . . . . . 14,632,453,660.50 21,136,281,588.91 25,011,701,910.71 26,156,918,889.03TOTAL LIABILITIES AND OWNERS’

EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,755,130,844.22 148,755,704,342.73 158,749,481,963.87 171,611,699,967.51

– 26 –

OTHER FINANCIAL DATA

As at1 January 2019 orfor the year ended31 December 2018

As at or for the year ended 31 DecemberAs at or for the six months

ended 30 June

2019 2020 2020 2021

EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . . RMB6,365,255,869.26 RMB8,959,977,663.67 RMB8,849,643,450.82 4,458,505,992.96 4,327,674,712.09EBITDA MARGIN(2) . . . . . . . . . . . . 0.89 0.89 0.87 0.92 0.92GROSS DEBT(3)(5)/EBITDA . . . . . 16.50 12.30 13.80 13.61 15.40NET DEBT(4)(5)/EBITDA . . . . . . . . 15.60 11.70 13.13 12.83 14.59EBITDA Interest Coverage

Ratio(6) . . . . . . . . . . . . . . . . . . . . . . . . 1.60 1.50 1.67 1.65 1.77GROSS

DEBT(3)/CAPITALISATION(7) 1.18 1.18 1.18 1.21 1.28

Notes:

(1) The Guarantor calculates EBITDA for any period as profit before tax for the period plus interest expenses,amortisation and depreciation. EBITDA is not a standard measure under PRC GAAP or IFRS. EBITDA is a widelyused financial indicator of a company’s ability to service and incur debt. EBITDA should not be considered in isolationor construed as an alternative to cash flows, net income or any other measure of performance or as an indicator of theGroup’s operating performance, liquidity, profitability or cash flows generated by operating, investing or financingactivities. In evaluating EBITDA, the Guarantor believes that investors should consider, among other things, thecomponents of EBITDA and the amount by which EBITDA exceeds capital expenditure and other charges. TheGuarantor has included EBITDA because it believes that it is a useful supplement to the cash flow data as a measureof the Group’s performance and its ability to generate cash flow from operations to cover debt service and taxes.EBITDA presented herein may not be comparable to similarly titled measures presented by other companies. Investorsshould not compare the Group’s EBITDA to EBITDA presented by other companies because not all companies use thesame definitions.

(2) EBITDA Margin means EBITDA divided by total revenue from operations for the period.

(3) Gross Debt means the sum of long-term borrowings and short-term borrowings.

(4) Net Debt means Gross Debt less cash at bank and on hand.

(5) Gross Debt and Net Debt as calculated above, may not be comparable to similarly titled measures reported by othercompanies.

(6) EBITDA Interest Coverage Ratio means EBITDA divided by gross interest expense for the period. Gross interestexpense includes the interest expenses capitalised in property, plant and equipment.

(7) Capitalisation means the sum of long-term borrowings and total owners’ equity.

– 27 –

RISK FACTORS

An investment in the Instruments is subject to a number of risks. Investors should carefully consider

all of the information in this Offering Circular and, in particular, the risks described below, before

deciding to invest in the Instruments. The following describes some of the significant risks that could

affect the Issuer, the Guarantor, the Group and the value of the Instruments. Some risks may be

unknown to the Issuer, the Guarantor and the Group and other risks, currently believed to be

immaterial, could in fact be material. Any of these could materially and adversely affect the business,

financial condition, results of operations and prospects of the Issuer, the Guarantor and the Group.

The market price of the Instruments could decline due to any of these risks, and investors may lose

part or all of their investment. This Offering Circular also contains forward-looking statements that

involve risks and uncertainties. The actual results of the Issuer, the Guarantor or the Group could

differ materially from those anticipated in these forward-looking statements as a result of certain

factors, including the risks described below and elsewhere in this Offering Circular. The Issuer, the

Guarantor and the Group may be affected materially by requirements and restrictions that arise

under PRC laws, regulations and government policies in nearly all aspects of its business in the PRC.

RISKS RELATING TO THE GROUP

Disruptions or volatility in global and domestic financial markets could adversely impact theindustries and markets in which the Group serves and operates.

The Group is a leasing company specialising in providing customised leasing services, including

aircraft leasing, ship leasing, urban infrastructure leasing and equipment leasing, and is largely

dependent on the growth of the Group’s target industries, including the aircraft, shipping, urban

infrastructure and equipment industries. The demand for the Group’s services is substantially

influenced by general global and domestic economic conditions. Global and domestic economic

conditions may cause volatility and disruptions in the capital and credit markets.

In recent years, there has been a slowdown in the overall growth of the PRC economy. The outlook

for the world economy and financial markets remains uncertain. In Asia and other emerging markets,

some countries are expecting increasing inflationary pressure as a result of liberal monetary policy

or excessive foreign fund inflow, or both. The United Kingdom’s exit from the European Union has

resulted in volatility in global financial markets, and it is expected to create mid- to long-term

economic uncertainty to not only the economies of the United Kingdom and the European Union but

also globally. In addition, the U.S. government’s policies may create uncertainty for the global

economy and financial markets. The United States and the PRC have recently been involved in

controversy over trade barriers that have threatened a trade war between the countries, and have

implemented or proposed to implement tariffs on certain imported products. Sustained tension

between the United States and the PRC over trade policies could significantly undermine the stability

of the global economies. More recently, the ongoing COVID-19 pandemic has adversely affected

global financial, foreign exchange, commodity and energy markets. In December 2019, the first case

of a novel strain of coronavirus, COVID-19, was identified. The pandemic has since spread globally

and there have been increased initial infection and fatality rates across the world. On 11 March 2020,

the World Health Organization declared the COVID-19 outbreak a pandemic. The COVID-19

pandemic and policies implemented by governments to deter the spread of the disease have had and

may continue to have an adverse effect on consumer confidence and the general economic conditions

to which the Group’s business is subject. Governments of many countries (including the PRC) have

– 28 –

declared a state of emergency, closed their borders to international travellers and issued stay-at-home

orders with a view to containing the pandemic. There can be no assurance that such measures will

be effective in ending or deterring the spread of COVID-19. As COVID-19 continues to spread

globally, more countries may be affected, which may result in the extension or implementation of

further restrictive measures. The resultant disruptions to the supply chain and reduced levels of

consumption, commercial activities and industrial production in the affected countries or regions may

result in an economic slowdown in such economies which, if prolonged, could cause a global

recession. As the situation of the COVID-19 pandemic is still evolving, the heightened uncertainties

surrounding the pandemic may pose a material adverse impact on the Group’s business, financial

condition, results of operations and prospects. Please see “Risk Factors – Risks Relating to the Group

– The global outbreak of the contagious COVID-19 may have an adverse effect on the Group’s

business, financial condition and results of operations.” and “Risk Factors – Risks Relating to the

Group – The Group’s operations are subject to force majeure events, political unrest or civil

disobedience movements, natural disasters, outbreaks of contagious diseases and other disasters.”

for further information.

While central banks of different countries, including the Federal Reserve Board of Governors of the

United States, have cut policy rates and/or announced stimulus packages, and national governments

have proposed or adopted various forms of economic relief to contain the economic impact of the

pandemic and stabilise the markets, there can be no assurance that such monetary and fiscal policy

measures will have the intended effects or that a global economic downturn will not occur or market

volatilities will not persist. The PRC economy is sensitive to global economic conditions, and it is

impossible to predict how the PRC economy will develop in the future and whether it may slow down

due to a global crisis or experience a financial crisis. There can be no assurance that changes in the

economic, social and political conditions in the PRC or the global economy would not have an

adverse effect on the Group’s business, financial conditions, performance, profitability and prospects.

In addition, other external factors, such as the imposition of trade tariffs, sanctions, boycotts, trade

and labour disputes and work stoppages, particularly in the aircraft industry, which are events beyond

the Group’s control, and the recurrence of adverse macroeconomic conditions may have a material

adverse effect on the Group’s business, financial condition, results of operations and prospects.

Global and domestic economic conditions may cause volatility and disruptions in the capital and

credit markets. Should global or domestic economic conditions deteriorate or access to credit markets

be reduced, the Group and its customers could experience reduced levels of liquidity and increased

credit spreads. For example, during the financial crisis arising out of the European sovereign debt

crisis and slow economic growth in developed economies, certain customers of the Group

experienced reduced liquidity, credit and credit capacity, which resulted in reduced demand for the

Group’s products and services.

– 29 –

The extent of any impact on the Group’s ability to meet funding or liquidity needs would depend onseveral factors, including its operating cash flows, the duration of any market disruptions, changesin counterparty credit risk, the impact of government intervention in financial markets including theeffects of any programmes or legislation designed to increase or restrict liquidity in certain areas ofthe market, general credit conditions, the volatility of equity and debt markets, any credit ratings andthe credit capacity of the Group and the costs of financing and other general economic and businessconditions. Market disruption and volatility may also lead to a number of other risks, including butnot limited to:

• market developments that may affect customer confidence, reduce the demand for financingservices or cause increases in delinquencies and default rates, which could increase the Group’swrite-offs and provisions for credit losses;

• the process the Group uses to estimate losses from its credit exposure requires a high degree ofmanagement’s judgment regarding numerous subjective and qualitative factors, includingforecasts of economic conditions and how economic predictors might impair the ability of itscustomers to perform their contractual obligations under the leases. Financial market disruptionand volatility may reduce the accuracy of the Group’s judgments;

• the Group’s ability to engage in routine funding transactions or borrow from other financialinstitutions on acceptable terms, or at all, could be adversely affected by disruptions in thecapital markets or other events, including a deterioration in investor expectations; and

• the ability of the Group’ funding counterparties to provide funding could be adversely affectedby market volatility or disruptions in the equity and credit markets.

Therefore, any market disruption or volatility may materially and adversely affect the Group’sbusiness, financial condition and results of operations.

The Group’s substantial indebtedness and net current liabilities position expose the Group toliquidity risk.

The Group currently has incurred a substantial amount of indebtedness. The Group’s totalindebtedness (including short-term borrowings, other current liabilities, long-term borrowings duewithin one year, long-term borrowings, other long-term liabilities and bond payable) wasapproximately RMB103,165.72 million, RMB110,113.20 million, RMB122,128.31 million andRMB133,267.52 million as at 31 December 2018, 2019 and 2020 and 30 June 2021, respectively,representing approximately 77.50 per cent., 74.02 per cent., 76.93 per cent. and 77.66 per cent. of theGroup’s total assets as at 1 January 2019, 31 December 2019, 31 December 2020 and 30 June 2021,respectively.

Due to the capital-intensive nature of the Group’s business, the need to refinance maturing debt andthe Group’s strategy of expanding its aircraft portfolios, the Guarantor expects that the Group willincur significant additional indebtedness in the future and continue to maintain high levels ofindebtedness. The Group’s high level of indebtedness:

• may cause a substantial portion of the Group’s cash flows from operations to be dedicated tointerest and principal payments and therefore is not available to fund the Group’s operations,working capital, capital expenditure, expansion, acquisitions or general corporate or otherpurposes;

– 30 –

• may impair the Group’s ability to obtain additional financing in the future;

• may limit the Group’s flexibility in planning for, or reacting to, changes in its business andindustry;

• may make the Group more vulnerable to downturns in its business, its industry or the economyin general;

• may restrict the Group from pursuing strategic business opportunities; and

• may increase the Group’s exposure to interest rate fluctuations.

Furthermore, the Group’s current liabilities exceeded its current assets by approximatelyRMB4,599.38 million, RMB9,678.53 million, RMB8,301.21 million and RMB13,761.76 million asat 1 January 2019, 31 December 2019, 31 December 2020 and 30 June 2021, respectively. The netcurrent liabilities position may expose the Group to liquidity risk which could restrict the Group’sability to make necessary capital expenditure or develop business opportunities, and the Group’sbusiness, operating results and financial condition could be materially and adversely affected.

There can be no assurance that the Group will always be able to continue to obtain the requiredfinancing in the future or that the Group would be able to arrange for re-financing its indebtednesswhen they become due, repay its indebtedness or raise the necessary funding to finance its businessgrowth and its capital commitments.

Furthermore, there can be no assurance that the Group will be able to comply with all therequirements or covenants under its financing agreements or other material contracts entered intoas part of its ordinary course of business or that the Group will be able to obtain any waiver if it failsto comply with them. The Group has not received, during the three years ended 31 December 2020and the six months ended 30 June 2021, any notice of breach of any covenant or undertaking resultingin early termination or modification of any contracts or agreements which are material to the Group’sbusiness.

If the Group violates any of the undertakings or covenants, it could result in increase in the interestrates, accelerated repayment of loans and interest, termination or delay in the relevant arrangementsor legal proceedings against the Group. Any of these incidents could have a material adverse effecton the Group’s business, operating results, and financial condition. Furthermore, the Group’sliquidity depends on the amount of cash generated from its operations and its access to furtherfinancial resources, which could also be in turn affected by the Group’s future operating performance,prevailing economic conditions, and other factors outside the Group’s control.

The global outbreak of the contagious COVID-19 may have an adverse effect on the Group’sbusiness, financial condition and results of operations.

The Guarantor believes that the Group had one of the largest networks of airline customers in thePRC as at 30 June 2021. The global outbreak of COVID-19 has resulted in material contraction inair travel within the PRC, Asia and globally due to a combination of adverse passenger sentiment andmeasures to contain and halt the outbreak. Moreover, COVID-19 will lead to lower levels ofeconomic growth in the PRC which is likely to reduce demand for leased aircraft in the PRC, witha consequent adverse impact on lease rates and the Group’s ability to lease, re-lease or sell its aircraft.In addition, the global outbreak of COVID-19 may adversely affect the liquidity and financial

– 31 –

condition of the Group’s airline customers and such customers’ ability to perform their contractualobligations. It is difficult to predict the level of impact of the outbreak of COVID-19 on the PRC andglobal economies and any escalation and/or intensification of the outbreak of COVID-19 couldmaterially and adversely affect the Group’s business, financial condition and results of operations andthe Group’s ability to meet its financial obligations. Although the Group has adopted various remedialmeasures to minimise the adverse impact of the continuing COVID-19 pandemic on its businessesand operations, there can be no assurance that such measures will have the intended effects or thatthe adverse impact of the continuing COVID-19 pandemic on the Group will not persist.

The PRC government (including the central SASAC) has no obligation to repay any amountunder the Instruments or the Guarantee.

The PRC government (including the central SASAC) is not an obligor and shall under nocircumstances have any obligation arising out of or in connection with the Instruments or theGuarantee. This position has been reinforced by the Circular of the Ministry of Finance on Issuesrelevant to the Regulation on the Financing Activities Conducted by Financial Enterprises for LocalGovernments and State-owned Enterprises (財政部關於規範金融企業對地方政府和國有企業投融資行為有關問題的通知) (財金 [2018] 23號) (the “MOF Circular”) promulgated on 28 March 2018 andwhich took effect on the same day, and the Circular of the National Development and ReformCommission and the Ministry of Finance on Improvement of Market Regulatory Regime and StrictPrevention of Foreign Debt Risks and Local Government Indebtedness Risks (Fa Gai Wai Zi [2018]No. 706) (國家發展改革委財政部關於完善市場約束機制嚴格防範外債風險和地方債務風險的通知)(發改外資 [2018] 706號) (the “Joint Circular”) promulgated on 11 May 2018 and which took effecton the same day.

The repayment obligations under the Instruments and the Guarantee remain the sole obligation of theIssuer or the Guarantor (as the case may be) and all obligations under the Instruments and theGuarantee shall solely be fulfilled by the Issuer or the Guarantor (as the case may be) as anindependent legal person. The PRC government as the ultimate shareholder of the Guarantor only haslimited liability in the form of its equity contribution in the Guarantor. Each of the PRC government(including the central SASAC) and AVIC has no obligation to repay any amount under theInstruments or the Guarantee. Investments in the Instruments are relying solely on the credit risk ofthe Issuer and the guarantee to be provided by the Guarantor. In the event the Issuer and the Guarantordo not fulfil their respective obligations under the Instruments and the Guarantee (as the case maybe), investors will only be able to claim as an unsecured creditor against the Issuer, the Guarantor andtheir respective assets, and not any other person including the PRC government, the central SASACor any other local or municipal government entities. As the MOF Circular and the Joint Circular arerelatively new and given the limited volume of published decisions related to these circulars, theinterpretation and enforcement of these laws and regulations involve uncertainties.

In addition, any ownership or control of the Group by the PRC government (including the centralSASAC) does not necessarily correlate to, or provide any assurance as to, the Issuer or theGuarantor’s financial condition. If the Issuer and the Guarantor do not fulfil their respectiveobligations under the Instruments and the Guarantee (as the case may be), investors will only haverecourse against the Issuer or the Guarantor (as the case may be), and not any other person includingthe PRC government, the central SASAC or any other local or municipal government entities.

Therefore, in making an investment decision, investors must rely upon their own examination of thefinancial condition of the Issuer, the Guarantor and the Group, the terms of the offering (includingthe merits and risks involved) and the financial information of the Guarantor included in this OfferingCircular.

– 32 –

The Group’s operations are subject to force majeure events, political unrest or civil

disobedience movements, natural disasters, outbreaks of contagious diseases and other

disasters.

Force majeure events, natural disasters, catastrophe or other events could result in severe personal

injury to the Group’s staff, property damage and environmental and other damage, which may curtail

the Group’s operations, cause delays in estimated completion dates for the Group’s projects and could

in turn materially and adversely affect the Group’s cash flows and accordingly, adversely affect its

ability to repay any debt.

A substantial part of the Group’s operations are based in the PRC, which is exposed to potential

natural disasters including, but not limited to, earthquakes, flooding, landslides, mudslides and

drought. If any of the Group’s developments are damaged by severe weather or any other disasters,

accidents, catastrophes or other events, the Group’s operations may be significantly interrupted. The

occurrence or continuance of any of such unforeseen events or similar events could increase the costs

associated with the Group’s operations and reduce its ability to operate its businesses effectively,

thereby reducing its operating income and profits.

In addition, the Group’s contracts with its suppliers and other counterparties may have force majeure

provisions that permit such parties to suspend, terminate or otherwise not perform their obligations

under the relevant contracts upon the occurrence of certain events such as strikes and other industrial

or labour disturbances, terrorism, restraints of government, civil protests, disobedience movements

or disturbances, or any natural disasters; all of which are beyond the control of the party asserting

such force majeure event. If one or more of the Group’s suppliers or other counterparties do not fulfil

their contractual obligations for any extended period of time due to a force majeure event or

otherwise, the Group’s results of operations and financial condition could be materially and adversely

affected.

Risks of substantial costs and liabilities are inherent in the Group’s principal operations and there can

be no assurance that significant costs and liabilities will not be incurred, including those relating to

claims for damages to property or persons. Insurance policies for civil liability and damages taken

out by the Group could prove to be significantly inadequate, and there can be no assurance that the

Group will always be able to maintain an adequate level of coverage at least equal to the Group’s

current coverage and at the same cost. The frequency and magnitude of natural disasters seen over

the past few years could have a significant impact on the capacities of the insurance and reinsurance

market and on the costs of civil liability and damages insurance cover for the Group. Please see

“– The insurance coverage of the Group may not adequately protect it against all operational risks

or any potential liabilities or losses.” for further information.

The Group’s operations and financial condition could also be materially and adversely affected by

any outbreak, epidemic and/or pandemic of (or the escalation and/or intensification of any outbreak,

epidemic and/or pandemic of) infectious or contagious diseases and/or other adverse public health

developments in the PRC or elsewhere. In particular, the global outbreak of the novel coronavirus,

COVID-19, in the PRC, Hong Kong and other countries has led to business suspension, travel and

other restrictions, labour shortages and supply or delivery chain constraints in the PRC, Hong Kong

and globally. It is difficult to predict the level of impact of the outbreak of COVID-19 on the PRC

and global economies and there can be no assurance that it would not have a material adverse effect

on the Group’s business, results of operations, financial condition and prospects.

– 33 –

In addition, all levels of business in Hong Kong, the PRC and other Asian countries were adverselyaffected by the outbreak of severe acute respiratory syndrome (“SARS”) in 2003. There have alsobeen sporadic outbreaks of the H5N1 virus or “Avian Influenza A” among birds, in particular poultry,as well as some isolated cases of transmission of the virus to humans. In 2009 and 2010, there havealso been outbreaks among humans of the A/H1N1 influenza virus. Other recent epidemics includethe Middle East Respiratory Syndrome (MERS), the H5N1 avian flu, the H7N9 avian flu, the Ebolavirus disease and the Zika virus disease. The occurrence of another outbreak of SARS, the A/H1N1influenza virus or of any other highly contagious disease or epidemic disease (whether known orunknown to the world) (or the escalation and/or intensification of any outbreak, epidemic and/orpandemic of infectious disease) in the PRC or elsewhere may result in another economic downturnregionally and/or globally and could materially and adversely affect the overall level of business andtravel activities in the affected areas and/or globally, which in turn could have a material adverseeffect on the Group’s business, results of operations and financial condition.

Certain affiliates of the Group have business activities in certain countries that are the subjectof economic sanctions.

Certain affiliates of the Group (the “Affiliates”) have business presence in a number of foreign

countries including certain countries that are the subject of economic sanctions regimes administered

or enforced by the United States, the United Nations, the European Union and/or Her Majesty’s

Treasury. The Affiliates also have a large number of clients located worldwide, and engage in limited

business activities relating to countries that are the subject of various United States economic

sanctions regimes, and there can be no assurance that the Affiliates will cease to engage in business

activities relating to those countries in the foreseeable future. The interpretation or implementation

of government policy at the U.S. federal, state or local levels with respect to any current or future

activities by the Affiliates in countries that are the subject of U.S. sanctions or with sanctioned

individuals or entities is difficult to predict. As at the date of this Offering Circular, the Group has

not engaged in any business activities in any sanctioned countries. However, if the U.S. government

determines that the Affiliates engage in any sanctionable activity or activity that is contrary to U.S.

policy, the Affiliates may be subject to various sanctions, and the Group, as a result of the affiliate

relationship, may also be subject to various sanctions ranging from restrictions on U.S. exports or

bank financing to outright blocking of the sanctioned entities’ property within U.S. jurisdiction. If the

most extreme sanction, blocking, were applied to the Group’s property, including property of their

respective controlled subsidiaries, the Group could be prohibited from engaging in business activities

in the United States or with U.S. individuals or entities. If the Group is sanctioned, the Group could

also be prohibited from engaging in U.S. transactions in the Instruments and distributions to U.S.

individuals and entities with respect to the Instruments could also be prohibited. As a result, the

market price of the Instruments may be adversely affected, and the Instrumentholders might be unable

to sell, or receive distributions with respect to, the Instruments. In addition, the Group may also be

subject to negative media or investor attention, which may distract management, consume internal

resources and affect investors’ perception of the Group. There can be no assurance that the Group will

not be the subject of sanctions in the future due to the Affiliates’ activities.

The Guarantor’s controlling shareholder, AVIC, is subject to certain Executive Orders issued bythe United States.

Since 2018, the U.S.-China trade war has brought uncertainty to global markets and to a certain

extent, impacted businesses and financial market sentiment, influenced financial market volatility,

and slowed investment and trade. The continued intensification of tensions between the United States

– 34 –

and China has caused the U.S. government to focus on national security concerns and increase

scrutiny of foreign businesses such as AVIC, which indirectly held approximately 44.03 per cent. of

the issued share capital of the Guarantor as at 30 June 2021.

On 12 November 2020 and 3 June 2021, the U.S. President issued Executive Order 13959,

“Addressing the Threat From Securities Investments That Finance Communist Chinese Military

Companies”, and Executive Order 14032, “Addressing the Threat From Securities Investments That

Finance Certain Companies of the People’s Republic of China” (“E.O. 14032”) (together, the

“Orders”), respectively. The present effect of the Orders is that U.S. Persons (as defined in the

Orders) are prohibited, as of 2 August 2021, from buying and selling (subject to a divestment period)

any publicly traded securities, or any publicly traded securities that are derivative of such securities

or are designed to provide investment exposure to such securities, of any company listed in the Annex

to E.O. 14032 (the “Annex”) or of any person determined by the U.S. Secretary of the Treasury, in

consultation with the U.S. Secretary of State, to operate or have operated in the “defense and related

materiel sector or the surveillance technology sector of the economy of the PRC” or to own or control

or be owned or controlled by a person who operates or has operated in that sector. The definition of

U.S. Persons in the Orders (including any United States citizen, permanent resident alien, entity

organised under the laws of the United States or any jurisdiction within the United States (including

foreign branches), or any person in the United States) is different from the definition of a U.S. person

under Regulation S of the Securities Act. E.O. 14032 includes a 10-month wind down period where

purchases for value or sales made within the prescribed period by U.S. persons solely to divest, in

whole or in part, from such restricted securities are permitted. The Orders are a form of U.S.

sanctions. Investors are responsible for ensuring that they comply with applicable provisions of

Executive Order 14032. Investors who are considered U.S. persons for purposes of the Orders should

consider whether this is an appropriate investment.

As at the date of this Offering Circular, to the knowledge of the Issuer and the Guarantor, AVIC is

one of the companies listed on the Annex. The Guarantor and other members of the Group have

engaged in, and will continue to engage in, various dealings and transactions with AVIC and other

companies that are listed on the Annex and/or subject to the prohibitions stipulated by the Orders

from time to time. As at the date of this Offering Circular, the prohibitions stipulated by the Orders

do not extend to the publicly traded securities of the Issuer and the Guarantor, as neither the Issuer

nor the Guarantor are named on the U.S. Department of the Treasury’s Office of Foreign Assets

Control’s Non-SDN Chinese Military Companies List (“NS-CMIC List”). Although as at the date of

this Offering Circular, the Issuer and the Guarantor are not named on the NS-CMIC List, the U.S.

Secretary of the Treasury is authorised under the Orders to include additional entities that are owned

or controlled by an entity subject to the Orders to the NS-CMIC List. Therefore, there can be no

assurance that the Issuer and/or the Guarantor will not be subject to the Orders in the future.

The inclusion of AVIC in the Annex and the fact that AVIC is subject to the prohibitions stipulated

by the Orders may result in negative media and investor attention targeted at AVIC and/or the Group,

which may cause their business partners to re-evaluate the risk of transacting with AVIC and/or the

Group, in particular in light of ongoing U.S.-China tensions. In addition, if the U.S. Secretary of the

Treasury ultimately determines that any of the Issuer, the Guarantor or other member of the Group

is named as an entity subject to the Orders, investors who are U.S. Persons will be prohibited (subject

to divestment periods) from entering into certain transactions in the relevant entity’s publicly traded

securities (which may include the Instruments and/or the Guarantee). In such case, the market

liquidity of the Instruments may be materially and adversely affected. Instrumentholders who are

U.S. Persons may also be required to divest their holdings in the Instruments and may have to do so

– 35 –

at a loss. The inclusion of AVIC in the Annex and the fact that AVIC is subject to the prohibitions

stipulated by the Orders may also affect AVIC and/or the Group’s businesses in the overseas markets

(including the United States). Although the Group’s overall operations and activities in the United

States and the Group’s business with individuals or entities in the United States represent only a small

percentage of the Group’s consolidated total revenue, such operations and activities of the Group may

be materially and adversely affected as tensions between the United States and China intensify.

In the future, any further escalation of the U.S.-China tensions may cause the U.S. government to

impose further sanctions and/or restrictions on AVIC and/or the Group, which could include measures

with a range of severity, including possible prohibition of transactions by the sanctioned entity

through the U.S. financial system and blocking sanctions. The Group has been closely monitoring the

development of the Orders and actively implementing corresponding mitigation measures in response

to the latest development of such situations. However, there can be no assurance that any potential

restrictions or sanctions on AVIC, the Group and/or any affiliates of the Guarantor will not materially

and adversely affect the business, prospects, financial condition and results of operations of AVIC,

the Group or the relevant affiliates and their future business expansion in the overseas markets

(including the United States).

The Group operates in an increasingly competitive market.

The PRC financial leasing industry is becoming increasingly competitive, and there can be no

assurance that the Group will be able to sustain its competitive advantage or maintain its market

position or effectively implement its business strategies. The Group faces competition from both

international and domestic players (including the financing divisions of vendors, manufacturers of

aircraft, vessels, urban infrastructure equipment and other equipment, financial institutions including

banks and other leasing companies) in its business, and competes with them in capturing new

business opportunities. Some of the Group’s competitors may have significant financial resources,

marketing and other capabilities, more extensive know-how and business relationships and longer

operating track records. Leveraging AVIC’s aircraft manufacturing business and industry expertise

within the aviation industry, the Group competes with its competitors on the basis of availability of

the aircraft types or product types that meet customers’ needs and the ability to provide customised

and integrated services to its customers. The Group’s revenue is affected by these competitive factors

and its success depends on its ability to compete effectively. Competition from such entities may

result in, among others, downward competitive pressure on interest rates charged to customers,

adoption by the Group’s competitors of innovative financial services or comparatively effective

branding efforts, any of which may have a material adverse effect on the Group’s business, financial

condition and results of operations.

Upon the PRC’s accession to the World Trade Organisation in 2001, the PRC financial leasing

industry entered a phase of rapid development and the number of both foreign and domestic investors

participating in the industry has increased. In order to fulfil its commitment to liberalise the PRC

financial leasing market, MOFCOM implemented several policies to develop further the financial

leasing industry and encourage additional investment. For instance, the Measures on the

Administration of Foreign Investment in the Leasing Industry was promulgated in 2005 and permitted

the incorporation of foreign investment leasing companies either through the establishment of

wholly-owned or joint venture financial leasing companies. In order to encourage participation by

domestic investors, the “Circular on Issues in Connection with the Engagement in Financial Leasing

Business” was jointly promulgated by MOFCOM and the State Administration of Taxation. This

– 36 –

notice permitted the establishment of domestic pilot financial leasing companies. Pursuant to the

Decision of the State Council of PRC on the Fifth Batch of Administrative Examination and Approval

Matters to be Cancelled or Delegated to Subordinate Authorities (國務院關於第五批取消和下放管理層級行政審批專案的決定) promulgated and effected on 4 July 2010, approval for the establishment

or modification of foreign invested enterprises engaged in financial leasing with a total investment

amount of U.S.$300 million or less can be approved by provincial-level governmental authorities

instead of those at the national level. The Guarantor believes that these measures are likely to further

increase competition in the PRC financial leasing industry. If the Group is unable to compete

successfully against current and future participants in the industry and maintain its competitive

advantage and market share, its business, results of operations and financial condition may be

materially and adversely affected.

The industries in which the Group is engaged are cyclical.

The aviation industry is cyclical. Demand for passenger and cargo air transportation services and, in

turn, demand for passenger and cargo aircraft has a strong positive correlation with economic growth.

Decline in economic activity adversely affects demand for business travel and air cargo services. In

addition, economic contraction may also impact leisure travel as discretionary income is reduced. The

global outbreak of COVID-19, as well as the financial crisis in Europe and the United States and,

together with slowing or contracting economies worldwide, may develop into a severe or prolonged

global recession that could result in lower demand for passenger and air cargo services, lower lease

rates for the Group’s aircraft, higher default rates among its customers and a decline in the value of

its portfolio of aircraft. Such developments would materially and adversely affect the Group’s

business, financial condition and results of operations, including its ability to meet its financial

obligations.

In addition, a proportion of the Group’s net lease receivables relates to the shipping industry. The

shipping industry is highly cyclical and is affected by factors such as global and regional economic

and political conditions, changes in regulatory regimes, strikes or armed conflicts, extreme weather

conditions and piracy. Likewise, in relation to the Group’s equipment leasing business, the industries

in which the Group’s customers are engaged can be very cyclical and are dependent on factors

including global and regional economic and political conditions and changes in regulatory regimes.

These factors are beyond the Group’s control and the nature, timing and degree of changes in industry

conditions are largely unpredictable. Any downturn in the shipping industry could result in extensive

customer defaults, decreased revenue, which in turn could materially and adversely affect the Group’s

business, financial condition and results of operations.

The Group is exposed to risks associated with entering into contracts with public organisations,and its performance may be significantly affected by changes in government policies.

The Group’s customers, in particular in its urban infrastructure leasing business, include agencies and

entities owned, controlled by or otherwise associated with local governments. The revenue

contributed by these customers accounts for a substantial part of the Group’s total revenue. Any

changes in the government’s budget or other policy considerations may result in reduced demand for

the Group’s urban infrastructure leasing business, and to the extent that the Group’s customers are

funded or supported by the government, may lead to customer defaults or contract termination, which

would adversely affect the Group’s business, financial position and results of operations, which in

turn may potentially affect the Group’s ability to meet its financial obligations.

– 37 –

The Group is subject to various PRC and overseas regulatory requirements and the Group’sfailure to comply with such requirements, could materially and adversely affect its business,financial condition, results of operations and reputation.

Certain members of the Group are the pilot domestic financial leasing enterprises approved by

MOFCOM and are subject to regulation by various PRC authorities including MOFCOM and the

State Administration of Taxation. On 8 May 2018, the General Office of MOFCOM issued the Notice

on Matters about the Rearrangement of Supervisory Responsibilities over Finance Leasing

Companies, Factoring Companies and Pawnshops (商務部辦公廳關於融資租賃公司、商業保理公司和典當行管理職責調整有關事宜的通知) (the “2018 Notice”), according to which the authority of

rule-making on operation and regulation of finance leasing companies, factoring companies and

pawnshops shall be transferred to CBIRC. From time to time, weaknesses in certain areas of the

Group’s operations, such as risk management and internal controls may be identified, which may

result in sanctions, fines or penalties being imposed on the Group. There can be no assurance that the

Group will be able to comply with all such requirements and guidelines at all time or that the Group

will not be subject to sanctions, fines or other penalties in the future as a result of non-compliance.

If sanctions, fines and other penalties are imposed on the Group for its non-compliance, the Group’s

business, financial condition, results of operations and reputation may be materially and adversely

affected.

Also, there can be no assurance that existing policies, laws and regulations governing the financialleasing industry will not change in the future or that any such changes will not materially andadversely affect the Group’s business, financial condition and results of operations nor can there beany assurance that the Group will be able to adapt to all such changes on a timely basis.

In addition, the aviation industry, in which many of the Group’s customers operate, and the operationof aircraft are subject to domestic and international regulatory controls as well as additional controlsthat various national or federal civil aviation authorities may impose, including the airworthinessdirectives for aircraft operated by airlines within the jurisdiction of such authorities. The regulatoryauthorities can suspend or revoke the licence granted to the Group’s airline customers to operate anaircraft for failure to comply with these regulations, resulting in the grounding of aircraft. If thebusiness activities of any of the Group’s lessees are disrupted due to failure to meet regulatoryrequirements, the ability of such lessees to meet their lease obligations towards the Group may beadversely affected.

Regulatory approvals are required for the import, re-export, deregistration or registration of theaircraft in various jurisdictions. Certain jurisdictions set maximum age limits for aircraft beingimported or registered. Subsequent changes in applicable laws may modify such requirements, orapprovals previously granted may be withdrawn. These changes may adversely affect the ability ofthe Group to sell these aircraft and may impair the values of these aircraft and thus have an adverseeffect on the Group’s financial performance and its ability to meet its financial obligations.

The Group is subject to risks related to default payments and breaches by its lessees or othercontractual counterparties.

The Group’s business, financial condition and results of operations are to a certain extent dependentupon the ability of its lessees to perform their contractual obligations under the leases. The abilityof each lessee to perform its contractual obligations is, in turn, dependent on its financial conditionand cash flow. If a lessee defaults, there can be no assurance that any security deposits paid underthe lease will be adequate to cover the lessee’s unpaid lease obligations, or that the maintenancereserves collected during the lease term will be sufficient to cover the Group’s maintenance expensesor the costs of re-leasing the aircraft.

– 38 –

Any deficiencies in the Group’s risk management and internal control systems may materiallyand adversely affect the Group’s financial condition and results of operations.

The Group has implemented an integrated and prudent risk management system to protect thelong-term interests of its shareholders, customers and employees. However, the Group’s riskmanagement systems and internal control policies may not be effective in mitigating its exposure toall types of risk, including unidentified or unanticipated risks. Some risk management and controlmethods are based upon historical market behaviour and past events. As such, the Group may not beable to adequately identify or estimate future risk exposures, which could be significantly greaterthan the levels indicated by measures based on historical data. Other risk management methodsdepend on evaluation of information regarding markets, customers or other relevant matters, whichmay be inaccurate, incomplete, obsolete or improperly evaluated. For instance, the informationinfrastructure in the PRC is still under development and there is no extensive and unified nationwidecredit information system. As such, risk assessment may not be based on complete, accurate,up-to-date or reliable information. Furthermore, as the Group enters into new industry sectors,expands into new customer segments or develops additional product and service offerings, it may notbe in a position to adequately identify, predict and manage future risk exposures.

In addition, management of operational, legal or regulatory risks requires various sets of policies andprocedures in order to accurately record and verify a large number of transactions and events. Suchpolicies and procedures may not be fully effective. Any failure of the Group’s risk managementprocedures or any failure to identify applicable risks may have a material adverse effect on its resultsof operations and financial condition.

The Group’s financial leasing businesses are capital intensive with long payback periods and theGroup may not be able to maintain sufficient liquidity to meet its business needs.

The Group is primarily engaged in aircraft leasing, ship leasing, urban infrastructure leasing andlarge-scale equipment leasing, which typically require significant initial cash outlays and have longpayback periods. For example, the Group is typically required to deposit a portion of the purchaseprice of the aircraft or vessel (as the case may be) to the vendor as pre-delivery payment and pay theremaining balance of the purchase price at the time of delivery. As at 30 June 2021, the lease termfor the Group’s leasing businesses ranged from three to 12 years depending on the type of leasing,during which the Group typically receives monthly, quarterly or semi-annual rental payments fromits lessees.

Although the Group generally generates significant funds from its operations, its ability to continueto meet its cash requirements over the long-term requires substantial liquidity and access to sourcesof funds. The Group has financed its businesses through a combination of borrowings from financialinstitutions, such as commercial banks, and the issuance of onshore asset back securities as well asonshore and offshore debt securities, but there can be no assurance that the Group is able to secureadequate financing for its business operations.

In addition, the Group may require additional financing to fund working capital requirements, growits business and refinance existing debt obligations. There can be no assurance that additionalfinancing, either on a short-term or a long-term basis, will be made available or, if available, suchfinancing will be obtained on favourable terms.

– 39 –

Any decrease in the residual value of the aircraft, vessels, urban infrastructure equipment orother equipment that the Group finances could adversely affect its business, financial conditionand results of operations.

Any decline in the residual value of the aircraft, vessels, urban infrastructure equipment or otherequipment financed by the Group may reduce the Group’s earnings. The Group recognises theresidual value of leased aircraft and vessel (as the case may be) based on the estimated future marketvalue of the leased asset at the maturity of the lease. The Group estimates the residual value of leasedasset at the inception of a lease based on a number of factors, including historical sale prices,management’s experience and any known significant market and product trends. If the estimatedmarket value of the Group’s leased assets declines significantly due to economic factors,obsolescence or other adverse circumstances, the Group may not realise the expected residual valueof the leased asset, which could adversely affect the Group’s business, financial condition and resultsof operations.

The Group has pledged certain lease receivables to secure its borrowings.

The Group has pledged certain of its lease receivables to secure some of its bank loans. If the Groupdefaults on such bank loans, the lenders may foreclose such leased receivables which the Group haspledged, which may disrupt and adversely affect the Group’s business. Although the terms of theGroup’s indebtedness may limit the Group’s ability to create certain security over its assets, there canbe no assurance that the Group will not pledge its leased receivables to secure its borrowings in thefuture. There can also be no assurance that the Group will not default on any of its borrowings in thefuture. As at 30 June 2021, a substantial portion of the Group’s lease receivables with total carryingvalues of approximately RMB63.62 billion were pledged to secure its bank loans amounting toapproximately RMB41.60 billion.

The value of collateral or guarantees securing the Group’s leases and the assets underlying itsleases which are disposed of upon repossession may be inadequate to cover related leasereceivables.

As at 30 June 2021, a considerable part of the Group’s leases was secured by collaterals or providedwith guarantees. To mitigate credit risks of its leases, the Group may request the lessees to provideguarantees and/or collaterals for the leases. Such guarantees and/or collaterals are typicallynegotiated on a case-by-case basis, depending on the nature of the business of the relevant lessee. Inthe event of any material default on the lease payment terms, the Group is contractually entitled toenforce its security rights over any guarantee or collateral, and/or repossess and dispose of the assetsunderlying its leases to realise their value. However, the value of such collateral and/or assetsunderlying such leases to be disposed of may decline and may be materially and adversely affectedby a number of factors, such as any damage, loss, oversupply, devaluation or reduced market demand.Similarly, any significant deterioration in the financial condition or creditworthiness of guarantorsunder the Group’s guaranteed leases could significantly decrease any amounts which the Group maybe able to recover under such guarantees.

The Group’s policies require periodic internal re-evaluation of collaterals, guarantees and assets

underlying its leases for impairment testing purposes. If the value of such collaterals, guarantees or

assets underlying the Group’s leases proves to be inadequate to cover the related lease receivables,

the Group may need to obtain additional security from its customers or other sources, but there can

be no assurance that it will be able to do so. Any decline in the value of such collaterals, guarantees

or assets underlying the Group’s leases or the Group’s inability to obtain additional security may

result in impairment losses and require the Group to make additional impairment provisions against

its lease receivables, which may in turn materially and adversely affect its business, financial

condition and results of operations.

– 40 –

The Group may not be able to successfully enforce its rights to the underlying collateral orguarantees to its leases, or enforce its rights to repossess leased assets.

In the PRC, the procedures for liquidating or otherwise realising the collateral value of tangible assetsand the procedures for enforcing the Group’s rights to a guarantee or to repossess and dispose of theasset underlying its leases could be time-consuming and in practice it may be difficult to realise suchcollateral value, enforce the guarantee or repossess and dispose of assets underlying the Group’sleases. Although the Group could apply to a PRC court in accordance with the PRC Civil ProcedureLaw (中華人民共和國民事訴訟法) for the attachment or disposal of any underlying collateral, theenforcement of a guarantee or the repossession of the assets underlying the Group’s leases upondefault, it is uncertain whether any judgment made by local courts would be enforceable due touncertainties of the PRC legal system governing such enforcement. In addition, under PRC law, theGroup’s rights to any collateral securing its leases may be subordinated to other claims. For example,according to the PRC Enterprise Bankruptcy Law (中華人民共和國企業破產法), claims for theamount that a company in bankruptcy owed its employees prior to 27 August 2006 (being the dateof publication of the PRC Enterprise Bankruptcy Law), including but not limited to salaries, medicalinsurance and pension benefits, will have priority over the rights of such company’s creditors tocollateral, if not adequately provided for in liquidation proceedings. Therefore, upon any default ofany lessee or any guarantor under the Group’s lease, if the Group is unable to successfully enforceits right in respect of any collateral or any guarantee related to any assets underlying its leases to berepossessed and disposed of on a timely basis, the Group’s asset quality, business, financial conditionor results of operations may be materially and adversely affected.

The Group’s provisions for impairment losses on lease receivables may not be adequate to coverfuture credit losses, and may have a material adverse impact on the Group’s business, financialcondition and results of operations.

The Group makes provisions for impairment losses on lease receivables in accordance with PRCGAAP. As at 1 January 2019, 31 December 2019, 31 December 2020 and 30 June 2021, the Group’sconsolidated impairment provision on lease receivables were approximately RMB2.06 billion,RMB2.50 billion, RMB3.24 billion and RMB3.61 billion, respectively, and the accumulatedimpairment provision represented approximately 1.78 per cent., 2.00 per cent., 2.52 per cent. and 2.61per cent. of the Group’s net lease receivables, respectively. This reflected both the growth of theGroup’s business operations and its approach to provisions in view of the macroeconomicenvironment. The amount of provisions for impairment losses on the Group’s lease receivables isdetermined on the basis of its internal provisioning procedures and guidelines taking into account anumber of factors, such as the nature and industry-specific characteristics of the Group’s customersand their creditworthiness, economic conditions and trends, write-off experience, delinquencies andthe value of underlying collateral and guarantees. As the Group’s provisions require significantjudgment and estimation, its allowance for impairment losses may not always be adequate to coveractual credit losses in its business operations. The Group’s allowance may prove to be inadequate ifunforeseen or adverse changes occur in the PRC economy or other economies in which the Groupoperates or if other events adversely affect specific customers, industries or markets. As at 1 January2019, 31 December 2019, 31 December 2020 and 30 June 2021, the Group’s non-performing leasereceivable was approximately RMB1.82 billion, RMB1.60 billion, RMB1.66 billion and RMB1.64billion, respectively, the Group’s non-performing lease receivable rates were approximately 1.57 percent., 1.27 per cent., 1.29 per cent. and 1.18 per cent., respectively, and the Group’s allowancecoverage ratios for non-performing lease receivable were approximately 113.48 per cent., 156.66 percent., 195.62 per cent. and 220.39 per cent., respectively. The Group may need to make additionalprovisions for its lease receivables, which could significantly reduce its profit and may materially andadversely affect its business, financial condition, results of operations and prospects.

The Group may not be able to sell the aircraft, vessel, urban infrastructure equipment or otherequipment upon termination or expiry of an existing lease.

Upon termination or expiry of an existing lease, the Group needs to sell the aircraft, vessel, urbaninfrastructure equipment or other equipment (as the case may be). There can be no assurance that the

– 41 –

Group can sell the aircraft, vessel, urban infrastructure equipment or other equipment (as the case

may be) at a price favourable to the Group or at all.

Factors that could affect the Group’s ability to sell the aircraft, vessel, urban infrastructure equipment

or other equipment include business cycles in the relevant industry, global and domestic financial

market conditions and market disruption risks which could adversely affect the liquidity, interest

rates, the availability of funding sources and natural or man-made calamities. Failure by the Group

to sell the relevant asset at a favourable price may result in losses incurred by the Group which may

have a material adverse effect on the Group’s financial condition and profitability.

The Group may not be able to successfully identify, acquire, invest in or operate suitable

investment projects, acquisition targets or businesses.

There can be no assurance that the Group will be able to identify suitable investments and acquisition

targets, complete the investments and acquisitions on satisfactory terms or, if at all, if any such

investments and acquisitions are consummated, satisfactorily integrate the acquired businesses and

investments. Any failure of the Group to implement its expansion plans through investments and

acquisitions could have a material adverse effect on the Group’s business, financial position and

results of operations, as well as its future prospects.

In addition, the Group’s subsidiaries operating in different business segments may determine that it

is in their shareholders’ interests to pursue new business ventures. There can be no assurance that

such business ventures will be successful or generate the synergies expected, if any. The successful

completion of this type of transaction will depend on several factors, including satisfactory due

diligence findings and the receipt of necessary regulatory approval, among others. If the Group fails

to complete such business ventures or such ventures prove to be unsuccessful, the Group’s operating

segments involved may be adversely affected.

There are risks associated with any material acquisitions by the Group in the future.

The Group may consider expanding its business by acquiring certain interests in other companies.

During the course of these transactions, the Group will conduct due diligence investigations with

respect to the target companies, but such due diligence conducted with respect to any acquisition

opportunity may not reveal all relevant facts that are necessary or useful in evaluating such

opportunity, which could subject the Group to unknown financial, legal and other risks and liabilities.

When determining the consideration for any acquisition, the Group will consider various factors,

including but not limited to the quality of the target business, estimated costs associated with the

acquisition and the management of the target business, prevailing market conditions and intensity of

competition. The Group will also face various issues arising from the acquisition after the relevant

transaction is completed, such as integration of the business into its operations and allocation of

internal resources. There can be no assurance that the Group will be able to address these issues

effectively.

– 42 –

In addition, any major acquisition or transaction of similar nature may consume substantial

management attention and financial resources of the Group or even cause the Group to incur

significant indebtedness. Any material decrease in its financial resources may limit the Group’s

ordinary operating activities and increase pressure on its liquidity, and in turn could adversely affect

its business, financial condition and results of operations.

The Group is unable to predict whether there will be any target suitable for acquisition or when any

suitable acquisition opportunities could arise. In the event that the Group enters into any letter of

intent or agreement for any material acquisition after the issue of the Instruments, the market price

and the trading volume of the Instruments may be adversely affected.

The Group may not be able to execute successfully or fully its business strategy with respect to

assets, projects or subsidiaries in which the Guarantor has minority interests (if any).

The Group may not be able to execute successfully or fully its business strategy with respect to assets,

projects or subsidiaries in which the Guarantor has minority interests (if any). The Group may also

fail to manage such assets, projects or subsidiaries successfully. The Group’s involvement with such

assets, projects and subsidiaries is generally subject to the terms of applicable agreements and

arrangements. The Guarantor may not have any board representation, veto power or power to exercise

control over the management, policies, business and affairs of certain of its subsidiaries in which the

Guarantor does not have majority interests.

The Group may encounter difficulties in executing its growth strategy and integrating its

expansion plans which may have a material adverse impact on its growth prospects, business

and results of operations.

As part of the Group’s business strategy, it plans to continue to explore growth opportunities within

other target industries in the PRC, Asia and overseas with high growth potential to complement its

existing businesses. The Group may achieve this through acquisitions, expansion, alliances, joint

ventures or partnerships, where suitable opportunities arise and under appropriate market conditions.

While the Group did not have any existing timetable to expand into these new industries as at the date

of this Offering Circular and it has not engaged in any related negotiations or entered into any

agreements with any acquisitions, alliances, joint ventures or partnerships, the Group may engage in

such transactions in the near future. However, there can be no assurance that the Group will be able

to identify any suitable target industries, investment projects or business partners in the near future.

In addition, any failure to effectively manage the Group’s expansion plans may lead to increased

costs, impaired growth and reduced profitability for the Group. Even upon completion of investments

or partnerships, the Group may experience difficulties in integrating such businesses into its existing

business model, and may incur higher costs than initially anticipated. All of the above factors may

materially and adversely affect the Group’s business, financial position and results of operations. The

shares of the Issuer, the Guarantor or one or more of its subsidiaries may become listed on one or

more stock exchanges. As a result of this, the entering into of certain transactions by the Issuer, the

Guarantor or any such subsidiary may be subject to various regulatory restrictions. Intra-group

transactions may also be subject to applicable listing requirements, such as the issuance of press

notices, the obtaining of independent shareholders’ approval at general meetings and disclosure in

annual reports and accounts. As a result, subsidiaries with funding needs may not be able to obtain

financial support from the Group in a timely manner, or at all.

– 43 –

The Group may engage in related party transactions with its affiliates and joint ventures fromtime to time which may create potential conflicts of interest.

The Group may engage in a variety of transactions with its affiliates and joint ventures, which may

include providing guarantees. There can be no assurance that those transactions would be deemed as

arm’s length or the Group’s related parties will not take actions that favour their interests over the

Group’s. There can be no assurance that conflicts of interests will not arise between the Group and

its affiliates and joint ventures pursuant to such related party transactions. If a borrower defaults on

any borrowings guaranteed by the relevant Group’s member, the relevant lender may exercise its right

under the guarantee to demand repayment from the Group, which may result in a funding shortage

at the Group level. The internal control regarding the management of various related party

transactions can also be challenging and demanding for the Group. Failure to adequately control and

manage its related party transaction could have an adverse effect on the Group’s business, financial

condition or results of operations.

The Group may be exposed to credit risk relating to guarantees.

The Group may from time to time provide guarantees in respect of indebtedness of entities which

were not members of the Group. If there is a downturn in the general economic conditions in the PRC

and globally or other adverse factors causing a deterioration of the financial condition of the

guaranteed entities and the guaranteed entities are unable to fulfil their obligations under their

respective indebtedness as a result of which the Group is required to pay the outstanding debt

obligations on behalf of the guaranteed entities, the Group’s financial condition, results of operations

and prospects could be materially and adversely affected.

The Group’s ability to generate cash to service its indebtedness depends on many factorsbeyond its control.

The Group’s ability to make payments on and to refinance its indebtedness, including the

Instruments, and to fund planned capital expenditures will depend on the Group’s ability to generate

cash. This, to a certain extent, is subject to general economic or financial conditions, competitive,

legislative, regulatory environment and other factors that are beyond the Group’s control. There can

be no assurance that the Group may generate sufficient cash flow from its operations to enable it to

pay its indebtedness, including the Instruments, or to fund the Group’s other liquidity needs. The

Group may need to refinance all or a portion of its indebtedness, including the Instruments, on or

before maturity. However, the Group might not be able to refinance any of its indebtedness, including

the Instruments, on commercially reasonable terms or at all. If the Group is unable to service its

indebtedness or obtain refinancing on terms acceptable to the Group, it may be forced to adopt an

alternative strategy that may include reducing or delaying capital expenditures, selling assets or

seeking equity capital. These strategies may not be instituted on satisfactory terms, if at all.

Changes in interest rates and currency exchange rates could have an adverse effect on theGroup’s business, financial condition and results of operations.

The Group’s business is affected by interest rates, including both the interest rates charged to its

financial leasing customers and the interest rates it pays under its loans and other financing

obligations. In order to remain responsive to changing interest rates and to manage the Group’s

interest rate exposure, the Group has implemented measures to adjust the structure of its assets and

– 44 –

liabilities based on an assessment of the sensitivity of projected net interest income under various

interest rate scenarios. However, an increase in interest rates, or the perception that such an increase

may occur, could adversely affect the Group’s ability to obtain bank loans at favourable interest rates,

its ability to maximise its interest income, its ability to originate new leases and its ability to grow.

In addition, changes in interest rates or in the relationships between short-term and long-term interest

rates or between different interest rate indices (i.e., basis risk) could affect the interest rates received

on interest-earning assets differently from the interest rates paid on interest-bearing liabilities, which

could, in turn, result in an increase in interest expense or a decrease in net interest income (which

is the Group’s interest income minus the Group’s interest expense). In addition, the Group’s net

interest income is also impacted by whether it can adjust the interest rates it charges its customers

in response to fluctuations in interest rates for the Group’s interest-bearing bank borrowings to

maintain its net interest spread and its net interest margin. If the Group fails to appropriately adjust

the interest rates of its lease contracts in a timely manner, its net interest spread and its net interest

margins may decrease, and as a result, its profitability and results of operations would be adversely

impacted. Any increase in the Group’s interest expense or decrease in its net interest income could

have a material adverse effect on its business, results of operations and financial condition.

In addition, fluctuations in exchange rates may also reduce the Group’s earnings and cash flow or

adversely affect the Group’s financial condition. Although the Group manages interest rate and

exchange rate risks with a variety of techniques, including the selective use of interest swaps and

cross-currency swaps, there can be no assurance that fluctuations in interest rates and currency

exchange rates will not have an adverse effect on the Group’s earnings and cash flows. If any of the

variety of instruments and strategies the Group uses to hedge its exposure to these various types of

risk are ineffective, the Group may incur losses.

The Group depends on its key senior management members and key senior officers and mayhave difficulty attracting and retaining skilled employees.

The Group’s financial leasing business is a highly specialised area which requires professional

knowledge and know-how in business areas including, but not limited to, finance, accounting,

international trade, insurance, the aviation, shipping and other related industries and various areas of

law. The Group’s success depends, to a significant extent, upon the abilities, expertise and dedication

of its key senior management members, senior officers and skilled employees. There is significant

competition in the PRC for such talent. If such key personnel leaves the Group to join other

employers, including the Group’s competitors, the Group may face difficulties employing and

assimilating suitable replacement personnel in the short term. Failure to recruit, train, develop and

retain personnel with the necessary qualifications may have a material adverse effect on the Group’s

business, financial condition, results of operations and prospects.

The Group’s business is dependent on the proper functioning of its information technologysystems.

The success of the Group’s operations is highly dependent on the ability of its information technology

systems to accurately process a large number of transactions and information in a timely manner. The

proper functioning of the Group’s financial control, risk management, accounting, customer service

and other data processing systems is critical to its business and its ability to compete effectively. If

the Group’s systems cannot cope with increased demand or otherwise fail to perform, the Group could

experience unanticipated business disruptions, slower response times and limitation on its ability to

– 45 –

monitor and manage data and risk exposure, control financial and operation conditions, and keepaccurate records. These consequences could result in operating outages, poor operating performance,financial losses and potential intervention by regulatory authorities.

Although the Group has established its own internal back-up systems to carry on principal functionsin the event of system failures, there can be no assurance that its operations will not be materiallydisrupted if any of the Group’s systems fail due to, among other things, fire, natural disasters, powerloss, software faults, computer virus attacks, conversion errors due to system upgrades, or securitybreaches. The internal safety measures may not be effective in preventing any harm or damageresulting from risks threatening the Group’s information technology systems. Any disruption to anyof the Group’s information technology systems could have a material adverse effect on its operations,business and financial condition.

Although the Group’s systems had not experienced major system failures and delays in the past, therecan be no assurance that the Group’s systems would not experience future system failures and delays,or the measures taken by the Group to reduce the risk of system disruptions are effective or adequate.If internet traffic and communication volume increase unexpectedly or other unanticipated eventsoccur, the Group may need to expand and upgrade the Group’s technology, systems and networkinfrastructure. There can be no assurance that the Group will be able to accurately project the rate,timing or cost of any increases, or expand and upgrade the Group’s systems and infrastructure toaccommodate any increases in a timely manner.

The Group may not be able to detect and prevent fraud or other misconducts committed by itsofficers, employees representatives, agents, customers or other third parties.

Following the 18th Chinese Communist Party Congress in 2012 and the wide-reaching anti-corruption campaign in the PRC, the Central Leading Group for Inspection Work (the “InspectionLeading Group”), a coordination body set up under the Central Committee of the ChineseCommunist Party for the purpose of managing party disciplinary inspections nationwide, hasdispatched inspection teams to provinces and central government organs such as ministries andstate-owned enterprises in the PRC to conduct inspection work on party disciplinary enforcement.While the Guarantor is not aware of any inspections or actions against the Group or its officers oremployees by the Inspection Leading Group as at the date of this Offering Circular, there can be noassurance that there will not be any such inspections or actions by the Inspection Leading Group orother governmental authorities or that any such inspections or actions would not affect the Group asa result.

In addition, the Group may be exposed to fraud or other misconducts committed by its former orcurrent officers, employees, representatives, agents, customers or other third parties that couldsubject the Group to financial losses and sanctions imposed by governmental authorities, which inturn affects its reputation. In particular, the Group’s operations are large in scale, which may renderfraudulent or accidental transactions difficult to detect.

These misconducts could include:

• hiding unauthorised or unsuccessful activities, resulting in unknown and unmanaged risks orlosses;

• intentionally concealing material facts, or failing to perform necessary due diligence proceduresdesigned to identify potential risks, which are material to the Group in deciding whether to makeinvestments or dispose of assets;

– 46 –

• improperly using or disclosing confidential information;

• recommending products, services or transactions that are not suitable for the Group’s customers;

• misappropriation of funds;

• conducting transactions that exceed authorised limits;

• engaging in misrepresentation or fraudulent, deceptive or otherwise improper activities when

marketing or selling products;

• engaging in unauthorised or excessive transactions to the detriment of the Group’s customers;

• making or accepting the bribery activities;

• conducting any inside dealing; or

• otherwise not complying with applicable laws or the Group’s internal policies and procedures.

In particular, the Group is required to comply with applicable anti-money laundering, anti-terrorism

laws and other regulations in the PRC and other relevant jurisdictions. The Group seeks to comply

fully with all applicable legislations in the PRC and other relevant jurisdictions such as the U.S.

Foreign Corrupt Practices Act, the UK Bribery Act and any applicable sanctions.

The Group’s internal control procedures are designed to monitor its operations and ensure overall

compliance. In particular, the Group has adopted policies and procedures aimed at detecting and

preventing the use of its business platforms to facilitate money laundering activities and terrorist acts.

However, such internal control procedures may be unable to identify all incidents of non-compliance

or suspicious transactions in a timely manner if at all.

In addition, fraud or other misconducts by employees (such as unauthorised business transactions and

breaches of its internal policies and procedures) or third parties (such as breach of law) may be

difficult to detect and prevent and could subject the Group to financial loss, sanctions imposed by

governmental authorities and seriously harm its reputation. The Group’s risk management systems,

information technology systems and internal control procedures are designed to monitor its

operations and overall compliance. However, there can be no assurance that it will be able to identify

all non-compliance or suspicious transactions in a timely manner or at all. Furthermore, it is not

always possible to detect and prevent fraud or other misconducts and the precautions undertaken by

the Group to prevent and detect such activities may not be effective. Hence, it is possible that fraud

or other misconducts may have previously occurred but was undetected, or that fraud or other

misconducts may occur in the future. If such fraud or any other misconduct does occur, it may cause

negative publicity as a result and the relevant government agencies may freeze its assets or impose

fines or other penalties on the Group. Any of these may materially and adversely affect the Group’s

reputation, business, financial condition and results of operations.

– 47 –

The Group is subject to additional operating costs.

The Group may incur other operational costs upon a lessee’s default or where the terms of the lease

require the Group to pay a portion of additional operating costs. Such costs, which can be substantial,

include:

(a) the costs of casualty, liability or war risk insurance and the liability costs or losses when

insurance coverage has not been or cannot be obtained as required or is insufficient in amount

or scope;

(b) the costs of licensing, exporting or importing an aircraft, costs of storing and operating an

aircraft, airport taxes, custom duties, air navigation charges, landing fees and similar

governmental or quasi-governmental impositions; and

(c) penalties and costs associated with the failure of lessees to keep the aircraft registered under all

appropriate local requirements or obtain required governmental licences, consents and

approvals.

The failure to pay some of these costs can result in liens on the aircraft or a loss of insurance. Any

of these events could result in the grounding of the aircraft and prevent the sale or other use of the

aircraft until the problem is resolved. This could adversely affect the Group’s business, financial

condition and results of operations.

The Group is exposed to interest rate risk.

Interest rate fluctuations may influence the Group’s financial performance. Any changes in the

prevailing interest rates may impact the Group’s borrowing costs as a portion of the Group’s

borrowings bear floating interest rates. The Group may be susceptible to interest rate volatility if it

is unable to match its floating rate liabilities with floating rate payments or secure appropriate hedges

for the same.

While the Group’s exposure to interest rate volatility may be hedged through the use of interest rate

swaps and interest caps, the magnitude of the final exposure depends on the effectiveness of the

hedge. There can be no assurance that fluctuations in interest rates will not have an adverse effect on

the Group’s earnings or cash flows. If any of the various instruments and strategies which the Group

uses to hedge its exposure to interest rate risk are or become ineffective, the Group may incur

significant losses, which could have a material adverse effect on the Group’s financial position and

results of operations.

The Group may be subject to legal, litigation and regulatory proceedings.

The Group may be involved, from time to time, in legal proceedings arising in the ordinary course

of its operations. Please see “Description of the Group – Legal and Regulatory Proceedings” for

further information. Litigation arising from any failure, injury or damage from the Group’s operations

may result in the relevant member of the Group being named as defendant in lawsuits asserting large

claims against such member of the Group or subject such member of the Group to significant

regulatory penalties. These risks often may be difficult to assess or quantify and their existence and

magnitude often remain unknown for a substantial period of time. Actions brought against the Group

– 48 –

may result in settlements, injunctions, fines, penalties or other sanctions adverse to the Group’sreputation, financial condition and results of operations. Even if the Group is successful in defendingagainst these actions, the costs associated with the Group’s defence may be significant. When themarket experiences a downturn, the number of legal claims and amount of damages sought inlitigations and regulatory proceedings may increase. A significant judgment, arbitration award orregulatory action against the Group, or a disruption in the Group’s business arising from adverseadjudications in proceedings against the Group’s director(s), senior management or key employees,would materially and adversely affect the Group’s liquidity, business, financial condition, reputation,results of operations and prospects.

The insurance coverage of the Group may not adequately protect it against all operational risksor any potential liabilities or losses.

The Group faces various operational risks in connection with its businesses. To manage operatingrisks, the Group maintains insurance policies that provide different types of risk coverage, which theGuarantor believes to be consistent with market practice within the relevant industries that the Groupoperates in and in amounts that the Guarantor believes to be adequate. However, the Group facesvarious risks in connection with its businesses and may lack adequate insurance coverage or mayhave no relevant insurance coverage. In addition, in line with general practice in the PRC, the Groupdoes not maintain business interruption insurance. As a result, its insurance coverage may beinadequate to cover such losses should they arise. Any such uninsured losses may materially andadversely affect its business, financial position and results of operations.

In addition, the Group may not always be able to obtain the type and amount of insurance atcommercially reasonable rates. Over time, premiums and deductibles for insurance policies maysubstantially increase, and certain insurance policies could become unavailable or only available withreduced amounts of coverage. There are also certain types of losses, such as loss caused by wars, actsof terrorism or acts of God, business interruption, property risks and third party (public) liability, thatare generally not covered by insurance policies as such events are deemed economically uninsurable.If the Group were to incur significant liability for which the Group is not insured or not fully insured,such liability could have a material adverse effect on its financial position and results of operations.In addition, any claims made under any insurance policies maintained by the Group may not be paidin a timely manner, or at all, and may be insufficient if such an event were to occur.

The Group may not be able to adequately protect its intellectual property, which couldadversely affect its business operations.

The Group relies on a combination of patents, copyrights, trademarks and contractual rights to protectits intellectual property. There can be no assurance that any protective measures adopted by the Groupwill be sufficient to prevent any misappropriation of the Group’s intellectual property. The legalregime governing intellectual property in the PRC is still evolving and the level of protectionafforded in respect of intellectual property rights in the PRC differs from those in other jurisdictions.In the event that the measures taken by the Group and the protection afforded by law do notadequately safeguard the Group’s proprietary technology or property, the Group could suffersignificant losses due to the sales of competing products or services that appoints the Group’sintellectual property which in turn could adversely affect its business, financial condition and resultsof operations.

There might be claims asserted against the Group.

Although under some of its leases the Group does not control the operation of its leased assets suchas aircraft, vessels, urban infrastructure equipment and other equipment, its ownership of the assetscould give rise, in some jurisdictions, to strict liability for losses resulting from their operation.

– 49 –

Lessees of the Group are normally required under the leases to indemnify the Group for, and insure

against, amongst others, liabilities arising out of the use and operation of the assets, including

third-party claims for death or injury to persons and damage to property for which the Group may be

deemed liable. The lessees are also typically required to maintain public liability, property damage

and all risks and war risks insurance on the leased assets at agreed upon levels.

There can be no assurance that the lessee’s insurance, and any contingent insurance undertaken by

the Group, will be adequate or sufficient to cover all types of claims that may be asserted against the

Group. Any insurance coverage shortfall or default by lessees to fulfil their indemnification or

insurance obligations, as well as the lack of available insurance, could reduce the proceeds upon an

event of loss and could subject the Group to uninsured liabilities, any of which could have an adverse

impact on the Group’s financial performance and its ability to meet its financial obligations.

Failure to obtain, renew, or retain licences, permits or approvals or failure to comply withapplicable laws and regulations may affect the Group’s ability to conduct its business.

The Group is subject to rules and regulations and is required to hold various licences, permits and

approvals issued by relevant authorities for the operation of its businesses. Any infringement of legal

or regulatory requirements, or any suspension or revocation of these licences, permits and approvals

may have a material adverse impact on the Group’s business and operations. In addition, the

regulatory and licensing requirements within the PRC financial leasing industry are constantly

evolving and the Group may be subject to more stringent regulatory requirements due to changes in

the political or economic policies in the PRC. There can be no assurance that the Group will be able

to satisfy such regulatory requirements or it will be able to retain, obtain or renew relevant licences,

permits or approvals in the future. Any failure to comply with the regulatory and legal requirements

may hinder the Group’s business operations and materially and adversely affect its results of

operations and financial condition.

Uncertainties and changes in the PRC’s legal framework for finance leasing and factoring businesses

could also materially and adversely affect the Group’s business. On 8 May 2018, the General Office

of MOFCOM issued the 2018 Notice, according to which the authority of rule-making on operation

and regulation of finance leasing companies, factoring companies and pawnshops shall be transferred

to CBIRC, which is a new department organ established on 21 March 2018 to combine and replace

the functions and authorities of the previous China Banking Regulatory Commission and China

Insurance Regulatory Commission. Detailed implementing measures of the 2018 Notice have not

been promulgated. In the event that other regulatory policies changes or stricter rules are promulgated

and implemented, the Group will be required to comply with further requirements and adjust its

business accordingly, and this may have a material adverse effect on the Group’s business, financial

condition and results of operations.

Changes in the organisational structure of the Group or the Guarantor’s shareholders mayaffect the Group’s financial condition and results of operations.

The Group or the Guarantor’s shareholders may undergo certain organisational restructuring from

time to time which may affect whether certain subsidiaries of the Guarantor will be consolidated in

the Guarantor’s consolidated financial statements or, as the case may be, whether the Guarantor will

be consolidated in the consolidated financial statements of the Guarantor’s shareholders. In addition,

the Guarantor may issue shares to entities other than the existing shareholders which would in turn

– 50 –

dilute the existing shareholders’ shareholding in the Guarantor’s registered share capital. There can

also be no assurance that any such organisational restructuring or changes in the Guarantor’s

shareholding structure will not have a material adverse effect on the Group’s business, financial

condition, results of operations and prospects.

The Group relies on government support to a certain extent and a reduction or discontinuanceof government support could materially and adversely affect the financial condition and resultsof operations of the Group.

Given the Guarantor’s exclusive position as the only aviation leasing company with state-ownedbackground, the Group has in the past received support (but not including credit support) from thePRC government in the form of governmental subsidies and preferential tax treatment to support itsinvestment and operation of its businesses. For example, for the years ended 31 December 2018, 2019and 2020 and the six months ended 30 June 2020 and 2021, the Group received government grantsof approximately RMB6.20 million, RMB70.09 million, RMB22.85 million, RMB10.08 million andRMB30.00 million, respectively.

There can be no assurance that the PRC government or the central SASAC will continue to providesupport to the Group or that the governmental subsidies, preferential tax treatment or other types ofgovernment support will not be reduced, adjusted or terminated due to changes in government policyor otherwise. If the favourable governmental subsidies, preferential tax treatment or other incentiveswhich are currently available to the Group are reduced or eliminated in the future, the viability of theGroup’s businesses may be affected and the financial condition and results of operations of the Groupwill be materially and adversely affected.

RISKS RELATING TO CONDUCTING BUSINESS IN THE PRC

The Group’s business, financial condition, results of operations and prospects could beadversely affected by slowdown in the PRC economy.

A substantial part of the Group’s revenue is derived from the PRC. The Group relies, to a significantdegree, on its domestic operations to achieve revenue growth. Domestic demand for leasing servicesis materially affected by growth of private consumption and overall economic growth in the PRC.Therefore, the performance of the PRC economy affects, to a significant degree, the Group’sbusiness, prospects, financial condition and results of operations.

In 2015, the PRC government adopted intensive reforms with the primary aim of restructuring andrebalancing the PRC economy towards a more sustainable model by focusing more on domesticconsumption and away from investment and export fuelled growth.

In recent years, as a result of recurring liquidity tightening in the banking system, alternative lendingand borrowing outside of traditional banking practices, generally known as “shadow banking”, hasgrown to become an integral and significant aspect of the PRC economy. Such alternative lending isloosely regulated and has led to an increase in PRC’s debt levels leading to concerns over rising baddebts and financial problems. As some of the funds obtained from shadow banking are being used forinvestments in speculative and risky products, should a widespread default on such investmentsoccur, this could harm the growth prospects of the PRC economy. In 2014, there were reports of anumber of shadow banking defaults in the PRC resulting in increased scrutiny and oversight byregulators who have proposed draft rules to control the industry. Even if the PRC governmentincreases regulation over such alternative lending and borrowing, there can be no assurance that such

– 51 –

regulations will be successful, or that they would not have an adverse impact on the overall loan

markets and liquidity in the PRC, which will materially and adversely impact the PRC economy.

Although the PRC government has taken several measures with the intention of increasing investor

confidence in the PRC economy, there can be no assurance that such measures will be effective. There

can be no assurance that the PRC government will not implement any reforms which may conflict

with any targeted growth rate. The Group’s business, financial conditions and results of operations

could be adversely affected by the PRC government’s inability to effect timely economic reforms.

Any slowdown in the PRC economy may increase the Group’s exposure to material losses from its

investments, decrease the opportunities for developing the Group’s businesses, create a credit

tightening environment, increase the Group’s financing costs, or reduce government subsidies to the

Group, any of which may result in a material adverse effect on the Group’s business, results of

operations and financial condition.

Turmoil in the financial markets could increase the Group’s cost of borrowing and impedeaccess to or increase the cost of financing the Group’s operations and investments.

The availability of credit to entities operating within emerging markets, including the Guarantor, is

significantly influenced by levels of investor confidence in such markets as a whole. Any factors that

may affect market confidence could affect the costs or availability of funding for entities within

emerging markets. Historically, challenging market conditions in emerging markets have resulted in

reduced liquidity, widening of credit spreads, lack of price transparency in credit markets, a reduction

in available financing and a tightening of credit terms. Significant fluctuations in the financial

markets in the PRC and globally may cause adverse effects on the Group’s business operations and

investments as a whole.

The PRC’s economic, political and social conditions, as well as government policies in the PRC,could affect the Group’s businesses.

A substantial part of the Group’s businesses, assets and operations is located in the PRC. Accordingly,

the Group’s business prospects, financial condition and results of operations are, to a significant

degree, subject to the economic, political and legal developments in the PRC. The PRC economy

differs from the economies of most developed countries in many respects, including, among other

things, level of government involvement, level of economic development, growth rate, foreign

exchange controls and resources allocation.

The PRC economy has been undergoing a transition from a centrally planned economy to a more

market-oriented economy. A substantial portion of productive assets in the PRC is still owned by the

PRC government. The government also exercises significant control over the PRC’s economic growth

by allocating resources, setting monetary policy and providing preferential treatment to particular

industries or companies. For more than three decades, the PRC government has implemented various

economic reform measures to utilise market forces in the development of the PRC economy. In

addition, the PRC government continues to play a significant role in regulating certain industries and

the economy through numerous policy measures. Such economic reform measures may be adjusted,

modified or applied differently depending on the industries and regions of the country. The Group

cannot predict whether changes in the nation’s economic, political or social conditions or in any laws,

regulations and policies will adversely affect its business, financial condition or results of operations.

– 52 –

In addition, many of the economic reforms carried out by the PRC government are unprecedented orexperimental and are expected to be refined and improved over time. Other political, economic andsocial factors may also lead to further adjustments of the reform measures. This refining andadjustment process may not necessarily have a positive effect on the Group’s operations and businessdevelopment.

The Group’s business, financial condition and results of operations may be adversely affected by:

• changes in PRC political, economic and social conditions;

• changes in policies of the PRC government, including changes in policies in relation to theGroup’s business segments;

• changes in laws and regulations or the interpretation of laws and regulations;

• measures that may be introduced to control inflation or deflation;

• changes in the rate or method of taxation;

• the imposition of additional restrictions on currency conversion and remittances abroad; and

• a reduction in tariff protection and other import restrictions.

If the PRC economy slows down or if the PRC economy experiences a prolonged decrease in growthrate or a significant downturn (such as due to the ongoing U.S.–China trade war), the unfavourablebusiness environment and economic condition for the Group’s customers could reduce their demand forthe Group’s products and services. The Group’s business, financial condition and results of operationsmay be materially and adversely affected.

Uncertainty with respect to the PRC legal system could affect the Group.

As a substantial part of the Group’s businesses is conducted, and a substantial part of the Group’sassets is located, in the PRC, the Group’s operations are governed principally by, and subject to, PRClaws and regulations. The PRC legal system is based on written statutes. Published court opinions arelimited. Prior court decisions may be cited for reference. Since 1979, PRC laws and regulationsdealing with economic matters such as the issuance and trade of securities, foreign investment,corporate organisation and governance, commerce, taxation, foreign exchange and trade, with a viewto developing a comprehensive system of commercial law, have significantly enhanced theprotections afforded to market participants in the PRC. However, the PRC has not developed a fullyintegrated legal system and recently enacted laws and regulations may not sufficiently cover allaspects of economic activities in the PRC. In particular, because these laws and regulations (includingthe MOF Circular promulgated on 28 March 2018 and which took effect on the same day and the JointCircular promulgated on 11 May 2018 and which took effect on the same day) are relatively new, andbecause of limited volume of published decisions, the interpretation and enforcement of these lawsand regulations involve uncertainties, as compared to other more developed jurisdictions. The PRClegal system is also based, in part, on government policies and internal rules (some of which are notpublished on a timely basis or at all) that may have a retroactive effect. As a result, in certain cases,the Group may not be aware of the Group’s violation of these policies and rules until sometime afterthe violation. In addition, any litigation in the PRC may be protracted and result in substantial costs,diversion of the Group’s resources and management’s attention and it may be difficult to obtain aswift and equitable enforcement of laws in the PRC, or the enforcement of judgments by a court ofanother jurisdiction. Such uncertainty may impede the Group’s ability to enforce contracts that the

– 53 –

Group has entered into with its investors, creditors, customers, suppliers and business partners. TheGroup cannot predict the effect of future developments in the PRC legal system or the integration ofsuch developments under the legal systems of other jurisdictions, including the promulgation of newlaws, changes to existing laws or the interpretation or enforcement thereof, the pre-emption of localregulations by national laws, or the overturn of local government’s decisions by itself, provincial ornational governments. Such uncertainty in interpretation, implementation and enforcement may limitlegal protections available to or against the Group. In addition, any bankruptcy proceeding relatingto the Group would likely involve PRC bankruptcy laws. The procedural and substantive provisionsof PRC bankruptcy laws may differ from comparable provisions of the local insolvency laws ofjurisdictions with which the Instrumentholders are familiar. All of the above could have a materialadverse effect on the Group’s business, prospects, financial condition and results of operations.

Certain PRC regulations governing PRC companies are less developed than those applicable tocompanies incorporated in more developed countries.

Most of the members of the Group are established in the PRC and are subject to PRC regulations

governing PRC companies. These regulations contain certain provisions that are required to be

included in the joint venture contracts, articles of association and all other major operational

agreements of these PRC companies and are intended to regulate the internal affairs of these

companies. These regulations in general, and the provisions for protection of shareholders’ rights and

access to information in particular, are less developed than those applicable to companies

incorporated in Hong Kong, the United States, the United Kingdom and other developed countries or

regions.

There may be difficulties in effecting service of legal process and enforcing judgments againstthe Guarantor or its directors or members of the Guarantor’s senior management who residein the PRC in connection with judgments obtained in non-PRC courts.

The Guarantor is a company incorporated under the laws of the PRC, and a substantial part of the

Group’s businesses, assets and operations is located in the PRC. In addition, a majority of the

Guarantor’s directors, supervisors and executive officers reside in the PRC, and substantially all of

their assets may be located in the PRC. As a result, it may not be possible for investors to effect

service of process upon the Guarantor or its directors or members of its senior management inside

the PRC. The PRC has not entered into treaties or arrangements providing for the recognition of

judgment made by courts of most other jurisdictions. On 14 July 2006, Hong Kong and the PRC

entered into the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and

Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative

Region Pursuant to Choice of Court Agreements Between Parties Concerned (關於內地與香港特別行政區法院相互認可和執行當事人協議管轄的民商事案件判決的安排) (the “Choice of CourtArrangement”), pursuant to which a party with a final court judgment rendered by a Hong Kong

court requiring payment of money in a civil and commercial case according to a “choice of court”

agreement in writing may apply for recognition and enforcement of the judgment in the PRC.

Similarly, a party with a final court judgment rendered by a PRC court requiring payment of money

in a civil and commercial case pursuant to a “choice of court” agreement in writing may apply for

recognition and enforcement of such judgment in Hong Kong. A “choice of court” agreement in

writing is defined as any agreement in writing entered into between parties after the effective date

of the Choice of Court Arrangement in which a Hong Kong court or a PRC court is expressly

designated as the court having sole jurisdiction for the dispute. Therefore, it is not possible to enforce

a judgment rendered by a Hong Kong court in the PRC if the parties in dispute do not enter into a

– 54 –

“choice of court” agreement in writing. As a result, it may be difficult or impossible for investors to

effect service of process against the Guarantor, the Group’s assets or the Guarantor’s directors or

members of its senior management in the PRC and/or to seek recognition and enforcement for foreign

judgments in the PRC. On 18 January 2019, Hong Kong and the PRC entered into the Arrangement

on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters between

the Courts of the Mainland and of the Hong Kong Special Administrative Region (關於內地與香港特別行政區法院相互認可和執行民商事案件判決的安排) (the “2019 Arrangement”), which seeks to

establish a bilateral legal mechanism with greater clarity and certainty for recognition and

enforcement of judgments in a wider range of civil and commercial matters between the courts of

Hong Kong and the PRC. The 2019 Arrangement will be implemented by local legislation in Hong

Kong and will take effect after both Hong Kong and the PRC have completed the necessary

procedures to enable implementation and shall apply to judgments made by the courts of Hong Kong

and the PRC on or after the date of the commencement of the 2019 Arrangement. Upon

commencement of the 2019 Arrangement, the Choice of Court Arrangement shall be terminated,

except for “choice of court” agreements in writing made between parties before the commencement

of the 2019 Arrangement, in which case the Choice of Court Arrangement shall continue to apply.

However, the recognition and enforcement of judgments rendered by a Hong Kong court in the PRC

are subject to the provisions, limits, procedures and other terms and requirements of the 2019

Arrangement. There can be no assurance that investors can successfully effect service of process

against the Guarantor or the Guarantor’s directors or members of its senior management in the PRC

and/or to seek recognition and enforcement for judgments rendered by a Hong Kong court in the PRC.

Furthermore, the PRC does not have treaties or agreements providing for the reciprocal recognition

and enforcement of judgments awarded by courts of the United States, the United Kingdom, or most

other European countries or Japan. Hence, the recognition and enforcement in the PRC of judgment

of a court in any of these jurisdictions in relation to any matter not subject to a binding arbitration

provision may be difficult or even impossible.

Increases in the costs of labour may have an adverse impact on the Group’s results of

operations.

The PRC Labour Contract Law (中華人民共和國勞動合同法) became effective on 1 January 2008,

and it was amended on 28 December 2012, which has taken effect on 1 July 2013. The current PRC

Labour Contract Law has imposed greater liabilities on employers and significantly increased the cost

of an employer’s decision to reduce its workforce. Further it requires certain terminations to be based

upon seniority instead of merit. In the event that the Group decides to significantly change or

decrease the Group’s workforce within the PRC, the PRC Labour Contract Law could adversely affect

the Group’s financial condition and results of operations. In addition, the PRC government has

continued to introduce various new labour-related regulations after the promulgation of the PRC

Labour Contract Law. Among other things, the Paid Annual Leave Provisions (職工帶薪年休假條例),

which became effective on 1 January 2008, stipulated that employees who have served more than one

year with an employer are entitled to a paid vacation from five to 15 days, depending on their length

of service. Subject to certain exceptions, employees who waive such vacation time at the request of

employers shall be compensated at three times their normal salaries for each waived vacation day.

Under the National Tourism and Leisure Outline 2013-2020 (國民旅遊休閒綱要2013-2020年), which

became effective on 2 February 2013, regulations on paid annual leave of employees shall have been

implemented on a general basis by 2020.

– 55 –

On 28 October 2010, the Standing Committee of the National People’s Congress promulgated the

PRC Social Insurance Law (中華人民共和國社會保險法) which has taken effect on 1 July 2011, and

it was amended on 29 December 2018, which has taken effect on the same day. According to the PRC

Social Insurance Law, employees will participate in pension insurance, work-related injury insurance,

medical insurance, unemployment insurance and maternity insurance and the employers must,

together with their employees or separately, pay for the social insurance premiums for such

employees.

To further strengthen the protection on labour remuneration, rest and vacations, social insurance and

other basic rights and interests of labourers, the Opinion of the Central Committee of the Communist

Party of China and the State Council on Building Harmonious Labour Relationships (中共中央、國務院關於構建和諧勞動關係的意見) was issued on 21 March 2015, which acts as a guideline on PRC

labour legislation.

As a result of the implementation of these and any future rules and regulations designed to enhance

the standard for labour protection, the Group’s labour costs may continue to increase. If the costs of

labour increase significantly, and the Group cannot offset such increase by reducing other costs or

cannot pass on such increase to for example, the buyers or tenants of its commercial properties in the

PRC, its business, the Group’s results of operations and financial position may be materially and

adversely affected.

In addition, a labour shortage or increase in costs of raw materials and other components required for

the Group’s business operation may cause similar adverse effects, particularly if the Group is unable

to identify and employ other appropriate means to reduce the costs. In such circumstances, the profit

margin may decrease and the financial results may be adversely affected. Inflation in the PRC has

also increased in recent years. Inflation in the PRC increases the costs of labour and the costs of raw

materials the Group must purchase for production. Rising labour costs may increase the Group’s

operating costs and partially erode the cost advantage of the Group’s PRC-based operations and

therefore materially and adversely impact the Group’s profitability.

The payment of dividends by the Guarantor’s operating subsidiaries in the PRC is subject to

restrictions under PRC law.

Part of the Group’s businesses are operated by the Guarantor’s operating subsidiaries in the PRC.

PRC laws require that dividends be paid only out of net profit, calculated according to the PRC

accounting principles, which differ from generally accepted accounting principles in other

jurisdictions. In addition, PRC law requires enterprises set aside part of their net profit as statutory

reserves before distributing the net profit for the current financial year. These statutory reserves are

not available for distribution as cash dividends. Since the availability of funds to fund the Guarantor’s

operations and to service its indebtedness depends upon dividends received from these subsidiaries

to a certain extent, any legal restrictions on the availability and usage of dividend payments from the

Guarantor’s subsidiaries may impact the Guarantor’s ability to fund its operations and to service its

indebtedness.

– 56 –

The Group is subject to restrictions on the remittance of Renminbi into and out of the PRC and

governmental controls on currency conversion, and may be affected by the risks relating to

fluctuations in exchange rates in the future.

The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and

the remittance of currency out of PRC. A portion of the Group’s operating revenue is denominated

in Renminbi, which may need to be converted into other currencies in order to meet the Group’s

foreign currency obligations, such as payments of principal and interests or Distribution under the

Instruments or other foreign currency denominated debt, if any.

Under the existing PRC laws and regulations on foreign exchange, payments of current account

items, including profit distributions, interest payments and trade and service related foreign exchange

transactions, can be made in foreign currencies without prior approval from SAFE provided that

certain procedural requirements are complied with. Approval from or registration with competent

government authorities is required where Renminbi is to be converted into foreign currency and

remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in

foreign currencies. The PRC government may, at its discretion, take measures to restrict access to

foreign currencies for current account and capital account transactions under certain circumstances.

If the foreign exchange control system prevents the Group from obtaining sufficient foreign

currencies to satisfy the Group’s foreign currency demands, the Group may not be able to pay

interests and/or principal to holders of the Instruments or other foreign currency denominated debt,

if any. In addition, there can be no assurance that new laws or regulations will not be promulgated

in the future that would have the effect of further restricting the remittance of Renminbi into or out

of the PRC.

The value of Renminbi against U.S. dollar and other foreign currencies is subject to changes in the

PRC’s policies, as well as international economic and political developments. On 21 July 2005, the

PRC government adopted a more flexible managed floating exchange rate system to allow the value

of Renminbi to fluctuate within a regulated band that is based on market supply and demand with

reference to a basket of currencies. From 21 July 2005 to 17 March 2014, the floating band of

interbank spot foreign exchange market trading price of Renminbi against U.S. dollar was gradually

widened from 0.3 per cent. to 2 per cent. On 11 August 2015, PBOC adjusted the mechanism for

market makers to form the central parity rate by requiring them to consider the closing exchange rate

of the last trading date, the supply and demand of foreign exchange and the rate change at primary

international currencies. On 11 December 2015, the China Foreign Exchange Trade System, a

sub-institutional organisation of PBOC, published the China Foreign Exchange Trade System

(CFETS) Renminbi exchange rate index for the first time which weighs Renminbi based on 13

currencies, to guide the market in order to measure the Renminbi exchange rate from a new

perspective. Starting from 1 October 2016, Renminbi has been added to the Special Drawing Rights

basket created by the International Monetary Fund. There can be no assurance that the PRC

government will continue to gradually liberalise the control over cross-border Renminbi remittances

in the future, that any pilot schemes for Renminbi cross-border utilisation will not be discontinued

or that new PRC regulations will not be promulgated in the future which have the effect of restricting

the remittance of Renminbi into or outside the PRC.

– 57 –

In addition, the value of Renminbi has depreciated significantly against U.S. dollar since the end of

2015 and there can be no assurance that Renminbi will not experience significant depreciation or

appreciation against U.S. dollar or against any other currency in the future. The exchange rate

between Renminbi and U.S. dollar experienced further fluctuation between 1 January 2016 and the

date of this Offering Circular. On 5 August 2019, PBOC set the Renminbi’s daily reference rate above

7 per U.S. dollar for the first time in over a decade amidst an uncertain trade and global economic

climate. There remains significant international pressure on the PRC government to adopt an even

more flexible currency policy, which could result in further and more significant appreciation of

Renminbi against U.S. dollar. If further reforms are implemented and result in devaluation of

Renminbi against U.S. dollar, the Group’s business, financial condition, results of operations and

prospects could be adversely affected because of the Group’s U.S. dollar denominated indebtedness

and other obligations. Such devaluation could also adversely affect the value, translated or converted

into U.S. dollars or otherwise, of the Group’s earnings and ability to satisfy its obligations under the

Instruments.

Furthermore, members of the Group may be required to obtain SAFE’s approval before converting

significant amounts of Renminbi into or out of foreign currencies. In the future, it is possible that the

PRC government could adopt a more flexible currency policy, which could result in further and more

significant revaluations of Renminbi against any foreign currency. Any future exchange rate volatility

relating to Renminbi or any significant revaluation of Renminbi may materially and adversely affect

earnings and financial position of the Group.

There is foreign exchange control in the PRC.

The Group’s PRC subsidiaries are subject to PRC laws and regulations on currency conversion. In the

PRC, SAFE regulates the conversion of Renminbi into foreign currencies. Currently, foreign-invested

enterprises (“FIEs”) are required to apply to local banks designated by SAFE for foreign exchange

registration after receiving their business licences. With such registration certifications, FIEs are

allowed to open foreign currency accounts including the “basic account” and “capital account”.

Currently, conversion within the scope of the “basic account” for current account type purposes such

as the remittance of foreign currencies for payment of dividends, can be effected without the approval

of SAFE. However, the conversion of currency in the “capital account,” for capital items such as

direct investments, loans and securities, still requires the approval of SAFE.

The Group has PRC subsidiaries that are FIEs and the ability of these subsidiaries to pay dividendsor make other distributions to the Group may be restricted by, among other things, the availabilityof funds, and statutory and other legal restrictions including PRC foreign exchange controlrestrictions. To the extent that the ability of the Group’s subsidiaries to distribute to the Group isrestricted, it may have an adverse effect on the Group’s cash flows.

Inflation in the PRC could materially and adversely affect the Group’s profitability and growth.

While the PRC economy has grown rapidly, the growth has been uneven among various sectors of theeconomy and in different geographical areas of the country. Rapid economic growth can lead togrowth in the money supply and rising inflation. Increasing inflation rates can also be caused by manyother factors beyond the Group’s control, such as rising production and labour costs, high lendinglevels, changes in national and foreign governmental policies and regulations as well as movementsin exchange rates and interest rates. It is impossible to accurately predict future inflationary trends.If prices for the Group’s products and services rise at a rate that is insufficient to compensate for the

– 58 –

rise in its costs, the Group’s business may be materially and adversely affected. In order to controlinflation in the past, the PRC government has imposed controls on bank credits, limits on loans forfixed assets and restrictions on state bank lending. Such an austerity policy can lead to a slowing ofeconomic growth. A slowdown in the PRC economy could also materially and adversely affect theGroup’s business and prospects.

Recently, concerns have arisen over deflationary pressures in the PRC as a result of weak domesticdemand and a slowing economy. Inflation rates within the PRC have been on a downward trend inrecent years. A prolonged period of deflation may result in falling profits, closure of plants andshrinking employment and incomes by companies and individuals, any of which could adverselyaffect the Group’s business, financial condition or results of operations.

RISKS RELATING TO FINANCIAL AND OTHER INFORMATION

The Guarantor’s independent auditors, ZSZH, may be involved in investigations initiated byrelevant PRC authorities from time to time.

ZSZH, the Guarantor’s independent auditors, is a registered accounting firm in the PRC supervisedby the PRC courts and other relevant PRC regulatory agencies, including China Securities RegulatoryCommission (“CSRC”).

In recent years, ZSZH was involved in investigations initiated by relevant PRC authorities andreceived administrative and rectification orders and warnings from CSRC or its local branches. Inparticular, ZSZH was issued warning letters and administrative and rectification orders by CSRC inrecent years for, among other things, its defects in audit and verification procedures and failure toidentify internal control defects relating to the preparation of the audit reports of a number ofcompanies listed on the stock exchanges in the PRC.

As confirmed by ZSZH, the companies involved in the administrative and regulatory actionsmentioned above are unrelated to the Group and the audit work performed by ZSZH for the Groupis not affected by the above incidents. ZSZH also confirmed that the auditor’s reports for the AuditedConsolidated Financial Statements included elsewhere in this Offering Circular remain valid andeffective. ZSZH also confirmed that its ability to provide comfort letters in respect of the offering ofthe Instruments and the qualification of the auditors and independent accountants involved in theoffering of the Instruments are not affected by such administrative and regulatory actions. However,there can be no assurance that the relevant PRC regulatory agencies would not carry out any reviewof ZSZH’s audit and/or other assurance work conducted in relation to other companies. There can alsobe no assurance that ZSZH’s involvement in such administrative and regulatory actions or anynegative publicities about ZSZH would not affect investors’ confidence in companies and financialstatements audited or reviewed by it or have a material adverse effect on the Group. Prospectiveinvestors should consider these factors prior to making any investment decision.

The Audited Consolidated Financial Statements and the Reviewed Consolidated InterimFinancial Statements have been prepared and presented in accordance with PRC GAAP, whichis different from IFRS.

The Audited Consolidated Financial Statements and the Reviewed Consolidated Interim FinancialStatements included elsewhere in this Offering Circular have been prepared and presented inaccordance with PRC GAAP. PRC GAAP is substantially in line with IFRS, except for certainmodifications which reflect the PRC’s unique circumstances and environment. Please see“Description of Certain Differences between PRC GAAP and IFRS” for details. Each investor shouldconsult its own professional advisers for an understanding of the differences between PRC GAAP andIFRS and/or between PRC GAAP and other generally accepted accounting principles, and how thosedifferences might affect the financial information contained herein.

– 59 –

Historical consolidated financial information of the Group may not be indicative of its currentor future results of operations.

The historical financial information of the Group included in this Offering Circular is not indicativeof its future financial results. Such financial information is not intended to represent or predict theGroup’s results of operations of any future periods. The Group’s future results of operations maychange materially if its future growth deviates from the historical trends for various reasons,including factors beyond its control, such as changes in economic environment, PRC environmentalrules and regulations and the competitive landscape of the industries in which the Group operates itsbusinesses. The Group may also acquire businesses or companies or dispose of its subsidiaries orassets from time to time in accordance with the Group’s business objectives. Period-to-periodcomparisons of the Group’s historical operating results must be evaluated in light of the impact ofany such transactions.

The Reviewed Consolidated Interim Financial Statements included in this Offering Circularhave not been audited by a certified public accountant.

The Reviewed Consolidated Interim Financial Statements have not been audited by a certified publicaccountant, and should not be relied upon by investors to provide the same quality of informationassociated with information that has been subject to an audit. None of the Arrangers, the Dealers, theTrustee or the Agents or any of their respective affiliates, directors, officers, employees,representatives, advisers or agents or any person who controls any of them makes any representationor warranty, express or implied, regarding the accuracy, completeness and sufficiency of theReviewed Consolidated Interim Financial Statements for an assessment of, and potential investorsmust exercise caution when using such data to evaluate, the Guarantor’s financial condition andresults of operations. In addition, the Reviewed Consolidated Interim Financial Statements should notbe taken as an indication of the expected financial condition or results of operations of the Guarantorfor the full financial year ending 31 December 2021.

Certain accounting items in the Audited Consolidated Financial Statements and the ReviewedConsolidated Interim Financial Statements may not be comparable to the financial informationin the Guarantor’s consolidated financial statements for the previous periods.

Since 2017, the Ministry of Finance of the PRC has promulgated the New Accounting Standards andRequirements. The Audited Consolidated Financial Statements and the Reviewed ConsolidatedInterim Financial Statements were prepared and presented in accordance with the relevant applicableNew Accounting Standards and Requirements. As a result, the presentation of certain accountingitems in the Audited Consolidated Financial Statements and the Reviewed Consolidated InterimFinancial Statements may not be comparable to the financial figures in the Guarantor’s financialstatements for the previous periods. For details of the New Accounting Standards and Requirementsand its impact on the Audited Consolidated Financial Statements and the Reviewed ConsolidatedInterim Financial Statements, please see “Notes to the Financial Statements – V Significant changesin accounting policies, accounting estimates and correction of errors in prior periods – 1. Changesin accounting policies” of the Guarantor’s audited consolidated financial statements as at and for theyear ended 31 December 2019, “Notes to the Financial Statements – V Significant changes inaccounting policies, accounting estimates and correction of errors in prior periods – 1. Changes inaccounting policies” of the Guarantor’s audited consolidated financial statements as at and for theyear ended 31 December 2020 and “Notes to the Financial Statements – V Significant changes in

accounting policies, accounting estimates and correction of errors in prior periods” of the ReviewedConsolidated Interim Financial Statements, respectively.

– 60 –

There can be no assurance that the Ministry of Finance of the PRC will not promulgate other new

accounting standards or requirements in relation to financial statements which may affect the

Guarantor’s accounting policies or the presentation of the Guarantor’s financial statements.

Accordingly, potential investors must exercise caution and consult its financial advisors if necessary

when using the consolidated financial information of the Group to evaluate its financial performance.

The Guarantor published and may continue to publish periodical financial information in thePRC pursuant to applicable PRC regulatory rules. Investors should be cautious and not placeany reliance on the financial information other than that disclosed in this Offering Circular.

The Guarantor from time to time issues mid-term or short-term bonds and commercial papers in the

domestic capital markets in the PRC. For so long as any Instruments remains outstanding, the

Guarantor is obligated by the terms of the Instruments, among others, to provide holders of the

Instruments with its audited financial statements and certain unaudited periodical financial

statements. The periodical financial information published by the Group in the PRC may not be

audited or reviewed by independent auditors. As such, such financial information published in the

PRC should not be referred to or relied upon by potential investors to provide the same quality of

information associated with any audited or reviewed financial information. The Guarantor is not

responsible to holders of the Instruments for the unaudited and unreviewed financial information

from time to time published in the PRC and therefore investors should not place any reliance on any

such financial information.

Certain facts and statistics in this Offering Circular are derived from publications notindependently verified by the Issuer, the Guarantor, the Arrangers, the Dealers, the Trustee, theAgents or their respective advisers.

This Offering Circular contains facts and statistics relating to the economy of the PRC and the

industries in which the Group operates. While each of the Issuer and the Guarantor has taken

reasonable care to select reliable information sources and ensure that the facts and statistics relating

to the PRC’s economy and the industries in which the Group operates presented are accurately

extracted from such sources, such facts and statistics have not been independently verified by the

Issuer, the Guarantor, the Arrangers, the Dealers, the Trustee or the Agents or any of their respective

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

controls any of them and, therefore, none of them makes any representation as to the accuracy of such

facts and statistics, which may not be consistent with other information compiled within or outside

the PRC. Due to ineffective calculation and collection methods and other problems, the facts and

statistics herein may be inaccurate or may not be comparable to facts and statistics produced for other

economies and should not be unduly relied upon.

The Issuer has little or no business activities of its own and will be dependent on funds from itsaffiliates to make payments under the Instruments.

The Issuer has little or no business activities of its own and its ability to make payments under the

Instruments depends on funds from its affiliates. In the event that the Issuer does not obtain sufficient

funds from the Guarantor and/or other members of the Group, its ability to make payments under the

Instruments could be adversely affected.

– 61 –

RISKS RELATING TO THE INSTRUMENTS UNDER THE PROGRAMME AND THE

GUARANTEE

There is uncertainty relating to the enforceability of the Guarantee. If the Guarantor fails to

complete the SAFE registration in connection with the Guarantee within the time period

prescribed by SAFE, there may be logistical hurdles for cross-border payment under the

Guarantee.

On 12 May 2014, SAFE promulgated the Notice concerning the Foreign Exchange Administration

Rules on Cross-border Security and the relating implementation guidelines (collectively the “SAFE

Regulations”) which stipulate that any guarantee provided by PRC-incorporated entities in favour of

offshore creditors in connection with debt financing granted to offshore debtors is required to be

registered with SAFE. Under the SAFE Regulations, the Guarantor is required to register the

Guarantee with SAFE as a procedural matter within 15 business days after the date of execution of

the Deed(s) of Guarantee. In the event that the Guarantor is required to perform its payment

obligations under the Guarantee, the Guarantor must submit the registration documents issued by

SAFE to its local SAFE branch within the prescribed timeframe.

Pursuant to the SAFE Regulations, the registration or record-filing of a cross-border guarantee

contract by SAFE, and other administrative matters and requirements specified therein, will not

constitute prerequisites for the cross-border guarantee contract to come into effect. However, failure

to complete the registration as required may result in a fine up to RMB300,000 under the Notice of

the State Administration of Foreign Exchange on Issuing the Measures on the Foreign Exchange

Administration of Cross-border Guarantees. In addition, where the Guarantor fails to complete the

registration with SAFE, the Guarantor must, before performing the obligations under the Guarantee,

complete a remedial registration. Only by submitting the registration documents or remedial

registration documents will the Guarantor be able to remit funds outside PRC in order to perform its

payment obligations under the Guarantee. In addition, if the guarantee liability is a repayment

obligation for an issuer under the offshore bond issuance, the equity interests of such issuer must be

directly or indirectly held by an onshore entity and the proceeds of the bond issuance must be used

for an offshore project in which the onshore entity has an equity interest and the issuer and such

offshore project must have been duly approved by, registered and filed with the relevant authorities

in charge of outbound investment.

There can be no assurance that the Guarantor will be able to complete the registration of the

Guarantee with SAFE within the prescribed timeframe or at all. Under the Terms and Conditions of

the Notes and the Terms and Conditions of the Perpetual Capital Securities, Instrumentholders may

require the Issuer to redeem their Instruments in the event that the Guarantee is not registered within

a specified timeframe. Instrumentholders who do not exercise such redemption option should note

that before requisite registrations and/or approvals of the Guarantee given by the Guarantor are

completed, it is uncertain whether the Guarantee given by the Guarantor can be enforced in practice.

There may be hurdles at the time of remittance of funds (if any cross-border payment is to be made

by the Guarantor under the Guarantee) as domestic banks may require evidence of SAFE registration

in connection with the Guarantee in order to effect such remittance.

The SAFE Regulations are recent regulations and may be subject to a degree of executive and policy

discretion and interpretation by SAFE.

– 62 –

The Instruments and the Guarantee are unsecured obligations.

The Instruments are unsecured obligations of the Issuer and the Guarantor, respectively. The

repayment of the Instruments and payment under the Guarantee may be adversely affected if:

• the Issuer or the Guarantor enters into bankruptcy, liquidation, reorganisation or other

winding-up proceedings;

• there is a default in payment under the Issuer’s or the Guarantor’s future secured indebtedness

or other unsecured indebtedness; or

• there is an acceleration of any of the Issuer’s or the Guarantor’s indebtedness.

If any of these events were to occur, the Issuer’s or the Guarantor’s assets may not be sufficient to

pay amounts due on the Instruments.

The ratings of the Instruments may be downgraded or withdrawn.

Each Tranche of Instruments may be rated or unrated, as specified in the relevant Pricing Supplement.

The rating represents the opinion of the relevant rating agency and its assessment of the ability of the

Issuer and the Guarantor to perform its obligations under the Instruments, and credit risks in

determining the likelihood that payments will be made when due under the Instruments and/or the

Guarantee. A rating is not a recommendation to buy, sell or hold securities. The rating can be lowered

or withdrawn at any time. None of the Issuer, the Guarantor, the Trustee or the Agents is obliged to

inform holders of the Instruments if a rating is lowered or withdrawn. A reduction or withdrawal of

a rating may adversely affect the market price of the Instruments.

Any downgrading of the Guarantor’s corporate ratings, or those of its subsidiaries, by any rating

agencies could adversely affect the Group’s business and the Group’s liquidity.

Any adverse revision to the Guarantor’s corporate ratings, or those of its subsidiaries, for domestic

and international debt by rating agencies such as Fitch, Moody’s Investors Service, Inc. (“Moody’s”)

and S&P Global Ratings (“S&P”) may adversely affect the Group’s business, its financial

performance and the trading price of the Instruments. Further, the Group’s ability to obtain financing

or to access to capital markets may also be limited, thereby lowering its liquidity.

The credit ratings assigned to the Instruments may not reflect all risks.

One or more independent credit rating agencies may assign credit ratings to an issue of the

Instruments. The ratings may not reflect the potential impact of all risks related to structure, market,

additional factors discussed above and other factors that may affect the value of the Instruments. A

credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn

by the rating agency at any time. There can be no assurance that the ratings assigned to any

Instruments will remain in effect for any given period or that the ratings will not be revised or

withdrawn by the rating agencies in the future if, in their judgment, the circumstances so warrant.

None of the Issuer, the Guarantor, the Trustee or the Agents has any obligation to inform holders of

the Instruments of any such suspension, revision, downgrade or withdrawal. A suspension,

downgrade or withdrawal of the ratings of any Instruments at any time may adversely affect the

market price of the Instruments.

– 63 –

The Guarantor’s credit rating may decline.

There is a risk that the Guarantor’s credit rating may change as a result of changes in its operatingperformance or capital structure, or for some other reason. No assurance can be given that a creditrating will remain for any given period of time or that a credit rating will not be lowered or withdrawnby the relevant rating agency if, in its judgment, circumstances in the future so warrant or if adifferent methodology is applied to derive such credit ratings. Any lowering or withdrawal of theGuarantor’s credit rating could, notwithstanding that it is not a rating of the Instruments, adverselyimpact the market price and the liquidity of the Instruments.

The Instruments may not be a suitable investment for all investors.

Each potential investor in any Instruments must determine the suitability of that investment in lightof its own circumstances. In particular, each potential investor should:

• have sufficient knowledge and experience to make a meaningful evaluation of the relevantInstruments, the merits and risks of investing in the relevant Instruments and the informationcontained or incorporated by reference in this Offering Circular, any applicable supplement tothis Offering Circular or any Pricing Supplement;

• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of itsparticular financial situation, an investment in the relevant Instruments and the impact suchinvestment will have on its overall investment portfolio;

• have sufficient financial resources and liquidity to bear all of the risks of an investment in therelevant Instruments, including where principal or interest or Distribution is payable in one ormore currencies, or where the currency for principal or interest or Distribution payments isdifferent from the potential investor’s currency;

• understand thoroughly the terms of the relevant Instruments and be familiar with the behaviourof any relevant indices and financial markets; and

• be able to evaluate (either alone or with the help of a financial adviser) possible scenarios foreconomic, interest rate and other factors that may affect its investment and its ability to bear theapplicable risks.

Some Instruments may be complex financial instruments and such instruments may be purchased asa way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk tothe purchaser’s overall portfolios. A potential investor should not invest in Instruments which arecomplex financial instruments unless it has the expertise (either alone or with the help of a financialadviser) to evaluate how the Instruments will perform under changing conditions, the resulting effectson the value of such Instruments and the impact this investment will have on the potential investor’soverall investment portfolio.

Additionally, the investment activities of certain investors are subject to legal investment laws andregulations, or review or regulation by certain authorities. Each potential investor should consult itslegal advisers to determine whether and to what extent (1) the Instruments are legal investments forit, (2) the Instruments can be used as collateral for various types of borrowing, and (3) otherrestrictions apply to its purchase of any Instrument. Financial institutions should consult their legaladvisers or the appropriate regulators to determine the appropriate treatment of the Instruments underany applicable risk-based capital or similar rules.

– 64 –

The Instruments are redeemable in the event of certain withholding taxes being applicable.

There can be no assurance as to whether or not payments on the Instruments may be made without

withholding taxes or deductions applying from the date of issue of the first Tranche of Instruments

for or on account of any taxes, duties, assessments or governmental charges of whatever nature

imposed, levied, collected, withheld or assessed by or within the Cayman Islands or the PRC or, in

each case, any political subdivision or authority therein or thereof having power to tax. Although,

pursuant to the Terms and Conditions of the Notes and the Terms and Conditions of the Perpetual

Capital Securities, the Issuer is required to gross up payments on account of any such withholding

taxes or deductions, the Issuer also has the right to redeem the Instruments at any time subject to

certain specified exceptions in the event that it or the Guarantor has or will become obliged to pay

additional amounts on account of any existing or future withholding or deduction for any taxes,

duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld

or assessed by or within the Cayman Islands or the PRC or, in each case, any political subdivision

or authority therein or thereof having power to tax as a result of any change in, or amendment to, the

laws or regulations of the PRC or any political subdivision or any authority thereof or therein having

power to tax, or any change in the application or official interpretation of such laws or regulations,

which change or amendment becomes effective on or after the date on which agreement is reached

to issue the first Tranche of the Instruments.

The Instruments do not restrict the Group’s ability to incur additional debt or to take otheractions that could negatively impact holders of the Instruments.

Neither the Issuer nor the Guarantor is restricted under the Terms and Conditions of the Notes and

the Terms and Conditions of the Perpetual Capital Securities from incurring additional debt,

including secured debt, or from repurchasing the Instruments. In addition, the covenants applicable

to the Instruments do not require the Issuer or the Guarantor to achieve or maintain any minimum

financial results relating to the Issuer’s or the Guarantor’s financial position or results of operations.

The Group’s ability to recapitalise, incur additional debt and take other actions that are not limited

by the Terms and Conditions of the Notes and the Terms and Conditions of the Perpetual Capital

Securities could diminish the Group’s ability to make payments on the Instruments and amortising

bonds when due.

A change in English law which governs the Instruments may adversely affectInstrumentholders.

The Terms and Conditions of the Notes and the Terms and Conditions of the Perpetual Capital

Securities are governed by English law in effect as at the date of issue of the relevant Instruments.

There can be no assurance as to the impact of any possible judicial decision or change to English law

or administrative practice after the date of issue of the relevant Instruments.

The Issuer may not be able to redeem the Instruments upon the due date for redemption thereof.

If specified in the relevant Pricing Supplement, the Issuer may, at its option or following the

occurrence of a Change of Control (as defined in “Terms and Conditions of the Notes”) or a Change

of Control Event (as defined in “Terms and Conditions of the Perpetual Capital Securities”), and at

maturity (in case of the Notes only) or at any time will, be required to redeem all of the Instruments.

If such an event were to occur, the Issuer may not have sufficient cash in hand and may not be able

– 65 –

to arrange financing to redeem the Instruments in time, or on acceptable terms, or at all. The ability

to redeem the Instruments in such event may also be limited by the terms of other debt instruments.

The Issuer’s failure to repay, repurchase or redeem tendered Instruments could constitute an event of

default under the Notes or a non-payment event under the Perpetual Capital Securities, which may

also constitute a default under the terms of the Issuer’s, the Guarantor’s or the Group’s other

indebtedness.

The Instruments may be represented by Global Instruments or Global Certificates and holders

of a beneficial interest in a Global Instrument or Global Certificate must rely on the procedures

of the relevant Clearing System(s).

Instruments issued under the Programme may be represented by one or more Global Instruments (in

the case of Bearer Instruments) or Global Certificates (in the case of Registered Instruments). Such

Global Instruments and Global Certificates will be deposited with a common depositary for Euroclear

and Clearstream or lodged with the CMU (each of Euroclear, Clearstream and the CMU, a “Clearing

System”). Except in the circumstances described in the relevant Global Instrument or Global

Certificate, investors will not be entitled to receive Definitive Instruments. The relevant Clearing

System(s) will maintain records of the beneficial interests in the Global Instruments or Global

Certificates. While the Instruments are represented by one or more Global Instruments or Global

Certificates, investors will be able to trade their beneficial interests only through the Clearing

Systems.

While the Instruments are represented by one or more Global Instruments or Global Certificates, the

Issuer will discharge its payment obligations under the Instruments by making payments to the

relevant Clearing System for distribution to their account holders or in the case of the CMU, to the

persons for whose account(s) interests in such Global Instruments or Global Certificate are credited

as being held in the CMU in accordance with the CMU Rules (as defined in the Trust Deed) as

notified by the CMU to the Issuer in a relevant CMU Issue Position Report (as defined by the CMU

Rules) or any other notification by the CMU.

A holder of a beneficial interest in a Global Instrument or Global Certificate must rely on the

procedures of the relevant Clearing System(s) to receive payments under the relevant Instruments.

None of the Issuer, the Trustee or the Agents has any responsibility or liability for the records relating

to, or payments made in respect of, beneficial interests in the Global Instruments or Global

Certificates.

Holders of beneficial interests in the Global Instruments or Global Certificates will not have a direct

right to vote in respect of the relevant Instruments. Instead, such holders will be permitted to act only

to the extent that they are enabled by the relevant Clearing System(s) to appoint appropriate proxies.

Similarly, holders of beneficial interests in the Global Instruments or Global Certificates will not

have a direct right under the respective Global Instruments or Global Certificates to take enforcement

action against the Issuer and/or the Guarantor in the event of a default or, as the case may be, a

non-payment by or a winding-up of the Issuer or the Guarantor under the relevant Instruments but

will have to rely upon their rights under the Trust Deed.

– 66 –

Instrumentholders should be aware that Definitive Instruments which have a denomination that

is not an integral multiple of the minimum Specified Denomination may be illiquid and difficult

to trade.

In relation to any issue of Instruments which have a denomination consisting of a minimum Specified

Denomination (as defined in “Terms and Conditions of the Notes” and “Terms and Conditions of the

Perpetual Capital Securities”, as the case may be) plus a higher integral multiple of another smaller

amount, it is possible that the Instruments may be traded in amounts in excess of the minimum

Specified Denomination that are not integral multiples of such minimum Specified Denomination. In

such a case an Instrumentholder who, as a result of trading such amounts, holds a principal amount

of less than the minimum Specified Denomination will not receive a Definitive Instrument in respect

of such holding (should Definitive Instruments be printed) and would need to purchase a principal

amount of Instruments such that it holds an amount equal to one or more Specified Denominations.

If Definitive Instruments are issued, holders should be aware that Definitive Instruments which have

a denomination that is not an integral multiple of the minimum Specified Denomination may be

illiquid and difficult to trade.

Gains on the transfer of the Instruments and interest payable by the Issuer to overseas

Instrumentholders may be subject to income tax and value-added tax under PRC tax laws.

Under the Enterprise Income Tax Law of the PRC (the “EIT Law”) which took effect on 1 January

2008 and its implementation rules, any gains realised on the transfer of the Instruments by holders

who are deemed under the EIT Law as non-resident enterprises may be subject to PRC enterprise

income tax if such gains are regarded as income derived from sources within the PRC. Under the EIT

Law, a “non-resident enterprise” means an enterprise established under the laws of a jurisdiction

other than the PRC and whose actual administrative organisation is not in the PRC, which has

established offices or premises in the PRC, or which has not established any offices or premises in

the PRC but has obtained income derived from sources within the PRC. There remains uncertainty

as to whether the gains realised on the transfer of the Instruments by enterprise holders would be

treated as income derived from sources within the PRC and be subject to PRC enterprise income tax.

In addition, there is uncertainty as to whether gains realised on the transfer of the Instruments by

individual holders who are not PRC citizens or residents will be subject to PRC individual income

tax. If such gains are subject to PRC income tax, the 10 per cent. enterprise income tax rate and 20

per cent. individual income tax rate will apply respectively unless there is an applicable tax treaty or

arrangement that reduces or exempts such income tax. The taxable income will be the balance of the

total income obtained from the transfer of the Instruments minus all costs and expenses that are

permitted under PRC tax laws to be deducted from the income. According to the Arrangement

between the Mainland and the Hong Kong Special Administrative Region for the Avoidance of

Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the

“Taxation Arrangement”) which was promulgated on 21 August 2006, Instrumentholders who are

Hong Kong residents, including both enterprise holders and individual holders, will be exempted

from PRC income tax on capital gains derived from a sale or exchange of the Instruments if such

capital gains are not connected with an office or establishment that the Instrumentholders have in the

PRC and all the other relevant conditions are satisfied.

– 67 –

Pursuant to the EIT Law, the PRC Individual Income Tax Law (the “IIT Law”) which took effect on

30 June 2011, and the implementation regulations in relation to both the EIT Law and the IIT Law,

PRC income tax at a rate of 10 per cent. or 20 per cent. is normally applicable to PRC-source income

derived by non-resident enterprises or individuals respectively, subject to adjustment by applicable

treaty. If the Issuer is deemed a PRC resident enterprise for tax purposes, interest or, as the case may

be, Distribution payments on the Instruments may be considered to be sourced within the PRC, and

therefore be subject to PRC income tax at a rate of 10 per cent. for non-resident enterprise

Instrumentholders and at a rate of 20 per cent. for non-resident individual Instrumentholders (or a

lower treaty rate, if any).

On 23 March 2016, the Ministry of Finance of the PRC and the State Administration of Taxation of

the PRC issued the Circular of Full Implementation of Replacing Business Tax with Value-Added Tax

Reform (Caishui [2016] No. 36) (“Circular 36”), which introduced a new value-added tax (“VAT”)

from 1 May 2016. VAT is applicable where entities or individuals provide services within the PRC.

If the Issuer is treated as PRC tax resident and if PRC tax authorities take the view that the

Instrumentholders are providing loans within the PRC, or if the Guarantor is treated as PRC tax

resident and in the event that the Guarantor is required to fulfil its obligations under the Guarantee

by making interest or, as the case may be, Distribution payments on behalf of the Issuer, the

Instrumentholders will be subject to VAT at the rate of six per cent. and certain surcharges when

receiving the interest or, as the case may be, Distribution payments under the Instruments. VAT is

unlikely to be applicable to any transfer of Instruments between entities or individuals located outside

of the PRC and therefore unlikely to be applicable to gains realised upon such transfers of

Instruments, but there is uncertainty as to the applicability of VAT if either the seller or buyer of

Instruments is located inside the PRC. Circular 36 together with other laws and regulations pertaining

to VAT are relatively new, the interpretation and enforcement of such laws and regulations involve

uncertainties. Pursuant to the Circular 36, the PRC Interim Regulations on Urban Maintenance and

Construction Tax (中華人民共和國城市維護建設稅暫行條例), the Interim Provisions on Imposition

of Education Surcharge (徵收教育費附加的暫行規定), the Notice on Unification of the Application

of Urban Maintenance and Construction Tax and Education Surcharge by Domestic and Foreign

Enterprises and Individuals (關於統一內外資企業和個人城市維護建設稅和教育費附加制度的通知),

the Notice on Relevant Issues of Imposition of Municipal Maintenance and Education Surcharge on

Foreign-invested Enterprises (關於對外資企業徵收城市維護建設稅和教育費附加有關問題的通知),

the municipal maintenance tax and education surcharge will be applicable when entities and

individuals are obliged to pay VAT (for an aggregate of maximum 12 per cent. on any VAT payable).

If an Instrumentholder, being a non-resident enterprise or non-resident individual, is required to pay

any PRC income tax on interest or gains on the transfer of the Instruments, the value of the relevant

Instrumentholder’s investment in the Instruments may be materially and adversely affected.

Foreign Account Tax Compliance withholding may apply to payments on Instruments.

Whilst the Instruments are in global form and held within Euroclear, Clearstream or the CMU, in all

but the most remote circumstances, it is not expected that Sections 1471 through 1474 of the U.S.

Internal Revenue Code (commonly referred to as “FATCA”) will affect the amount of any payment

received by Euroclear, Clearstream or the CMU. However, FATCA may affect payments made to

custodians or intermediaries in the subsequent payment chain leading to the ultimate investor if any

such custodian or intermediary generally is unable to receive payments free of FATCA withholding.

It also may affect payment to any ultimate investor that is a financial institution that is not entitled

to receive payments free of withholding under FATCA, or an ultimate investor that fails to provide

its broker (or other custodian or intermediary from which it receives payment) with any information,

– 68 –

forms, other documentation or consents that may be necessary for the payments to be made free of

FATCA withholding. Investors should choose the custodians or intermediaries with care (to ensure

each is compliant with FATCA or other laws or agreements related to FATCA), provide each

custodian or intermediary with any information, forms, other documentation or consents that may be

necessary for such custodian or intermediary to make a payment free of FATCA withholding.

Investors should consult their own tax adviser to obtain a more detailed explanation of FATCA and

how FATCA may affect them. The Issuer’s obligations under the Instruments are discharged once it

has made payment to, or to the order of, the common depositary for Euroclear and Clearstream or the

CMU and the Issuer has therefore no responsibility for any amount thereafter transmitted through

Euroclear, Clearstream or the CMU and custodians or intermediaries.

The insolvency laws of the Cayman Islands, the PRC and other local insolvency laws may differ

from those of another jurisdiction with which the holders of the Instruments are familiar.

As the Issuer and the Guarantor are incorporated under the laws of the Cayman Islands and the PRC,

respectively, any insolvency proceeding relating to the Issuer or the Guarantor would likely involve

insolvency laws of the Cayman Islands or, as the case may be, the PRC, the procedural and

substantive provisions of which may differ from comparable provisions of the local insolvency laws

of jurisdictions with which the holders of the Instruments are familiar.

The Trustee may request the Instrumentholders to provide an indemnity and/or security and/or

prefunding to its satisfaction.

In certain circumstances, including without limitation giving of notice to the Issuer and the Guarantor

pursuant to Condition 10 of the Terms and Conditions of the Notes or, as the case may be, Condition

10(c) of the Terms and Conditions of the Perpetual Capital Securities and taking enforcement steps

and/or actions and/or initiating proceedings pursuant to Condition 12 of the Terms and Conditions of

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

Trustee may, at its sole discretion, request the Instrumentholders to provide an indemnity and/or

security and/or prefunding to its satisfaction before it takes steps and/or actions and/or initiates

proceedings on behalf of the Instrumentholders. The Trustee shall not be obliged to take any such

steps and/or actions and/or initiate such proceedings if not first indemnified and/or secured and/or

prefunded to its satisfaction. Negotiating and agreeing to an indemnity and/or security and/or

prefunding can be a lengthy process and may impact on when such steps and/or actions can be taken

and/or such proceedings can be initiated. The Trustee may not be able to take steps and/or actions

and/or to initiate proceedings, notwithstanding the provision of an indemnity or security or

prefunding to it, in breach of the terms of the Trust Deed or the Terms and Conditions of the Notes

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

circumstances, or where there is uncertainty or dispute as to the applicable laws or regulations, to the

extent permitted by the agreements and the applicable laws or regulations, it will be for the holders

of the Instruments to take such steps and/or actions and/or to initiate such proceedings directly.

– 69 –

Modifications and waivers may be made in respect of the Terms and Conditions of the Notes (inrelation to the Notes) or the Terms and Conditions of the Perpetual Capital Securities (inrelation to the Perpetual Capital Securities), the Agency Agreement, the Deed of Guaranteeand/or the Trust Deed by the Trustee or less than all of the holders of the Instruments, anddecisions may be made on behalf of all holders of the Instruments that may be adverse to theinterests of the individual holders of the Instruments.

The Terms and Conditions of the Notes and the Terms and Conditions of the Perpetual Capital

Securities contain provisions for calling meetings of the holders of the Instruments to consider

matters affecting their interests generally. These provisions permit defined majorities to bind all

Instrumentholders including those Instrumentholders who did not attend and vote at the relevant

meeting and those Instrumentholders who voted in a manner contrary to the majority. There is a risk

that the decision of the majority of holders of the Instruments may be adverse to the interests of

individual holders of the Instruments.

The Terms and Conditions of the Notes and the Terms and Conditions of the Perpetual Capital

Securities also provide that the Trustee may, without the consent of the holders of the Instruments,

agree (i) to any modification of the Deed of Guarantee, the Trust Deed, the Terms and Conditions of

the Notes, the Terms and Conditions of the Perpetual Capital Securities and/or the Agency Agreement

(as defined in “Terms and Conditions of the Notes” and “Terms and Conditions of the Perpetual

Capital Securities”, as the case may be) (other than in respect of a reserved matter) which in the

opinion of the Trustee will not be materially prejudicial to the interests of the holders of the

Instruments and (ii) to any modification of the Instruments, the Trust Deed, the Terms and Conditions

of the Notes, the Terms and Conditions of the Perpetual Capital Securities, the Deed of Guarantee or

the Agency Agreement which in the opinion of the Trustee is of a formal, minor or technical nature

or is to correct a manifest error or to comply with any mandatory provision of applicable law.

In addition, the Trustee may, without the consent of the holders of the Instruments, authorise or waive

any proposed breach or breach of the Instruments, the Deed of Guarantee, the Trust Deed or the

Agency Agreement (other than a proposed breach, or a breach relating to the subject of certain

reserved matters) if, in the opinion of the Trustee, the interests of the holders of the Instruments will

not be materially prejudiced thereby.

RISKS RELATING TO THE STRUCTURE OF A PARTICULAR ISSUE OF INSTRUMENTSUNDER THE PROGRAMME

A wide range of Instruments may be issued under the Programme. A number of these Instruments may

have features which contain particular risks for potential investors. Set out below is a description of

certain such features:

The market price of Instruments carrying optional redemption features may be more limitedthan that of Instruments without these features.

Instruments issued under the Programme may sometimes have Issuer optional redemption features.

In a decreasing interest rate environment, the Issuer may exercise its right to redeem such Instruments

earlier than the final maturity date at the stated optional redemption price and an investor may face

reinvestment risk as well as see the market price of the Instruments converge to its redemption price

as it gets closer to the optional redemption date.

– 70 –

An optional redemption feature is likely to limit the market value of the Instruments. During any

period when the Issuer may elect to redeem the Instruments, the market value of those Instruments

generally will not rise substantially above the price at which they can be redeemed. This also may

be true prior to any redemption period.

The Issuer may be expected to redeem Instruments when its cost of borrowing is lower than the

interest rate (in relation to Notes) or Distribution Rate (in relation to Perpetual Capital Securities) on

the Instruments. At those times, an investor generally would not be able to reinvest the redemption

proceeds at an effective interest and/or distribution rate as high as the interest rate (in relation to

Notes) or Distribution Rate (in relation to Perpetual Capital Securities), respectively, on the

Instruments being redeemed and may only be able to do so at a significantly lower rate. Potential

investors should consider reinvestment risk in light of other investments available at that time.

Dual Currency Instruments have features which are different from single currency issues.

The Issuer may issue Instruments with principal or interest payable in one or more currencies which

may be different from the currency in which the Instruments are denominated. Potential investors

should be aware that:

• the market price of such Instruments may be volatile;

• they may receive no interest;

• payment of principal or interest or Distribution may occur at a different time or in a different

currency than expected; and

• the amount of principal payable at redemption may be less than the nominal amount of such

Instruments or even zero.

Failure by an investor to pay a subsequent instalment of Partly Paid Instruments may result in

an investor losing all of its investment.

The Issuer may issue Instruments where the issue price is payable in more than one instalment.

Failure to pay any subsequent instalments could result in an investor losing all of its investment.

The market price of variable rate Instruments with a multiplier or other leverage factor may

be volatile.

Instruments with variable interest or distribution rates can be volatile securities. If they are structured

to include multipliers or other leverage factors, or caps or floors, or any combination of those features

or other similar related features, their market values may be even more volatile than those for

securities that do not include such features.

– 71 –

Inverse Floating Rate Instruments are typically more volatile than conventional floating rate

debt.

Inverse Floating Rate Instruments have an interest rate equal to a fixed rate minus a rate based upon

a reference rate such as LIBOR. The market values of such Instruments typically are more volatile

than market values of other conventional floating rate debt securities based on the same reference rate

(and with otherwise comparable terms). Inverse Floating Rate Instruments are more volatile because

an increase in the reference rate not only decreases the interest rate of the Instruments, but may also

reflect an increase in prevailing interest rates, which further adversely affects the market value of

these Instruments.

Instruments carrying an interest rate (in relation to Notes) or a Distribution Rate (in relation

to Perpetual Capital Securities) which may be converted from fixed to floating interest rates (in

relation to Notes) or fixed to floating Distributions Rates (in relation to Perpetual Capital

Securities), and vice versa, may have lower market values than other Instruments.

Fixed Rate Notes and Floating Rate Notes may bear interest at a rate that the Issuer may elect to

convert from a fixed rate to a floating rate, or from a floating rate to a fixed rate. Fixed Rate Perpetual

Capital Securities and Floating Rate Perpetual Capital Securities may bear Distribution at a rate that

the Issuer may elect to convert from a fixed rate to a floating rate, or from a floating rate to a fixed

rate. The Issuer’s ability to convert the interest rate (in relation to Notes) or the Distribution Rate (in

relation to Perpetual Capital Securities) will affect the secondary market and the market value of such

Instruments since the Issuer may be expected to convert the rate when it is likely to produce a lower

overall cost of borrowing. If the Issuer converts from a fixed rate to a floating rate, the spread on the

Fixed Rate Instruments may be less favourable than then prevailing spreads on comparable Floating

Rate Instruments tied to the same reference rate. In addition, the new floating rate at any time may

be lower than the rates on other Instruments. If the Issuer converts from a floating rate to a fixed rate,

the fixed rate may be lower than then prevailing rates on its Instruments.

The market prices of Instruments issued at a substantial discount or premium tend to fluctuate

more in relation to general changes in interest rates than do prices for conventional

interest-bearing securities.

The market values of securities issued at a substantial discount or premium to their nominal amount

tend to fluctuate more in relation to general changes in interest rates than do prices for conventional

interest-bearing securities. Generally, the longer the remaining term of the securities, the greater the

price volatility as compared to conventional interest-bearing securities with comparable maturities.

Investors may lose part or all of their investment in any Index Linked Instruments issued.

If, in the case of a particular Tranche of Instruments, the relevant Pricing Supplement specifies that

the Instruments are Index Linked Instruments or variable redemption amount Instruments, there is a

risk that the investor may lose the value of its entire investment or part of it.

– 72 –

The value of, and return on, Floating Rate Instruments linked to or referencing LIBOR may beadversely affected in the event of a permanent discontinuation of LIBOR.

On 27 July 2017, the United Kingdom Financial Conduct Authority, which regulates the LIBOR,announced that it will no longer persuade or compel banks to submit rates for the calculation of theLIBOR benchmark after 2021 (the “FCA Announcement”). The FCA Announcement indicates thatthe continuation of LIBOR on the current basis (or at all) cannot and will not be guaranteed after2021. It is not possible to predict whether, and to what extent, panel banks will continue to provideLIBOR submissions to the administrator of LIBOR going forward. On 21 September 2017, theEuropean Central Bank announced that it would be part of a new working group tasked with theidentification and adoption of a “risk free overnight rate” which can serve as a basis for an alternativeto current benchmarks used in a variety of financial instruments and contracts in the euro area.

Following the implementation of any such potential reforms, the manner of administration ofbenchmarks may change, with the result that they may perform differently than in the past, or thebenchmark could be eliminated entirely, or there could be other consequences that cannot bepredicted. The elimination of the LIBOR benchmark or any other benchmark, or changes in themanner of administration of any benchmark, could require or result in an adjustment to the interestcalculation provisions of the Terms and Conditions of the Notes (as further described in Condition5(b) of the Terms and Conditions of the Notes) (in relation to the Notes) or to the Distributioncalculation provisions of the Terms and Conditions of the Perpetual Capital Securities (as furtherdescribed in Condition 5(b)(i) of the Terms and Conditions of the Perpetual Capital Securities) (inrelation to the Perpetual Capital Securities), or result in adverse consequences to holders of anysecurities linked to such benchmark (including but not limited to Floating Rate Notes whose interestrates are linked to LIBOR or any other such benchmark that is subject to reform or Floating RatePerpetual Capital Securities whose Distribution Rates are linked to LIBOR or any other suchbenchmark that is subject to reform). Furthermore, even prior to the implementation of any changes,uncertainty as to the nature of alternative reference rates and as to potential changes to suchbenchmark may adversely affect such benchmark during the term of the relevant Instruments, thereturn on the relevant Instruments and the trading market for securities based on the same benchmark.

The Terms and Conditions of the Notes and the Terms and Conditions of the Perpetual CapitalSecurities provide for certain fallback arrangements in the event that a published benchmark, such asLIBOR, (including any page on which such benchmark may be published (or any successor service))becomes unavailable, including the possibility that the rate of interest could be set by reference to asuccessor rate or an alternative reference rate and that such successor rate or alternative rate may beadjusted (if required) in order to reduce or eliminate, to the extent reasonably practicable in thecircumstances, any economic prejudice or benefit (as applicable) to investors arising out of thereplacement of the relevant benchmark. In certain circumstances the ultimate fallback of interest fora particular Interest Period (as defined in “Terms and Conditions of the Notes”) or Distribution fora particular Distribution Period may result in the rate of interest for the last preceding Interest Periodor Distribution Period, respectively, being used.

This may result in the effective application of a fixed rate for Floating Rate Instruments based on therate which was last observed on the Relevant Screen Page (as defined in “Terms and Conditions of

the Notes” or “Terms and Conditions of the Perpetual Capital Securities”, as the case may be). Inaddition, due to the uncertainty concerning the availability of successor rates and alternative rates andthe involvement of an Independent Adviser (as defined in “Terms and Conditions of the Notes” or“Terms and Conditions of the Perpetual Capital Securities”, as the case may be), the relevant fallbackprovisions may not operate as intended at the relevant time.

– 73 –

Any such consequences could have a material adverse effect on the value of and return on any such

Instruments. Moreover, any of the above matters or any other significant change to the setting or

existence of any relevant reference rate could affect the ability of the Issuer to meet its obligations

under the Floating Rate Instruments or could have a material adverse effect on the value or liquidity

of, and the amount payable under, the Floating Rate Instruments. Investors should consider these

matters when making their investment decision with respect to the relevant Floating Rate

Instruments.

RISKS RELATING TO PERPETUAL CAPITAL SECURITIES

Perpetual Capital Securityholders will have no right to require redemption.

The Issuer may issue Perpetual Capital Securities under the Programme. The Perpetual Capital

Securities are perpetual and have no fixed final maturity date. Perpetual Capital Securityholders have

no right to require the Issuer to redeem Perpetual Capital Securities at any time, and an investor who

acquires Perpetual Capital Securities may only dispose of such Perpetual Capital Securities by sale.

Perpetual Capital Securityholders who wish to sell their Perpetual Capital Securities may be unable

to do so at a price at or above the amount they have paid for them, or at all. Therefore, holders of

Perpetual Capital Securities should be aware that they may be required to bear the financial risks of

an investment in Perpetual Capital Securities for an indefinite period of time.

If specified in the relevant Pricing Supplement, Perpetual Capital Securityholders may not

receive Distribution payments if the Issuer elects not to pay all or a part of a Distribution under

the Terms and Conditions of the Perpetual Capital Securities.

If Distribution Deferral is specified in the relevant Pricing Supplement, the Issuer may, at its sole

discretion, elect to defer any scheduled Distributions or Arrears of Distribution for any period of time

except that Condition 5(k)(v) of the Terms and Conditions of the Perpetual Capital Securities (see

“Terms and Conditions of the Perpetual Capital Securities – Distribution Deferral – Restrictions in

the case of Deferral”) shall be complied with until all outstanding Arrears of Distribution and

Additional Distribution Amount have been paid in full. Save as aforesaid, the Issuer is not subject to

any limits as to the number of times Distributions or Arrears of Distribution can be deferred.

Although Arrears of Distributions following a deferral are cumulative, the Issuer may defer their

payment for an indefinite period of time by delivering the relevant deferral election notices to the

Trustee and the Principal Paying Agent.

Any deferral of Distribution will likely have an adverse effect on the market price of the Perpetual

Capital Securities. In addition, as a result of the Distribution deferral provision of any such Perpetual

Capital Securities, the market price of such Perpetual Capital Securities may be more volatile than

the market prices of debt securities on which original issue discount or distribution accrues that are

not subject to such deferrals and may be more sensitive generally to adverse changes in the Issuer’s

and the Guarantor’s financial condition.

– 74 –

The Perpetual Capital Securities may be redeemed at the Issuer’s option on the date(s) specified

in the relevant Pricing Supplement or on the occurrence of certain other events.

The Perpetual Capital Securities are perpetual capital securities and have no fixed final redemption

date. If specified in the relevant Pricing Supplement, the Perpetual Capital Securities may be

redeemed at the option of the Issuer on certain date(s) specified in the relevant Pricing Supplement

at their principal amount (or such other redemption amount stated in the relevant Pricing Supplement)

together with all outstanding Arrears of Distribution, Additional Distribution Amounts and

Distribution accrued to the date fixed for redemption. In addition, if specified on the relevant Pricing

Supplement, the Issuer may, at its option, redeem the Perpetual Capital Securities in whole, but not

in part, on any Distribution Payment Date, or any time after such Distribution Payment Date, for

taxation reasons or upon the occurrence of certain other events, including a Change of Control Event,

an Equity Disqualification Event (as defined in “Terms and Conditions of the Perpetual Capital

Securities”), a Breach of Covenants Event, a Relevant Indebtedness Default Event, a Dividend

Stopper Breach Event or if at least 90 per cent. in principal amount of the Perpetual Capital Securities

originally issued has already been cancelled prior to the date fixed for redemption. See “Terms and

Conditions of the Perpetual Capital Securities – Redemption, Purchase and Options” for further

details.

The date on which the Issuer elects to redeem the Perpetual Capital Securities may not accord with

the preference of individual Perpetual Capital Securityholders. This may be disadvantageous to

Perpetual Capital Securityholders in light of market conditions or the individual circumstances of the

holder of Perpetual Capital Securities. In addition, an investor may not be able to reinvest the

redemption proceeds in comparable securities at an effective distribution rate at the same level as that

of the Perpetual Capital Securities.

There are limited remedies for default under the Perpetual Capital Securities.

Any scheduled Distribution will not be due if the Issuer elects to defer that Distribution pursuant to

the Terms and Conditions of the Perpetual Capital Securities. Notwithstanding any of the provisions

relating to non-payment defaults, the right to institute Winding-Up proceedings is limited to

circumstances where payment has become due and is unpaid and the Issuer or the Guarantor fails to

make the payment when due. The only remedy against the Issuer or the Guarantor available to the

Trustee or (where the Trustee has failed to proceed against the Issuer or the Guarantor as provided

in the Terms and Conditions of the Perpetual Capital Securities) any Perpetual Capital Securityholder

for recovery of amounts in respect of the Perpetual Capital Securities following the occurrence of a

payment default after any sum becomes due in respect of the Perpetual Capital Securities will be

instituting Winding-Up proceedings and/or proving and/or claiming in such Winding-Up in respect

of any payment obligations of the Issuer or the Guarantor arising from the Perpetual Capital

Securities and the Trust Deed. The Trustee or (where the Trustee has failed to proceed against the

Issuer or the Guarantor as provided in the Terms and Conditions of the Perpetual Capital Securities)

any Perpetual Capital Securityholder can only institute proceedings for the Winding-Up of the Issuer

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

liquidation of the Issuer and/or Guarantor for such payment, if there is a Winding-Up of the Issuer

or the Guarantor, or the Issuer or the Guarantor has not made payment in respect of the Perpetual

Capital Securities or under the Trust Deed for a period of 14 days or more after the date on which

such payment is due.

– 75 –

The Issuer may raise or redeem other capital which affects the price of the Perpetual Capital

Securities.

The Issuer and the Guarantor may raise additional capital through the issue of other securities or other

means. There is no restriction, contractual or otherwise, on the amount of securities or other liabilities

which the Issuer and the Guarantor may issue or incur and which rank senior to, or pari passu with,

the Perpetual Capital Securities. The issue of any such securities or the incurrence of any such other

liabilities or the redemption of any such securities may reduce the amount (if any) recoverable by

holders of Perpetual Capital Securities on a Winding-Up of the Issuer and/or the Guarantor, and may

increase the likelihood of a deferral of Distribution under the Perpetual Capital Securities. The issue

of any such securities or the incurrence of any such other liabilities or the redemption of any such

securities might also have an adverse impact on the trading price of the Perpetual Capital Securities

and/or the ability of holders of Perpetual Capital Securities to sell their Perpetual Capital Securities.

RISKS RELATING TO THE MARKET GENERALLY

Set out below is a brief description of certain market risks, including liquidity risk, exchange rate

risk, interest rate risk and credit risk:

Instruments issued under the Programme have no current active trading market and may trade

at a discount to their initial offering price and/or with limited liquidity.

Instruments issued under the Programme will be new securities which may not be widely distributed

and for which there is currently no active trading market (unless in the case of any particular Tranche,

such Tranche is to be consolidated with and form a single series with a Tranche of Instruments which

is already issued). If the Instruments are traded after their initial issuance, they may trade at a

discount to their initial offering price, depending upon prevailing interest rates, the market for similar

securities, general economic conditions and the financial condition of the Issuer, the Guarantor and

the Group. If the Instruments are trading at a discount, investors may not be able to receive a

favourable price for their Instruments, and in some circumstances investors may not be able to sell

their Instruments at all or at their fair market value. Although application has been made to the Hong

Kong Stock Exchange for the listing of the Programme by way of debt issues to Professional

Investors only during the 12-month period after the date of this Offering Circular on the Hong Kong

Stock Exchange, there can be no assurance that such application will be accepted, that any particular

Tranche of Instruments will be so admitted or that an active trading market will develop. In addition,

the market for investment grade and crossover grade debt has been subject to disruptions that have

caused volatility in prices of securities similar to the Instruments issued under the Programme.

Accordingly, there can be no assurance as to the development or liquidity of any trading market, or

that disruptions will not occur, for any particular Tranche of Instruments. In addition, one or more

initial investors in the Instruments may purchase a significant portion of the aggregate principal

amount of the Instruments pursuant to any offering under the Programme. The existence of any such

significant Instrumentholder(s) may reduce the liquidity of the Instruments in the secondary trading

market. Accordingly, there can be no assurance as to the development or liquidity of any trading

market, or that disruptions will not occur, for any particular Tranche of Instruments.

– 76 –

The liquidity and price of the Instruments following an offering may be volatile.

The price and trading volume of the Instruments may be highly volatile. Factors such as variations

in the revenues, earnings and cash flows of the Group and proposals of new investments, strategic

alliances and/or acquisitions, interest rates and fluctuations in prices for comparable companies and

government regulations and changes thereof applicable to the Group’s industry and general economic

conditions nationally or internationally could cause the price of the Instruments to change. Any such

developments may result in large and sudden changes in the volume and price at which the

Instruments will trade. There can be no assurance that these developments will not occur in the future.

Developments in other markets may adversely affect the market price of the Instruments.

The market price of the Instruments may be adversely affected by declines in the international

financial markets and world economic conditions. The market for the Instruments is, to varying

degrees, influenced by economic and market conditions in other markets, especially those in Asia.

Although economic conditions are different in each country, investors’ reactions to developments in

one country can affect the securities markets and the securities of issuers in other countries, including

China. Since the global financial crisis of 2008 and 2009, the international financial markets have

experienced significant volatility. If similar developments occur in the international financial markets

in the future, the market price of the Instruments could be adversely affected.

Exchange rate risks and exchange controls may result in an Instrumentholder receiving less

interest or Distribution or principal than expected.

The Issuer will pay principal and interest or Distribution on the Instruments in the Specified Currency

(as defined in “Terms and Conditions of the Notes” or “Terms and Conditions of the Perpetual Capital

Securities”, as the case may be). This presents certain risks relating to currency conversions if an

Instrumentholder’s financial activities are denominated principally in a currency or currency unit (the

“Investor’s Currency”) other than the Specified Currency. These include the risk that exchange rates

may significantly change (including changes due to devaluation of the Specified Currency or

revaluation of the Investor’s Currency) and the risk that authorities with jurisdiction over the

Investor’s Currency may impose or modify exchange controls. An appreciation in the value of the

Investor’s Currency relative to the Specified Currency would decrease:

(i) the Investor’s Currency equivalent yield on the Instruments;

(ii) the Investor’s Currency equivalent value of the principal payable on the Instruments; and

(iii) the Investor’s Currency equivalent market value of the Instruments.

Governments and monetary authorities may impose (as some have done in the past) exchange

controls that could adversely affect an applicable exchange rate. As a result, an Instrumentholder may

receive less interest or Distribution or principal than expected, or no interest or Distribution or

principal.

– 77 –

Changes in market interest rates may adversely affect the value of Fixed Rate Instruments.

Investment in Fixed Rate Instruments involves the risk that subsequent changes in market interest

rates may adversely affect the value of Fixed Rate Instruments.

RISKS RELATING TO RENMINBI-DENOMINATED INSTRUMENTS

Instruments denominated in Renminbi (“Renminbi Instruments”) may be issued under the

Programme. Renminbi Instruments contain particular risks for potential investors.

Renminbi is not freely convertible and there are significant restrictions on the remittance of

Renminbi into and outside the PRC which may adversely affect the liquidity of Renminbi

Instruments.

Renminbi is not freely convertible at present. The PRC government continues to regulate conversion

between Renminbi and foreign currencies, including the Hong Kong dollar, despite significant

reduction in control by it in recent years over trade transactions involving the import and export of

goods and services as well as other frequent routine foreign exchange transactions. These transactions

are known as current account items.

However, remittance of Renminbi by foreign investors into the PRC for settlement purposes of capital

account items, such as capital contributions, is generally only permitted upon obtaining specific

approvals from, or completing specific registrations or filings with, the relevant authorities on a

case-by-case basis and is subject to a strict monitoring system. Regulations in the PRC on the

remittance of Renminbi into the PRC for settlement of capital account items are being developed.

Although the Renminbi was added to the Special Drawing Rights basket created by the International

Monetary Fund in 2016 and policies further improving accessibility to Renminbi to settle

cross-border transactions in foreign currencies were implemented by PBOC in 2018, there can be no

assurance that the PRC government will continue to gradually liberalise control over cross-border

remittance of Renminbi in the future, that any pilot schemes for Renminbi cross-border utilisation

will not be discontinued or that new regulations in the PRC will not be promulgated in the future

which have the effect of restricting or eliminating the remittance of Renminbi into or outside the

PRC. In the event that funds cannot be repatriated outside the PRC in Renminbi, this may affect the

overall availability of Renminbi outside the PRC and the ability of the Issuer and the Guarantor to

source Renminbi to finance their obligations under Instruments denominated in Renminbi.

Holders of beneficial interests in Renminbi Instruments may be required to provide certifications and

other information (including Renminbi account information) in order to allow such holder to receive

payments in Renminbi in accordance with the Renminbi clearing and settlement system for

participating banks in Hong Kong.

– 78 –

There is only limited availability of Renminbi outside the PRC, which may affect the liquidity

of the Renminbi Instruments and the ability of the Issuer and the Guarantor to source

Renminbi outside the PRC to service Renminbi Instruments.

As a result of the restrictions by the PRC government on cross-border Renminbi fund flows, the

availability of Renminbi outside the PRC is limited. While PBOC has entered into agreements on the

clearing of Renminbi business with financial institutions in a number of financial centres and cities

(the “Renminbi Clearing Banks”), including but not limited to Hong Kong and are in the process

of establishing Renminbi clearing and settlement mechanisms in several other jurisdictions (the

“Settlement Arrangements”), the current size of Renminbi denominated financial assets outside the

PRC remains limited.

There are restrictions imposed by PBOC on Renminbi business participating banks in respect of

cross-border Renminbi settlement, such as those relating to direct transactions with PRC enterprises.

Furthermore, Renminbi business participating banks do not have direct Renminbi liquidity support

from PBOC. The Renminbi Clearing Banks only have access to onshore liquidity support from PBOC

to square open positions of participating banks for limited types of transactions and are not obliged

to square for participating banks any open positions resulting from other foreign exchange

transactions or conversion services. In such cases, the participating banks will need to source

Renminbi from the offshore market to square such open positions.

Although it is expected that the offshore Renminbi market will continue to grow in depth and size,

its growth is subject to many constraints as a result of PRC laws and regulations on foreign exchange.

There can be no assurance that new PRC regulations will not be promulgated or the Settlement

Arrangements will not be terminated or amended in the future which will have the effect of restricting

availability of Renminbi outside the PRC. The limited availability of Renminbi outside the PRC may

affect the liquidity of the Renminbi Instruments. To the extent the Issuer or the Guarantor is required

to source Renminbi outside the PRC to service the Renminbi Instruments, there can be no assurance

that the Issuer or the Guarantor will be able to source such Renminbi on satisfactory terms, if at all.

Investment in the Renminbi Instruments is subject to exchange rate risks.

The value of Renminbi against U.S. dollar and other foreign currencies fluctuates from time to time

and is affected by changes in the PRC and international political and economic conditions and by

many other factors. All payments of interest and principal will be made with respect to the RMB

Instruments in Renminbi. As a result, the value of these Renminbi payments in U.S. dollars or other

foreign currencies may vary with the prevailing exchange rates in the marketplace. If the value of

Renminbi depreciates against U.S. dollar or other foreign currencies, the value of investment in U.S.

dollars or other applicable foreign currencies will decline. In August 2015, PBOC changed the way

it calculates the mid-point price of Renminbi against U.S. dollar, requiring the market-makers who

submit for PBOC’s reference rates to consider the previous day’s closing spot rate, foreign-exchange

demand and supply as well as changes in major currency rates. This change, and other changes such

as widening the trading band that may be implemented, may increase volatility in the value of the

Renminbi against foreign currencies. In addition, there may be tax consequences for investors as a

result of any foreign currency gains resulting from any investment in the Renminbi Instruments.

– 79 –

Investment in Renminbi Instruments is subject to interest rate risks.

The PRC government has gradually liberalised its regulation of interest rates in recent years. Further

liberalisation may increase interest rate volatility. In addition, the interest rate for Renminbi in

markets outside the PRC may significantly deviate from the interest rate for Renminbi in the PRC as

a result of foreign exchange controls imposed by PRC laws and regulations and prevailing market

conditions.

As Renminbi Notes may carry a fixed interest rate, the trading price of the Renminbi Notes will

consequently vary with the fluctuations in the Renminbi interest rates. If holders of the Renminbi

Notes propose to sell their Renminbi Notes before their maturity, they may receive an offer lower

than the amount they have invested.

Payments in respect of the Renminbi Instruments will only be made to investors in the manner

specified in such Renminbi Instruments.

All payments to investors in respect of the Renminbi Instruments will be made solely by (i) when the

Renminbi Instruments are represented by Global Instruments or Global Certificates, transfer to a

Renminbi bank account maintained in Hong Kong in accordance with prevailing CMU Rules, or (ii)

when the Renminbi Instruments are in definitive form, transfer to a Renminbi bank account

maintained in Hong Kong in accordance with prevailing rules and regulations. Neither the Issuer nor

the Guarantor can be required to make payment by any other means (including in any other currency

or in bank notes, by cheque or draft or by transfer to a bank account in the PRC).

Remittance of proceeds into or outside of the PRC in Renminbi may be difficult.

In the event that the Issuer decides to remit some or all of the proceeds into the PRC in Renminbi,

its ability to do so will be subject to obtaining all necessary approvals from, and/or registration or

filing with, the relevant PRC government authorities. However, there can be no assurance that the

necessary approvals from, and/or registration or filing with, the relevant PRC government authorities

will be obtained at all or, if obtained, they will not be revoked or amended in the future.

There can be no assurance that the PRC government will continue to gradually liberalise the control

over cross-border Renminbi remittances in the future, that the pilot schemes introduced will not be

discontinued or that new PRC regulations will not be promulgated in the future which have the effect

of restricting or eliminating the remittance of Renminbi into or outside the PRC. In the event that the

Issuer does remit some or all of the proceeds into the PRC in Renminbi and the Issuer subsequently

is not able to repatriate funds outside the PRC in Renminbi, it will need to source Renminbi outside

the PRC to finance its obligations under the Renminbi Instruments, and its ability to do so will be

subject to the overall availability of Renminbi outside the PRC.

– 80 –

RISKS RELATING TO IRISH TAXES

A change in Irish tax laws could adversely affect the Group.

Changes in Irish tax laws may adversely impact the value of the Instrumentholders’ investment. In

particular, the Issuer intends to satisfy the conditions to be a “Qualifying Company” as defined in

Section 110 of Ireland’s Taxes Consolidation Act 1997 (“TCA”). There can be no assurance that the

tax treatment of a “Qualifying Company” for the purposes of Section 110 of TCA will not change in

the future. The tax deductibility of the Issuer’s interest costs will depend on the applicability of

Section 110 of TCA (as more properly described below) and the current practice of the Revenue

Commissioners of Ireland in relation to the same. Any change to these rules may have an impact on

the Instrumentholders.

The Issuer may not satisfy or continue to satisfy the requirements to be a “QualifyingCompany” under Irish law.

The Issuer intends to satisfy the conditions to be a “Qualifying Company” as defined in Section 110

of TCA and be subject to Irish corporation tax at 25 per cent. on its taxable profits. If the Issuer ceases

to satisfy the conditions to be a “Qualifying Company” as defined in Section 110 of TCA, the Issuer

will not be entitled to benefits under Section 110 of TCA.

Any change in the Issuer’s tax residency could have material adverse effects on the Issuer’staxes.

The Issuer intends to be a tax resident in Ireland. The net proceeds from the issue of the Instruments

may be on-lent to the Guarantor and/or other members of the Group under inter-company loan

agreements. If the Issuer ceases to be a tax resident in Ireland, withholding tax on interest payment

to the Issuer may apply.

Restrictions to deductibility of interest – Changes to Section 110 of TCA.

There may be restrictions on the deductibility of interest or funding expenses paid by a qualifying

company within the meaning of Section 110 of TCA (such as the Issuer) where that company holds

or manages certain loans, securities, or other interests which derive their value from Irish land.

Further detail on these provisions is set out in “Taxation – Ireland”. If the Issuer holds or manages

any of the relevant assets and is not able to benefit from any of the exceptions contained in the

legislation, additional Irish tax may be payable by the Issuer.

BEPS & ATAD Considerations.

On 5 October 2015, the Organisation for Economic Co-operation and Development (the “OECD”)

published final recommendations for new, or amendments to existing, tax laws arising from its Base

Erosion and Profit Shifting (“BEPS”) project. One of the recommendations of the OECD in relation

to the BEPS project is that double tax treaties modelled on the OECD model convention (such as

those of Ireland) should include enhanced anti-abuse provisions such as a limitation of benefit or

principal purpose clause (“BEPS Action 6”). The nature and timing of any change in tax laws that

may occur (whether as a result of such recommendations or otherwise) is not clear and until further

– 81 –

clarity is obtained, the Issuer will continue to be subject to uncertainty as to any potential tax risk

in Ireland and in each jurisdiction where its assets are located. If the Issuer was denied treaty benefits

following the implementation of BEPS Action 6 by a relevant jurisdiction, this may have a material

and adverse effect on the Issuer’s financial condition, financial returns and results of operations.

In addition, further to the publication by the OECD of its BEPS recommendations, the EU Member

States adopted Directive 2016/1164/EU – the so-called anti-tax avoidance directive (“ATAD”) on

12 July 2016 to implement in the EU Member States’ domestic legal frameworks common measures

to tackle tax avoidance practices, ATAD lays down, amongst others, (i) controlled foreign corporation

rules, (ii) rules regarding anti-hybrid mismatches within the EU, (iii) general interest limitation rules,

and (iv) a general anti-abuse rule. In respect of the interest deductibility limitation rule contained in

ATAD, the Irish Minister for Finance had stated that Ireland would not introduce these rules until

2024. Most recently the Irish Department of Finance has stated that Ireland will continue to make

progress on transposition in 2020, with a view to producing a detailed Feedback Statement for

consultation with stakeholders by end-2020. The Irish Department of Finance stated that this would

be intended to allow for an iterative consultation process to take place in the first half of 2021, with

the final legislation to be introduced in Finance Bill 2021, to take effect from 1 January 2022.

The ATAD interest limitation rules provide that interest costs in excess of the higher of

(a) EUR3,000,000, or (b) 30 per cent. of an entity’s earnings before interest, tax, depreciation and

amortisation will not be deductible in the year in which they are incurred but would remain available

for carry forward. However, the restriction on interest deductibility would only be in respect of the

amount by which the borrowing costs exceed “interest revenues and other equivalent taxable

revenues from financial assets”. Following the adoption of ATAD, the EU Member States decided to

go further as regards hybrid-mismatches with third countries and adopted the Directive 2017/952/EU

(“ATAD 2”) amending the ATAD provisions, on 29 May 2017. EU member states were required to

implement these rules by 31 December 2019 except for the provision on reverse hybrid mismatches

for which implementation can be postponed to 31 December 2021, and will apply as of 1 January

2022.

The Issuer’s tax treatment may be impacted by the implementation of the Anti-Tax Avoidance

Directive II in other EU jurisdictions. The Issuer’s Irish tax position may be impacted by Ireland’s

implementation of the anti-hybrid legislation. The final Irish implementing legislation was enacted

as part of the Finance Act 2019, which has been effective from 1 January 2020, and initial guidance

from the Irish Revenue was issued on 9 July 2020.

Application of transfer pricing to the Issuer.

Transfer pricing legislation impacting qualifying companies (such as the Issuer) under Section 110

of the TCA was introduced in Finance Act 2019.

Under the legislation, transactions between the Issuer and an associated person may be subject to

transfer pricing from 1 January 2020. If transfer pricing were to apply to any of the transactions

entered into by the Issuer, the Issuer would be required to maintain and have available certain

documents and records for the purposes of determining its compliance with the transfer pricing rules.

The Issuer may also be required to adjust, and increase, its taxable profits and consequently have a

larger tax liability than may be expected.

– 82 –

The Issuer will be associated with a person who has the power to secure that the affairs of the Issuer

are conducted in accordance with their wishes. Any person controlled by the same person as the

Issuer, will also be associated with the Issuer. A person will only have control of the Issuer for these

purposes if they have shareholder or voting control of the Issuer, or if the Issuer’s constitutional

documents or other documents regulating the Issuer, or any other company provide them with control.

Instrumentholders are not currently anticipated to be persons who would be considered associated

with the Issuer, merely by reason of holding Instruments.

Transactions between the Issuer and an associated person who is chargeable to Irish corporation or

income tax (other than another qualifying person for the purposes of Section 110 TCA) will not

generally give rise to a transfer pricing adjustment for the Issuer. The transfer pricing legislation will

not apply with respect to securities issued by a qualifying company for the purposes of Section 110

TCA under which the return is to any extent dependent on the results of the company’s business or

represents more than a reasonable commercial return.

– 83 –

CAPITALISATION AND INDEBTEDNESS

The following table sets forth the reviewed but unaudited consolidated total borrowings (both current

and non-current portions), total equity and total capitalisation of the Guarantor as at 30 June 2021.

This table should be read in conjunction with the Reviewed Consolidated Interim Financial

Statements and related notes thereto included elsewhere in this Offering Circular.

As at 30 June 2021

(RMB) (U.S.$)(1)

(unaudited) (unaudited)

Total borrowings – current portionShort-term borrowings ........................................... 15,714,741,722.20 2,433,903,559.49Notes payable.......................................................... 280,500,000.00 43,443,917.85Other current liabilities .......................................... 11,204,356,767.12 1,735,333,885.81

27,199,598,489.32 4,212,681,363.15

Total borrowings – non-current portionLong-term borrowings ............................................ 44,369,263,074.61 6,871,923,779.48Other non-current liabilities ................................... 10,157,571,573.30 1,573,207,504.46Debentures payable ................................................. 13,103,733,321.00 2,029,509,853.64

67,630,567,968.91 10,474,641,137.58

EquityPaid-in capital ........................................................ 9,978,467,899.00 1,545,467,877.68Capital surplus ....................................................... 3,342,130,738.76 517,630,136.41Surplus reserve ...................................................... 607,859,791.20 94,145,493.17Undistributed profits .............................................. 3,932,513,138.33 609,068,726.32Other equity instruments ......................................... 5,400,000,000.00 836,353,498.75Other comprehensive income................................... -242,571,624.25 -37,569,560.49

23,018,399,943.04 3,565,096,171.83

Total capitalisation(2) ............................................. 90,648,967,911.95 14,039,737,309.41

Current portion of total borrowings and totalcapitalisation ...................................................... 117,848,566,401.27 18,252,418,672.56

Notes:

(1) For convenience only, all translations from Renminbi into U.S. dollars are made at the rate of RMB6.4566 toU.S.$1.00, based on the noon buying rate as set forth in the H.10 statistical release of the Federal Reserve Bank ofNew York on 30 June 2021.

(2) Total capitalisation represents the sum of equity.

Since 30 June 2021, the Guarantor has issued onshore debt securities in an aggregate principal

amount of approximately RMB5.9 billion. In addition, the Issuer issued EUR200,000,000 0.95 per

cent. guaranteed notes due 2022 under the Programme which are unconditionally and irrevocably

guaranteed by the Guarantor in August 2021. Except as otherwise disclosed above, there has been no

material change in the consolidated capitalisation and indebtedness of the Group since 30 June 2021.

– 84 –

USE OF PROCEEDS

The net proceeds from the issue of each Tranche of Instruments will be used for debt replacement and

providing financing for leasing projects. If, in respect of any particular issue, there is a particular

identified use of proceeds, this will be stated in the relevant Pricing Supplement.

– 85 –

DESCRIPTION OF THE ISSUER

OVERVIEW

The Issuer was incorporated as an exempted company with limited liability under the Companies

Law, as amended of the Cayman Islands on 9 August 2018 with company number 340929. The

registered office of the Issuer is at the offices of Conyers Trust Company (Cayman) Limited, Cricket

Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands.

SHARE CAPITAL

The share capital of the Issuer is U.S.$50,000, divided into 50,000 shares of par value U.S.$1.00

each. One share has been issued and paid up, which is owned by CAVIC Aviation Leasing (Ireland)

Co., Designated Activity Company. CAVIC Aviation Leasing (Ireland) Co., Designated Activity

Company is in turn wholly-owned by the Guarantor.

BUSINESS ACTIVITIES

The Issuer was established for the purpose of issuing the Instruments and on-lending the proceeds to

the Guarantor or its subsidiaries. Since its incorporation, the Issuer has not engaged in any business

activity or any other activity whatsoever other than activities in connection with the establishment

and maintenance of the Programme, the offering, sale or issuance of the Instruments. The Issuer will

be managed in accordance with its memorandum and articles of association and the laws of the

Cayman Islands. The Issuer has no employees.

DIRECTORS

The directors of the Issuer as at the date of this Offering Circular are Zhou Yong, Tom Geary and

Laura Morgan.

FINANCIAL INFORMATION

Under Cayman Islands law, the Issuer is not required to carry out annual audits, appoint auditors or

publish interim or annual financial statements. The Issuer has not published, and does not propose to

publish, any financial statements. The Issuer is, however, required to keep proper books of account

as it is necessary to give a true and fair view of the state of the Issuer’s affairs and to explain its

transactions.

– 86 –

DESCRIPTION OF THE GROUP

OVERVIEW

The Group is principally engaged in the leasing business in the PRC and provides a diverse array of

financial leasing and operating leasing services, focusing on the aircraft, shipping, urban

infrastructure and equipment sectors. The Guarantor was one of the first PRC leasing companies

approved by MOFCOM and the State Administration of Taxation. As at 30 June 2021, the Guarantor

was one of the leading leasing companies in the PRC. In addition, the Guarantor believes that the

Group had one of the largest networks of airline customers in the PRC as at 30 June 2021.

As at 30 June 2021, AVIC indirectly held approximately 44.03 per cent. of the issued share capital

of the Guarantor. AVIC is one of the central state-owned enterprises directly supervised by central

SASAC, focusing on aerospace and defence. Through its subsidiaries and affiliates in the PRC and

overseas, AVIC’s businesses principally cover defence, transport aircraft, engines, helicopters,

avionics and systems, general aviation, aviation research, flight test, trade and logistics, asset

management, finance services, engineering planning and construction and automobile. As at 30 June

2021, AVIC’s group consisted of a number of listed companies. AVIC had been named in the “Global

500” published by Fortune magazine for 13 consecutive years and ranked 140th on the list in 2021.

As at the date of this Offering Circular, AVIC ranks the fourth among the industrial manufacturing

enterprises owned by SASAC in the PRC. With its extensive customer base and supplier network,

established relationship with local governments and other state-owned enterprises, in-depth industry

knowledge, strong brand recognition and experienced management, AVIC provides the Group with

valuable support for the development of its business. As at 30 June 2021, the Guarantor was the only

leasing platform operating under the financial services business segment of AVIC.

In June 2021, the Group’s leased asset scale exceeded RMB160 billion. As at 30 June 2021, the leased

asset scale of the Group’s operating leasing business and the Group’s financial leasing business

amounted to approximately RMB18.87 billion and RMB142.46 billion, respectively. In terms of

leased asset scale, the Guarantor ranked first and eighth among the domestic leasing companies

(excluding Bohai Leasing Co., Ltd.) and all domestic and foreign leasing companies (excluding

Bohai Leasing Co., Ltd.), respectively, in the PRC as at 30 June 2021.

For the years ended 31 December 2018, 2019 and 2020 and the six months ended 30 June 2020 and

2021, the Group reported total consolidated revenue from operations of approximately RMB7,164.06

million, RMB10,076.85 million, RMB10,125.86 million, RMB4,850.42 million and RMB4,678.59

million, respectively, and consolidated net profit of approximately RMB1,262.39 million,

RMB1,711.21 million, RMB1,974.09 million, RMB965.11 million and RMB995.66 million,

respectively. As at 1 January 2019, 31 December 2019, 31 December 2020 and 30 June 2021, the total

consolidated assets of the Group amounted to approximately RMB133,121.80 million,

RMB148,755.70 million, RMB158,749.48 million and RMB171,611.70 million, respectively.

– 87 –

Awards and Recognitions

In recognition of its achievements, the Guarantor has received numerous awards which include thefollowing:

• The Guarantor was ranked 16th in the list of global top 50 lessors of 2021 published by Ciriumin 2021.

• The Guarantor was ranked 20th in the list of global top 50 lessors of 2020 published by Ciriumin 2020.

• The Guarantor was ranked 31st in terms of fleet value in the “Global Aircraft LeasingCompanies Ranking” published by FlightGlobal in 2019.

• The Guarantor was awarded the “Best Transaction Award” and “Ten Years Industry PromotionAward” in the seventh China Air Finance “Wan Hoo” Awards Presentation Ceremony in 2019.

• The Guarantor was recognised as one of the first “five-star enterprises” in Dongjiang by theDongjiang Free Trade Port Zone of Tianjin in 2018.

• The Guarantor was awarded the “China Maritime Financing Star Award” at the fourth ChinaMaritime Finance (Dongjiang) International Forum in 2018.

• The Guarantor was awarded the “Industry Promotion Award” in the sixth China Air Finance“Wan Hoo” Awards Presentation Ceremony in 2018.

• The Guarantor was awarded the “Financial Outstanding Contribution Award” by the People’sGovernment of Shanghai Pudong Xinqu in 2016, 2017 and 2018.

• The Guarantor was awarded the “One Belt One Road and International Projects DevelopmentAward” in the fifth China Air Finance “Wan Hoo” Awards Presentation Ceremony in 2017.

• The Guarantor was recognised as a “Shanghai City Five Star Integrity Enhancement Enterprise”by the Shanghai Financial Leasing Industry Association of the Organising Committee of theShanghai Corporate Integrity Enhancement Campaign in 2015, 2016 and 2017.

• The Guarantor was recognised as an “Outstanding Enterprise” by the Shanghai Leasing TradeAssociation in 2017.

• The Guarantor was recognised as the “Pudong Xinqu Modern Service Industry OutstandingContribution Award” by the People’s Government of Shanghai Pudong Xinqu in 2017.

• The Guarantor was recognised as reaching the “Pudong Corporate Social ResponsibilityStandards” by the Office of Shanghai Pudong Corporate Social Responsibility in 2017.

• The Guarantor was recognised as the “Best Risk Management Enterprise for CustomerExperience in 2017” at the Financial Risk Management Leadership Forum 2018 and 2017Financial Risk Management Awards Presentation Ceremony.

• The Guarantor was recognised as the “Advanced Unit of Planned Financial Management” byAVIC in 2017.

• The Guarantor was recognised as the “PRC Financial Leasing Enterprise of the Year” at theChina Financial Leasing Annual Conference in 2012 and 2016.

• The Guarantor’s direct financing arrangement with Export Development Canada was awardedthe “Innovation Award” in the third China Air Finance “Wan Hoo” Awards PresentationCeremony in 2015.

– 88 –

• The Guarantor was recognised as the “Most Influential Enterprise” by the Shanghai FinancialLeasing Industry Association in 2014.

• The Guarantor was awarded the “PRC Best Financial Innovation Award” by the OrganisingCommittee of the sixth Beijing International Finance Expo in 2010.

COMPETITIVE STRENGTHS

The Guarantor believes that the Group has the following competitive strengths:

Significant growth potential in the PRC financial leasing industry.

Supported by the favourable government policies, financial reforms, development of industry lawsand regulations, industry collaborations and lowered cost of funding resulting from interest rate

liberalisation, the PRC financial leasing industry has grown significantly in recent years.

The following chart sets forth the number of financial leasing companies in the PRC from 2008 to

2019:

2008

142 170 233 369 6431,106

2,202

4,508

7,136

9,676

11,777

2009 2010 2011 2012 2013 2014 2015 2016 2017 20180

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Unit: #

12,130

2019

Source: China Leasing Alliance (中國租賃聯盟)

The following chart sets forth the registered capital of financial leasing enterprises in the PRC from

2006 to 2019:

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2006 2007

571 1,003 1,187 1,617 2,576 3,0601,9551,308

6,611

15,165

25,569

32,031 32,331

2008 2009 2010 2011 2012 2013 2014 2015 2016 20182017

Unit: RMB100 million

2019

32,763

Source: China Leasing Alliance (中國租賃聯盟)

– 89 –

The following chart sets forth the outstanding financial leasing contracts balance in the PRC from

2008 to 2019:

2008

1,5503,700

7,000 9,300

15,50021,000

32,000

44,400

53,300

60,600

66,500

2009 2010 2011 2012 2013 2014 2015 2016 2017 20180

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Unit: RMB100 million

2019

66,540

Source: China Leasing Alliance (中國租賃聯盟)

The following chart sets forth the penetration of financial leasing in the PRC from 2007 to 2022:

2007

0.2%0.9%

1.6%2.5%

3.0%4.1%

4.7%

6.2%

8.0%

10.8%11.9%

13.2%

14.6%

16.1%

9.8%8.9%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20220.0%

3.0%

6.0%

9.0%

12.0%

15.0%

18.0%

Unit: %

Source: Qianzhan Industry Institute

As at the date of this Offering Circular, the PRC is the second largest financial leasing market in the

world. However, the Guarantor believes that the penetration of financial leasing in the PRC is still

low as compared to other developed countries, resulting in significant growth potential in the PRC

financial leasing market.

In June 2021, the Group’s leased asset scale exceeded RMB160 billion. In terms of leased asset scale,

the Guarantor ranked first and eighth among the domestic leasing companies (excluding Bohai

Leasing Co., Ltd.) and all domestic and foreign leasing companies (excluding Bohai Leasing Co.,

Ltd.), respectively, in the PRC as at 30 June 2021. The Guarantor believes that the Group’s business

has benefited, and will continue to benefit, from the development and growth of the PRC financial

leasing industry.

– 90 –

Strong shareholder support from AVIC and AVIC Industry-Finance Holdings Co., Ltd.

The Guarantor’s controlling shareholder, AVIC, is a central state-owned enterprise directly

supervised by central SASAC, focusing on aerospace and defence. AVIC had been named in the

“Global 500” published by Fortune magazine for 13 consecutive years and ranked 140th on the list

in 2021. As at the date of this Offering Circular, AVIC ranks the fourth among the industrial

manufacturing enterprises owned by SASAC in the PRC. As a leading manufacturer of aircraft,

aviation engines and helicopters in the PRC, AVIC has established and maintained strong long-term

relationships with local governments and large corporations across the PRC, which has enabled the

Group to benefit from numerous business opportunities and enhance its market share and reputation

in the financial leasing industry. Leveraging AVIC’s leading position and track record in the aircraft

manufacturing business, the Guarantor believes that the Group has a competitive advantage over its

competitors in the provision of financial leasing services for domestically manufactured civil aircraft.

The Guarantor believes that the Group can continue to leverage support from, and its relationship

with, AVIC and its subsidiaries and affiliates to further enhance its competitiveness and market share

in the financial leasing industry by acquiring and sourcing suitable aircraft and other assets to meet

its customers’ needs, improving management capabilities and corporate governance and further

strengthening its brand equity and credibility.

The Guarantor also believes that the Group has a competitive advantage derived from the continued

strong support from AVIC in terms of its brand name and expertise in the aviation industry, its

network and resources as well as its supply of domestically manufactured civil aircraft which has also

been paramount to the Group’s businesses and development. AVIC has provided strong financial

support to the Group in the form of loan, capital injection and guarantee. For example, as at 30 June

2021, AVIC has provided various loans to the Group in the amount of approximately RMB10.44

billion. AVIC has also made several capital injections to the Group since 2006. The Guarantor’s

registered capital was increased from RMB430 million in 2006 to RMB9.98 billion as at 30 June

2021. Please see “– Corporate History” for further information.

In light of AVIC’s state-owned background, the Group has also received government support in the

form of governmental subsidies to support the Group’s overall business operations. For the years

ended 31 December 2018, 2019 and 2020 and the six months ended 30 June 2020 and 2021, the Group

received government grants of approximately RMB6.20 million, RMB70.09 million, RMB22.85

million, RMB10.08 million and RMB30.00 million, respectively.

In addition to strong financial support, AVIC has also continued to provide talent support to the

Group. As at 30 June 2021, AVIC has appointed all of the Guarantor’s directors, recommended all of

the Group’s senior management and supervisors.

To promote the continual development of the PRC aviation industry, Chinese policy banks have also

been supportive of AVIC and the Group on promoting the usage of domestically manufactured civil

aircraft in the PRC. In November 2014, Okay Airways, the Guarantor, AVIC Xi’an Aircraft Industry

(Group) Co., Ltd. and China Development Bank entered into a strategic co-operation agreement

under which China Development Bank would provide financing of approximately RMB10 billion to

support the usage of A-series aircraft in the PRC. In addition, the Group has entered into strategic co-

operation agreements with China Development Bank, China Construction Bank, Postal Savings Bank

of China, Ping An Bank and China Minsheng Bank, respectively. Also, in 2017, 14 banks have

granted a U.S.$200 million syndicated loan to the Group. In addition, in 2016, AVIC Industry-

Finance Holdings Co., Ltd. has provided credit support to the Group by giving a guarantee to a credit

– 91 –

facility granted by The Export-Import Bank of China to the Guarantor. In 2018, AVIC Industry-

Finance Holdings Co., Ltd. has provided additional credit support to the Group by giving a guarantee

to a U.S.$1 billion credit facility granted by the Export-Import Bank of China to the Guarantor. As

at 30 June 2021, the total credit line granted by AVIC Industry-Finance Holdings Co., Ltd. to the

Guarantor amounted to approximately RMB10.44 billion. AVIC Industry-Finance Holdings Co., Ltd.

was the first financial holding company in the PRC listed on the Shanghai Stock Exchange and was

assigned a corporate rating of A3 and A- by Moody’s and Fitch, respectively, as at the date of this

Offering Circular.

In addition, the Guarantor believes that the Group will continue to receive business resources and

professional and technical support from AVIC and AVIC Industry-Finance Holdings Co., Ltd., and

benefit from the “single line of production, financing and marketing” (產、融、銷一條線) business

structure of the AVIC’s group as well as the crossover sales and referral of customers between the

Group and other business units of the AVIC’s group.

Leading position in the PRC financial leasing industry with an extensive and diverse customer

base.

The Group is recognised as one of the market leaders among the PRC financial leasing companies,

in particular in relation to the aircraft sector. The Guarantor was one of the first PRC leasing

companies approved by MOFCOM and the State Administration of Taxation. As at 30 June 2021, the

Guarantor was one of the leading leasing companies in the PRC. As at 30 June 2021, the Guarantor

had approximately 912 domestic customers and 59 overseas customers. In addition, the Guarantor

believes that the Group had one of the largest networks of airline customers in the PRC as at 30 June

2021. In 2019, the Guarantor was ranked 31st in terms of fleet value in the “Global Aircraft Leasing

Companies Ranking” published by FlightGlobal and was awarded the “Best Transaction Award” and

“Ten Years Industry Promotion Award” in the seventh China Air Finance “Wan Hoo” Awards

Presentation Ceremony. In 2021, the Guarantor was ranked 16th in the list of global top 50 lessors

of 2021 published by Cirium.

Throughout its approximately 17 years of operation, the Group has established and maintained a

well-structured financial and operating leasing platform for both overseas and domestically

manufactured civil aircraft, as well as for shipping, urban infrastructure and large-scale equipment.

The Group operates one of the youngest fleets among major top-tier aircraft leasing companies in the

PRC, comprising internationally renowned aircraft (including new generation Airbus, Boeing,

Embraer and Bombardier aircraft) as well as domestically manufactured civil aircraft (including the

ARJ21, Modern Ark MA60 and Y-12).

– 92 –

The Group’s leading market position in the PRC financial leasing industry for aircraft is supported

by both a well-established and an expanding customer base across the PRC with whom it has

maintained strong long-term relationships. The Group’s customer base for its aircraft leasing business

comprises a number of domestic airline companies in the PRC and multinational airline companies

in various countries in Asia and Europe, primarily including China Eastern Airlines, Air China, China

Southern Airlines, Xiamen Airlines, Shenzhen Airlines, Hebei Airlines, Hainan Airlines, Tianjin

Airlines, Juneyao Airlines, Okay Airways, China Express, Donghai Airlines, Qingdao Airlines,

Vietnam Airlines, Turkish Airlines, Wizz Air, Indigo Airline, Spring Airways, Lion Air, Chengdu

Airlines, Scandinavian Airlines, Myway Airlines, Loong Air, Kunming Airlines and Etihad Airways.

As at 30 June 2021, the Guarantor had approximately 65 domestic customers and 14 overseas

customers in respect of its aircraft leasing business. Leveraging AVIC’s brand name and close

relationships with local governments and large corporations across the PRC, the Group is able to

develop business relationships with long-term customers of strong credit profile. Its customers have

been selected under stringent risk management procedures based on factors such as the stability of

their cash flows and/or asset values, industry reputation and track record performance. As testimony

to its customers’ satisfaction and reliance on its services, the Group also has a large number of repeat

customers. The Group has also successfully tapped into its financial leasing customer base to provide

extended value-added services in addition to providing its integrated financial services to new

customers.

Diversified business portfolio.

The Group’s business portfolio includes aircraft leasing, ship leasing, urban infrastructure leasing and

equipment leasing. As at 30 June 2021, aircraft leasing, ship leasing, urban infrastructure leasing and

equipment leasing business accounted for approximately 32.66 per cent., 11.60 per cent., 30.86 per

cent. and 24.89 per cent. of the Group’s total leased asset scale, respectively.

The Group’s diversified business portfolio enables the Group to reduce the risks associated with

reliance on limited portfolios of business and also mitigate any adverse impact resulting from price,

supply and demand volatilities as well as geographical concentration risk relating to any single

business portfolio. In particular, as at 30 June 2021, the Guarantor was one of the leading leasing

companies in the PRC. As at 30 June 2021, the Group provided leasing for more than 30 different

types of aircraft across the passenger, commercial and general aircraft spectrum. The Group also has

an extensive vessel fleet including high-end vessels and operates a diverse portfolio of large-sized

commercial vessels such as bulk carriers, container ships, liquid cargo ships and other vessels. In

addition, the Guarantor entered into a project co-operation agreement with SDTR Marine Pte. Ltd.

and Dalian Shipbuilding Industry Co., Ltd. in January 2019 pursuant to which the Group would lease

ten 85,000 DWT Super-Kamsarmax bulk carriers to SDTR Marine Pte. Ltd. As at 30 June 2021, the

Group’s number of vessels on lease reached 221. The Group’s urban infrastructure leasing and

equipment leasing businesses are also the Group’s main sources of revenue.

The Guarantor believes that the Group’s diversified business portfolio will continue to enable the

Group to equip itself for future growth and capture potential opportunities.

– 93 –

Diverse aircraft leasing services.

The Group provides diverse aircraft leasing services to its customers. It has a diversified and rapidly

growing aircraft fleet comprising both overseas and domestically manufactured civil aircraft. As at

31 December 2018, 2019 and 2020 and 30 June 2021, the total number of aircraft on lease were 291,

300, 313 and 322, respectively. In addition, the Group has developed strategic relationships with

Boeing and COMAC. The Group ordered 30 ARJ21 aircraft in 2016 and 30 C919 in 2017 from

COMAC. As at 30 June 2021, the Group’s aircraft on lease comprised 59 domestically manufactured

aircraft, 166 mainstream passenger aircraft, 26 business jets and 71 general aircraft. The Group’s fleet

of domestically manufactured aircraft includes the ARJ21, Modern Ark MA60, Y-12, AC313 and

LE-500; its fleet of mainstream passenger aircraft includes A350, B787, B777, A320, B737 and

CRJ900; its fleet of business jets includes BBJ, Gulfstream GV, Challenger 850, Global Express 6000

and Falcon; and its fleet of general aircraft includes Cessna, King Air and Cirrus aircraft.

Able to provide customised and integrated financial services to its customers.

The Group has developed strong industry experience and expertise in the financial leasing business

for the aircraft, shipping, urban infrastructure and equipment sectors. In particular, it is able to

provide professional, customised and integrated financial services to meet the ever-changing business

requirements of its clients. It is also able to enhance its sales and marketing capabilities primarily

through the following:

• the establishment of a dedicated sales team comprising former industry professionals with

substantial industry knowledge and experience, as well as sales and marketing skills;

• the maintenance of close and regular contact with its customers by organising industry

exhibitions and forums to create platforms for market information exchange among industry

players and participating in industry specific associations to gain first-hand market information

on the latest market trends within the target industries;

• the leveraging of its knowledge and experience in the relevant industry sectors and its

established relationships with manufacturers and sales agents in order to source suitable aircraft,

vessels, urban infrastructure equipment and other equipment at competitive prices to

accommodate the business needs of its customers and enhance its competitiveness;

• the establishment and maintenance of the “single line of production, financing and marketing”

business structure of the AVIC’s Group as well as the crossover sales and share of customers

between the Group’s financial leasing business sector and other business units of the Group;

• the maintenance of an advanced information technology system to improve the efficiency and

quality of its services; and

• the provision of management training and on-going support services for its customers.

– 94 –

Access to multiple financing channels, strong balance sheet and prudent financial management.

The Group’s business growth and working capital requirements are primarily supported by internalfunding sources, bank loans, debt issuances and equity. With the strong shareholder support fromAVIC, the Guarantor has a registered capital of RMB9.98 billion as at 30 June 2021, being one of thehighest in the financial leasing industry.

Leveraging the support from, credibility of and relationship with AVIC, the Group maintains closerelationships with a large number of systematically important banks, policy banks and domestic andinternational commercial banks. As at 30 June 2021, approximately 63 banks provided bankingfacilities to the Group to support its various funding needs, including The Export-Import Bank ofChina, China Development Bank, Agricultural Development Bank of China, Bank of China,Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China,Bank of Communications, DBS Bank, EDC, Deutsche Bank, Natixis, Commonwealth Bank ofAustralia and BNP Paribas with a total approved credit line of approximately RMB121.05 billion andunused credit line of approximately RMB53.03 billion. These relationships have allowed the Groupto secure sustainable sources of financing to support its business growth and working capitalrequirements. In addition, the Group has been able to obtain long-term financing with favourableinterest rates from national policy banks for the Group’s acquisition of domestically manufacturedcivil aircraft. Utilising its close relationships with the banks, the Group is able to secure bankfinancing at a cost efficient level.

The unique corporate structure of the Group also enables it to explore funding solutions in bothdomestic and international debt capital markets, such as issuing asset-backed securities or financialbonds, or issuing bonds in offshore markets via its offshore subsidiaries. As at 30 June 2021,approximately 81.62 per cent. and 18.38 per cent. of the Group’s debt securities were issued in thedomestic and international markets, respectively. For example, backed by an AAA corporate ratingissued by China Chengxin International Credit Rating Company Limited, the Guarantor issued bondsin the PRC in an aggregate principal amount of approximately RMB37.29 billion as at 30 June 2021,comprising medium term notes of approximately RMB7.17 billion, super and short-term commercialpaper of approximately RMB4.6 billion, privately placed notes of approximately RMB9.5 billion andcorporate bonds of approximately RMB16.02 billion. As at 30 June 2021, the Guarantor obtained aquota to issue bonds in the aggregate amount of up to approximately RMB59.3 billion in the PRC,of which approximately RMB36.5 billion was unused. In addition, on 13 June 2014, Soar RiseLimited, an indirect wholly-owned subsidiary of the Guarantor, issued RMB500,000,000 4.375 percent. credit enhanced bonds due 2017 (the “2017 Bonds”) which are unconditionally and irrevocablyguaranteed by the China Aviation International Holding Co., Ltd. (a direct wholly-owned subsidiaryof the Guarantor) and have the benefit of a keepwell and liquidity support deed provided by theGuarantor. Payments of principal and interest in respect of the 2017 Bonds also have the benefit ofan irrevocable standby letter of credit issued by Agricultural Bank of China Limited, SingaporeBranch. Also, the Guarantor issued U.S.$300,000,000 3.00 per cent. notes due 2020 under itsU.S.$500,000,000 medium term note programme in November 2017. In November 2018, May 2019,October 2019, November 2020, March 2021 and August 2021, the Issuer issued U.S.$350,000,0004.625 per cent. guaranteed notes due 2021, U.S.$450,000,000 3.50 per cent. guaranteed notes due2022, U.S.$200,000,000 3.45 per cent. guaranteed perpetual capital notes, U.S.$200,000,000 3.425per cent. guaranteed perpetual capital notes, U.S.$500,000,000 1.75 per cent. guaranteed notes due2024 and EUR200,000,000 0.95 per cent. guaranteed notes due 2022 under the Programme which areunconditionally and irrevocably guaranteed by the Guarantor, respectively.

The Guarantor believes the Group’s access to diversified funding sources enables the Group to secureadequate and cost efficient funds to support the growth and expansion of its overall businessoperations and working capital requirements.

– 95 –

In addition, the Group has implemented prudent financial policies to ensure a strong balance sheet

and a healthy financial position by maintaining gearing ratios at a level that the Group considers

reasonable. The Group aims to closely manage the levels of gearing ratio to avoid any potential

liquidity risk. By reference to the gearing ratios of main competitors in the PRC, the Guarantor

believes that the Group’s gearing ratio has been maintained at reasonable levels. The Group has been

able to secure sufficient equity and debt financing to match the expansion of its business operations

and working capital requirements.

The Guarantor believes that the Group’s diversified access to financing channels, strong balance

sheet and liquidity position and prudent financial policies enables the Group to undertake large-scale

projects and further increase the size of its operating assets in accordance with the regulatory

restrictions.

Comprehensive and robust risk management systems.

The Group has adopted a prudent risk management strategy and established a comprehensive internal

control and risk management system to enhance its overall internal control and risk management

capabilities, covering various areas such as financial management, financial planning, connected

transactions, subsidiary management and investment management.

The internal control and risk management system was developed from, and is fully integrated with,

the Group’s overall internal control and risk management system. The Group’s risk management is

fully integrated into its approval process for each key business decision and project. At each stage

of the approval process, all elements of risk, including credit risk, market risk, liquidity risk, asset

risk, tax and accounting risk and legal and compliance risk, are carefully and independently assessed

by the risk management team of the Group. The Group also has a dedicated risk management team

to continuously monitor the risk level during the life cycle of each project and the creditworthiness

of its lessee portfolio using its internal risk management system. Policies and procedures for

managing risks across the Group are overseen by the Group’s risk control committee.

As at 1 January 2019, 31 December 2019, 31 December 2020 and 30 June 2021, the Group’s

consolidated impairment provision on lease receivables were approximately RMB2.06 billion,

RMB2.50 billion, RMB3.24 billion and RMB3.61 billion, respectively, and the accumulated

impairment provision represented approximately 1.78 per cent., 2.00 per cent, 2.52 per cent. and 2.61

per cent. of the Group’s net lease receivables, respectively. For the years ended 31 December 2018,

2019 and 2020 and the six months ended 30 June 2020 and 2021, the top five customers for the Group

accounted for approximately 15.31 per cent., 13.27 per cent., 11.61 per cent., 10.77 per cent. and

14.70 per cent. of the Group’s lease receivables, respectively.

Experienced management team.

Most members of the Group’s management team have been with the Group since the Group’s

inception. As at 30 June 2021, approximately 18.33 per cent. of the Group’s employees had been with

the Group for over ten years, approximately 34.17 per cent. of the Group’s employees had been with

the Group for five to ten years, approximately 39.58 per cent. of the Group’s employees had been

with the Group for one to five years and approximately 7.92 per cent. of the Group’s employees had

been with the Group for less than one year. In addition, the Group’s experienced management team

has extensive knowledge in the leasing industry, strong asset management and disposition capability,

– 96 –

and strong working relationships with the PRC government authorities and leading industry players.The Guarantor believes that the Group’s management team’s strong industry knowledge and in-depthunderstanding of the relevant regulatory, legal and tax considerations and the needs and interests ofthe parties involved, enable the Group to successfully structure and execute the large-scale andsophisticated transactions that the Group enters into with clients and financing partners.

In addition, the Group is committed to motivating and developing its employees and creating ameritocratic system under which compensation is dependent on the satisfaction of attainableperformance targets. It has fostered a distinct culture and set of core values which it seeks to reinforcewith the Guarantor’s directors, senior management and employees. These core values embrace thespirit of continuous learning and innovation, integrity, discipline, a competitive spirit, harmony andco-operation. The Group is also committed to provide training and seminars for its employees tofurther develop their knowledge and expertise in the relevant industry.

BUSINESS STRATEGIES

The Guarantor intends to implement the following principal strategies to support the furtherdevelopment of the Group’s business:

To further strengthen the Group’s leading market position in the aircraft leasing industry byacquiring aircraft in strong demand at competitive prices and by expanding its client base.

The Group intends to regularly review opportunities to acquire suitable aircraft, focusing on assetsthat are not only in strong demand but that also meet the Group’s disciplined fleet portfolio mixcriteria and leasing strategies. For example, the Group has introduced a variety of trunk and regionalaircraft and high-end mainstream passenger aircraft. The core fleet comprises models that theGuarantor believes will have operational longevity and that are capable of being easily transitionedbetween airlines to avoid potentially costly ground time between leases. The Group will onlypurchase aircraft models that the Guarantor believes will remain in strong demand in the industry inthe long run. As at 30 June 2021, the B737, A320, CRJ900, MA60 and ARJ21 were the Group’schoice of narrowbody aircraft given their wide operator base, thus ensuring their marketability toairlines. The Group also leases wide body aircraft, such as the B787 and A350, to some of its keyclients. In addition, the Group has developed strategic relationships with Boeing and COMAC. TheGroup ordered 30 ARJ21 aircraft in 2016 and 30 C919 in 2017 from COMAC. The Group will alsocontinue to offer innovative and comprehensive financing solutions to meet the ever-changing needsof its customers to enhance its market share in the aircraft leasing industry, in particular, in relationto domestically manufactured civil aircraft.

Leveraging AVIC’s in-depth knowledge of the aviation industry, the Group plans to further strengthenits supplier negotiation capabilities and targets to place aircraft order at competitive prices in orderto maintain pricing advantages over its competitors.

In addition, the Group plans to further expand its customer base in both the PRC and overseasmarkets. Through its offshore entities, the Group plans to maintain its relationships and co-operationwith internationally renowned airlines, aircraft manufacturers and aircraft leasing companies toexplore business opportunities in overseas markets. The Group targets to achieve a diversifiedcustomer base to avoid over-exposure to any given geographical area and customer group.

To strive to be cost competitive and prudently promote its business in the ship leasingsub-sector.

The Group will continue to actively manage its capital structure and operating cost base to eliminateinefficiencies and minimise the costs of its service offering. In particular, the Group intends to lower

– 97 –

its funding costs by exploring funding solutions in both domestic and international capital marketsand lower its operating costs by further improving its centralised back office systems.

The Group will continue to focus on the quality of its leased assets and prudently promote its shipleasing business. Also, the Group will gradually focus on providing operating leasing services forshipping which generate stable and recurring income to improve its cash flows. In addition, theGuarantor intends to further expand its client base in the United States and Europe.

To continue to strengthen the Group’s market position in the equipment leasing sub-sector.

The Group will continue to seize the opportunities provided by the on-going urbanisation andindustrialisation in the PRC including: (i) the growing demand for alternative financing by largecorporations and local governments, and (ii) substantial opportunities to help clients finance large-scale projects. The Group aims to expand its business in sectors that will have significant fixed assetinvestment growth with preferential national policy support under the PRC’s “Fourteenth Five-YearPlan”, such as transportation, logistics, energy, chemical, utilities and others. The Group will furtherstrengthen its research on the leasing industry and select its major business areas by focusing onregions supported by favourable policies, fast-growing economy, and industry cluster effects. Forexample, Zhejiang, Jiangsu and Jiangxi provinces may be the key regions where the Group willfurther develop its business. The Group will continue to focus on local state-owned companies andlisted corporations, and expand its level of co-operation with clients by providing diverse andcustomised services leveraging its full financial leasing licences and comprehensive businessplatforms. The Guarantor believes the Group’s advantage of multiple business platforms will provideclients with more comprehensive and higher quality leasing services.

To explore business opportunities in other industries in the PRC.

The Guarantor intends to continue exploring growth opportunities within other target industries in thePRC with growth potential and in industries which it believes the Group’s services can becompetitive, so as to complement its existing businesses. For example, the Group has expanded intothe railway and renewable energy industries in the PRC.

The Group is also exploring business opportunities in other industries in the PRC, such as high-endmanufacturing industry, and may penetrate into these new industries only when suitable opportunitiesarise. While the Group does not have any existing timetable to expand into these new industries, theGuarantor believes that the Group’s track record and extensive experience in the PRC financialleasing industry will provide the Group with sufficient insights into industry trends, customer needsand market potential, which will equip the Group with the required capabilities to pursue suitableexpansion and penetration into these new industries.

To continue to diversify financing channels and optimise capital structure.

The Group will continue to broaden its access to multiple financing channels to support its businessdevelopment with adequate and cost-efficient funding:

• bank borrowings will remain the main financing source to the Group. The Group intends tofurther enhance co-operation with existing and new banking partners;

• bond issuance will be the supplemental financing sources to the Group. The Group may issue

onshore corporate bonds or financial bonds, or issue bonds in offshore capital markets; and

– 98 –

• asset-backed security will be a new financing source to the Group.

The Guarantor believes that the Group’s ability to access extensive and diversified sources of funding

and to explore the option of funding the transactions with onshore or offshore debt may enable the

Group to optimise its costs of funding. Utilising its adequate and cost-efficient funding, the Group

will also continue to improve and maintain its financial performance.

To further leverage the Group’s relationship with AVIC and the Guarantor’s subsidiaries and

affiliates and the strong support from AVIC.

The Guarantor plans to further leverage AVIC’s brand name and the Group’s close relationships with

various provincial and local governments and large corporations to further expand the Group’s

aircraft leasing business in the PRC. In particular, by leveraging AVIC’s aircraft manufacturing

business and its experience in the aviation industry, the Group seeks to further enhance its market

share in the aviation leasing business for domestically manufactured civil aircraft and promote the

usage of domestically manufactured civil aircraft in the PRC. The Group will further leverage AVIC’s

network to enhance its negotiation capabilities and relationship with leasing assets suppliers. The

Group will further seek technical support from AVIC when expanding its aircraft leasing business

offshore. The Guarantor also believes that AVIC will continue to provide strong financial talent, and

other support to the Group in the form of loan, capital injection and guarantee, which will enable the

Group to support its overall business growth and working capital requirements.

To continue to strengthen risk management and corporate governance capabilities.

The Guarantor intends to further enhance the Group’s risk management and corporate governance

capabilities by continuing to focus on implementing an integrated and dynamic risk management

system and optimising prudent risk management systems to protect the long-term interests of its

shareholders, customers and employees. The Guarantor has upgraded the Group’s information

technology system to more closely monitor and control the status of assets, financing project

management and overall asset monitoring of the Group. In addition, the Guarantor intends to

proactively streamline the procedures to enhance stringent selection process of suitable fundamental

and sustainable industries, the segmentation of suitable target customers, customer credit assessment

and approval procedures, as well as portfolio monitoring and management. Utilising more

comprehensive and upgraded risk management systems, the Group is able to improve its selection

process and valuation of its leasing assets, and hence to minimise downside risks such as credit

default of its clients and asset price deflation. The Group will also maintain prudent investment

policies that aim to achieve a balance between assets and liabilities, between investment returns and

risk taking, and among its business segments.

– 99 –

CORPORATE HISTORY

The Guarantor was incorporated in 1993 with a registered capital of U.S.$5 million. Since the

incorporation of the Guarantor in 1993, the Group has successfully grown to become one of the

leading leasing companies in the PRC. The following table sets forth the key corporate milestones of

the Group:

Year Event

2004................................................ The Guarantor was approved by MOFCOM to conductfinancial leasing business.

2006................................................ Following restructuring, the Guarantor’s registered capitalwas increased to RMB430 million.

2009................................................ The Guarantor’s registered capital was increased to RMB850million.

2010................................................ The Guarantor was honoured as a “Top 10 Financial LeasingEnterprise” at the China Financial Leasing AnnualConference.

The Guarantor was awarded the “PRC Best FinancialInnovation Award” by the Organising Committee of the SixthBeijing International Finance Expo.

The Guarantor was awarded the “World Expo Honour Award”by the Organising Committee of the Shanghai World Expo.

2011 ................................................ The Guarantor’s registered capital was increased to RMB1.5billion and the Group’s leased asset scale reached RMB14billion.

The Guarantor was recognised as reaching the “PudongCorporate Social Responsibility Standards” by the Office ofShanghai Pudong Corporate Social Responsibility.

2012................................................ The Guarantor was recognised as a “Integrity EnhancementEnterprise” by the Shanghai Financial Leasing IndustryAssociation of the Organising Committee of the ShanghaiCorporate Integrity Enhancement Campaign.

The Guarantor was honoured as the “PRC Financial LeasingEnterprise of the Year” at the 2012 China Financial LeasingAnnual Conference.

The Guarantor’s registered capital was increased to RMB2.00billion.

– 100 –

Year Event

2013................................................ The shares of AVIC Industry-Finance Holdings Co., Ltd.were listed on the Shanghai Stock Exchange.

The Guarantor’s registered capital was increased to RMB2.73billion.

The Guarantor was recognised as a “Shanghai Three StarIntegrity Enhancement Enterprise” by the Shanghai FinancialLeasing Industry Association of the Organising Committee ofthe Shanghai Corporate Integrity Enhancement Campaign.

The Guarantor was awarded the “Innovation and PioneeringAward” at the 2013 China Financial Leasing AnnualConference.

The Guarantor was awarded the “Innovation Award” jointlyby the Dongjiang Free Trade Port Zone of Tianjin and theGeneral Aviation Committee of China Air TransportationAssociation for the first leasing transaction for CRJ900aircraft in the PRC.

2014................................................ The Guarantor’s registered capital was increased to RMB3.79billion.

The Guarantor was recognised as the “Most InfluentialEnterprise” by the Shanghai Financial Leasing IndustryAssociation.

The Guarantor was recognised as a “Shanghai Four StarIntegrity Enhancement Enterprise” by the Shanghai FinancialLeasing Industry Association of the Organising Committee ofthe Shanghai Corporate Integrity Enhancement Campaign.

The Guarantor was awarded the “Innovation Award” jointlyby the Dongjiang Free Trade Port Zone of Tianjin and theGeneral Aviation Committee of China Air TransportationAssociation for the leasing transactions for B737-800 andB737-900ER aircraft.

The Guarantor was recognised as reaching the “PudongCorporate Social Responsibility Standards” by the Office ofShanghai Pudong Corporate Social Responsibility.

– 101 –

Year Event

2015................................................ The Group was the first leasing company in the PRC to enterinto direct financing arrangement with Export DevelopmentCanada for its leasing transaction with China Express inrespect of two CRJ900 aircraft.

The Guarantor was recognised as a “Shanghai Five StarIntegrity Enhancement Enterprise” by the Shanghai FinancialLeasing Industry Association of the Organising Committee ofthe Shanghai Corporate Integrity Enhancement Campaign.

The Guarantor’s direct financing arrangement with ExportDevelopment Canada was awarded the “Innovation Award” inthe third China Air Finance “Wan Hoo” Awards PresentationCeremony.

The Group’s leased asset scale exceeded RMB50 billion.

2016................................................ The Guarantor’s registered capital was increased to RMB4.94billion.

The Guarantor was recognised as a “Shanghai City Five StarIntegrity Enhancement Enterprise” by the Shanghai FinancialLeasing Industry Association of the Organising Committee ofthe Shanghai Corporate Integrity Enhancement Campaign.

The Guarantor was awarded the “Financial OutstandingContribution Award” by the People’s Government ofShanghai Pudong Xinqu.

The Guarantor was recognised as the “PRC Financial LeasingEnterprise of the Year” at the 2016 China Financial LeasingAnnual Conference.

The Group’s leased asset scale exceeded RMB60 billion.

– 102 –

Year Event

2017................................................ The Guarantor’s registered capital was increased to RMB7.47billion.

The Guarantor was awarded the “Financial OutstandingContribution Award” by the People’s Government ofShanghai Pudong Xinqu.

The Guarantor was recognised as a “Shanghai City Five StarIntegrity Enhancement Enterprise” by the Shanghai FinancialLeasing Industry Association of the Organising Committee ofthe Shanghai Corporate Integrity Enhancement Campaign.

The Guarantor was recognised as an “OutstandingEnterprise” by the Shanghai Leasing Trade Association.

The Guarantor was awarded the “One Belt One Road andInternational Projects Development Award” in the fifth ChinaAir Finance “Wan Hoo” Awards Presentation Ceremony.

The Guarantor was recognised as the “Pudong Xinqu ModernService Industry Outstanding Contribution Award” by thePeople’s Government of Shanghai Pudong Xinqu.

The Guarantor was recognised as reaching the “PudongCorporate Social Responsibility Standards” by the Office ofShanghai Pudong Corporate Social Responsibility.

The Guarantor was recognised as the “Best Risk ManagementEnterprise for Customer Experience in 2017” at the FinancialRisk Management Leadership Forum 2018 and 2017Financial Risk Management Awards Presentation Ceremony.

The Guarantor was recognised as the “Advanced Unit ofPlanned Financial Management” by AVIC in 2017.

The Group’s leased asset scale exceeded RMB80 billion.

– 103 –

Year Event

2018................................................ The Group’s leased asset scale exceeded RMB100 billion.

The Guarantor’s registered capital was increased to RMB9.98billion.

The Guarantor was recognised as one of the first “five-starenterprises” in Dongjiang by the Dongjiang Free Trade PortZone of Tianjin.

The Guarantor was awarded the “Industry Promotion Award”in the sixth China Air Finance “Wan Hoo” AwardsPresentation Ceremony.

The Guarantor was awarded the “China Maritime FinancingStar Award” at the fourth China Maritime Finance(Dongjiang) International Forum.

The Guarantor was awarded the “Financial OutstandingContribution Award” by the People’s Government ofShanghai Pudong Xinqu.

2019................................................ China Aviation Investment Co., Ltd. increased its capital andissued new shares to five strategic investors including but notlimited to China Life Insurance Company Limited (中國人壽保險股份有限公司). Following such capital increase, AVICIndustry-Finance Holdings Co., Ltd.’s shareholding in ChinaAviation Investment Co., Ltd. decreased from 100 per cent. toapproximately 73.56 per cent..

The Guarantor was ranked 31st in terms of fleet value in the“Global Aircraft Leasing Companies Ranking” published byFlightGlobal.

The Guarantor was awarded the “Best Transaction Award”and “Ten Years Industry Promotion Award” in the seventhChina Air Finance “Wan Hoo” Awards PresentationCeremony.

The Group’s leased asset scale exceeded RMB140 billion.

2020................................................ The Guarantor was ranked 20th in the list of global top 50lessors of 2020 published by Cirium.

The Group’s leased asset scale exceeded RMB150 billion inJune 2020.

2021................................................ The Guarantor was ranked 16th in the list of global top 50lessors of 2021 published by Cirium.

– 104 –

RECENT DEVELOPMENTS

The outbreak of COVID-19.

The global outbreak of COVID-19 has caused substantial disruptions in the PRC and internationaleconomies and markets as well as additional uncertainties in the Group’s operating environment. TheGroup has been closely monitoring the impact of the outbreak and continued escalation of COVID-19on the Group’s businesses and will keep its contingency measures and risk management under reviewas the situation evolves. Please see “Risk Factors – Risks Relating to the Group – The global outbreakof the contagious COVID-19 may have an adverse effect on the Group’s business, financial conditionand results of operations.” and “Risk Factors – Risks Relating to the Group – The Group’s operationsare subject to force majeure events, political unrest or civil disobedience movements, naturaldisasters, outbreaks of contagious diseases and other disasters.” for further information.

Issue of debt instruments since 30 June 2021.

Since 30 June 2021, the Guarantor has issued onshore debt securities in an aggregate principalamount of approximately RMB5.9 billion. It is also expected that the Guarantor will issue onshoredebt securities in an aggregate principal amount of RMB900 million on or about 22 September 2021.In addition, the Issuer issued EUR200,000,000 0.95 per cent. guaranteed notes due 2022 under theProgramme which are unconditionally and irrevocably guaranteed by the Guarantor in August 2021.

– 105 –

ORGANISATIONAL STRUCTURE

The following chart sets forth a simplified corporate structure of the Group, which shows the Issuer,the Guarantor and the Guarantor’s shareholders as at 30 June 2021:

State-owned Assets Supervision

and Administration Commission

of the State Council of the PRC

Aviation Industry

Corporation of China(1)

AVIC Industry-Finance Holdings Co., Ltd.

AVIC Xi’an

Aircraft Industry

(Group) Co., Ltd.

(“AVIC Xi’an”)

COMAC

Capital Co., Ltd.

(“COMAC Capital”)

China Aviation

Investment

Co., Ltd.

AVIC International Leasing Co., Ltd.

(The Guarantor)

CAVIC Aviation

Leasing (Ireland)

Co., Designated

Activity Company

100%

100% 9.97% 73.56%

100%

Soar Wise Limited

(The Issuer)

100%

1.37% 0.49% 49.07%49.07%

50.03%

Note:

(1) As at 30 June 2021, AVIC directly owned approximately 39.45 per cent. of the issued share capital of AVICIndustry-Finance Holdings Co., Ltd. and indirectly through its subsidiaries (other than AVIC Xi’an and COMACCapital) owned approximately 10.58 per cent. of the issued share capital of AVIC Industry-Finance Holdings Co., Ltd.

– 106 –

BUSINESS DESCRIPTION

The Group is principally engaged in the leasing business in the PRC and provides a diverse array of

financial leasing and operating leasing services, primarily focusing on the aircraft, shipping, urban

infrastructure and equipment sectors. The Group primarily focuses on large-scale projects and

long-term customers with strong credit profile, which allow the Group to dedicate its resources to

customised leasing products and value-added services to key clients in target industries, as well as

to anticipate and adapt to shifting market conditions and changing customer needs. By concentrating

on large-scale leasing businesses, the Group is able to achieve economies of scale and a market

leading position in the leasing industry. Throughout its approximately 17 years of operation, the

Group has established and maintained a well-structured financial and operating leasing platform for

both overseas and domestically manufactured civil aircraft, as well as for large-scale equipment,

urban infrastructure equipment and vessels.

The Guarantor was one of the first PRC leasing companies approved by MOFCOM and the State

Administration of Taxation. As at 30 June 2021, the Guarantor was one of the leading leasing

companies in the PRC. In addition, the Guarantor believes that the Group had one of the largest

networks of airline customers in the PRC as at 30 June 2021.

As at 30 June 2021, AVIC indirectly held approximately 44.03 per cent. of the issued share capital

of the Guarantor. AVIC is one of the central state-owned enterprises directly supervised by central

SASAC, focusing on aerospace and defence. Through its subsidiaries and affiliates in the PRC and

overseas, AVIC’s businesses principally cover defence, transport aircraft, engines, helicopters,

avionics and systems, general aviation, aviation research, flight test, trade and logistics, asset

management, finance services, engineering planning and construction and automobile. As at 30 June

2021, AVIC’s group consisted of a number of listed companies. AVIC had been named in the “Global

500” published by Fortune magazine for 13 consecutive years and ranked 140th on the list in 2021.

As at the date of this Offering Circular, AVIC ranks the fourth among the industrial manufacturing

enterprises owned by SASAC in the PRC. With its extensive customer base and supplier network,

established relationship with local governments and other state-owned enterprises, in-depth industry

knowledge, strong brand recognition and experienced management, AVIC provides the Group with

valuable support for the development of its business. As at 30 June 2021, the Guarantor was the only

leasing platform operating under the financial services business segment of AVIC.

In June 2021, the Group’s leased asset scale exceeded RMB160 billion. As at 30 June 2021, the leased

asset scale of the Group’s operating leasing business and the Group’s financial leasing business

amounted to approximately RMB18.87 billion and RMB142.46 billion, respectively. In terms of

leased asset scale, the Guarantor ranked first and eighth among the domestic leasing companies

(excluding Bohai Leasing Co., Ltd.) and all domestic and foreign leasing companies (excluding

Bohai Leasing Co., Ltd.), respectively, in the PRC as at 30 June 2021.

For the years ended 31 December 2018, 2019 and 2020 and the six months ended 30 June 2020 and

2021, the Group reported total consolidated revenue from operations of approximately RMB7,164.06

million, RMB10,076.85 million, RMB10,125.86 million, RMB4,850.42 million and RMB4,678.59

million, respectively, and consolidated net profit of approximately RMB1,262.39 million,

RMB1,711.21 million, RMB1,974.09 million, RMB965.11 million and RMB995.66 million,

respectively. As at 1 January 2019, 31 December 2019, 31 December 2020 and 30 June 2021, the total

consolidated assets of the Group amounted to approximately RMB133,121.80 million,

RMB148,755.70 million, RMB158,749.48 million and RMB171,611.70 million, respectively.

– 107 –

The following table sets forth the breakdown by product of the Group’s consolidated revenue from

operations for the periods indicated:

Consolidated revenue fromoperations by products(RMB million, exceptpercentages)

For the year ended 31 December For the six months ended 30 June

2018 Percentage 2019 Percentage 2020 Percentage 2020 Percentage 2021 Percentage

Financial Leasing and

Operating Leasing . . . . . . . . . . 7,004.00 97.77% 9,934.78 98.59% 9,795.37 96.74% 4,666.33 96.20% 4,604.95 98.43%Others. . . . . . . . . . . . . . . . . . . . . . . . 160.06 2.23% 142.07 1.41% 330.49 3.26% 184.09 3.80% 73.65 1.57%

Total . . . . . . . . . . . . . . . . . . . . . . . . . 7,164.06 100% 10,076.85 100% 10,125.86 100% 4,850.42 100% 4,678.59 100%

The following table sets forth the Group’s income from financial leasing and operating leasing,

expenses relating to financial leasing and operating leasing and net income from financial leasing and

operating leasing for the periods indicated:

For the year ended 31 DecemberFor the six months

ended 30 June

2018 2019 2020 2020 2021

(RMB million)

Income from financial leasing

and operating leasing ............... 7,004.00 9,934.78 9,795.37 4,666.33 4,604.95Expenses relating to financial

leasing and operating leasing .. 3,983.34 5,579.39 5,074.40 2,704.00 2,441.73Net income from financial

leasing and operating leasing .. 3,020.66 4,335.38 4,720.97 1,962.33 2,163.22

The following table sets forth the breakdown of the Group’s leased asset scale by the operating

leasing and financial leasing businesses of each target industry as at the dates indicated:

Leased asset scaleby industries(RMB billion, exceptpercentages)

As at 31 December As at 30 June

2018 Percentage 2019 Percentage 2020 Percentage 2021 Percentage

Aircraft . . . . . . . . . . . . . . . . . . . . 36.33 28.81% 42.31 29.90% 45.86 30.74% 52.68 32.66%Shipping . . . . . . . . . . . . . . . . . . . 11.34 8.99% 15.44 10.91% 19.45 13.04% 18.71 11.60%Urban Infrastructure . . . . . 32.26 25.58% 40.50 28.62% 44.48 29.81% 49.78 30.86%Equipment . . . . . . . . . . . . . . . . . 46.19 36.62% 43.27 30.57% 39.41 26.42% 40.15 24.89%

Total . . . . . . . . . . . . . . . . . . . . . . . 126.12 100% 141.52 100% 149.20 100% 161.33 100%

– 108 –

The following table sets forth the number of new lease agreements entered into by the Group and the

total contracted amount of the relevant new lease agreements for the periods indicated:

For the year ended 31 DecemberFor the six months

ended 30 June

2018 2019 2020 2020 2021

Number of new lease

agreements............................... 464 403 343 139 193Total contracted amount of new

lease agreements (RMB

billion) .................................... 79.72 73.64 60.28 25.51 36.16

The following table sets forth the breakdown of the Group’s leased asset scale by business model as

at the dates indicated:

As at 31 DecemberAs at

30 June

Business model (percentage) 2018 2019 2020 2021

Sale and lease-back ........................... 67.66% 65.97% 64.13% 62.29%Direct financial leasing ..................... 26.58% 24.41% 24.16% 26.02%Operating leasing .............................. 5.76% 9.62% 11.71% 11.69%

Total ................................................. 100% 100% 100% 100%

The following table sets forth the Group’s rental recovery rate as at the dates indicated:

As at 31 DecemberAs at

30 June

2018 2019 2020 2021

Rental recovery rate(1)

(percentage) ................................... 99.25% 99.27% 98.90% 99.23%

Note:

(1) The rental recovery rate means, for a relevant period, lease payments received divided by lease receivables multipliedby 100 per cent..

Aircraft Leasing

Overview

The Group is principally involved in the provision of financial leases and operating leases of

domestic aircraft, mainstream passenger aircraft, business jets and general aircraft to airlines in the

PRC and other Asia regions. Leveraging its track record, it has established long-term business

relationships and co- operation arrangements with domestic and international aircraft manufacturers

as well as suppliers, airlines and general aviation companies.

– 109 –

Business Model

The Group’s aircraft leases primarily comprise financial leases and operating leases.

Under direct financial leases, the Group typically enters into a commercial arrangement with its

clients pursuant to which: (i) the client, as the lessee, will select the required asset; (ii) the Group,

as the lessor, will then purchase that asset; (iii) the lessee will be entitled to use that asset for the

duration of the lease; (iv) the lessee will make a series of rental payments to the Group for the use

of that asset during the lease term; (v) the Group will recover a majority or the entire costs of the asset

and earn interest from the rental payments made by the lessee; and (vi) the lessee has the option to

acquire ownership of the asset from the Group upon expiry of the lease term. Under direct financial

leasing arrangements, substantially all of the risks and reward of ownership of the assets are

transferred to the lessees.

Under operating leases, the client, as the lessee, bears all of the risks and reward of the operation of

the asset, while the Group, as a lessor, retains ownership and risks related to the ownership of the

asset. The lessee generally makes rental payments to the lessor in advance, and the lessor may require

the lessee to pay a security deposit equivalent to an amount ranging from one to six months’ rent. The

lessee will be required to return the asset to the lessor at the end of the lease term in a pre-agreed

acceptable condition that will allow the lessor to lease out the asset to another client rapidly upon

expiry of the lease term, with compensation mechanics in place as an alternative.

Lease rentals are contracted on either a fixed rate or floating rate basis. For fixed rate leases, the

rental is typically fixed in advance at the time of execution of lease contract or just prior to the

delivery date by reference to a swap rate in line with the term of the lease. For floating rate leases,

rental payments are typically re-set periodically by reference to LIBOR or other floating interest

rates.

During the full lease term, the Group, as the lessor, will require the airline lessees to undertake the

required maintenance procedures and maintain full value insurance extending to the aircraft and its

installed parts.

Since 2010, the Group has commenced using its project companies established in Ireland, the

Dongjiang Free Trade Port Zone of Tianjin, the China (Shanghai) Pilot Free Trade Zone and the

Hainan Free Trade Zone to act as lessors to enter into aircraft leasing transactions with airline

operators in the PRC. As at 30 June 2021, the Group had approximately 182 aircraft leasing

special-purpose vehicle companies.

– 110 –

The Group’s project companies source their fleet primarily from three channels, namely, (i) directpurchases from aircraft manufacturers; (ii) sale and lease-back transactions with airline operators;and (iii) purchases from other aircraft leasing companies or other owners, with or without leases inplace. The following diagram illustrates a simplified structure of an aircraft leasing transactionengaged by the Group’s project companies:

Aircraft manufacturers

The Group’sproject

companies

Airlineoperators

Banks/Financial

institutions

2. The Group’s project companies

obtained long-term bank borrowings

6. The Group’s project companies pay

principal and interest to banks/financial

institutions

3. Payment of the purchase price

1. The Group’s project companies source

their fleet primarily from three channels,

namely, direct purchases from aircraft

manufacturers, sale and lease-back

transactions with airline operators and

purchases from other aircraft leasing

companies or other owners, with or

without leases in place.

4. The Group’s project companies lease

the aircraft to airline operators in

long-term

5. The Group’s project companies receive

lease payments from airline operators

The following table sets forth the breakdown of leased asset scale of the Group’s aircraft leasingbusiness by business model as at the dates indicated:

Aircraft leasing – Business model(percentage)

As at 31 DecemberAs at

30 June

2018 2019 2020 2021

Sale and lease-back .......................... 5.70% 6.80% 5.65% 4.22%Direct financial leasing .................... 76.76% 66.06% 65.56% 67.89%Operating leasing .............................. 17.54% 27.14% 28.79% 27.89%

Total ................................................. 100% 100% 100% 100%

Fleet of Aircraft

The Group has a diversified and rapidly growing aircraft fleet comprising both overseas anddomestically manufactured civil aircraft. The Group operates one of the youngest fleets among majortop-tier aircraft leasing companies in the PRC, comprising internationally renowned aircraft(including new generation Airbus, Boeing, Embraer and Bombardier aircraft) as well as domesticallymanufactured civil aircraft (including the ARJ21, Modern Ark MA60 and Y-12). The Group’s fleetcomprises mainly modern, in- production fuel efficient aircraft types based around the B737, A320,CRJ900 and MA60 families of aircraft, with an emphasis on narrowbody aircraft. As at 30 June 2021,the average age of the Group’s fleet of aircraft was approximately three years.

Leveraging the support from, and its relationships with, AVIC and the Guarantor’s subsidiaries andaffiliates, the Group also maintains strong business relationships with both domestic and international

– 111 –

aircraft manufacturers and sales agents. The Group focuses on acquiring aircraft at attractive prices,

sourcing suitable aircraft from AVIC and its subsidiaries and affiliates, sourcing external funding at

competitive rates, maintaining an efficient operational structure with low overhead and minimizing

aircraft transition costs. In addition, the Group has developed strategic relationships with Boeing and

COMAC. The Group ordered 30 ARJ21 aircraft in 2016 and 30 C919 in 2017 from COMAC.

The following table sets forth certain data about the Group’s aircraft fleet as at or for the periods

indicated:

As at or for the year ended31 December

As at orfor the six

months ended30 June

2018 2019 2020 2021

Total number of aircraft contractedfor delivery (for the periodsindicated) ..................................... 34 44 57 30

Total contracted amount of aircraftcontracted for delivery (for theperiods indicated) .........................

RMB14.35billion

RMB18.54billion

RMB6.98billion

RMB8.97billion

Total number of aircraft delivered(for the periods indicated) ............. 33 33 50 34

Total contracted amount in respect ofaircraft delivered (for the periodsindicated) .....................................

RMB15.78billion

RMB15.24billion

RMB10.18billion

RMB9.68billion

Total number of aircraft on lease (asat the dates indicated) .................. 291 300 313 322

Aircraft type:– Domestic aircraft .......................... 55 53 52 59– Mainstream passenger aircraft ....... 115 130 150 166– Business jets ................................. 24 22 24 26– General aircraft ............................. 97 95 87 71

Customers

As at 30 June 2021, the Group’s aircraft were primarily leased and delivered to aircraft operators inAsia and Europe with a lease term typically ranging from eight to 12 years. The Guarantor believesthat the contracted revenue generated from long-term leases combined with a high-quality lessee baseprovide the Group with a stable source of earnings and cash flow from year to year.

The Guarantor believes that the Group had one of the largest networks of airline customers in thePRC as at 30 June 2021. In March 2015, the Group was the first leasing company in the PRC to enterinto direct financing arrangement with Export Development Canada for its leasing transaction withChina Express in respect of two CRJ900 aircraft. The Group enjoys both a well-established and anexpanding customer base across the PRC with whom it has maintained strong long-term relationships.The Group’s customer base for its aircraft leasing business comprises a number of domestic airlinecompanies in the PRC and multinational airline companies in various countries in Asia and Europe,primarily including China Eastern Airlines, Air China, China Southern Airlines, Xiamen Airlines,Shenzhen Airlines, Hebei Airlines, Hainan Airlines, Tianjin Airlines, Juneyao Airlines, OkayAirways, China Express, Donghai Airlines, Qingdao Airlines, Vietnam Airlines, Turkish Airlines,Wizz Air, Indigo Airline, Spring Airways, Lion Air, Chengdu Airlines, Scandinavian Airlines, MywayAirlines, Loong Air, Kunming Airlines and Etihad Airways. For the years ended 31 December 2018,

– 112 –

2019 and 2020 and the six months ended 30 June 2020 and 2021, the top five customers for theGroup’s aircraft leasing business accounted for approximately 15.31 per cent., 11.29 per cent., 11.61per cent., 10.50 per cent. and 14.70 per cent. of the Group’s aircraft leasing assets, respectively.

As at 30 June 2021, the Group had no non-performing aircraft leases.

Ship Leasing

Overview

The Group primarily provides ship leasing services to shipping companies established in the PRC orultimately owned by PRC entities.

Business Model

The Group leases its vessels primarily via direct financial leasing, sale and lease-back arrangementsand operating leasing. The business model for direct financial leasing is similar to that describedunder “– Business Description – Aircraft Leasing” above. Under sale and lease-back transactions, thelessee purchases the asset first and then sells it to the Group. The asset is leased back by the Groupto the lessee, who will subsequently make a series of rental payments for the use of the asset. Suchan arrangement allows the lessee to make full use of the asset while not having capital tied up in theasset and, in some situations, to enjoy a tax benefit.

During the full lease term, the Group, as the lessor, will require the shipping lessees to undertake therequired maintenance procedures and maintain full value insurance extending to the vessel and itsinstalled parts.

The following table sets forth the breakdown of leased asset scale of the Group’s ship leasingbusiness by business model as at the dates indicated:

Ship leasing – Business model(percentage)

As at 31 DecemberAs at

30 June

2018 2019 2020 2021

Sale and lease-back .......................... 68.94% 61.55% 58.00% 56.72%Direct financial leasing ..................... 25.97% 28.12% 23.15% 24.03%Operating leasing .............................. 5.09% 10.33% 18.85% 19.25%

Total ................................................. 100% 100% 100% 100%

The Group leverages its industry expertise within the shipping industry and provides customised shipfinancing services to provide effective and reliable funding support for its shipping customers. TheGroup’s specialised sales team is capable of providing comprehensive financing solutions andprofessional advisory services for its customers who request industry-specific financing advice forthe purchase of their vessels. The Guarantor believes that the Group’s provision of an integrated andcustomised range of financial services to its shipping customers has enhanced its customers’ trust andreliance on its services and enabled it to establish its market presence within the ship financingmarket.

In addition, the Group’s operations in the ship leasing market are categorised as the U.S. dollarfinancing business and the Renminbi financing business. Its U.S. dollar financing services areprovided primarily to shipping companies operating on international shipping lines, and its Renminbifinancing services are provided principally to shipping companies operating on domestic shippinglines. The Group also provides various advisory services to its shipping industry customers which

– 113 –

include (i) vessel operation advisory services such as ship selection and purchasing timing analysis;(ii) industry competition analysis based on its cumulative industry expertise and market information;and (iii) finance consulting services such as working capital and cash flow management consultingbased on an analysis of the customer’s financial statements and operational status, profit projectionand vessel value assessment.

Fleet of Vessel

The Group has an extensive vessel fleet including high-end vessels and operates a diverse portfolioof large-sized commercial vessels, primarily including bulk carriers, container ships, liquid cargoships (such as liquefied petroleum gas carriers, chemical tankers, asphalt carriers and heavy-liftships) and other vessels (such as gas carriers, car carriers, passenger ships and cattle carriers). As at30 June 2021, the Group’s number of vessels on lease reached 221 and the average age of the Group’svessel fleet was approximately four years.

The following table sets forth certain data about the Group’s vessel fleet as at or for the periodsindicated:

As at or for the year ended31 December

As at orfor the six

months ended30 June

2018 2019 2020 2021

Total number of vessel contractedfor delivery (for the periodsindicated)....................................... 73 62 26 22

Total contracted amount of vesselscontracted for delivery (for theperiods indicated) .........................

RMB10.17billion

RMB9.15billion

RMB4.78billion

RMB3.63billion

Total number of vessel delivered (forthe periods indicated) .................... 55 53 42 31

Total contracted amount in respect ofvessels delivered (for the periodsindicated) .....................................

RMB7.10billion

RMB7.59billion

RMB7.23billion

RMB2.41billion

Total number of vessel on lease (asat the dates indicated) .................. 187 216 248 221

Vessel type:– Bulk carriers ................................. 74 102 112 105– Container ships ............................. 32 34 38 31– Liquid cargo ships ........................ 34 42 50 31– Other vessels ................................ 47 38 48 54

Customers

As at 30 June 2021, part of the Group’s vessels were leased and delivered to shipping companiesestablished in the PRC or ultimately owned by PRC entities, including other members of AVIC’sgroup, with a lease term ranging from five to ten years. The Group has also developed businessrelationships with customers in the United States, Greece, Switzerland and the United Kingdom. Asat 30 June 2021, the Group’s key customers included China COSCO Shipping Corporation Limited,China Merchants Group, China State Shipbuilding Corporation, SUMEC Group Corporation, ChinaShipbuilding Industry Corporation, Jianlong Group, Trawind Shipping Logistics, Taizhou Maple LeafShipbuilding Co., Ltd., Wide Shine Development Limited, Mediterranean Shipping Company, GoldenUnion Shipping Co. S.A., Navig8 Limited, Seanergy Maritime Holdings Corp., Scorpio Tankers Inc.

– 114 –

and Interlink Maritime Corp. In addition, pursuant to the project co-operation agreement between theGuarantor, SDTR Marine Pte. Ltd. and Dalian Shipbuilding Industry Co., Ltd. entered into in January2019, the Group would lease ten 85,000 DWT Super-Kamsarmax bulk carriers to SDTR Marine Pte.Ltd. The Group intends to further expand its overseas customer base. For the years ended31 December, 2019 and 2020 and the six months ended 30 June 2020 and 2021, the top five customersfor the Group’s ship leasing business accounted for approximately 2.92 per cent., 4.80 per cent., 5.10per cent., 4.46 per cent. and 4.43 per cent. of the Group’s ship leasing assets, respectively.

As at 30 June 2021, none of the Group’s shipping customers was in material default or breach of theirleasing contracts with the Group.

Urban Infrastructure Leasing

The Group operates a diverse portfolio of, and provides financial leasing services for, urbaninfrastructure equipment, covering primarily public transport related equipment, water supply,sewage disposal and water-environmental protection machinery, construction machinery, gas and heatsupply equipment and agricultural machinery. As at 30 June 2021, the lease term of the Group’s urbaninfrastructure leasing typically ranges from three to five years.

The Group promotes urban infrastructure construction in the key cities in the PRC by providing urbaninfrastructure leasing services primarily to infrastructure construction and operation managementcompanies in the PRC, including Zhenjiang Transportation Industry Group. The Group also providesfinancial leasing services to tourism companies in the PRC, such as Dengfeng Songshan ShaolinCultural Tourism Co. Ltd and Wuzhen International Tourism Group. Leveraging on its establishedrelationship with local governments and other state-owned enterprises, the Group has closerelationships with agencies or entities owned, controlled by or otherwise associated with localgovernments, including local government financing vehicles, in the PRC and has assisted theseorganisations in a variety of urban infrastructure or public utilities construction projects. For theyears ended 31 December 2018, 2019 and 2020 and the six months ended 30 June 2020 and 2021,the top five customers for the Group’s urban infrastructure leasing business accounted forapproximately 1.38 per cent., 3.16 per cent., 2.98 per cent., 2.85 per cent. and 2.57 per cent. of theGroup’s urban infrastructure leasing assets, respectively.

The urban infrastructure financial leasing business primarily involves sale and lease-back services.The business model for sale and lease-back is similar to those described under “– BusinessDescription – Ship Leasing” above.

Equipment Leasing

The Group provides financial leasing services for large-scale equipment to various manufacturers ina wide range of industries, including the machinery, iron and steel, chemical and transportation andlogistics industries. The Group’s equipment leasing business also focuses on the technologicaltransformation of equipment used in the aviation industry. In addition, the Group has established apresence in the environmental protection industry by providing equipment leasing services to therenewable energy, energy saving and environmentally-friendly machinery and modern agriculturalsectors. The Group provides financial leasing services for large scale equipment to its clients with theaim to satisfy their financing and investment needs, optimise its clients’ financial structures andpromote technological advancement and upgrade of industrial equipment. As at 30 June 2021, thelease term of the Group’s equipment leases typically ranges from three to five years.

– 115 –

The following table sets forth the breakdown of leased asset scale of the Group’s equipment leasingbusiness by industry as at the dates indicated:

Leased asset scaleIndustry (percentage)

As at 31 DecemberAs at

30 June

2018 2019 2020 2021

Papermaking...................................... 3.65% 3.79% 3.45% 2.81%Iron and Steel ................................... 13.30% 12.72% 16.47% 13.50%Machinery ......................................... 24.69% 25.52% 26.77% 30.38%Chemical ........................................... 19.32% 17.96% 15.58% 14.96%Renewable Energy............................. 2.58% 3.99% 6.16% 7.45%Transportation and Logistics.............. 12.61% 11.87% 5.59% 6.07%Other Equipment(1) ............................ 23.85% 24.14% 25.98% 24.82%

Total ................................................. 100% 100% 100% 100%

Note:

(1) Other equipment includes aviation equipment, energy saving and environmentally-friendly machinery and modernagricultural equipment.

The Group serves these sectors by providing equipment leasing services to various manufacturers,

satisfying the financing and investment needs of clients, optimising clients’ financial structures, and

promoting technological advancement and replacement of industrial equipment. The Group has close

relationships with state-owned companies, listed companies and large-scale privately-owned

enterprises across the PRC, including Chengdu Chengfa Science & Energy Power Engineering Co.,

Ltd., AVIC SAC Commercial Aircraft Company Limited, Shanghai Aviation Aero – Engine

Manufacturing Co., Ltd., Beijing Enterprises Clean Energy Electric Power Limited, China Sinogy

Electric Engineering Company Limited and Wuhan Metro Group Company Limited and has assisted

these organisations in a variety of equipment leasing projects. For the years ended 31 December 2018,

2019 and 2020 and the six months ended 30 June 2020 and 2021, the top five customers for the

Group’s equipment leasing business accounted for approximately 2.26 per cent., 2.06 per cent., 2.34

per cent., 1.67 per cent. and 1.91 per cent. of the Group’s equipment leasing assets, respectively.

The large-scale equipment financial leasing business involves a variety of services including sale and

lease-back, direct financial leasing and financial advisory services. The business models for direct

financial leasing and sale and lease-back are similar to those described under “– Business Description

– Aircraft Leasing” and “– Business Description – Ship Leasing” above, respectively.

– 116 –

The following table sets forth the breakdown of leased asset scale of the Group’s equipment leasing

business by business model as at the dates indicated:

Equipment leasing – Businessmodel (percentage)

As at 31 DecemberAs at

30 June

2018 2019 2020 2021

Sale and lease-back ........................... 96.54% 93.69% 94.74% 94.31%Direct financial leasing ..................... 3.46% 5.20% 3.74% 4.27%Operating leasing .............................. – 1.11% 1.52% 1.42%

Total ................................................. 100% 100% 100% 100%

The Group also provides financial advisory service in equipment leasing according to the clients’

need for sale or purchase of equipment, financial statement optimisation and business restructuring.

COMPREHENSIVE AND ROBUST RISK MANAGEMENT

The Group’s risk management principle is to implement an integrated and dynamic risk management

system and continue to optimise its risk management system to protect the long-term interests of

shareholders, customers and employees.

The Group has implemented its prudent risk management system across three dimensions:

Business model dimension. The Group’s business is organised and operated with an industry-

focused approach. Such a business model helps manage systematic risk through established

procedures, primarily comprising (i) a stringent selection process of suitable, fundamental and

sustainable industries; (ii) segmentation of suitable targeted customers; (iii) customer credit

assessment and approval procedures; and (iv) portfolio monitoring and management. The Guarantor

believes these established procedures enable it to maintain relatively low overall risk.

Strategic dimension. The Group’s risk management initiatives at the strategic level are led by its

board of directors and senior management under the supervision of its risk management committee,

with a focus on risks arising from strategic planning, business operations, corporate credit

environment, finance and accounting, and the financial markets. The Group has established a vertical

reporting procedure involving relevant functional departments in its strategic risk management

system, and a risk reporting framework has been established to monitor the overall risk balance at the

corporate level and to regularly oversee the Group’s risk management system at a strategic level.

Operational dimension. The Group’s risk management initiatives at the operational level primarily

focus on the management of its credit risk (which includes risks arising from new industry selection,

new customer selection, customer credit assessment and approval, as well as portfolio monitoring and

management), operational risk, liquidity risk and interest rate risk. The Group has established “three

lines of defence” at the operational level:

(i) in terms of credit risk and operational risk management, the Group has been (a) complying

strictly with rules and regulations imposed on financial leasing companies by CBIRC and other

statutory and regulatory bodies, (b) controlling project risks by ensuring strict adherence to

internal credit facility standards and preliminary screening guidelines, (c) assessing credit risks

– 117 –

of new customers and projects through standardised credit evaluation procedures beforeentering into any business contract, (d) strengthening its internal authorisation and approvalpolicies and procedures, and (e) establishing effective supervision and monitoring measuresduring post-transaction portfolio management;

(ii) in terms of liquidity risk management, the Group has been managing its balance sheet to matchthe durations of its assets and liabilities; and

(iii) in terms of interest rate risk management, the Group has been hedging its interest rate risk bymatching its lease pricing mechanisms with interest on its borrowings.

Through its comprehensive in-house risk management system, the Group carries out reviews of allexisting lessees to monitor lessees’ compliance with obligations under leases and to detect warningsigns of potential delinquencies so that corrective measures can be taken in a timely manner.

CUSTOMERS

As at 30 June 2021, the Group had approximately 912 customers.

The following table sets forth the breakdown by industry of the Group’s customers as at 30 June2021:

As at 30 June 2021

Customers by industries Number Percentage

Aircraft ................................................................................... 79 8.66%Shipping.................................................................................. 104 11.40%Urban Infrastructure ................................................................ 321 35.20%Equipment ............................................................................... 408 44.74%

Total ....................................................................................... 912 100%

The Group’s main customer base consists of local state-owned companies and listed corporations.The Group has established comprehensive systems adopting certain criteria for its customer selectionprocess, including their track record and business scale, with the aim of selecting long-termcustomers with strong profitability potential, long-term financing demands, stable cash flows and asound financial base. The Guarantor believes that the Group’s customers’ satisfaction and reliance onits services is demonstrated by a large number of repeat customers.

INSURANCE

As at 30 June 2021, the Group maintained a range of insurance cover on its fixed assets underlyingits leases. The Group maintains asset insurance for the assets underlying its leases to cover significantloss or damage to such assets during the leasing period. The insurance payments are generally paidby its customers in line with leasing industry practice and the Group is usually the beneficiary of suchinsurance. As at 30 June 2021, the Group did not maintain credit insurance for its lease receivables.

The Group provides social security insurance for its employees as required by PRC social securityregulations, such as pension insurance, unemployment insurance, work injury insurance, maternityinsurance and medical insurance.

– 118 –

Please see “Risk Factors – Risks relating to the Group – The insurance coverage of the Group may

not adequately protect it against all operational risks or any potential liabilities or losses.” in this

Offering Circular for a discussion of the risks associated with the Group’s insurance coverage.

LEGAL AND REGULATORY PROCEEDINGS

The Group is involved, from time to time, in legal proceedings arising in the ordinary course of its

operations. See “Risk Factors – Risks Relating to the Group – The Group may be subject to legal,

litigation and regulatory proceedings.”. A majority of these legal proceedings involve claims initiated

by it to recover payment of leasing receivables from its customers.

Except as otherwise disclosed in this Offering Circular, as at 30 June 2021, none of the Guarantor or

its subsidiaries was involved in any litigation or arbitration proceedings which could have a material

adverse effect on its business, financial condition and results of operations nor is the Guarantor aware

of any such litigation or proceedings pending or threatened against it or any of their respective

subsidiaries which is material in the context of the offering of the Instruments.

EMPLOYEES

As at 30 June 2021, the Group had approximately 240 employees. The Guarantor believes that the

Group has a high-quality workforce possessing specialised industry expertise, with approximately

37.50 per cent. of its employees having attained bachelor’s degrees and approximately 57.92 per cent.

having attained master’s degrees or above as at 30 June 2021.

The Group’s ability to attract, retain and motivate qualified personnel is critical to its success. The

Guarantor believes that the Group offers employees competitive compensation, that the Group is able

to attract and retain qualified personnel and that the Group has maintained a stable core management

team. The Group’s remuneration packages are generally structured by reference to market rates and

individual merit. Salaries are normally reviewed annually, based on performance appraisals and other

relevant criteria.

In accordance with PRC regulations, the Group has established an employee labour union, in which

all of its employees are eligible for participation. The labour union organises various activities for its

employees, such as charity fund raising activities to help employees in poor economic condition due

to serious illnesses. The labour union has established a labour dispute committee to assist its

employees in dealing with their potential labour disputes with the Group.

As at the date of this Offering Circular, the Group has not experienced any major disputes with, nor

has there been any major labour action taken by, the labour union which has had a material effect on

its business.

– 119 –

DIRECTORS OF THE GUARANTOR

The directors of the Guarantor as at 30 June 2021 were as follows:

Name Position

Zhou Yong......................................................... ChairmanZhou Qinye ....................................................... DirectorCai Mingsheng .................................................. DirectorZhao Zhuping .................................................... DirectorLi Tianshu ......................................................... DirectorWu Liang .......................................................... DirectorLiu Xinfeng....................................................... Director

The biographies of the Guarantor’s directors as at 30 June 2021 were as follows:

Zhou Yong

Mr. Zhou, born in 1963, serves as the chairman of the board of directors, the secretary of the party

committee and the general manager of the Guarantor. He previously served various positions in

Shanghai Xinsheng Aviation Industry Investment and Development Co., Ltd. (上海欣盛航空工業投資發展有限公司), including but not limited to, deputy general manager, general manager, vice

chairman and chairman of the board of directors. He also worked as the general manager, the

chairman of the board of directors and the secretary of the party committee of China Aviation

Industry Shanghai Asset Operations and Management Co., Ltd. (中航工業上海資產經營管理有限公司). Mr. Zhou also worked for Aviation Industry Pudong Development Centre (航空工業浦東開發中心) and was an executive director, deputy general manager and manager of the finance department

of Shanghai Guoyi Aviation Industry Company (上海國翼航空工業公司). Mr. Zhou also worked at

Shanghai Aviation Electric Co., Ltd (上海航空電器有限公司), AVIC and China Aviation Medical

Industry Management Co., Ltd. (中航醫療產業管理有限公司). Mr. Zhou holds a postgraduate degree.

Zhou Qinye

Mr. Zhou, born in 1952, serves as a director of the Guarantor. Mr. Zhou previously worked as a

consultant of the research and development centre of and the chief accountant and a deputy general

manager in the Shanghai Stock Exchange. He also served as a member of the issuance audit

committee and the major reorganisation audit committee of China Securities Regulatory Commission

and a deputy director in the Shanghai University of Finance and Economics. Mr. Zhou holds a

postgraduate degree.

Cai Mingsheng

Mr. Cai, born in 1968, serves as a director of the Guarantor. He also serves as a supervisor of the

board of supervisors of the Guarantor. He previously served various positions in the Beijing

University of Aeronautics and Astronautics. Mr. Cai holds a doctoral degree.

– 120 –

Zhao Zhuping

Mr. Zhao, born in 1963, serves as a director of the Guarantor. He also serves as a director of AVIC

Securities Co., Ltd. He previously worked as a director of AVICI Commercial Aircraft Co., Ltd. (中航商用飛機有限公司) and the legal representative and a director of Shanghai Aeroengine

Manufacturing Company, Ltd. (上海航空發動機製造股份有限公司). He also served as the secretary

of the party committee and a deputy general manager of the Guarantor. Mr. Zhao holds a postgraduate

degree and is a senior economist.

Li Tianshu

Mr. Li, born in 1978, serves as a director of the Guarantor. He also serves as the head of the planning

and finance department of AVIC Industry-Finance Holdings Co., Ltd. He previously served various

positions in Beijing Shougang High-Tech Co., Ltd. (北京首鋼高新技術公司), Ping An Insurance

(Group) Company of China, Ltd. (中國平安保險公司), China Aviation Industry Corporation II (中國航空工業第二集團), AVIC and AVIC Electromechanical Systems Co., Ltd. (中航工業機電系統股份有限公司). Mr. Li holds a master’s degree and is a senior accountant and certified public accountant.

Wu Liang

Mr. Wu, born in 1979, serves as a director of the Guarantor. He also serves as the deputy head of the

securities department of AVIC Industry-Finance Holdings Co., Ltd. He previously served various

positions in Airbus Beijing Engineering Centre Co., Ltd. (空客北京工程技術中心有限公司), Kaibo

Engineering Group Corporation (中海楷博國際工程諮詢有限公司) and AVIC Industry-Finance

Holdings Co., Ltd. Mr. Wu holds a master’s degree.

Liu Xinfeng

Mr. Liu, born in 1975, serves as a director of the Guarantor. He previously worked as the head of the

European project team of the International Cooperation Project Office under the International

Cooperation Department of Xi’an Aircraft International Corporation (西安飛機國際航空製造股份有限公司). He also served various positions in Xi’an Aircraft International (Tianjin) Corporation (西飛國際航空製造(天津)有限公司). Mr. Liu holds a bachelor’s degree.

– 121 –

FORM OF PRICING SUPPLEMENT OF THE NOTES

The Pricing Supplement that will be issued in respect of each Tranche will be substantially in thefollowing form, duly supplemented (if necessary), amended (if necessary) and completed to reflect theparticular terms of the relevant Notes and their issue:

[EU MiFID II product governance/Professional investors and ECPs only target market – Solelyfor the purposes of [the/each] manufacturer’s product approval process, the target market assessmentin respect of the Notes has led to the conclusion that: (i) the target market for the Notes is eligiblecounterparties and professional clients only, each as defined in [Directive 2014/65/EU (as amended,“MiFID II”)] [MiFID II]; and (ii) all channels for distribution of the Notes to eligible counterpartiesand professional clients are appropriate. [Consider any negative target market] Any personsubsequently offering, selling or recommending the Notes (a “distributor”) should take intoconsideration the manufacturer[’s/s’] target market assessment; however, a distributor subject toMiFID II is responsible for undertaking its own target market assessment in respect of the Notes (byeither adopting or refining the manufacturer[’s/s’] target market assessment) and determiningappropriate distribution channels.]

[UK MiFIR product governance/Professional investors and ECPs only target market – Solelyfor the purposes of [the/each] manufacturer’s product approval process, the target market assessmentin respect of the Notes has led to the conclusion that: (i) the target market for the Notes is onlyeligible counterparties, as defined in the FCA Handbook Conduct of Business Sourcebook (“COBS”),and professional clients, as defined in the Regulation (EU) No 600/2014 (as amended, “UK MiFIR”);and (ii) all channels for distribution of the Notes to eligible counterparties and professional clientsare appropriate. [Consider any negative target market] Any [person subsequently offering, selling orrecommending the Perpetual Capital Securities (a “distributor”)]/[distributor] should take intoconsideration the manufacturer[’s/s’] target market assessment; however, a distributor subject to theFCA Handbook Product Intervention and Product Governance Sourcebook (the “UK MiFIR ProductGovernance Rules”) is responsible for undertaking its own target market assessment in respect of theNotes (by either adopting or refining the manufacturer[’s/s’] target market assessment) anddetermining appropriate distribution channels.]

[PRIIPs REGULATION – PROHIBITION OF SALES TO EEA RETAIL INVESTORS – TheNotes are not intended to be offered, sold or otherwise made available to and should not be offered,sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). Forthese purposes, a retail investor means a person who is one (or more) of: (i) a retail client as definedin point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID II”); (ii) a customerwithin the meaning of Directive (EU) 2016/97 (the “Insurance Distribution Directive”), where thatcustomer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFIDII; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (the “ProspectusRegulation”). Consequently no key information document required by Regulation (EU) No1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Notes or otherwisemaking them available to retail investors in the EEA has been prepared and therefore offering orselling the Notes or otherwise making them available to any retail investor in the EEA may beunlawful under the PRIIPs Regulation.]

[PRIIPs REGULATION – PROHIBITION OF SALES TO UK RETAIL INVESTORS – TheNotes are not intended to be offered, sold or otherwise made available to and should not be offered,sold or otherwise made available to any retail investor in the United Kingdom (“UK”). For thesepurposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined inpoint (8) of Article 2 Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of theEuropean Union (Withdrawal) Act 2018 (“EUWA”); (ii) a customer within the meaning of theprovisions of the FSMA and any rules or regulations made under the FSMA to implement Directive

– 122 –

(EU) 2016/97, where that customer would not qualify as a professional client, as defined in point (8)of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of theEUWA; or (iii) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129 as itforms part of domestic law by virtue of the EUWA. Consequently no key information documentrequired by Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of the EUWA(the “UK PRIIPs Regulation”) for offering or selling the Notes or otherwise making them availableto retail investors in the UK has been prepared and therefore offering or selling the Notes or otherwisemaking them available to any retail investor in the UK may be unlawful under the UK PRIIPsRegulation.]

[Singapore SFA Product Classification: In connection with Section 309B of the Securities and FuturesAct (Chapter 289) of Singapore (the “SFA”) and the Securities and Futures (Capital MarketsProducts) Regulations 2018 of Singapore (the “CMP Regulations 2018”), the Issuer has determined,and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA), that the Notes [areprescribed capital markets products]/[capital markets products other than prescribed capital marketsproducts] (as defined in the CMP Regulations 2018) and [are] [Excluded]/[Specified] InvestmentProducts (as defined in the MAS Notice SFA 04-N12: Notice on the Sale of Investment Products andMAS Notice FAA-N16: Notice on Recommendation on Investment Products).]1

[This document is for distribution to professional investors (as defined in Chapter 37 of the RulesGoverning the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong KongStock Exchange”) (“Professional Investors”) only.

Notice to Hong Kong investors: The Issuer and the Guarantor confirm that the Notes are intendedfor purchase by Professional Investors only and will be listed on the Hong Kong Stock Exchange onthat basis. Accordingly, the Issuer and the Guarantor confirm that the Notes are not appropriate as aninvestment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

The Hong Kong Stock Exchange has not reviewed the contents of this document, other than toensure that the prescribed form disclaimer and responsibility statements, and a statementlimiting distribution of this document to Professional Investors only have been reproduced inthis document. Listing of the Programme and the Notes on the Hong Kong Stock Exchange isnot to be taken as an indication of the commercial merits or credit quality of the Programme,the Notes or the Issuer or the Guarantor or the Group or quality of disclosure in this document.Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take noresponsibility for the contents of this document, make no representation as to its accuracy orcompleteness and expressly disclaim any liability whatsoever for any loss howsoever arising from orin reliance upon the whole or any part of the contents of this document.

This document, together with the Offering Circular (as defined below), includes particulars given incompliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong KongLimited for the purpose of giving information with regard to the Issuer, the Guarantor and the Group.The Issuer and the Guarantor accept full responsibility for the accuracy of the information containedin this document and each confirms, having made all reasonable enquiries, that to the best of itsknowledge and belief there are no other facts the omission of which would make any statement hereinmisleading.]

WARNING: The contents of this Pricing Supplement have not been reviewed by any regulatoryauthority of any jurisdiction. You are advised to exercise caution in relation to the offering of theNotes. If you are in any doubt about any of the contents of this Pricing Supplement, you should obtainindependent professional advice.

1 For any Notes to be offered to Singapore investors, the Issuer to consider whether it needs to re-classify the Notespursuant to Section 309B of the SFA prior to the launch of the offer.

– 123 –

[Date]

SOAR WISE LIMITED

Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes] due [●]

Guaranteed by AVIC International Leasing Co., Ltd.

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

Guaranteed Medium Term Note and Perpetual Capital Securities Programme

This document constitutes the Pricing Supplement relating to the issue of Notes described herein.

Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions

of the Notes (the “Conditions”) set forth in the Offering Circular dated [●] 2021 (the “Offering

Circular”) [and the Supplemental Offering Circular dated [●]]. This Pricing Supplement contains the

final terms of the Notes and must be read in conjunction with such Offering Circular [as so

supplemented]. Full information on the Issuer, the Guarantor and the offer of the Notes is only

available on the basis of the combination of this Pricing Supplement, the Offering Circular [and the

Supplemental Offering Circular dated [●]].

[N.B. If [the Issuer or] the Guarantor has prepared any unaudited, but reviewed, condensed

consolidated financial statements dated as at a date, or for a period ending, subsequent to the

financial statements appearing in the latest Offering Circular, ensure that such financial

statements are provided to potential investors of the relevant series of Notes as soon as practicable

upon announcement of the deal.]

[The following alternative language applies if the first tranche of an issue which is being increased

was issued under an Offering Circular with an earlier date.

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth

in the Offering Circular dated [●] 2021. This Pricing Supplement contains the final terms of the Notes

and must be read in conjunction with the Offering Circular dated [●] 2021 [and the Supplemental

Offering Circular dated [●]], save in respect of the Conditions which are extracted from the Offering

Circular dated [original date] and are attached hereto.] Full information on the Issuer, the Guarantor

and the offer of the Notes is only available on the basis of the combination of this Pricing

Supplement, the Offering Circular [and the Supplemental Offering Circular dated [●]].

[Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the

numbering should remain as set out below, even if “Not Applicable” is indicated for individual

paragraphs or sub-paragraphs. Italics denote directions for completing the Pricing Supplement.]

[If the Notes have a maturity of less than one year from the date of their issue, the minimum

denomination may need to be £100,000 or its equivalent in any other currency.]

– 124 –

1 (i) Issuer: Soar Wise Limited

(ii) Guarantor: AVIC International Leasing Co., Ltd.

2 (i) Series Number: [●]

(ii) Tranche Number: [●]

(iii) Date on which the Notes become

fungible:

[The Notes will be consolidated and form a single

Series with [identify earlier Tranches] on [the Issue

Date/the date that is 40 days after the Issue

Date/exchange of the Temporary Global Instrument

for interests in the Permanent Global Instrument, as

referred to in paragraph [●] below, which is expected

to occur on or about [date]][Not Applicable] (if

fungible with an existing Series, details of that

Series, including the date on which the Notes become

fungible)

3 Specified Currency or Currencies: [●]

4 Aggregate Nominal Amount:

(i) Series: [●]

(ii) Tranche: [●]

5 (i) Issue Price: [●] per cent. of the Aggregate Nominal Amount [plus

accrued interest from [insert date] (in the case of

fungible issues only, if applicable)]

[(ii) Net proceeds: [[●] (required only for listed issues)]]

6 (i) Specified Denominations:2, 3 [●]

(ii) Calculation Amount: [●]

7 (i) Issue Date: [●]

(ii) Interest Commencement Date: [specify/Issue Date/Not Applicable]

2 Notes (including Notes denominated in sterling) in respect of which the issue proceeds are to be accepted by the Issuerin the United Kingdom or whose issue otherwise constitutes a contravention of section 19 of the FSMA and which havea maturity of less than one year and must have a minimum redemption value of £100,000 (or its equivalent in othercurrencies).

3 If the specified denomination is expressed to be C100,000 or its equivalent and multiples of a lower principal amount(for example C1,000), insert the additional wording as follows: C100,000 and integral multiples of C1,000 in excessthereof up to and including C199,000. No notes in definitive form will be issued with a denomination above C199,000.In relation to any issue of Notes which are a “Global Instrument exchangeable to Definitive Notes” in circumstancesother than in the limited circumstances specified in the Global Instrument, such Instruments may only be issued indenominations equal to, or greater than, C100,000 (or equivalent) and multiples thereof.

– 125 –

8 Maturity Date: [Fixed rate – specify date/Floating rate – InterestPayment Date falling in or nearest to [specifymonth]]4

9 Interest Basis: [[●] per cent. Fixed Rate][[LIBOR/EURIBOR/HIBOR/CNH HIBOR] +/- [●]per cent. Floating Rate][Zero Coupon][Index Linked Interest][Dual Currency Interest][specify other](further particulars specified below)

10 Redemption/Payment Basis: [Redemption at par][Index Linked Redemption][Dual Currency Redemption][Partly Paid][Instalment][specify other]

11 Change of Interest Basis orRedemption/Payment Basis:

[Specify details of any provision for change of Notesinto another Interest Basis or Redemption/PaymentBasis] [Not Applicable]

12 Put/Call Options: [Investor Put]5

[Issuer Call]

[Change of Control Put Option]

[No Registration Put Option]

[(further particulars specified below)]

13 Date of [Board] approval for issuanceof Notes and Guarantee obtained:

[●] [and [●], respectively]

(N.B. Only relevant where Board (or similar)authorisation is required for the particular trancheof Notes or related Guarantee)

14 Listing: [The Stock Exchange of Hong Kong Limited/specifyother/None] (For Notes to be listed on the HongKong Stock Exchange, insert the expected effectivelisting date of the Notes)

15 Method of distribution: [Syndicated/Non-syndicated]

4 Note that for Renminbi and Hong Kong dollar denominated Fixed Rate Notes where the Interest Payment Dates aresubject to modification it will be necessary to use the second option here.

5 For as long as Bearer Notes issued in accordance with TEFRA D are represented by a Temporary Global Instrument,an Investor Put shall not be available unless the certification required under TEFRA D with respect to non-U.S.beneficial ownership has been received by the Issuer or the Agent.

– 126 –

Provisions Relating to Interest (if any) Payable

16 Fixed Rate Note Provisions [Applicable/Not Applicable]

(If not applicable, delete the remainingsubparagraphs of this paragraph)

(i) Rate[(s)] of Interest: [●] per cent. per annum [payable [annually/semi-annually/quarterly/other (specify)] in arrear]

(If payable other than annually, consider amendingCondition 5)

(ii) Interest Payment Date(s): [[●] in each year [adjusted in accordance with[specify Business Day Convention and anyapplicable Business Centre(s) for the definition of“Business Day”]/not adjusted]

(N.B.: This will need to be amended in the case oflong or short coupons)

(iii) Fixed Coupon Amount(s):(Applicable to Notes in definitiveform)

[●] per Calculation Amount6

(iv) Broken Amount(s):(Applicable to Notes in definitiveform)

[●] per Calculation Amount, payable on the InterestPayment Date falling [in/on] [●]

(v) Day Count Fraction: [30/360 or Actual/Actual (ICMA/ISDA) orActual/365 (Fixed)7 or [specify other]]

(vi) Determination Date(s): [●] in each year

[Insert regular interest payment dates, ignoring issuedate or maturity date in the case of a long or shortfirst or last coupon]

(N.B.: This will need to be amended in the case ofregular interest payment dates which are not of equalduration)

(N.B.: Only relevant where Day Count Fraction isActual/Actual (ICMA))

6 For Renminbi or Hong Kong dollar denominated Fixed Rate Notes where the Interest Payment Dates are subject tomodification the following alternative wording is appropriate: “Each Fixed Coupon Amount shall be calculated bymultiplying the product of the Rate of Interest and the Calculation Amount by the Day Count Fraction and roundingthe resultant figure to the nearest CNY0.01, CNY0.005 being rounded upwards in the case of Renminbi denominatedFixed Rate Notes and to the nearest HK$0.01, HK$0.005 for the case of Hong Kong dollar denominated Fixed RateNotes, being rounded upwards.”

7 Applicable to Hong Kong dollar denominated Fixed Rate Notes and Renminbi denominated Fixed Rate Notes.

– 127 –

(vii) Other terms relating to themethod of calculating interest forFixed Rate Notes:

[None/Give details]

17 Floating Rate Note Provisions [Applicable/Not Applicable]

(If not applicable, delete the remaining sub-paragraphs of this paragraph)

(i) Interest Period(s): [●] [[, subject to adjustment in accordance with theBusiness Day Convention set out in (v) below/, notsubject to any adjustment [, as the Business DayConvention in (v) below is specified to be NotApplicable]

(ii) Specified Period(s)/SpecifiedInterest Payment Dates:

[[●] in each year[, subject to adjustment inaccordance with the Business Day Convention setout in (v) below/, not subject to any adjustment[, asthe Business Day Convention in (v) below isspecified to be Not Applicable]]]

(iii) Interest Period Date: [Not Applicable]/[●] [in each year[, subject toadjustment in accordance with the Business DayConvention set out in (v) below/, not subject to anyadjustment[, as the Business Day Convention in (v)below is specified to be Not Applicable]]

(iv) First Interest Payment Date: [●]

(v) Business Day Convention [Floating Rate Convention/Following Business DayConvention/Modified Following Business DayConvention/Preceding Business DayConvention/other (give details)][Not Applicable]

(vi) Additional Business Centre(s): [●]

(vii) Manner in which the Rate ofInterest and Interest Amount is tobe determined:

[Screen Rate Determination/ISDA Determination/other (give details)]

(viii) Party responsible for calculatingthe Rate of Interest and InterestAmount (if not the PrincipalPaying Agent):

[●]

(ix) Screen Rate Determination:

(a) Reference Bank: [●]

– 128 –

(b) Reference Rate: [●]

(Either LIBOR, EURIBOR, HIBOR or other,although additional information is required if other –including fallback provisions in the AgencyAgreement)

(c) Interest DeterminationDate(s):

[●]

(Second London business day prior to the start ofeach Interest Period if LIBOR (other than Sterling,Hong Kong dollar or euro LIBOR), first day of eachInterest Period if Sterling LIBOR or Hong Kongdollar LIBOR or HIBOR and the second day onwhich the TARGET2 System is open prior to the startof each Interest Period if EURIBOR or euro LIBOR)

(d) Relevant Screen Page: [●]

(In the case of EURIBOR, if not Reuters EURIBOR01ensure it is a page which shows a composite rate oramend the fallback provisions appropriately)

(x) ISDA Determination:

(a) Floating Rate Option: [●]

(b) Designated Maturity: [●]

(c) Reset Date: [●]

(xi) Margin(s) [+/-][●] per cent. per annum

(xii) Minimum Rate of Interest: [●] per cent. per annum

(xiii) Maximum Rate of Interest: [●] per cent. per annum

(xiv) Day Count Fraction: [Actual/Actual or Actual/Actual (ISDA)Actual/365(Fixed)Actual/365(Sterling)Actual/36030/360, 360/360 or Bond Basis30E/360 or Eurobond Basis30E/360 (ISDA)Other](See Condition 5 for alternatives)

(xv) Benchmark discontinuation andfallback provisions

(a) Benchmark Discontinuation(Condition 5(j)):

[Applicable/Not Applicable]

– 129 –

(b) Fallback provisions,

rounding provisions,

denominator and any other

terms relating to the method

of calculating interest on

Floating Rate Notes, if

different from those set out

in the Conditions:

[●]

18 Zero Coupon Note Provisions: [Applicable/Not Applicable]

(If not applicable, delete the remaining sub-

paragraphs of this paragraph)

(i) Amortisation Yield: [●] per cent. per annum

(ii) Reference Price: [●]

(iii) Any other formula/basis of

determining amount payable:

[●]

(iv) Day Count Fraction in relation to

Early Redemption Amounts and

late payment:

[Condition 7.6(c) and Condition 7.11 apply/specify

other]

(Consider applicable day count fraction if not U.S.

dollar denominated)

19 Index Linked Interest Note Provisions [Applicable/Not Applicable]

(If not applicable, delete the remaining sub-

paragraphs of this paragraph)

(i) Index/Formula: [give or annex details]

(ii) Calculation Agent: [●]

(iii) Party responsible for calculating

the Rate of Interest (if not the

Calculation Agent) and Interest

Amount (if not the Principal

Paying Agent):

[●]

(iv) Provisions for determining

Coupon where calculation by

reference to Index and/or

Formula is impossible or

impracticable:

[need to include a description of market disruption

or settlement disruption events and adjustment

provisions]

(v) Specified Period(s)/Specified

Interest Payment Dates:

[●]

– 130 –

(vi) Business Day Convention: [Floating Rate Convention/Following Business Day

Convention/Modified Following Business Day

Convention/Preceding Business Day

Convention/specify other]

(vii) Additional Business Centre(s): [●]

(viii) Minimum Rate of Interest: [●] per cent. per annum

(ix) Maximum Rate of Interest: [●] per cent. per annum

(x) Day Count Fraction: [●]

20 Dual Currency Interest Note

Provisions

[Applicable/Not Applicable]

(If not applicable, delete the remaining sub-

paragraphs of this paragraph)

(i) Rate of Exchange/method of

calculating Rate of Exchange:

[give or annex details]

(ii) Party, if any, responsible for

calculating the principal and/or

interest due (if not the Principal

Paying Agent):

[●]

(iii) Provisions applicable where

calculation by reference to Rate

of Exchange impossible or

impracticable:

[need to include a description of market disruption

or settlement disruption events and adjustment

provisions]

(iv) Person at whose option Specified

Currency(ies) is/are payable:

[●]

Provisions Relating to Redemption

21 Issuer Call: [Applicable/Not Applicable]

(If applicable, specify/include details. If not

applicable, delete the remaining sub-paragraphs of

this paragraph)

(i) Optional Redemption Date(s): [●]

(ii) Optional Redemption Amount

and method, if any, of calculation

of such amount(s):

[[●] per Calculation Amount/specify other/see

Appendix]

(iii) If redeemable in part: [●]

(a) Minimum Redemption

Amount:

[●]

– 131 –

(b) Maximum RedemptionAmount:

[●]

(iv) Notice period (if other than asset out in the Conditions):

(N.B. If setting notice periods which are different tothose provided in the Conditions, the Issuer isadvised to consider the practicalities of distributionof information through intermediaries, for example,clearing systems and custodians, as well as any othernotice requirements which may apply, for example,as between the Issuer and the Principal Paying Agentor the Trustee)

22 Investor Put: [Applicable/Not Applicable]

(If applicable, specify/include details. If notapplicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Optional Redemption Date(s): [●]

(ii) Optional Redemption Amountand method, if any, of calculationof such amount(s):

[[●] per Calculation Amount/specify other/seeAppendix]

(iii) Notice period (if other than asset out in the Conditions):

[●](N.B. If setting notice periods which are different tothose provided in the Conditions, the Issuer isadvised to consider the practicalities of distributionof information through intermediaries, for example,clearing systems and custodians, as well as any othernotice requirements which may apply, for example,as between the Issuer and the Principal Paying Agentor the Trustee)

23 Change of Control Put: [Applicable/Not Applicable]

24 No Registration Put [Applicable/Not Applicable]

(If applicable, specify/include details. If notapplicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Registration Deadline [●]

(ii) Registration Document [●]

(Please see Condition 6(e) for further details)

25 Final Redemption Amount: [[●] per Calculation Amount/specify other/seeAppendix]]

26 Early Redemption Amount payable onredemption for taxation reasons or onevent of default and/or the method ofcalculating the same:

[[●] per Calculation Amount/specify other/seeAppendix]]

– 132 –

General Provisions Applicable to the Notes

27 Form of Notes: [Bearer Notes:

[Temporary Global Instrument exchangeable for aPermanent Global Instrument which is exchangeablefor Definitive Notes in the limited circumstancesspecified in the Permanent Global Instrument]

[Temporary Global Instrument exchangeable forDefinitive Notes on [●] days’ notice8]

[Permanent Global Instrument exchangeable forDefinitive Notes in the limited circumstancesspecified in the Permanent Global Instrument]

[Registered Notes:

Global Certificate exchangeable for Individual NoteCertificates in the limited circumstances described inthe Global Certificate]

28 Additional Financial Centre(s) or otherspecial provisions relating to PaymentDates:

[Not Applicable/give details]

(Note that this paragraph relates to the place ofpayment and not Interest Period end dates to whichsub-paragraphs 17(iii) and 19(vii) relate)

29 Talons for future Coupons or Receiptsto be attached to Definitive BearerNotes (and dates on which suchTalons mature):

[Yes/No/If yes, give details]

30 Details relating to Partly Paid Notes:amount of each payment comprisingthe Issue Price and date on whicheach payment is to be made andconsequences of failure to pay,including any right of the Issuer toforfeit the Notes and interest due onlate payment:

[Not Applicable/give details. N.B.: a new form ofTemporary Global Instrument and/or PermanentGlobal Instrument may be required for Partly Paidissues]

31 Details relating to Instalment Notes:

(i) Instalment Amount(s): [Not Applicable/give details]

(ii) Instalment Date(s): [Not Applicable/give details]

8 If the Specified Denominations of the Notes in paragraph 6 includes language substantially to the following effect:“C100,000 and integral multiples of C1,000 in excess thereof up to and including C199,000”, the Temporary GlobalInstrument shall not be exchangeable on [●] days’ notice.

– 133 –

32 Redenomination applicable: Redenomination [not] applicable

[(If Redenomination is applicable, specify the

applicable Day Count Fraction and any provisions

necessary to deal with floating rate interest

calculation (including alternative reference rates)]

33 Consolidation provisions: [Not Applicable/The provisions] [annexed to this

Pricing Supplement] apply]

34 Notification to PRC Authorities [specify the NDRC Circular/the Cross-border

Security Registration requirements]

(Please see Condition 4(d) and Condition 4(e) for

further details)

35 Other terms or special conditions: [Not Applicable/give details]

Distribution

36 (i) If syndicated, names and

addresses of Managers/relevant

Dealer and commitments:

[Not Applicable/give names and addresses and

commitments]

(ii) Date of Subscription

Agreement:

[●]

(iii) Stabilisation Manager(s) (if

any):

[Not Applicable/give name]

37 If non-syndicated, name of relevant

Dealer:

[Not Applicable/give name and address]

38 Total commission and concession: [●] per cent. of the Aggregate Nominal Amount

39 U.S. Selling Restrictions: [Reg. S Category 2; TEFRA D/TEFRA C/TEFRA not

applicable9]

40 Additional selling restrictions: [Not Applicable/give details]

41 Prohibition of Sales to EEA Retail

Investors:

[Applicable/Not Applicable]10

9 “TEFRA not applicable” is only available for Bearer Notes with a term of 365 days or less (taking into account anyunilateral extensions and rollovers) or Registered Notes.

10 If the Notes clearly do not constitute “packaged” products, “Not Applicable” should be specified. If the Notes mayconstitute “packaged” products and no key information document will be prepared, “Applicable” should be specified.

– 134 –

42 Prohibition of Sales to UK Retail

Investors:

[Applicable/Not Applicable]11

Operational Information

43 ISIN: [●]

44 Common Code: [●]

45 CMU Instrument Number: [●]

46 Legal Entity Identifier (LEI): 2138001423MK8G3BNM68

47 Any clearing system(s) other than

Euroclear or Clearstream and the

relevant identification number(s):

[CMU/Not Applicable/give name(s) and number(s)]

48 Delivery: Delivery [against/free of] payment

(insert here any other relevant codes)

General

49 Rating[s]: The Notes to be issued have [not] been rated:

[S&P: [●]];

[Moody’s: [●]];

[Fitch: [●]];

[[Other: [●]]

(the above disclosure should reflect the rating

allocated to Notes of the type being issued under the

Programme generally or, where the issue has been

specifically rated, that rating)

50 Governing Law: English Law

11 If the Notes clearly do not constitute “packaged” products, “Not Applicable” should be specified. If the Notes mayconstitute “packaged” products and no key information document will be prepared, “Applicable” should be specified.

– 135 –

[USE OF PROCEEDS

Give details if different from the “Use of Proceeds” section in the Offering Circular.]

[STABILISATION

In connection with this issue, [insert name of Stabilisation Manager] (the “Stabilisation Manager”)(or persons acting on behalf of any Stabilisation Manager) may over-allot Notes or effect transactionswith a view to supporting the market price of the Notes at a level higher than that which mightotherwise prevail for a limited period after the closing date of the relevant Tranche of Notes.However, there is no obligation on such Stabilisation Manager (or persons acting on behalf of anyStabilisation Manager) to do this. Any stabilisation action may begin on or after the date on whichadequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, ifbegun, may cease at any time, but must end no later than the earlier of 30 days after the issue dateof the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Trancheof Notes. Any stabilisation action or over-allotment must be conducted by the relevant StabilisationManager (or persons acting on behalf of any Stabilisation Manager) in accordance with all applicablelaws and rules.]

[LISTING APPLICATION

This Pricing Supplement comprises the final terms required for the issue of Notes described hereinpursuant to the U.S.$3,500,000,000 Guaranteed Medium Term Note and Perpetual Capital SecuritiesProgramme of Soar Wise Limited.]

[MATERIAL ADVERSE CHANGE STATEMENT

[Except as disclosed in this document, there/There]12 has been no significant change in the financialor trading position of the Issuer, the Guarantor or the Group since [insert date of last audited full yearor interim financial statements] and no material adverse change in the financial position or prospectsof the Issuer, the Guarantor or the Group since [insert date of last published audited annual financialstatements].]

RESPONSIBILITY

The Issuer and the Guarantor accept responsibility for the information contained in this PricingSupplement.

Signed on behalf of Soar WiseLimited as the Issuer:

Signed on behalf of AVIC InternationalLeasing Co., Ltd. as the Guarantor:

By: By:Duly authorised Duly authorised

12 If any change is disclosed in the Pricing Supplement, it will require approval by the Stock Exchange(s). Considerationshould be given as to whether or not such disclosure should be made by means of a supplemental Offering Circularrather than in a Pricing Supplement.

– 136 –

FORM OF PRICING SUPPLEMENT OFTHE PERPETUAL CAPITAL SECURITIES

The Pricing Supplement that will be issued in respect of each Tranche will be substantially in the

following form, duly supplemented (if necessary), amended (if necessary) and completed to reflect the

particular terms of the relevant Perpetual Capital Securities and their issue:

[EU MiFID II product governance/Professional investors and ECPs only target market – Solely

for the purposes of [the/each] manufacturer’s product approval process, the target market assessment

in respect of the Perpetual Capital Securities has led to the conclusion that: (i) the target market for

the Perpetual Capital Securities is eligible counterparties and professional clients only, each as

defined in [Directive 2014/65/EU (as amended, “MiFID II”)] [MiFID II]; and (ii) all channels for

distribution of the Perpetual Capital Securities to eligible counterparties and professional clients are

appropriate. [Consider any negative target market] Any person subsequently offering, selling or

recommending the Perpetual Capital Securities (a “distributor”) should take into consideration the

manufacturer[’s/s’] target market assessment; however, a distributor subject to MiFID II is

responsible for undertaking its own target market assessment in respect of the Perpetual Capital

Securities (by either adopting or refining the manufacturer[’s/s’] target market assessment) and

determining appropriate distribution channels.]

[UK MiFIR product governance/Professional investors and ECPs only target market – Solely

for the purposes of [the/each] manufacturer’s product approval process, the target market assessment

in respect of the Perpetual Capital Securities has led to the conclusion that: (i) the target market for

the Perpetual Capital Securities is only eligible counterparties, as defined in the FCA Handbook

Conduct of Business Sourcebook (“COBS”), and professional clients, as defined in the Regulation

(EU) No 600/2014 (as amended, “UK MiFIR”); and (ii) all channels for distribution of the Perpetual

Capital Securities to eligible counterparties and professional clients are appropriate. [Consider any

negative target market] Any [person subsequently offering, selling or recommending the Perpetual

Capital Securities (a “distributor”)]/[distributor] should take into consideration the

manufacturer[’s/s’] target market assessment; however, a distributor subject to the FCA Handbook

Product Intervention and Product Governance Sourcebook (the “UK MiFIR Product GovernanceRules”) is responsible for undertaking its own target market assessment in respect of the Perpetual

Capital Securities (by either adopting or refining the manufacturer[’s/s’] target market assessment)

and determining appropriate distribution channels.]

[PRIIPs REGULATION – PROHIBITION OF SALES TO EEA RETAIL INVESTORS – The

Perpetual Capital Securities are not intended to be offered, sold or otherwise made available to and

should not be offered, sold or otherwise made available to any retail investor in the European

Economic Area (“EEA”). For these purposes, a retail investor means a person who is one (or more)

of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended,

“MiFID II”); (ii) a customer within the meaning of Directive (EU) 2016/97 (the “InsuranceDistribution Directive”), where that customer would not qualify as a professional client as defined

in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU)

2017/1129 (the “Prospectus Regulation”). Consequently no key information document required by

Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the

Perpetual Capital Securities or otherwise making them available to retail investors in the EEA has

been prepared and therefore offering or selling the Perpetual Capital Securities or otherwise making

them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.]

– 137 –

[PRIIPs REGULATION – PROHIBITION OF SALES TO UK RETAIL INVESTORS – The

Perpetual Capital Securities are not intended to be offered, sold or otherwise made available to and

should not be offered, sold or otherwise made available to any retail investor in the United Kingdom

(“UK”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client

as defined in point (8) of Article 2 Regulation (EU) No 2017/565 as it forms part of domestic law

by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”); (ii) a customer within the

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

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

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

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

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

document required by Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of

the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Perpetual Capital Securities or

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

offering or selling the Perpetual Capital Securities or otherwise making them available to any retail

investor in the UK may be unlawful under the UK PRIIPs Regulation.]

[Singapore SFA Product Classification: In connection with Section 309B of the Securities and Futures

Act (Chapter 289) of Singapore (the “SFA”) and the Securities and Futures (Capital Markets

Products) Regulations 2018 of Singapore (the “CMP Regulations 2018”), the Issuer has determined,

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

Capital Securities [are prescribed capital markets products]/[capital markets products other than

prescribed capital markets products] (as defined in the CMP Regulations 2018) and [are]

[Excluded]/[Specified] Investment Products (as defined in the MAS Notice SFA 04-N12: Notice on the

Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendation on Investment

Products).]1

For any Perpetual Capital Securities to be offered to Singapore investors, the Issuer to consider

whether it needs to re-classify the Perpetual Capital Securities pursuant to Section 309B of the SFA

prior to the launch of the offer.

[This document is for distribution to professional investors (as defined in Chapter 37 of the Rules

Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong KongStock Exchange”) (“Professional Investors”) only.

Notice to Hong Kong investors: The Issuer and the Guarantor confirm that the Perpetual Capital

Securities are intended for purchase by Professional Investors only and will be listed on the Hong

Kong Stock Exchange on that basis. Accordingly, the Issuer and the Guarantor confirm that the

Perpetual Capital Securities are not appropriate as an investment for retail investors in Hong Kong.

Investors should carefully consider the risks involved.

The Hong Kong Stock Exchange has not reviewed the contents of this document, other than toensure that the prescribed form disclaimer and responsibility statements, and a statementlimiting distribution of this document to Professional Investors only have been reproduced in

1 For any Perpetual Capital Securities to be offered to Singapore investors, the Issuer to consider whether it needs tore-classify the Perpetual Capital Securities pursuant to Section 309B of the SFA prior to the launch of the offer.

– 138 –

this document. Listing of the Programme and the Perpetual Capital Securities on the Hong

Kong Stock Exchange is not to be taken as an indication of the commercial merits or credit

quality of the Programme, the Perpetual Capital Securities or the Issuer or the Guarantor or

the Group or quality of disclosure in this document. Hong Kong Exchanges and Clearing Limited

and the Hong Kong Stock Exchange take no responsibility for the contents of this document, make

no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever

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

document.

This document, together with the Offering Circular (as defined below), includes particulars given in

compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong

Limited for the purpose of giving information with regard to the Issuer, the Guarantor and the Group.

The Issuer and the Guarantor accept full responsibility for the accuracy of the information contained

in this document and each confirms, having made all reasonable enquiries, that to the best of its

knowledge and belief there are no other facts the omission of which would make any statement herein

misleading.]

WARNING: The contents of this Pricing Supplement have not been reviewed by any regulatory

authority of any jurisdiction. You are advised to exercise caution in relation to the offering of the

Perpetual Capital Securities. If you are in any doubt about any of the contents of this Pricing

Supplement, you should obtain independent professional advice.

– 139 –

[Date]

SOAR WISE LIMITED

Issue of [Aggregate Nominal Amount of Tranche] [Title of Perpetual Capital Securities]

Guaranteed by AVIC International Leasing Co., Ltd.

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

Guaranteed Medium Term Note and Perpetual Capital Securities Programme

This document constitutes the Pricing Supplement relating to the issue of Perpetual Capital Securities

described herein.

Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions

of the Perpetual Capital Securities (the “Conditions”) set forth in the Offering Circular dated [●]

2021 (the “Offering Circular”) [and the Supplemental Offering Circular dated [●]]. This Pricing

Supplement contains the final terms of the Perpetual Capital Securities and must be read in

conjunction with such Offering Circular [as so supplemented]. Full information on the Issuer, the

Guarantor and the offer of the Perpetual Capital Securities is only available on the basis of the

combination of this Pricing Supplement, the Offering Circular [and the Supplemental Offering

Circular dated [●]].

[N.B. If [the Issuer or] the Guarantor has prepared any unaudited, but reviewed, condensed

consolidated financial statements dated as at a date, or for a period ending, subsequent to the

financial statements appearing in the latest Offering Circular, ensure that such financial

statements are provided to potential investors of the relevant series of Perpetual Capital Securities

as soon as practicable upon announcement of the deal.]

[The following alternative language applies if the first tranche of an issue which is being increased

was issued under an Offering Circular with an earlier date.

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth

in the Offering Circular dated [●] 2021. This Pricing Supplement contains the final terms of the

Perpetual Capital Securities and must be read in conjunction with the Offering Circular dated [●]

2021 [and the Supplemental Offering Circular dated [●]], save in respect of the Conditions which are

extracted from the Offering Circular dated [original date] and are attached hereto.] Full information

on the Issuer, the Guarantor and the offer of the Perpetual Capital Securities is only available on the

basis of the combination of this Pricing Supplement, the Offering Circular [and the Supplemental

Offering Circular dated [●]].

[Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the

numbering should remain as set out below, even if “Not Applicable” is indicated for individual

paragraphs or sub-paragraphs. Italics denote directions for completing the Pricing Supplement.]

– 140 –

1 (i) Issuer: Soar Wise Limited

(ii) Guarantor: AVIC International Leasing Co., Ltd.

2 (i) Series Number: [●]

(ii) Tranche Number: [●]

(iii) Date on which the Perpetual

Capital Securities become

fungible:

[The Perpetual Capital Securities will be

consolidated and form a single Series with [identify

earlier Tranches] on [the Issue Date/][Not

Applicable] (if fungible with an existing Series,

details of that Series, including the date on which the

Perpetual Capital Securities become fungible)

3 Specified Currency or Currencies: [●]

4 Aggregate Nominal Amount:

(i) Series: [●]

(ii) Tranche: [●]

5 (i) Issue Price: [●] per cent. of the Aggregate Nominal Amount [plus

accrued Distribution from [insert date] (in the case

of fungible issues only, if applicable)]

[(ii) Net proceeds: [[●] (required only for listed issues)]]

6 (i) Specified Denominations:2, 3 [●]

(ii) Calculation Amount: [●]

7 (i) Issue Date: [●]

(ii) Distribution Commencement

Date:

[specify/Issue Date/Not Applicable]

2 Perpetual Capital Securities (including Perpetual Capital Securities denominated in sterling) in respect of which theissue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise constitutes acontravention of section 19 of the FSMA and which have a maturity of less than one year and must have a minimumredemption value of £100,000 (or its equivalent in other currencies).

3 If the specified denomination is expressed to be C100,000 or its equivalent and multiples of a lower principal amount(for example C1,000), insert the additional wording as follows: C100,000 and integral multiples of C1,000 in excessthereof up to and including C199,000. No Perpetual Capital Securities in definitive form will be issued with adenomination above C199,000.

– 141 –

8 Distribution Basis: [[●] per cent. Fixed Rate]

[[LIBOR/EURIBOR/HIBOR/CNH HIBOR] +/- [●]

per cent. Floating Rate] [Index Linked Distribution]

[Dual Currency Distribution]

[specify other]

(further particulars specified below)

Payment of any Distribution is subject to the terms

and conditions specified in Condition 5

9 Change of Distribution Basis or

Redemption/Payment Basis:

[Specify details of any provision for change of

Perpetual Capital Securities into another

Distribution Basis or Redemption/Payment

Basis]/[Not Applicable]

10 Call Options: [Issuer Call] [(further particulars specified below)]

11 Date of [Board] approval for issuance

of Perpetual Capital Securities and

Guarantee obtained:

[●] [and [●], respectively]

(N.B. Only relevant where Board (or similar)

authorisation is required for the particular tranche

of Perpetual Capital Securities or related

Guarantee)

12 Listing: [The Stock Exchange of Hong Kong Limited/specify

other/None] (For Perpetual Capital Securities to be

listed on the Hong Kong Stock Exchange, insert the

expected effective listing date of the Perpetual

Capital Securities)

13 Method of distribution: [Syndicated/Non-syndicated]

Provisions Relating to Distribution (if any) Payable

14 Fixed Rate Perpetual Capital Security

Provisions

[Applicable/Not Applicable]

(If not applicable, delete the remaining

subparagraphs of this paragraph)

(i) Distribution Rate[(s)]: [●] per cent. per annum [payable [annually/semi-

annually/quarterly/monthly/other (specify)] in arrear]

– 142 –

(ii) Distribution Payment Date(s): [●] in each year [adjusted in accordance with [specify

Business Day Convention and any applicable

Business Centre(s) for the definition of “Business

Day”]/not adjusted]

(iii) Fixed Distribution Amount[(s)]: [●] per Calculation Amount prior to [First Reset

Date]

(iv) Broken Amount(s): [Not Applicable]/[[●] per Calculation Amount,

payable on the Distribution Payment Date falling

[in/on] [●]].

(v) Day Count Fraction: [30/360/Actual/Actual/Actual/Actual-ICMA or

Actual/365 (Fixed)4/Actual/365 (Sterling)/Actual/

360/30E/360/30E/360 (ISDA)/other]

(vi) First Reset Date: [●]

(vii) Reset Date: [The First Reset Date and each date falling every [●]

years thereafter]

(viii) Reset Distribution Rate: [The Initial Spread plus the Reference Rate plus the

Step-Up Margin]/[specify other]

(ix) Initial Spread: [●]

(x) Step-Up Margin: [●]

(xi) Reference Rate: [Treasury Rate/give details]

(xii) Reset Period for determining

Comparable Treasury Issue:

[[●]/Not Applicable]

(xiii) Other terms relating to the

method of calculating

Distribution for Fixed Rate

Perpetual Capital Securities:

[Not Applicable/give details]

15 Floating Rate Perpetual Capital

Security Provisions

[Applicable/Not Applicable]

(If not applicable, delete the remaining sub-

paragraphs of this paragraph)

4 Applicable to Hong Kong dollar denominated Fixed Rate Perpetual Capital Securities and Renminbi denominatedFixed Rate Perpetual Capital Securities.

– 143 –

(i) Distribution Period(s): [●][[, subject to adjustment in accordance with theBusiness Day Convention set out in (iv) below/, notsubject to any adjustment[, as the Business DayConvention in (iv) below is specified to be NotApplicable]]

(ii) Specified Distribution PaymentDates:

[[●] in each year[, subject to adjustment inaccordance with the Business Day Convention setout in (iv) below/, not subject to any adjustment[, asthe Business Day Convention in (iv) below isspecified to be Not Applicable]]]

(iii) Distribution Period Date: [Not Applicable]/[●] [in each year[, subject toadjustment in accordance with the Business DayConvention set out in (iv) below/, not subject to anyadjustment[, as the Business Day Convention in (iv)below is specified to be Not Applicable]]

(iv) Business Day Convention: [Floating Rate Business Day Convention/FollowingBusiness Day Convention/Modified FollowingBusiness Day Convention/Preceding Business DayConvention/other (give details)] [Not Applicable]

(v) Business Centre(s): [●]

(vi) Manner in which the DistributionRate[(s)] is/are to be determined:

[Screen Rate Determination/ISDADetermination/other (give details)]

(vii) Party responsible for calculatingthe Distribution Rate[(s)] and/orDistribution Amount(s) (if notthe Calculation Agent):

[●]

(viii) Screen Rate Determination:

(a) Reference Rate: [●]

(b) Distribution DeterminationDate(s):

[●]

(c) Relevant Screen Page: [●]

(ix) ISDA Determination:

(a) Floating Rate Option: [●]

(b) Designated Maturity: [●]

(c) Reset Date: [●]

– 144 –

(x) [Linear Interpolation: Not Applicable/Applicable – the Distribution Rate

for the [long/short] [first/last] Distribution Period

shall be calculated using Linear Interpolation

(specify for each short or long Distribution period)]

(xi) Margin(s): [+/-][●] per cent. per annum

(xii) Minimum Distribution Rate: [●] per cent. per annum

(xiii) Maximum Distribution Rate: [●] per cent. per annum

(xiv) [Day Count Fraction in relation

to Early Redemption Amounts:

[30/360] [Actual/360] [Actual/365] [specify other]]

(xv) Benchmark discontinuation and

fallback provisions

– Benchmark Discontinuation

(Condition 5(i)):

[Applicable/Not Applicable]

– Fall back provisions,

rounding provisions,

denominator and any other

terms relating to the method

of calculating Distribution

on Floating Rate Perpetual

Capital Securities, if

different from those set out

in the Conditions:

[●]

16 Index Linked Distribution Perpetual

Capital Security Provisions

[Applicable/Not Applicable]

(If not applicable, delete the remaining sub-

paragraphs of this paragraph)

(i) Index/Formula: [give or annex details]

(ii) Calculation Agent: [●]

(iii) Party responsible for calculating

the Distribution Rate (if not the

Calculation Agent) and

Distribution Amount (if not the

Principal Paying Agent):

[●]

– 145 –

(iv) Provisions for determiningCoupon where calculation byreference to Index and/orFormula is impossible orimpracticable:

[need to include a description of market disruption

or settlement disruption events and adjustment

provisions]

(v) Specified Period(s)/SpecifiedDistribution Payment Dates:

[●]

(vi) Business Day Convention: [Floating Rate Convention/Following Business DayConvention/Modified Following Business DayConvention/Preceding Business DayConvention/specify other]

(vii) Additional Business Centre(s): [●]

(viii) Minimum Distribution Rate: [●] per cent. per annum

(ix) Maximum Distribution Rate: [●] per cent. per annum

(x) Day Count Fraction: [●]

17 Dual Currency Distribution PerpetualCapital Security Provisions

[Applicable/Not Applicable]

(If not applicable, delete the remaining sub-

paragraphs of this paragraph)

(i) Rate of Exchange/method ofcalculating Rate of Exchange:

[give or annex details]

(ii) Party, if any, responsible forcalculating the principal and/orDistribution due (if not thePrincipal Paying Agent):

[●]

(iii) Provisions applicable wherecalculation by reference to Rateof Exchange impossible orimpracticable:

[need to include a description of market disruption

or settlement disruption events and adjustment

provisions]

(iv) Person at whose option SpecifiedCurrency(ies) is/are payable:

[●]

18 Other provisions relating toDistribution

(i) Distribution Deferral: (Condition5(k))

[Applicable/Not Applicable]

– 146 –

(ii) Dividend Stopper: (Condition5(k)(v))

[Applicable/Not Applicable]

(iii) Dividend Pusher and ReferencePeriod: (Conditions 5(k)(i), (vi))

[Applicable, [insert Reference Period]/NotApplicable]

Provisions Relating to Redemption

19 Issuer Call: [Applicable/Not Applicable]

(If applicable, specify/include details. If notapplicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Optional Redemption Date(s): [First Reset Date or on any Distribution PaymentDate after the First Reset Date]/[●]

(ii) Optional Redemption Amountand method, if any, of calculationof such amount(s):

[[●] per Calculation Amount/specify other/seeAppendix]

(iii) Notice period (if other than asset out in the Conditions):

[as set out in the Conditions]/[●]

(N.B. If setting notice periods which are different tothose provided in the Conditions, the Issuer isadvised to consider the practicalities of distributionof information through intermediaries, for example,clearing systems and custodians, as well as any othernotice requirements which may apply, for example,as between the Issuer and the Principal Paying Agentor the Trustee)

General Provisions Applicable to the Perpetual Capital Securities

20 Form of Perpetual Capital Securities: [Bearer Perpetual Capital Securities:

[Temporary Global Instrument exchangeable for aPermanent Global Instrument which is exchangeablefor Definitive Instrument in the limitedcircumstances specified in the Permanent GlobalInstrument]

[Temporary Global Instrument exchangeable forDefinitive Instruments on [●] days’ notice5]

5 If the Specified Denominations of the Perpetual Capital Securities in paragraph 6 includes language substantially tothe following effect: “C100,000 and integral multiples of C1,000 in excess thereof up to and including C199,000”,the Temporary Global Instrument shall not be exchangeable on [●] days’ notice.

– 147 –

[Permanent Global Instrument exchangeable forDefinitive Instruments in the limited circumstancesspecified in the Permanent Global Instrument]

Registered Perpetual Capital Securities:

Global Certificate

21 Additional Financial Centre(s) or otherspecial provisions relating to PaymentDates:

[Not Applicable/give details]

(Note that this paragraph relates to the place ofpayment and not Distribution Period end dates towhich sub-paragraphs 17(iii) and 19(vii) relate)

22 Talons for future Coupons or Receiptsto be attached to Definitive BearerPerpetual Capital Securities (and dateson which such Talons mature):

[Yes/No/If yes, give details]

23 Details relating to Partly PaidPerpetual Capital Securities: amountof each payment comprising the IssuePrice and date on which each paymentis to be made [and consequences (ifany) of failure to pay, including anyright of the Issuer to forfeit thePerpetual Capital Securities andDistribution due on late payment]:

[Not Applicable/give details. N.B.: a new form ofTemporary Global Instrument and/or PermanentGlobal Instrument may be required for Partly Paidissues]

24 Redenomination applicable: Redenomination [not] applicable

[(If Redenomination is applicable, specify theapplicable Day Count Fraction and any provisionsnecessary to deal with floating rate Distributioncalculation (including alternative reference rates)]

25 Consolidation provisions: [Not Applicable/The provisions] [annexed to thisPricing Supplement] apply]

26 Notification to PRC Authorities [specify the NDRC Circular/the Cross-borderSecurity Registration requirements]

(Please see Condition 4(d) and Condition 4(e) forfurther details)

27 Other terms or special conditions: [Not Applicable/give details]

– 148 –

Distribution

28 (i) If syndicated, names andaddresses of Managers/relevantDealer and commitments:

[Not Applicable/give names and addresses andcommitments]

(ii) Date of Subscription Agreement: [●]

(iii) Stabilisation Manager(s) (if any): [Not Applicable/give name]

29 If non-syndicated, name of relevantDealer:

[Not Applicable/give name and address]

30 Total commission and concession: [●] per cent. of the Aggregate Nominal Amount

31 U.S. Selling Restrictions: [Reg. S Category 2; TEFRA D/TEFRA C/TEFRA notapplicable6

32 Additional selling restrictions: [Not Applicable/give details]

33 Prohibition of Sales to EEA RetailInvestors:

[Applicable/Not Applicable]7

34 Prohibition of Sales to UK RetailInvestors:

[Applicable/Not Applicable]8

Operational Information

35 ISIN: [●]

36 Common Code: [●]

37 CMU Instrument Number: [●]

38 Legal Entity Identifier (LEI): 2138001423MK8G3BNM68

39 Any clearing system(s) other thanEuroclear or Clearstream and therelevant identification number(s):

[CMU/Not Applicable/give name(s) and number(s)]

6 “TEFRA not applicable” is only available for Bearer Perpetual Capital Securities with a with a term of 365 days orless (taking into account any unilateral extensions and rollovers) or Registered Perpetual Capital Securities.

7 If the Perpetual Capital Securities clearly do not constitute “packaged” products, “Not Applicable” should be specified.If the Perpetual Capital Securities may constitute “packaged” products and no key information document will beprepared, “Applicable” should be specified.

8 If the Perpetual Capital Securities clearly do not constitute “packaged” products, “Not Applicable” should be specified.If the Perpetual Capital Securities may constitute “packaged” products and no key information document will beprepared, “Applicable” should be specified.

– 149 –

40 Delivery: Delivery [against/free of] payment

(insert here any other relevant codes)

General

41 Rating[s]: The Perpetual Capital Securities to be issued have

[not] been rated:

[S&P: [●]];

[Moody’s: [●]];

[Fitch: [●]];

[[Other: [●]]

(the above disclosure should reflect the rating

allocated to Perpetual Capital Securities of the type

being issued under the Programme generally or,

where the issue has been specifically rated, that

rating)

42 Governing Law: English Law

– 150 –

[USE OF PROCEEDS

Give details if different from the “Use of Proceeds” section in the Offering Circular.]

[STABILISATION

In connection with this issue, [insert name of Stabilisation Manager] (the “Stabilisation Manager”)(or persons acting on behalf of any Stabilisation Manager) may over-allot Perpetual Capital Securitiesor effect transactions with a view to supporting the market price of the Perpetual Capital Securitiesat a level higher than that which might otherwise prevail for a limited period after the closing dateof the relevant Tranche of Perpetual Capital Securities. However, there is no obligation on suchStabilisation Manager (or persons acting on behalf of any Stabilisation Manager) to do this. Anystabilisation action may begin on or after the date on which adequate public disclosure of the termsof the offer of the relevant Tranche of Perpetual Capital Securities is made and, if begun, may ceaseat any time, but must end no later than the earlier of 30 days after the issue date of the relevantTranche of Perpetual Capital Securities and 60 days after the date of the allotment of the relevantTranche of Perpetual Capital Securities. Any stabilisation action or over-allotment must be conductedby the relevant Stabilisation Manager (or persons acting on behalf of any Stabilisation Manager) inaccordance with all applicable laws and rules.]

[LISTING APPLICATION

This Pricing Supplement comprises the final terms required for the issue of Perpetual CapitalSecurities described herein pursuant to the U.S.$3,500,000,000 Guaranteed Medium Term Note andPerpetual Capital Securities Programme of Soar Wise Limited.]

[MATERIAL ADVERSE CHANGE STATEMENT

[Except as disclosed in this document, there/There]9 has been no significant change in the financialor trading position of the Issuer, the Guarantor or the Group since [insert date of last audited full yearor interim financial statements] and no material adverse change in the financial position or prospectsof the Issuer, the Guarantor or the Group since [insert date of last published audited annual financialstatements].]

RESPONSIBILITY

The Issuer and the Guarantor accept responsibility for the information contained in this PricingSupplement.

Signed on behalf of Soar Wise Limited as theIssuer:

Signed on behalf of AVIC International LeasingCo., Ltd. as the Guarantor:

By: By:Duly authorised Duly authorised

9 If any change is disclosed in the Pricing Supplement, it will require approval by the Stock Exchange(s). Considerationshould be given as to whether or not such disclosure should be made by means of a supplemental Offering Circularrather than in a Pricing Supplement.

– 151 –

TERMS AND CONDITIONS OF THE NOTES

The following, other than the words in italics, is the text of the terms and conditions that, subject tocompletion and amendment and as supplemented or varied in accordance with the provisions of therelevant Pricing Supplement, shall be applicable to the Notes in definitive form (if any) issued inexchange for the Global Note(s) or the Global Certificate representing each Series. Either (i) the fulltext of the terms and conditions together with the relevant provisions of the Pricing Supplement or(ii) the terms and conditions as so completed, amended, supplemented or varied (and subject tosimplification by the deletion of non-applicable provisions), shall be endorsed on such Bearer Notesor on the Certificates relating to such Registered Notes. All capitalised terms that are not defined inthe Conditions will have the meanings given to them in the relevant Pricing Supplement. Thosedefinitions will be endorsed on the definitive Notes or Certificates, as the case may be. Referencesin the Conditions to “Notes” are to the Notes of one Series only, not to all Notes that may be issuedunder the Programme.

The Notes are issued by Soar Wise Limited (the “Issuer”) pursuant to the Trust Deed (as definedbelow). The due payment of all sums expressed to be payable by the Issuer under the Notes and theTrust Deed is guaranteed by AVIC International Leasing Co., Ltd. (the “Guarantor”) as specifiedhereon. The Notes are constituted by a trust deed dated 22 October 2020 (as amended and/orsupplemented as at the date of issue of the Notes (the “Issue Date”), the “Trust Deed”) between theIssuer, the Guarantor and DB Trustees (Hong Kong) Limited (the “Trustee”, which expression shall,where the context so permits, include all persons for the time being the trustee or trustees under theTrust Deed) as trustee for itself and the Noteholders (as defined below). These terms and conditions(these “Conditions”) include summaries of, and are subject to, the detailed provisions of the TrustDeed, which includes the form of the Bearer Notes, Certificates, Receipts, Coupons and Talonsreferred to below. An agency agreement dated 22 October 2020 (as amended and/or supplemented asat the Issue Date, the “Agency Agreement”) has been entered into in relation to the Notes betweenthe Issuer, the Guarantor, the Trustee, Deutsche Bank AG, Hong Kong Branch as initial paying agent,Deutsche Bank AG, Hong Kong Branch as lodging and paying agent for Notes to be held in theCentral Moneymarkets Unit Service operated by the Hong Kong Monetary Authority (the “CMU”)and the other agents named in it. The principal paying agent, the CMU lodging and paying agent, theother paying agents, the registrar, the transfer agents and the calculation agent(s) for the time being(if any) are referred to below respectively as the “Principal Paying Agent”, the “CMU Lodging andPaying Agent”, the “Paying Agents” (which expression shall include the Principal Paying Agent andthe CMU Lodging and Paying Agent), the “Registrar”, the “Transfer Agents” and the “CalculationAgent(s)” (such Principal Paying Agent, CMU Lodging and Paying Agent, Paying Agents, Registrar,Transfer Agents and Calculation Agent(s) being together referred to as the “Agents”). The Notes willhave the benefit of a deed of guarantee dated the Issue Date (the “Deed of Guarantee”) entered intoby the Guarantor and the Trustee relating to the Notes. The giving of the Guarantee (as defined inCondition 3(b)) was authorised by the resolutions of the board of directors of the Guarantor dated 29May 2020 and the resolutions of shareholders’ meeting of the Guarantor dated 29 May 2020. For thepurposes of these Conditions, all references to the Principal Paying Agent shall, with respect to aSeries of Notes to be held in the CMU, be deemed to be a reference to the CMU Lodging and PayingAgent and all such references shall be construed accordingly.

Copies of the Deed of Guarantee, the Trust Deed and the Agency Agreement are available forinspection by Noteholders following prior written request and satisfactory proof of holding andidentity at all reasonable times during usual business hours at the principal place of business of theTrustee (presently at 60/F, International Commerce Centre, 1 Austin Road West, Kowloon, HongKong) and at the specified office for the time being of the Principal Paying Agent.

– 152 –

The Noteholders, the holders of the interest coupons (the “Coupons”) relating to interest bearing

Notes in bearer form and, where applicable in the case of such Notes, talons for further Coupons (the

“Talons”) (the “Couponholders”) and the holders of the receipts for the payment of instalments of

principal (the “Receipts” and the holder of Receipts, the “Receiptholders”) relating to Notes in

bearer form of which the principal is payable in instalments are entitled to the benefit of, are bound

by, and are deemed to have notice of, all the provisions of the Trust Deed and the Deed of Guarantee

are deemed to have notice of those provisions applicable to them of the Agency Agreement. The

statements in these Conditions include summaries of, and are subject to, the detailed provisions of

the Deed of Guarantee, the Trust Deed and the Agency Agreement.

As used in these Conditions, “Tranche” means Notes which are identical in all respects, and “Series”

means a Tranche of Notes together with any further Tranche or Tranches of Notes which are (i)

expressed to be consolidated and form a single series with such Tranche of Notes and (ii) identical

in all respects (including as to listing and admission to trading) except for their respective Issue

Dates, Interest Commencement Dates and/or issue prices.

1 FORM, DENOMINATION AND TITLE

The Notes are issued in bearer form (“Bearer Notes”) or in registered form (“Registered

Notes”) in each case in the Specified Denomination(s) shown hereon.

This Note is a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, an Index Linked

Interest Note, an Index Linked Redemption Note, an Instalment Note, a Dual Currency Note or

a Partly Paid Note, a combination of any of the foregoing or any other kind of Note, depending

upon the Interest and Redemption/Payment Basis shown hereon.

Bearer Notes are serially numbered and are issued with Coupons (and, where appropriate, a

Talon) attached, save in the case of Zero Coupon Notes in which case references to interest

(other than in relation to interest due after the Maturity Date), Coupons and Talons in these

Conditions are not applicable. Instalment Notes are issued with one or more Receipts attached.

Registered Notes are represented by registered certificates (“Certificates”) and, save as

provided in Condition 2(c), each Certificate shall represent the entire holding of Registered

Notes by the same holder.

Title to the Bearer Notes and the Receipts, Coupons and Talons shall pass by delivery. Title to

the Registered Notes shall pass by registration in the register that the Issuer shall procure to be

kept by the Registrar in accordance with the provisions of the Agency Agreement (the

“Register”). Except as ordered by a court of competent jurisdiction or as required by law, the

holder (as defined below) of any Note, Receipt, Coupon or Talon shall be deemed to be and may

be treated as its absolute owner for all purposes whether or not it is overdue and regardless of

any notice of ownership, trust or an interest in it, any writing on it (or on the Certificate

representing it) or its theft or loss (or that of the related Certificate) and no person shall be liable

for so treating the holder.

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In these Conditions, “Noteholder” means the bearer of any Bearer Note and the Receiptsrelating to it or the person in whose name a Registered Note is registered (as the case may be),“holder” (in relation to a Note, Receipt, Coupon or Talon) means the bearer of any Bearer Note,Receipt, Coupon or Talon or the person in whose name a Registered Note is registered (as thecase may be) and capitalised terms have the meanings given to them hereon, the absence of anysuch meaning indicating that such term is not applicable to the Notes.

2 NO EXCHANGE OF NOTES AND TRANSFERS OF REGISTERED NOTES

(a) No Exchange of Notes: Registered Notes may not be exchanged for Bearer Notes. BearerNotes of one Specified Denomination may not be exchanged for Bearer Notes of anotherSpecified Denomination. Bearer Notes may not be exchanged for Registered Notes.

(b) Transfer of Registered Notes: One or more Registered Notes may be transferred upon thesurrender (at the specified office of the Registrar or any Transfer Agent) of the Certificaterepresenting such Registered Notes to be transferred, together with the form of transferendorsed on such Certificate (or another form of transfer substantially in the same formand containing the same representations and certifications (if any), unless otherwise agreedby the Issuer), duly completed and executed by the holder or holders thereof or his or theirattorney or attorneys duly authorised in writing and any other evidence as the Registrar orthe relevant Transfer Agent may require. In the case of a transfer of part only of a holdingof Registered Notes represented by one Certificate, a new Certificate shall be issued to thetransferee in respect of the part transferred and a further new Certificate in respect of thebalance of the holding not transferred shall be issued to the transferor. In the case of atransfer of Registered Notes to a person who is already a holder of Registered Notes, a newCertificate representing the enlarged holding shall only be issued against surrender of theCertificate representing the existing holding. All transfers of Notes and entries on theRegister will be made in accordance with the detailed regulations concerning transfers ofNotes scheduled to the Agency Agreement. The regulations may be changed by the Issuer,with the prior written approval of the Registrar and the Trustee, or by the Registrar, withthe prior written approval of the Trustee. A copy of the current regulations will be madeavailable by the Registrar to any Noteholder following written request and proof ofholding and identity satisfactory to the Registrar. No transfer of title to any Notes will bevalid unless and until entered on the Register.

Transfers of interests in the Notes evidenced by the Global Certificate will be effected inaccordance with the rules of the relevant clearing systems.

(c) Exercise of Options or Partial Redemption in Respect of Registered Notes: In the caseof an exercise of an Issuer’s or Noteholders’ option in respect of, or a partial redemptionof, a holding of Registered Notes represented by a single Certificate, a new Certificateshall be issued to the holder to reflect the exercise of such option or in respect of thebalance of the holding not redeemed. In the case of a partial exercise of an option resultingin Registered Notes of the same holding having different terms, separate Certificates shallbe issued in respect of those Notes of that holding that have the same terms. NewCertificates shall only be issued against surrender of the existing Certificates to theRegistrar or any Transfer Agent. In the case of a transfer of Registered Notes to a personwho is already a holder of Registered Notes, a new Certificate representing the enlargedholding shall only be issued against surrender of the Certificate representing the existingholding.

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(d) Delivery of New Certificates: Each new Certificate to be issued pursuant to Conditions

2(b) or 2(c) shall be made available for delivery within seven business days of receipt of

a duly completed form of transfer or a CoC Put Exercise Notice (as defined in Condition

6(d)) or No Registration Put Exercise Notice (as defined in Condition 6(e)) (a CoC Put

Exercise Notice or a No Registration Put Exercise Notice, as the context requires, shall be

referred to as a “Put Exercise Notice”) or an Exercise Notice (as defined in Condition

6(f)) and surrender of the Certificate for exchange. Delivery of the new Certificate(s) shall

be made at the specified office of the Transfer Agent or of the Registrar (as the case may

be) to whom delivery or surrender of such form of transfer, Put Exercise Notice, Exercise

Notice or Certificate shall have been made or, at the option of the holder making such

delivery or surrender as aforesaid and as specified in the relevant form of transfer, Put

Exercise Notice, the Exercise Notice or otherwise in writing, be mailed by uninsured post

at the risk of the holder entitled to the new Certificate (but free of charge to the holder and

at the expense of the Issuer (failing whom the Guarantor)) to such address as may be so

specified, unless such holder requests otherwise and pays in advance to the relevant

Transfer Agent or the Registrar (as the case may be) the costs of such other method of

delivery and/or such insurance as it may specify. In this Condition 2(d), “business day”

means a day, other than a Saturday or Sunday or public holiday, on which commercial

banks are generally open for business in the place of the specified office of the relevant

Transfer Agent or the Registrar (as the case may be).

(e) Transfers Free of Charge: Transfers of Notes and Certificates on registration, transfer,

exercise of an option or partial redemption shall be effected without charge by or on behalf

of the Issuer, the Registrar or the Transfer Agents, but upon (i) payment by the relevant

Noteholders of any tax or other governmental charges that may be imposed in relation to

it (or the giving of such indemnity and/or security and/or prefunding as the Registrar or

the relevant Transfer Agent may require); and (ii) the Registrar being satisfied in its

absolute discretion with the documents of title or identity of the person making the

application.

(f) Closed Periods: No Noteholder may require the transfer of a Registered Note to be

registered (i) during the period of 15 days ending on (and including) the due date for

redemption of, or payment of any Instalment Amount in respect of, that Note, (ii) after the

exercise of the put option in Condition 6(d), (iii) after the exercise of the put option in

Condition 6(f), (iv) during the period of 15 days prior to any date on which Notes are being

called for redemption in part by the Issuer at its option, (v) after any such Note has been

called for redemption where not all the Notes are being called for redemption or (vi) during

the period of seven days ending on (and including) any Record Date.

3 GUARANTEE AND STATUS

(a) Status of Notes: The Notes and the Receipts and the Coupons relating to them constitute

direct, unsubordinated, unconditional and (subject to Condition 4(a)) unsecured

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

among themselves. The payment obligations of the Issuer under the Notes and the Receipts

and the Coupons relating to them shall, save for such exceptions as may be provided by

applicable legislation and subject to Condition 4(a), at all times rank at least equally with

all other present and future unsecured and unsubordinated indebtedness and monetary

obligations of the Issuer.

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(b) Guarantee: The Guarantor has unconditionally and irrevocably guaranteed the due

payment of all sums expressed to be payable by the Issuer under the Trust Deed, the Notes,

the Receipts and the Coupons. The Guarantor’s obligations in that respect (the

“Guarantee”) are contained in the Deed of Guarantee. The payment obligations of the

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

applicable legislation and subject to Condition 4(a), at all times rank at least equally with

all other present and future unsecured and unsubordinated indebtedness and monetary

obligations of the Guarantor.

4 NEGATIVE PLEDGE AND OTHER COVENANTS

(a) Negative Pledge: So long as any Note or Coupon remains outstanding (as defined in the

Trust Deed), neither the Issuer nor the Guarantor will, and each of the Issuer and the

Guarantor shall ensure that none of their respective Subsidiaries will, create or, have

outstanding, any Security Interest (save for any Permitted Security Interest), upon the

whole or any part of its present or future undertaking, assets or revenues (including any

uncalled capital) to secure any Relevant Indebtedness or to secure any guarantee or

indemnity in respect of any Relevant Indebtedness, without at the same time or prior

thereto according to the Notes and the Coupons the same security as is created or

subsisting to secure any such Relevant Indebtedness, guarantee or indemnity or such other

security as either (i) the Trustee shall in its absolute discretion deem not materially less

beneficial to the interest of the Noteholders or (ii) shall be approved by an Extraordinary

Resolution (as defined in the Trust Deed) of the Noteholders.

(b) Issuer Activities: The Issuer shall not, and the Guarantor will procure that the Issuer will

not, so long as any Note or Coupon remains outstanding, carry on any business activity

whatsoever other than in connection with the Programme and the Notes and the Coupons

(such activities in connection with the Programme and the Notes and the Coupons shall,

for the avoidance of doubt, include (i) the offering, sale or issuance of the Notes and the

Coupons under the Programme; (ii) the activities related to the establishment and/or

maintenance of the Issuer’s corporate existence; and (iii) the on-lending of the proceeds of

the issue of the Notes and the Coupons to the Guarantor or any other Subsidiaries of the

Guarantor and to cause such borrower to pay the interest and principal in respect of such

intercompany loan on time).

(c) Financial Information: For so long as any Note or Coupon remains outstanding, each of

the Issuer and the Guarantor will furnish the Trustee with a Compliance Certificate of each

of the Issuer and the Guarantor (as the case may be) (on which the Trustee may rely

conclusively as to such compliance) within 180 days of the end of each Relevant Period

and within 14 days of any request therefor from the Trustee, and the Guarantor will furnish

the Trustee with (i) a copy of the relevant Guarantor Audited Financial Reports within 180

days of the end of each Relevant Period prepared in accordance with PRC GAAP (audited

by a nationally or internationally recognised firm of independent accountants) and if such

statements shall be in the Chinese language, together with an English translation of the

same translated by (A) a nationally or internationally recognised firm of independent

accountants or (B) a professional translation service provider and checked by a nationally

or internationally recognised firm of independent accountants, together with a certificate

in English signed by an Authorised Signatory (as defined in the Trust Deed) of the

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Guarantor certifying that such translation is complete and accurate; and (ii) a copy of the

Guarantor Unaudited Financial Reports within 90 days of the end of each Relevant Period

prepared on a basis consistent with the Guarantor Audited Financial Reports and if such

statements shall be in the Chinese language, together with an English translation of the

same translated by (A) a nationally or internationally recognised firm of independent

accountants or (B) a professional translation service provider and checked by a nationally

or internationally recognised firm of independent accountants, together with a certificate

in English signed by an Authorised Signatory (as defined in the Trust Deed) of the

Guarantor certifying that such translation is complete and accurate; provided that, if at any

time the capital stock of the Guarantor is listed for trading on a recognised stock exchange,

the Guarantor may furnish the Trustee, as soon as they are available but in any event not

more than 14 calendar days after any financial or other reports of the Guarantor are filed

with the exchange on which the Guarantor’s capital stock is at such time listed for trading,

with true and correct copies of any financial or other report filed with such exchange in

lieu of the financial reports identified in Conditions 4(c)(i) and 4(c)(ii) above, and if such

financial or other reports of the Guarantor shall be in the Chinese language, together with

an English translation of the same translated by (A) a nationally or internationally

recognised firm of independent accountants or (B) a professional translation service

provider and checked by a nationally or internationally recognised firm of independent

accountants, together with a certificate in English signed by an Authorised Signatory (as

defined in the Trust Deed) of the Guarantor certifying that such translation is complete and

accurate.

(d) Notification to NDRC: Where it is specified hereon that the NDRC Circular applies to any

Note to be issued in accordance with these Conditions, each of the Issuer and the

Guarantor undertakes (as applicable) (i) to file or cause to be filed with the NDRC the

requisite information and documents within the prescribed timeframe in accordance with

the NDRC Circular and/or any other applicable PRC laws and regulations specified hereon

(the “NDRC Post-issue Filing”); and (ii) to provide the Trustee with the Registration

Documents within 10 Registration Business Days after submission of the NDRC Post-issue

Filing. The Trustee shall have no obligation to monitor whether or not, or to assist with or

ensure that, the NDRC Post-issue Filing is filed with the NDRC within the prescribed

timeframe in accordance with the NDRC Circular and/or any other applicable PRC laws

and regulations specified hereon and shall not be liable to Noteholders or any other person

for not doing so.

(e) Undertaking relating to the Guarantee: Where it is specified hereon that the Foreign

Exchange Administration Rules on Cross-border Security (跨境擔保外匯管理規定)

(“Cross-border Security Registration”) applies to any Note to be issued in accordance

with these Conditions, the Guarantor undertakes that it will (i) submit or cause to be

submitted an application for the registration of the Deed of Guarantee with SAFE in

accordance with, and within the time period prescribed by, the Cross-border Security

Registration so long as such rules are still in effect, (ii) use its best endeavours to complete

the Cross-border Security Registration and obtain a registration record from SAFE on or

before the Registration Deadline, (iii) comply with all applicable PRC laws and

regulations in relation to the Guarantee, and (iv) within ten Registration Business Days

after receipt of the registration record from SAFE (or any other document evidencing

completion of registration issued by SAFE), (A) procure that the Issuer delivers to the

Principal Paying Agent a notice from the Issuer addressed to the Noteholders for the

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Principal Paying Agent to release or distribute to the Noteholders, confirming the

completion of the Cross-border Security Registration and (B) provide the Trustee with the

Registration Documents. The Trustee shall have no obligation to monitor whether or not,

or to assist with or ensure that, the registration of the Deed of Guarantee with SAFE is

completed on or before the Registration Deadline and shall not be liable to Noteholders or

any other person for not doing so.

(f) Definitions

In these Conditions:

“Asset-Backed Securities” means any Relevant Indebtedness that:

(i) by the terms of such indebtedness it is expressly provided that recourse by the holders

of such indebtedness is limited to the properties or assets of the Guarantor and the

revenues to be generated by the operation of, or loss of or damage to, such properties

or assets, for repayment of the moneys advanced and payment of interest thereon; and

(ii) such indebtedness is not guaranteed by the Guarantor or any of its Subsidiaries;

“Compliance Certificate” means a certificate substantially in the form scheduled to the

Trust Deed of each of the Issuer and the Guarantor (as the case may be) signed by an

Authorised Signatory of the Issuer or the Guarantor (as the case may be) that, having made

all reasonable enquiries, to the best of the knowledge, information and belief of the Issuer

or the Guarantor (as the case may be) as at a date (the “Certification Date”) not more than

five days before the date of the certificate:

(i) no Event of Default (as defined in Condition 10) or Potential Event of Default had

occurred since the Certification Date of the last such certificate or (if none) the date

of the Trust Deed or, if such an event had occurred, giving details of it; and

(ii) each of the Issuer and the Guarantor (as the case may be) has complied with all its

obligations under the Deed of Guarantee, the Trust Deed and the Notes (as

applicable);

“Guarantor Audited Financial Reports” means, for a Relevant Period, the annual

audited consolidated balance sheet, income statement, statement of cash flows and

statement of changes in owners’ equity of the Guarantor together with any statements,

reports (including any directors’ and auditors’ reports) and notes attached to or intended

to be read with any of them;

“Guarantor Unaudited Financial Reports” means, for a Relevant Period, the semi-

annual (or any other interim reporting period required by applicable law or regulations)

unaudited consolidated balance sheet, income statement, statement of cash flows and

statement of changes in owners’ equity of the Guarantor;

“NDRC” means the National Development and Reform Commission of the PRC or its

local counterparts;

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“NDRC Circular” means the Circular on Promoting the Reform of the Administrative

System on the Issuance by Enterprises of Foreign Debt Filings and Registrations (國家發展改革委關於推進企業發行外債備案登記制管理改革的通知(發改外資[2015]2044號)) issued

by NDRC and which came into effect on 14 September 2015, and any implementation rules

or applicable policies in relation thereto as issued by NDRC from time to time;

“Permitted Security Interest” means:

(i) any Security Interest over any assets (or related documents of title) purchased by the

Guarantor or any of its Subsidiaries as Security Interest for all or part of the purchase

price of such assets and any substitute Security Interest created on those assets in

connection with the refinancing (together with interest, fees and other charges

attributable to such refinancing) of the indebtedness secured on those assets,

provided that in the case of refinancing, the principal or nominal amount of such

refinancing is not greater than the amount of the original financing;

(ii) any Security Interest over any assets (or related documents of title) purchased by the

Guarantor or any of its Subsidiaries subject to such Security Interest and any

substitute Security Interest created on those assets in connection with the refinancing

(together with interest, fees and other charges attributable to such refinancing) of the

indebtedness secured on those assets, provided that in the case of refinancing, the

principal or nominal amount of such refinancing is not greater than the amount of the

original financing; and

(iii) any Security Interest created to secure Asset-Backed Securities issued by a

Subsidiary of the Guarantor,

provided that the aggregate value of the relevant assets subject to the Security Interest

pursuant to this provision do not exceed 10 per cent. of the total consolidated assets of the

Guarantor and its Subsidiaries measured in accordance with PRC GAAP based on the latest

Guarantor Audited Financial Reports or the Guarantor Unaudited Financial Reports, as the

case may be;

“Potential Event of Default” means an event or circumstance which could with the giving

of notice, lapse of time, issue of a certificate and/or fulfilment of any other requirement

provided for in Condition 10 become an Event of Default;

“PRC” means the People’s Republic of China which, for the purposes of these Conditions,

shall not include the Hong Kong Special Administrative Region of the People’s Republic

of China, the Macau Special Administrative Region of the People’s Republic of China and

Taiwan;

“PRC GAAP” means the Accounting Standards for Business Enterprises in the PRC;

“Relevant Indebtedness” means any indebtedness outside the PRC which is in the form

of, or represented or evidenced by, bonds, notes, debentures, loan stock or other securities

which for the time being are, or are intended to be or capable of being, quoted, listed or

dealt in or traded on any stock exchange or over-the-counter or other securities market;

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“Relevant Period” means:

(i) in relation to the Guarantor Audited Financial Reports, each period of twelve months

ending on the last day of its financial year (being 31 December of that financial year);

and

(ii) in relation to the Guarantor Unaudited Financial Reports, each period of six months

ending on the last day of its first half financial year (being 30 June of that financial

year);

“SAFE” means the State Administration of Foreign Exchange of the PRC or its local

branches;

“Security Interest” means any mortgage, charge, pledge, lien or other security interest;

and

a “Subsidiary” of any person means:

(i) any company or other business entity of which that person owns or controls (either

directly or through one or more other Subsidiaries) more than 50 per cent. of the

issued share capital or other ownership interest having ordinary voting power to elect

directors, managers or trustees of such company or other business entity; or

(ii) any company or other business entity which at any time has its accounts consolidated

with those of that person or which, under the law, regulations or generally accepted

accounting principles of the jurisdiction of incorporation of such person from time to

time, should have its accounts consolidated with those of that person.

5 INTEREST AND OTHER CALCULATIONS

(a) Interest on Fixed Rate Notes: Each Fixed Rate Note bears interest on its outstanding

nominal amount from and including the Interest Commencement Date at the rate per

annum (expressed as a percentage) equal to the Rate of Interest, such interest being

payable in arrear on each Interest Payment Date. The amount of interest payable shall be

determined in accordance with Condition 5(h).

(b) Interest on Floating Rate Notes and Index Linked Interest Notes:

(i) Interest Payment Dates: Each Floating Rate Note and Index Linked Interest Note

bears interest on its outstanding nominal amount from (and including) the Interest

Commencement Date at the rate per annum (expressed as a percentage) equal to the

Rate of Interest, such interest being payable in arrear on each Interest Payment Date.

The amount of interest payable shall be determined in accordance with Condition

5(h). Such Interest Payment Date(s) is/are either shown hereon as Specified Interest

Payment Dates or, if no Specified Interest Payment Date(s) is/are shown hereon,

Interest Payment Date shall mean each date which falls the number of months or

other period shown hereon as the Interest Period after the preceding Interest Payment

Date or, in the case of the first Interest Payment Date, after the Interest

Commencement Date.

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(ii) Business Day Convention: If any date referred to in these Conditions that is

specified to be subject to adjustment in accordance with a Business Day Convention

would otherwise fall on a day that is not a Business Day, then, if the Business Day

Convention specified is:

(A) the Floating Rate Business Day Convention, such date shall be postponed to the

next day that is a Business Day unless it would thereby fall into the next

calendar month, in which event (x) such date shall be brought forward to the

immediately preceding Business Day and (y) each subsequent such date shall be

the last Business Day of the month in which such date would have fallen had

it not been subject to adjustment;

(B) the Following Business Day Convention, such date shall be postponed to the

next day that is a Business Day;

(C) the Modified Following Business Day Convention, such date shall be postponed

to the next day that is a Business Day unless it would thereby fall into the next

calendar month, in which event such date shall be brought forward to the

immediately preceding Business Day; or

(D) the Preceding Business Day Convention, such date shall be brought forward to

the immediately preceding Business Day.

(iii) Rate of Interest for Floating Rate Notes: The Rate of Interest in respect of Floating

Rate Notes for each Interest Accrual Period shall be determined in the manner

specified hereon and the provisions below relating to either ISDA Determination or

Screen Rate Determination shall apply, depending upon which is specified hereon.

(A) ISDA Determination for Floating Rate Notes

Where ISDA Determination is specified hereon as the manner in which the Rate

of Interest is to be determined, the Rate of Interest for each Interest Accrual

Period shall be determined by the Calculation Agent as a rate equal to the

relevant ISDA Rate. For the purposes of this sub-paragraph (A), “ISDA Rate”

for an Interest Accrual Period means a rate equal to the Floating Rate that would

be determined by the Calculation Agent under a Swap Transaction under the

terms of an agreement incorporating the ISDA Definitions and under which:

(x) the Floating Rate Option is as specified hereon

(y) the Designated Maturity is a period specified hereon and

(z) the relevant Reset Date is the first day of that Interest Accrual Period

unless otherwise specified hereon.

For the purposes of this sub-paragraph (A), “Floating Rate”, “CalculationAgent”, “Floating Rate Option”, “Designated Maturity”, “Reset Date” and

“Swap Transaction” have the meanings given to those terms in the ISDA

Definitions.

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(B) Screen Rate Determination for Floating Rate Notes

(x) Where Screen Rate Determination is specified hereon as the manner in

which the Rate of Interest is to be determined, the Rate of Interest for each

Interest Accrual Period will, subject as provided below, be either:

(1) the offered quotation; or

(2) the arithmetic mean of the offered quotations,

(expressed as a percentage rate per annum) for the Reference Rate which

appears or appear, as the case may be, on the Relevant Screen Page as at

either 11:00 a.m. (London time in the case of LIBOR or Brussels time in

the case of EURIBOR or Hong Kong time in the case of HIBOR) or 11:15

a.m. (Hong Kong time in the case of CNH HIBOR) or if, at or around that

time it is notified that the fixing will be published at 2:30 p.m. (Hong

Kong time), then as of 2:30 p.m. (Hong Kong time in the case of CNH

HIBOR), as the case may be, on the Interest Determination Date in

question as determined by the Calculation Agent. If five or more of such

offered quotations are available on the Relevant Screen Page, the highest

(or, if there is more than one such highest quotation, one only of such

quotations) and the lowest (or, if there is more than one such lowest

quotation, one only of such quotations) shall be disregarded by the

Calculation Agent for the purpose of determining the arithmetic mean of

such offered quotations.

If the Reference Rate from time to time in respect of Floating Rate Notes

is specified hereon as being other than LIBOR or EURIBOR or HIBOR or

CNH HIBOR, the Rate of Interest in respect of such Notes will be

determined as provided hereon.

(y) If the Relevant Screen Page is not available or if sub-paragraph (x)(1)

applies and no such offered quotation appears on the Relevant Screen Page

or if sub-paragraph (x)(2) above applies and fewer than three such offered

quotations appear on the Relevant Screen Page, in each case as at the time

specified above, subject as provided below, the Calculation Agent shall

promptly notify the Issuer and the Issuer shall use all commercially

reasonable endeavours to appoint an Independent Investment Bank and

procure such Independent Investment Bank to request, if the Reference

Rate is LIBOR, the principal London office of each of the Reference

Banks or, if the Reference Rate is EURIBOR, the principal Euro-zone

office of each of the Reference Banks or, if the Reference Rate is HIBOR

or CNH HIBOR, the principal Hong Kong office of each of the Reference

Banks, to provide the Independent Investment Bank and the Calculation

Agent with its offered quotation (expressed as a percentage rate per

annum) for the Reference Rate if the Reference Rate is LIBOR, at

approximately 11:00 a.m. (London time), or if the Reference Rate is

EURIBOR, at approximately 11:00 a.m. (Brussels time) or, if the

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Reference Rate is HIBOR or CNH HIBOR, at approximately 11:00 a.m.(Hong Kong time) on the Interest Determination Date in question. If twoor more of the Reference Banks provide the Independent Investment Bankand the Calculation Agent with such offered quotations, the Rate ofInterest for such Interest Accrual Period shall be the arithmetic mean ofsuch offered quotations as determined by the Calculation Agent.

(z) If paragraph (y) above applies and the Calculation Agent has receivedoffered quotations from fewer than two Reference Banks, subject asprovided below, the Rate of Interest shall be the arithmetic mean of therates per annum (expressed as a percentage) as communicated at therequest of the Independent Investment Bank to the Independent InvestmentBank and the Calculation Agent by the Reference Banks or any two ormore of them, at which such banks were offered, if the Reference Rate isLIBOR, at approximately 11:00 a.m. (London time) or, if the ReferenceRate is EURIBOR, at approximately 11:00 a.m. (Brussels time) or, if theReference Rate is HIBOR or CNH HIBOR, at approximately 11:00 a.m.(Hong Kong time) on the relevant Interest Determination Date, deposits inthe Specified Currency for a period equal to that which would have beenused for the Reference Rate by leading banks in, if the Reference Rate isLIBOR, the London inter-bank market or, if the Reference Rate isEURIBOR, the Euro-zone inter-bank market, or, if the Reference Rate isHIBOR or CNH HIBOR, the Hong Kong inter-bank market, as the casemay be, or, if fewer than two of the Reference Banks provide theIndependent Investment Bank and the Calculation Agent with such offeredrates, the offered rate for deposits in the Specified Currency for a periodequal to that which would have been used for the Reference Rate, or thearithmetic mean of the offered rates for deposits in the Specified Currencyfor a period equal to that which would have been used for the ReferenceRate, at which, if the Reference Rate is LIBOR, at approximately 11:00a.m. (London time) or, if the Reference Rate is EURIBOR, atapproximately 11:00 a.m. (Brussels time), or, if the Reference Rate isHIBOR or CNH HIBOR, at approximately 11:00 a.m. (Hong Kong time)on the relevant Interest Determination Date, any one or more banks (whichbank or banks is or are in the opinion of the Independent Investment Banksuitable for such purpose) informs the Independent Investment Bank andthe Calculation Agent it is quoting to leading banks in, if the ReferenceRate is LIBOR, the London inter-bank market or, if the Reference Rate isEURIBOR, the Euro-zone inter-bank market, or, if the Reference Rate isHIBOR or CNH HIBOR, the Hong Kong inter-bank market, as the casemay be, provided that, if the Rate of Interest cannot be determined inaccordance with the foregoing provisions of this paragraph, the Rate ofInterest shall be determined as at the last preceding Interest DeterminationDate (though substituting, where a different Margin or Maximum Rate ofInterest or Minimum Rate of Interest is to be applied to the relevantInterest Accrual Period from that which applied to the last precedingInterest Accrual Period, the Margin or Maximum Rate of Interest orMinimum Rate of Interest relating to the relevant Interest Accrual Period,in place of the Margin or Maximum Rate of Interest or Minimum Rate ofInterest relating to that last preceding Interest Accrual Period).

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For the purposes of this Condition 5(b)(iii)(B), “Independent InvestmentBank” means an independent financial institution of international reputeor an independent financial adviser with appropriate experience (whichshall not be the Calculation Agent) selected and appointed by the Issuer (atthe expense of the Issuer, failing whom the Guarantor) for the purposes ofthis Condition 5(b)(iii)(B) and notified in writing by the Issuer to theCalculation Agent and the Trustee.

(iv) Rate of Interest for Index Linked Interest Notes: The Rate of Interest in respectof Index Linked Interest Notes for each Interest Accrual Period shall be determinedin the manner specified hereon and interest will accrue by reference to an Index orFormula as specified hereon.

(c) Zero Coupon Notes: Where a Note the Interest Basis of which is specified to be ZeroCoupon is repayable prior to the Maturity Date and is not paid when due, the amount dueand payable prior to the Maturity Date shall be the Early Redemption Amount of suchNote. As from the Maturity Date, the Rate of Interest for any overdue principal of such aNote shall be a rate per annum (expressed as a percentage) equal to the Amortisation Yield(as described in Condition 6(b)(i)).

(d) Dual Currency Notes: In the case of Dual Currency Notes, if the rate or amount of interestfalls to be determined by reference to a Rate of Exchange or a method of calculating Rateof Exchange, the rate or amount of interest payable shall be determined in the mannerspecified hereon.

(e) Partly Paid Notes: In the case of Partly Paid Notes (other than Partly Paid Notes whichare Zero Coupon Notes), interest will accrue as aforesaid on the paid-up nominal amountof such Notes and otherwise as specified hereon.

(f) Accrual of Interest: Interest shall cease to accrue on each Note on the due date forredemption unless, upon due presentation, payment is improperly withheld or refused, inwhich event interest shall continue to accrue (both before and after judgment) at the Rateof Interest in the manner provided in this Condition 5 to the Relevant Date (as defined inCondition 8).

(g) Margin, Maximum Rate of Interest/Minimum Rate of Interest, Maximum InstalmentAmount/Minimum Instalment Amount and Maximum Redemption Amount/MinimumRedemption Amount and Rounding:

(i) If any Margin is specified hereon (either (x) generally, or (y) in relation to one ormore Interest Accrual Periods), an adjustment shall be made to all Rates of Interest,in the case of (x), or the Rates of Interest for the specified Interest Accrual Periods,in the case of (y), calculated in accordance with Condition 5(b) above by adding (ifa positive number) or subtracting the absolute value (if a negative number) of suchMargin, subject always to Condition 5(g)(ii) below.

(ii) If any Maximum Rate of Interest or Minimum Rate of Interest, Maximum InstalmentAmount or Minimum Instalment Amount or Maximum Redemption Amount orMinimum Redemption Amount is specified hereon, then any Rate of Interest,Instalment Amount or Redemption Amount shall be subject to such maximum orminimum, as the case may be.

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(iii) For the purposes of any calculations required pursuant to these Conditions (unless

otherwise specified), (x) all percentages resulting from such calculations shall be

rounded, if necessary, to the nearest one hundred-thousandth of a percentage point

(with 0.000005 of a percentage point being rounded up), (y) all figures shall be

rounded to seven significant figures (provided that if the eighth significant figure is

a 5 or greater, the seventh significant figure shall be rounded up) and (z) all currency

amounts that fall due and payable shall be rounded to the nearest unit of such

currency (with half a unit being rounded up), save in the case of yen, which shall be

rounded down to the nearest yen. For these purposes “unit” means the lowest amount

of such currency that is available as legal tender in the country or countries of such

currency.

(h) Calculations: The amount of interest payable per Calculation Amount in respect of any

Note for any Interest Accrual Period shall be equal to the product of the Rate of Interest,

the Calculation Amount specified hereon, and the Day Count Fraction for such Interest

Accrual Period, unless an Interest Amount (or a formula for its calculation) is applicable

to such Interest Accrual Period, in which case the amount of interest payable per

Calculation Amount in respect of such Note for such Interest Accrual Period shall equal

such Interest Amount (or be calculated in accordance with such formula). Where any

Interest Period comprises two or more Interest Accrual Periods, the amount of interest

payable per Calculation Amount in respect of such Interest Period shall be the sum of the

Interest Amounts payable in respect of each of those Interest Accrual Periods. In respect

of any other period for which interest is required to be calculated, the provisions above

shall apply save that the Day Count Fraction shall be for the period for which interest is

required to be calculated.

(i) Determination and Publication of Rates of Interest, Interest Amounts, FinalRedemption Amounts, Early Redemption Amounts, Optional Redemption Amountsand Instalment Amounts: The Calculation Agent shall, as soon as practicable on each

Interest Determination Date, or such other time on such date as the Calculation Agent may

be required to calculate any rate or amount, obtain any quotation or make any

determination or calculation, determine such rate and calculate the Interest Amounts for

the relevant Interest Accrual Period, calculate the Final Redemption Amount, Early

Redemption Amount, Optional Redemption Amount or Instalment Amount, obtain such

quotation or make such determination or calculation, as the case may be, and cause the

Rate of Interest and the Interest Amounts for each Interest Accrual Period and the relevant

Interest Payment Date and, if required to be calculated, the Final Redemption Amount,

Early Redemption Amount, Optional Redemption Amount or any Instalment Amount to be

notified to the Trustee, the Issuer, each of the Paying Agents, the Noteholders, any other

Calculation Agent appointed in respect of the Notes that is to make a further calculation

upon receipt of such information and, if the Notes are listed on a stock exchange and the

rules of such exchange or other relevant authority so require, such exchange or other

relevant authority as soon as possible after their determination but in no event later than

(i) the commencement of the relevant Interest Period, if determined prior to such time, in

the case of notification to such exchange of a Rate of Interest and Interest Amount, or (ii)

in all other cases, the fourth Business Day after such determination. Where any Interest

Payment Date or Interest Period Date is subject to adjustment pursuant to Condition

5(b)(ii), the Interest Amounts and the Interest Payment Date so published may

subsequently be amended (or appropriate alternative arrangements made with the consent

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of the Trustee by way of adjustment) without notice in the event of an extension or

shortening of the Interest Period. If the Notes become due and payable under Condition 10,

the accrued interest and the Rate of Interest payable in respect of the Notes shall

nevertheless continue to be calculated as previously in accordance with this Condition 5

but no publication of the Rate of Interest or the Interest Amount so calculated need be

made unless the Trustee otherwise requires. The determination of any rate or amount and

the making of each determination or calculation by the Calculation Agent(s) shall (in the

absence of manifest error) be final and binding upon all parties and the Noteholders.

(j) Benchmark discontinuation:

(i) Independent Adviser

If a Benchmark Event occurs in relation to an Original Reference Rate when any Rate

of Interest (or any component part thereof) remains to be determined by reference to

such Original Reference Rate, then the Issuer shall use its reasonable endeavours to

appoint, at the expense of the Issuer, failing whom the Guarantor, an Independent

Adviser, as soon as reasonably practicable, to determine a Successor Rate, failing

which an Alternative Rate (in accordance with Condition 5(j)(ii)) and, in either case,

an Adjustment Spread and any Benchmark Amendments (in accordance with

Condition 5(j)(iv)). In making such determination, the Independent Adviser

appointed pursuant to this Condition 5(j) shall act in good faith and in a commercially

reasonable manner as an expert. In the absence of bad faith or fraud, the Independent

Adviser shall have no liability whatsoever to the Issuer, the Trustee, the Paying

Agents or the Noteholders, Receiptholders or the Couponholders for any

determination made by it pursuant to this Condition 5(j).

If (A) the Issuer is unable to appoint an Independent Adviser; or (B) the Independent

Adviser appointed by it fails to determine a Successor Rate or, failing which, an

Alternative Rate in accordance with this Condition 5(j) prior to the relevant Interest

Determination Date, the Rate of Interest applicable to the next succeeding Interest

Period shall be equal to the Rate of Interest last determined in relation to the Notes

in respect of the immediately preceding Interest Period. If there has not been a first

Interest Payment Date, the Rate of Interest shall be the initial Rate of Interest. Where

a different Margin or Maximum or Minimum Rate of Interest is to be applied to the

relevant Interest Period from that which applied to the last preceding Interest Period,

the Margin or Maximum or Minimum Rate of Interest relating to the relevant Interest

Period shall be substituted in place of the Margin or Maximum or Minimum Rate of

Interest relating to that last preceding Interest Period. For the avoidance of doubt, this

Condition 5(j) shall apply to the relevant next succeeding Interest Period only and

any subsequent Interest Periods are subject to the subsequent operation of, and to

adjustment as provided in, the first paragraph of this Condition 5(j)(i).

(ii) Successor Rate or Alternative Rate

If the Independent Adviser determines that:

(A) there is a Successor Rate, then such Successor Rate and the applicable

Adjustment Spread shall subsequently be used in place of the Original

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Reference Rate to determine the Rate of Interest (or the relevant component part

thereof) for all future payments of interest on the Notes (subject to the operation

of this Condition 5(j)); or

(B) there is no Successor Rate but that there is an Alternative Rate, then such

Alternative Rate and the applicable Adjustment Spread shall subsequently be

used in place of the Original Reference Rate to determine the Rate of Interest

(or the relevant component part thereof) for all future payments of interest on

the Notes (subject to the operation of this Condition 5(j)).

(iii) Adjustment Spread

The Adjustment Spread shall be applied to the Successor Rate or the Alternative Rate

(as the case may be). If the Independent Adviser is unable to determine the quantum

of, or a formula or methodology for determining, such Adjustment Spread, then the

Successor Rate or the Alternative Rate (as applicable) will apply without an

Adjustment Spread.

(iv) Benchmark Amendments

If any Successor Rate or Alternative Rate and, in either case, the applicable

Adjustment Spread is determined in accordance with this Condition 5(j) and the

Independent Adviser determines (A) that amendments to these Conditions and/or the

Trust Deed are necessary to ensure the proper operation of such Successor Rate or

Alternative Rate and/or (in either case) the applicable Adjustment Spread (such

amendments, the “Benchmark Amendments”) and (B) the terms of the Benchmark

Amendments, then the Issuer shall, subject to giving notice thereof in accordance

with Condition 5(j)(v), without any requirement for the consent or approval of

Noteholders, vary these Conditions and/or the Trust Deed to give effect to such

Benchmark Amendments with effect from the date specified in such notice.

At the written request of the Issuer, but subject to receipt by the Trustee of a

certificate signed by an Authorised Signatory of the Issuer pursuant to Condition

5(j)(v), the Trustee shall (at the expense of the Issuer, failing whom the Guarantor),

without any requirement for the consent or approval of the Noteholders, be obliged

to concur with the Issuer in effecting any Benchmark Amendments (including, inter

alia, by the execution of a deed supplemental to or amending the Trust Deed),

provided that the Trustee shall not be obliged so to concur if in the opinion of the

Trustee doing so would impose more onerous obligations upon it or expose it to any

additional duties, responsibilities or liabilities or reduce or amend the protective

provisions afforded to the Trustee in these Conditions or the Trust Deed (including,

for the avoidance of doubt, any supplemental trust deed) in any way.

Notwithstanding any other provision of this Condition 5(j), neither the Calculation

Agent nor any Paying Agent is obliged to concur with the Issuer or the Independent

Adviser in respect of any changes or amendments as contemplated under this

Condition 5(j) to which, in the sole opinion of the Calculation Agent or the relevant

Paying Agent, as the case may be, would impose more onerous obligations upon it or

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expose it to any additional duties, responsibilities or liabilities or reduce or amend the

protective provisions afforded to the Calculation Agent or the relevant Paying Agent

(as applicable) in the Agency Agreement and/or these Conditions.

In connection with any such variation in accordance with this Condition 5(j)(iv), the

Issuer shall comply with the rules of any stock exchange on which the Notes are for

the time being listed or admitted to trading.

(v) Notices, etc.

Any Successor Rate, Alternative Rate, Adjustment Spread and the specific terms of

any Benchmark Amendments, determined under this Condition 5(j) will be notified

promptly by the Issuer to the Trustee, the Calculation Agent, the Paying Agents. In

accordance with Condition 16, notice shall be provided to the Noteholders promptly

thereafter. Such notice shall be irrevocable and shall specify the effective date of the

Benchmark Amendments, if any.

No later than notifying the Noteholders of the same, the Issuer shall deliver to the

Trustee, the Calculation Agent and the Paying Agents a certificate signed by an

Authorised Signatory of the Issuer:

(A) confirming (I) that a Benchmark Event has occurred, (II) the Successor Rate or,

as the case may be, the Alternative Rate, (III) the applicable Adjustment Spread

and (IV) the specific terms of the Benchmark Amendments (if any), in each case

as determined in accordance with the provisions of this Condition 5(j); and

(B) certifying that the Benchmark Amendments (if any) are necessary to ensure the

proper operation of such Successor Rate or Alternative Rate and (in either case)

the applicable Adjustment Spread.

Each of the Trustee, the Calculation Agent and the Paying Agents shall be entitled to

accept without verification or investigation and to rely conclusively on such

certificate (without liability to any person) as sufficient evidence thereof. The

Successor Rate or Alternative Rate and the Adjustment Spread and the Benchmark

Amendments (if any) specified in such certificate will (in the absence of manifest

error or bad faith in the determination of the Successor Rate or Alternative Rate and

the Adjustment Spread and the Benchmark Amendments (if any) and without

prejudice to the Trustee’s or the Calculation Agent’s or the Paying Agents’ ability to

rely on such certificate as aforesaid) be binding on the Issuer, the Trustee, the

Calculation Agent, the Paying Agents and the Noteholders. The Trustee shall be

protected and shall have no liability to any Noteholder, the Issuer, the Guarantor or

any other person for so accepting and relying on any such certificate and/or opinion.

Notwithstanding any other provision of this Condition 5(j), if in the Calculation

Agent’s opinion there is any uncertainty between two or more alternative courses of

action in making any determination or calculation under this Condition 5(j), the

Calculation Agent shall promptly notify the Issuer thereof and the Issuer shall direct

the Calculation Agent in writing as to which alternative course of action to adopt. If

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the Calculation Agent is not promptly provided with such direction, or is otherwise

unable (other than due to its own gross negligence, wilful default or fraud) to make

such calculation or determination for any reason, it shall notify the Issuer thereof and

the Calculation Agent shall be under no obligation to make such calculation or

determination and (in the absence of such gross negligence, wilful default or fraud)

shall not incur any liability to any person for not doing so.

(vi) Survival of Original Reference Rate

Without prejudice to the obligations of the Issuer under Conditions 5(j)(i), 5(j)(ii),

5(j)(iii) and 5(j)(iv), the Original Reference Rate and the fallback provisions

provided for in Condition 5(b)(B) will continue to apply unless and until a

Benchmark Event has occurred.

(vii) Definitions

As used in this Condition 5(j):

“Adjustment Spread” means either (a) a spread (which may be positive, negative or

zero) or (b) a formula or methodology for calculating a spread, in each case to be

applied to the Successor Rate or the Alternative Rate (as the case may be) and is the

spread, formula or methodology which:

(i) in the case of a Successor Rate, is formally recommended in relation to the

replacement of the Original Reference Rate with the Successor Rate by any

Relevant Nominating Body; or (if no such recommendation has been made, or

in the case of an Alternative Rate);

(ii) the Independent Adviser determines, is customarily applied to the relevant

Successor Rate or the Alternative Rate (as the case may be) in international debt

capital markets transactions to produce an industry-accepted replacement rate

for the Original Reference Rate; or (if the Independent Adviser determines that

no such spread is customarily applied);

(iii) the Independent Adviser determines is recognised or acknowledged as being the

industry standard for over-the-counter derivative transactions which reference

the Original Reference Rate, where such rate has been replaced by the Successor

Rate or the Alternative Rate (as the case may be);

“Alternative Rate” means an alternative benchmark or screen rate which the

Independent Adviser, determines in accordance with Condition 5(j)(ii) is customarily

applied in international debt capital markets transactions for the purposes of

determining rates of interest (or the relevant component part thereof) in the same

Specified Currency as the Notes;

“Benchmark Amendments” has the meaning given to it in Condition 5(j)(iv);

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“Benchmark Event” means:

(i) the Original Reference Rate ceasing to be published for a period of at least fiveBusiness Days or ceasing to exist; or

(ii) a public statement by the administrator of the Original Reference Rate that it hasceased or that it will cease publishing the Original Reference Rate permanentlyor indefinitely (in circumstances where no successor administrator has beenappointed that will continue publication of the Original Reference Rate); or

(iii) a public statement by the supervisor of the administrator of the OriginalReference Rate, that the Original Reference Rate has been or will bepermanently or indefinitely discontinued; or

(iv) a public statement by the supervisor of the administrator of the OriginalReference Rate as a consequence of which the Original Reference Rate will beprohibited from being used either generally, or in respect of the Notes; or

(v) a public statement by the supervisor of the administrator of the OriginalReference Rate that, with effect from a date after 31 December 2021, theOriginal Reference Rate is or will be (or is or will be deemed by such supervisorto be) no longer representative of its relevant underlying market; or

(vi) it has become unlawful for any Paying Agent, the Calculation Agent, the Issueror other party to calculate any payments due to be made to any Noteholder usingthe Original Reference Rate,

provided that the Benchmark Event shall be deemed to occur (A) in the case ofsub-paragraphs (ii) and (iii) above of this definition, on the date of the cessation ofpublication of the Original Reference Rate or the discontinuation of the OriginalReference Rate, as the case may be, (B) in the case of sub-paragraph (iv) above ofthis definition, on the date of the prohibition of use of the Original Reference Rateand (C) in the case of sub-paragraph (v) above of this definition, on the date witheffect from which the Original Reference Rate will no longer be (or will be deemedby the relevant supervisor to no longer be) representative of its relevant underlyingmarket and which is specified in the relevant public statement, and, in each case, notthe date of the relevant public statement.

The occurrence of a Benchmark Event shall be determined by the Issuer and promptlynotified to the Trustee, the Calculation Agent and the Paying Agents. For theavoidance of doubt, none of the Trustee, the Calculation Agent or the Paying Agentsshall have any responsibility or liability for making such determination and shallhave no obligation to monitor whether any Benchmark Event has occurred;

“business day” means a day, other than a Saturday or Sunday, on which banks areopen for business in the place of the specified office of the Calculation Agent;

“Independent Adviser” means an independent financial institution of internationalrepute or an independent financial adviser with appropriate expertise selected andappointed by the Issuer (at the expense of the Issuer, failing whom the Guarantor)under Condition 5(j)(i);

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“Original Reference Rate” means the originally-specified benchmark or screen rate(as applicable) used to determine the Rate of Interest (or any component part thereof)on the Notes;

“Relevant Nominating Body” means, in respect of a benchmark or screen rate (asapplicable):

(i) the central bank for the currency to which the benchmark or screen rate (asapplicable) relates, or any central bank or other supervisory authority which isresponsible for supervising the administrator of the benchmark or screen rate (asapplicable); or

(ii) any working group or committee sponsored by, chaired or co-chaired by orconstituted at the request of (A) the central bank for the currency to which thebenchmark or screen rate (as applicable) relates, (B) any central bank or othersupervisory authority which is responsible for supervising the administrator ofthe benchmark or screen rate (as applicable), (C) a group of the aforementionedcentral banks or other supervisory authorities or (D) the Financial StabilityBoard or any part thereof; and

“Successor Rate” means a successor to or replacement of the Original ReferenceRate which is formally recommended by any Relevant Nominating Body.

(k) Determination or Calculation by Trustee: If the Calculation Agent does not at any timefor any reason determine or calculate the Rate of Interest for an Interest Accrual Period orany Interest Amount, Instalment Amount, Final Redemption Amount, Early RedemptionAmount or Optional Redemption Amount, the Trustee may but shall not be obliged to doso (or may but shall not be obliged to appoint, at the cost of the Issuer, failing whom theGuarantor, an agent on its behalf to do so) and such determination or calculation shall bedeemed for all purposes to have been made by the Calculation Agent. Any person soappointed by the Trustee shall not be an agent of the Trustee for any purpose. In doing so,the Trustee or such agent appointed by it shall apply the foregoing provisions of thisCondition 5, with any necessary consequential amendments, to the extent that, in itsopinion, it can do so, and, in all other respects it shall do so in such manner as it shall deemfair and reasonable in all the circumstances.

(l) Definitions: In these Conditions, unless the context otherwise requires, the followingdefined terms shall have the meanings set out below:

“Business Day” means:

(i) in the case of a currency other than euro or Renminbi, a day (other than a Saturdayor Sunday) on which commercial banks and foreign exchange markets settlepayments in the principal financial centre for such currency; and/or

(ii) in the case of euro, a day on which the TARGET System is operating (a “TARGETBusiness Day”); and/or

(iii) in the case of Renminbi, a day (other than a Saturday, Sunday or public holiday) onwhich commercial banks and foreign exchange markets are generally open forbusiness and settlement of Renminbi payments in Hong Kong; and/or

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(iv) in the case of a currency and/or one or more Business Centres a day (other than aSaturday or a Sunday) on which commercial banks and foreign exchange marketssettle payments in such currency in the Business Centre(s) or, if no currency isindicated, generally in each of the Business Centres;

“Day Count Fraction” means, in respect of the calculation of an amount of interest on anyNote for any period of time (from and including the first day of such period to butexcluding the last) (whether or not constituting an Interest Period or an Interest AccrualPeriod, the “Calculation Period”):

(i) if “Actual/Actual” or “Actual/Actual – ISDA” is specified hereon, the actualnumber of days in the Calculation Period divided by 365 (or, if any portion of that

Calculation Period falls in a leap year, the sum of (A) the actual number of days in

that portion of the Calculation Period falling in a leap year divided by 366 and (B)

the actual number of days in that portion of the Calculation Period falling in a

non-leap year divided by 365);

(ii) if “Actual/365 (Fixed)” is specified hereon, the actual number of days in the

Calculation Period divided by 365;

(iii) if “Actual/365 (Sterling)” is specified hereon, the actual number of days in the

Calculation Period divided by 365 or, in the case of an Interest Payment Date falling

in a leap year, 366;

(iv) if “Actual/360” is specified hereon, the actual number of days in the Calculation

Period divided by 360;

(v) if “30/360”, “360/360” or “Bond Basis” is specified hereon, the number of days in

the Calculation Period divided by 360, calculated on a formula basis as follows:

Day Count Fraction =[360 × (Y2 – Y1)] + [30 × (M2 – M1)] + (D2 – D1)

360

where:

“Y1” is the year, expressed as a number, in which the first day of the Calculation

Period falls;

“Y2” is the year, expressed as a number, in which the day immediately following the

last day included in the Calculation Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of the

Calculation Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediately

following the last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period,

unless such number would be 31, in which case D1 will be 30; and

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“D2” is the calendar day, expressed as a number, immediately following the last dayincluded in the Calculation Period, unless such number would be 31 and D1 isgreater than 29, in which case D2 will be 30;

(vi) if “30E/360” or “Eurobond Basis” is specified hereon, the number of days in theCalculation Period divided by 360, calculated on a formula basis as follows:

Day Count Fraction =[360 × (Y2 – Y1)] + [30 × (M2 – M1)] + (D2 – D1)

360

where:

“Y1” is the year, expressed as a number, in which the first day of the CalculationPeriod falls;

“Y2” is the year, expressed as a number, in which the day immediately following thelast day included in the Calculation Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of theCalculation Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediatelyfollowing the last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period,unless such number would be 31, in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last dayincluded in the Calculation Period, unless such number would be 31, in whichcase D2 will be 30;

(vii) if “30E/360 (ISDA)” is specified hereon, the number of days in the CalculationPeriod divided by 360, calculated on a formula basis as follows:

Day Count Fraction =[360 × (Y2 – Y1)] + [30 × (M2 – M1)] + (D2 – D1)

360

where:

“Y1” is the year, expressed as a number, in which the first day of the CalculationPeriod falls;

“Y2” is the year, expressed as a number, in which the day immediately following thelast day included in the Calculation Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of theCalculation Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediatelyfollowing the last day included in the Calculation Period falls;

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“D1” is the first calendar day, expressed as a number, of the Calculation Period,unless (i) that day is the last day of February or (ii) such number would be 31,in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last dayincluded in the Calculation Period, unless (i) that day is the last day of Februarybut not the Maturity Date or (ii) such number would be 31, in which case D2 willbe 30;

(viii) if “Actual/Actual-ICMA” is specified hereon,

(A) if the Calculation Period is equal to or shorter than the Determination Periodduring which it falls, the number of days in the Calculation Period divided bythe product of (x) the number of days in such Determination Period and (y) thenumber of Determination Periods normally ending in any year; and

(B) if the Calculation Period is longer than one Determination Period, the sum of:

(x) the number of days in such Calculation Period falling in the DeterminationPeriod in which it begins divided by the product of (1) the number of daysin such Determination Period and (2) the number of Determination Periodsnormally ending in any year; and

(y) the number of days in such Calculation Period falling in the nextDetermination Period divided by the product of (1) the number of days insuch Determination Period and (2) the number of Determination Periodsnormally ending in any year

where:

“Determination Period” means the period from and including a DeterminationDate in any year to but excluding the next Determination Date;

“Determination Date” means the date(s) specified as such hereon or, if none isso specified, the Interest Payment Date(s);

“Euro-zone” means the region comprised of member states of the EuropeanUnion that adopt the single currency in accordance with the Treaty establishingthe European Community, as amended;

“Interest Accrual Period” means the period beginning on (and including) theInterest Commencement Date and ending on (but excluding) the first InterestPeriod Date and each successive period beginning on (and including) an InterestPeriod Date and ending on (but excluding) the next succeeding Interest PeriodDate;

“Interest Amount” means:

(i) in respect of an Interest Accrual Period, the amount of interest payable perCalculation Amount for that Interest Accrual Period and which, in the case

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of Fixed Rate Notes, and unless otherwise specified hereon, shall mean the

Fixed Coupon Amount or Broken Amount specified hereon as being

payable on the Interest Payment Date ending the Interest Period of which

such Interest Accrual Period forms part; and

(ii) in respect of any other period, the amount of interest payable per

Calculation Amount for that period;

“Interest Commencement Date” means the Issue Date or such other date as

may be specified hereon;

“Interest Determination Date” means, with respect to a Rate of Interest and

Interest Accrual Period, the date specified as such hereon or, if none is so

specified, (i) the first day of such Interest Accrual Period if the Specified

Currency is Sterling or Hong Kong dollars or Renminbi other than where the

Specified Currency is Renminbi and the Reference Rate is CNH HIBOR or (ii)

the day falling two Business Days in London for the Specified Currency prior

to the first day of such Interest Accrual Period if the Specified Currency is

neither Sterling nor euro nor Hong Kong dollars nor Renminbi or (iii) the day

falling two TARGET Business Days prior to the first day of such Interest

Accrual Period if the Specified Currency is euro or (iv) the day falling two

Business Days in Hong Kong prior to the first day of such Interest Accrual

Period if the Specified Currency is Renminbi and the Reference Rate is CNH

HIBOR;

“Interest Period” means the period beginning on and including the Interest

Commencement Date and ending on but excluding the first Interest Payment

Date and each successive period beginning on and including an Interest

Payment Date and ending on but excluding the next succeeding Interest

Payment Date;

“Interest Period Date” means each Interest Payment Date unless otherwise

specified hereon;

“ISDA Definitions” means the 2006 ISDA Definitions, as published by the

International Swaps and Derivatives Association, Inc., unless otherwise

specified hereon;

“Rate of Interest” means the rate of interest payable from time to time in

respect of this Note and that is either specified or calculated in accordance with

the provisions hereon;

“Reference Banks” means, in the case of a determination of LIBOR, the

principal London office of four major banks in the London inter-bank market

and, in the case of a determination of EURIBOR, the principal Euro-zone office

of four major banks in the Euro-zone inter-bank market and, in the case of a

determination of HIBOR, the principal Hong Kong office of four major banks

in the Hong Kong inter-bank market and, in the case of a determination of CNH

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HIBOR, the principal Hong Kong office of four major banks dealing in

Renminbi in the Hong Kong inter-bank market, in each case selected by the

Issuer or as specified hereon;

“Reference Rate” means the rate specified as such hereon;

“Relevant Screen Page” means such page, section, caption, column or other

part of a particular information service as may be specified hereon (or any

successor or replacement page, section, caption column or other part of a

particular information service);

“Specified Currency” means the currency specified as such hereon or, if none

is specified, the currency in which the Notes are denominated; and

“TARGET System” means the Trans-European Automated Real-Time Gross

Settlement Express Transfer (known as TARGET2) System which was launched

on 19 November 2007 or any successor thereto.

(m) Calculation Agent: The Issuer shall procure that there shall at all times be one or more

Calculation Agents if provision is made for it or them hereon and for so long as any Note

or Coupon is outstanding (as defined in the Trust Deed). Where more than one Calculation

Agent is appointed in respect of the Notes, references in these Conditions to the

Calculation Agent shall be construed as each Calculation Agent performing its respective

duties under these Conditions. If the Calculation Agent is unable or unwilling to act as

such or if the Calculation Agent fails duly to establish the Rate of Interest for an Interest

Accrual Period or to calculate any Interest Amount, Instalment Amount, Final Redemption

Amount, Early Redemption Amount or Optional Redemption Amount, as the case may be,

or to comply with any other requirement, the Issuer shall (with the prior written approval

of the Trustee) appoint a leading bank or financial institution engaged in the interbank

market (or, if appropriate, money, swap or over-the-counter index options market) that is

most closely connected with the calculation or determination to be made by the

Calculation Agent (acting through its principal London office or any other office actively

involved in such market) to act as such in its place. The Calculation Agent may not resign

its duties without a successor having been appointed as aforesaid.

6 REDEMPTION, PURCHASE AND OPTIONS

(a) Redemption by Instalments and Final Redemption:

(i) Unless previously redeemed, purchased and cancelled as provided in this Condition

6, each Note that provides for Instalment Dates and Instalment Amounts shall be

partially redeemed on each Instalment Date at the related Instalment Amount

specified hereon. The outstanding nominal amount of each such Note shall be

reduced by the Instalment Amount (or, if such Instalment Amount is calculated by

reference to a proportion of the nominal amount of such Note, such proportion) for

all purposes with effect from the related Instalment Date, unless payment of the

Instalment Amount is improperly withheld or refused, in which case, such amount

shall remain outstanding until the Relevant Date relating to such Instalment Amount.

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(ii) Unless previously redeemed, purchased and cancelled as provided below, each Noteshall be finally redeemed on the Maturity Date specified hereon at its FinalRedemption Amount (which, unless otherwise provided hereon, is its outstandingnominal amount) or, in the case of a Note falling within Condition 6(a)(i) above, itsfinal Instalment Amount.

(b) Early Redemption:

(i) Zero Coupon Notes:

(A) The Early Redemption Amount payable in respect of any Zero Coupon Note, theEarly Redemption Amount of which is not linked to an index and/or a formula,upon redemption of such Note pursuant to Condition 6(c), Condition 6(e) orCondition 6(f) or upon it becoming due and payable as provided in Condition10 shall be the Amortised Face Amount (calculated as provided below) of suchNote unless otherwise specified hereon.

(B) Subject to the provisions of sub-paragraph (C) below of this Condition 6(b)(i),the Amortised Face Amount of any such Note shall be the scheduled FinalRedemption Amount of such Note on the Maturity Date discounted at a rate perannum (expressed as a percentage) equal to the Amortisation Yield (which, ifnone is shown hereon, shall be such rate as would produce an Amortised FaceAmount equal to the issue price of the Notes if they were discounted back totheir issue price on the Issue Date) compounded annually.

(C) If the Early Redemption Amount payable in respect of any such Note upon itsredemption pursuant to Condition 6(c), Condition 6(e) or Condition 6(f) or uponit becoming due and payable as provided in Condition 10 is not paid when due,the Early Redemption Amount due and payable in respect of such Note shall bethe Amortised Face Amount of such Note as defined in sub-paragraph (B) aboveof this Condition 6(b)(i), except that such sub-paragraph shall have effect asthough the date on which the Note becomes due and payable were the RelevantDate. The calculation of the Amortised Face Amount in accordance with thissub-paragraph (C) shall continue to be made (both before and after judgment)until the Relevant Date, unless the Relevant Date falls on or after the MaturityDate, in which case the amount due and payable shall be the scheduled FinalRedemption Amount of such Note on the Maturity Date together with anyinterest that may accrue in accordance with Condition 5(c).

Where such calculation is to be made for a period of less than one year, it shallbe made on the basis of the Day Count Fraction shown hereon.

(ii) Other Notes: The Early Redemption Amount payable in respect of any Note (otherthan Notes described in Condition 6(b)(i) above), upon redemption of such Notepursuant to Condition 6(c), Condition 6(d), Condition 6(e) or Condition 6(f) or uponit becoming due and payable as provided in Condition 10, shall be the FinalRedemption Amount unless otherwise specified hereon.

(c) Redemption for Taxation Reasons: The Notes may be redeemed at the option of theIssuer in whole, but not in part, on any Interest Payment Date (if this Note is either a

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Floating Rate Note or an Index Linked Interest Note) or at any time (if this Note is neither

a Floating Rate Note nor an Index Linked Interest Note), on giving not less than 30 nor

more than 60 days’ notice to the Noteholders in accordance with Condition 16 (which

notice shall be irrevocable) and in writing to the Trustee and the Principal Paying Agent,

at their Early Redemption Amount (as described in Condition 6(b) above) (together with

interest accrued up to but excluding the date fixed for redemption), if the Issuer (or, if the

Guarantee was called, the Guarantor) satisfies the Trustee immediately prior to the giving

of such notice that (i) it (or, if the Guarantee was called, the Guarantor) has or will become

obliged to pay Additional Tax Amounts as provided or referred to in Condition 8 as a result

of any change in, or amendment to, the laws or regulations of the Cayman Islands or the

PRC or, in each case, any political subdivision or any authority thereof or therein having

power to tax, or any change in the application or official interpretation of, such laws or

regulations, which change or amendment becomes effective on or after the date on which

agreement is reached to issue the first Tranche of the Notes, and (ii) such obligation cannot

be avoided by the Issuer (or the Guarantor, as the case may be) taking reasonable measures

available to it, provided that no such notice of redemption shall be given earlier than 90

days prior to the earliest date on which the Issuer (or the Guarantor, as the case may be)

would be obliged to pay such Additional Tax Amounts were a payment in respect of the

Notes (or the Guarantee, as the case may be) then due. Prior to the giving of any notice

of redemption pursuant to this Condition 6(c), the Issuer (or the Guarantor, as the case may

be) shall deliver to the Trustee (A) a certificate signed by an Authorised Signatory of the

Issuer (or by an Authorised Signatory of the Guarantor, as the case may be) stating that the

obligation referred to in (i) above of this Condition 6(c) cannot be avoided by the Issuer

(or the Guarantor, as the case may be) taking reasonable measures available to it and (B)

an opinion, addressed to and in form and substance satisfactory to the Trustee, of

independent tax or legal advisers of recognised standing to the effect that the Issuer or the

Guarantor (as the case may be) has or will become obliged to pay such Additional Tax

Amounts as a result of such change or amendment, and the Trustee shall be entitled to

accept such certificate and opinion as sufficient evidence of the satisfaction of the

conditions precedent set out in (i) and (ii) above of this Condition 6(c) without further

enquiry and without liability to any Noteholder or Couponholder, in which event the same

shall be conclusive and binding on the Noteholders and Couponholders. All Notes in

respect of which any notice of redemption is given under Condition 6(c) shall be redeemed

on the date and in such manner as specified in such notice in accordance with this

Condition 6(c).

(d) Redemption for Change of Control: If Change of Control Put Option is specified hereon,

at any time following the occurrence of a Change of Control, the holder of any Note will

have the right, at such holder’s option, to require the Issuer to redeem all but not some only

of that holder’s Notes on the CoC Put Settlement Date at 101 per cent. of their nominal

amount, together with accrued interest up to but excluding such CoC Put Settlement Date.

To exercise such right, the holder of the relevant Note must deposit (in the case of Bearer

Notes) such Note (together with all unmatured Receipts and Coupons and unexchanged

Talons) with any Paying Agent (or in the case of Registered Notes) the Certificates

representing such Note(s) with the Registrar or any Transfer Agent, in each case at its

specified office together with a duly completed and signed notice of redemption, in the

form for the time being current, obtainable from the specified office of any Paying Agent,

Transfer Agent or the Registrar (as applicable) (a “CoC Put Exercise Notice”), by not

later than 30 days following the occurrence of a Change of Control or, if later, 30 days

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following the date upon which notice thereof is given to Noteholders by the Issuer in

accordance with Condition 16. The “CoC Put Settlement Date” shall be the 14th day after

the expiry of such period of 30 days as referred to above in this Condition 6(d).

A CoC Put Exercise Notice, once delivered, shall be irrevocable and the Issuer shall

redeem the Notes subject to the CoC Put Exercise Notices delivered as aforesaid on the

CoC Put Settlement Date.

The Issuer shall give notice to Noteholders in accordance with Condition 16 and to the

Trustee and the Principal Paying Agent in writing by not later than 14 days following the

first day on which it becomes aware of the occurrence of a Change of Control, which

notice shall specify the procedure for exercise by holders of their rights to require

redemption of the Notes pursuant to this Condition 6(d).

The Trustee and the Agents shall not be required to take any steps to ascertain whether a

Change of Control or any event which may result in a Change of Control has occurred and

shall not be responsible for or liable to Noteholders, the Issuer, the Guarantor or any other

person for any loss arising from any failure to do so.

In these Conditions:

a “Change of Control” occurs when:

(i) (A) SASAC; and

(B) any other person directly or indirectly controlled by SASAC or the central

government of the PRC (such person and SASAC, a “PRC GovernmentPerson”),

together cease to directly or indirectly control the Guarantor;

(ii) the Guarantor ceases to directly or indirectly hold or own 100 per cent. of the issued

share capital of the Issuer; or

(iii) the Guarantor consolidates with or merges into or sells or transfers all or substantially

all of the Guarantor’s assets to any other person or persons, acting together, except

where such person(s) (in the case of asset transfer) or the surviving entity (in the case

of consolidation or merger) is/are controlled by a PRC Government Person;

“control” means:

(i) the ownership or control of more than 30 per cent. of the Voting Rights of the issued

share capital of a person;

(ii) the nomination, designation or removal of no less than half of the members then in

office of a person’s board of directors or other governing body, whether obtained

directly or indirectly, and whether obtained by ownership of share capital, the

possession of Voting Rights, contract or otherwise; or

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(iii) the possession, directly or indirectly, of the power to direct or cause the direction of

the management policies of a person.

For the avoidance of doubt, a person is deemed to control another person so long as it

fulfils one of the three foregoing requirements. The terms “controlling” and “controlled”

have meanings correlative to the foregoing;

“SASAC” means the State-owned Assets Supervision and Administration Commission of

the State Council of the PRC or its successor; and

“Voting Rights” means the right generally to vote at a general meeting of shareholders of

a person (irrespective of whether or not, at the time, stock of any other class or classes

shall have, or might have, voting power by reason of the happening of any contingency,

and any such voting power shall therefore be excluded for the purpose of this definition).

(e) Redemption for No Registration Event: If No Registration Put Option is specified

hereon, the holder of any Note of a particular series will have the right, at such holder’s

option, to require the Issuer to redeem all but not some only of that holder’s Notes of a

particular series on the relevant No Registration Put Settlement Date at 100 per cent. of

their nominal amount, together with accrued interest up to but excluding such No

Registration Put Settlement Date. To exercise such right, the holder of the relevant Note

must deposit (in the case of Bearer Notes) such Note (together with all unmatured Receipts

and Coupons and unexchanged Talons) with any Paying Agent (or in the case of Registered

Notes) the Certificates representing such Note(s) with the Registrar or any Transfer Agent,

in each case at its specified office together with a duly completed and signed notice of

redemption, in the form for the time being current, obtainable from the specified office of

any Paying Agent, Transfer Agent or the Registrar (as applicable) (a “No Registration PutExercise Notice”), by not later than 30 days following the date upon which notice thereof

is given to Noteholders by the Issuer in accordance with Condition 16. The “NoRegistration Put Settlement Date” shall be the 14th day after the expiry of such period

of 30 days as referred to above in this Condition 6(e).

A No Registration Put Exercise Notice, once delivered, shall be irrevocable and the Issuer

shall redeem the relevant Notes subject to the No Registration Put Exercise Notices

delivered as aforesaid on the Put Settlement Date.

The Issuer shall give notice to Noteholders in accordance with Condition 16 and to the

Trustee in writing by not later than 14 days following the first day on which it becomes

aware of the occurrence of a No Registration Event, which notice shall specify the

procedure for exercise by holders of their rights to require redemption of the relevant

Notes pursuant to this Condition 6(e).

In this Condition 6(e):

(A) a “No Registration Event” occurs when the Registration Conditions are not satisfied

on or before the Registration Deadline;

(B) “Registration Business Day” means a day, other than a Saturday, Sunday or public

holiday, on which commercial banks are generally open for business in Beijing;

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(C) “Registration Conditions” means the receipt by the Trustee of the RegistrationDocuments;

(D) “Registration Deadline” means the day falling 120 Registration Business Days afterthe Issue Date of the relevant Notes or such other date as is specified hereon; and

(E) “Registration Documents” means, in relation to Condition 4(d) or Condition 4(e), asapplicable:

(i) a certificate in English substantially in the form scheduled to the Trust Deedsigned by an Authorised Signatory of the Guarantor confirming the completionof the applicable registration or filing procedures in accordance with therelevant NDRC or SAFE requirements (as applicable) as specified hereon;

(ii) copies of the relevant documents evidencing the applicable registration or filingprocedures in accordance with the relevant NDRC or SAFE requirements (asapplicable), each certified in English by an Authorised Signatory of theGuarantor as being a true and complete copy of the original; and

(iii) such other documents as specified hereon.

(f) Redemption at the Option of the Issuer: If Call Option is specified hereon, the Issuermay, on giving not less than 15 nor more than 30 days’ irrevocable notice to theNoteholders (or such other notice period as may be specified hereon) and in writing to theTrustee and the Principal Paying Agent, redeem all or, if so provided, some of the Noteson any Optional Redemption Date specified hereon. Any such redemption of Notes shallbe at their Optional Redemption Amount specified hereon (which may be the EarlyRedemption Amount (as described in Condition 6(b) above)), together with interestaccrued up to and excluding the date fixed for redemption. Any such redemption orexercise must relate to Notes of a nominal amount at least equal to the MinimumRedemption Amount to be redeemed specified hereon and no greater than the MaximumRedemption Amount to be redeemed specified hereon.

All Notes in respect of which any such notice is given shall be redeemed on the datespecified in such notice in accordance with this Condition 6(f).

In the case of a partial redemption, the notice to Noteholders shall also contain thecertificate numbers of the Bearer Notes, or in the case of Registered Notes shall specifythe nominal amount of Registered Notes drawn and the holder(s) of such Registered Notes,to be redeemed, which shall have been drawn in such place and in such manner asdetermined by the Issuer and notified in writing to the Trustee and the Principal PayingAgent, subject to compliance with any applicable laws and stock exchange or otherrelevant authority requirements.

(g) Redemption at the Option of Noteholders: If Put Option is specified hereon, the Issuershall, at the option of the holder of any such Note, upon the holder of such Note givingnot less than 15 nor more than 30 days’ notice to the Issuer (or such other notice periodas may be specified hereon) redeem such Note on the Optional Redemption Date(s) at itsOptional Redemption Amount specified hereon, together with interest accrued to the datefixed for redemption.

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To exercise such option the holder must deposit (in the case of Bearer Notes) such Note(together with all unmatured Receipts and Coupons and unexchanged Talons) with anyPaying Agent or (in the case of Registered Notes) the Certificate representing such Note(s)with the Registrar or any Transfer Agent, in each case at its specified office, together witha duly completed option exercise notice (an “Exercise Notice”) in the form obtainablefrom any Paying Agent, the Registrar or any Transfer Agent (as applicable) within thenotice period. No Note or Certificate so deposited and option exercised may be withdrawn(except as provided in the Agency Agreement) without the prior consent of the Issuer.

(h) Partly Paid Notes: Partly Paid Notes will be redeemed, whether at maturity, earlyredemption or otherwise, in accordance with the provisions of this Condition 6 and theprovisions specified hereon.

(i) Purchases: The Issuer, the Guarantor and their respective Subsidiaries may at any timepurchase Notes (provided that all unmatured Receipts and Coupons and unexchangedTalons relating thereto are attached thereto or surrendered therewith) in the open marketor otherwise at any price. The Notes so purchased, while held by or on behalf of the Issuer,the Guarantor or any such Subsidiary, shall not entitle the holder to vote at any meetingsof the Noteholders and shall not be deemed to be outstanding for the purposes of, amongother things, calculating quorums at meetings of the Noteholders or for the purposes ofConditions 10, 11(a) and 12.

(j) Cancellation: All Notes purchased by or on behalf of the Issuer, the Guarantor or any oftheir respective Subsidiaries shall be surrendered for cancellation, in the case of BearerNotes, by surrendering each such Note together with all unmatured Receipts and Couponsand all unexchanged Talons to the Principal Paying Agent and, in the case of RegisteredNotes, by surrendering the Certificate representing such Notes to the Registrar and, in eachcase, if so surrendered, shall, together with all Notes redeemed by the Issuer, be cancelledforthwith (together with all unmatured Receipts and Coupons and unexchanged Talonsattached thereto or surrendered therewith). Any Notes so surrendered for cancellation maynot be reissued or resold and the obligations of the Issuer and the Guarantor in respect ofany such Notes shall be discharged.

7 PAYMENTS AND TALONS

(a) Bearer Notes: Payments of principal and interest in respect of Bearer Notes shall, subjectas mentioned below, be made against presentation and surrender of the relevant Receipts(in the case of payments of Instalment Amounts other than on the due date for redemptionand provided that the Receipt is presented for payment together with its relative Note),Notes (in the case of all other payments of principal and, in the case of interest, asspecified in Condition 7(f)(vi)) or Coupons (in the case of interest, save as specified inCondition 7(f)(ii)), as the case may be:

(i) in the case of a currency other than Renminbi, at the specified office of any PayingAgent outside the United States by transfer to an account denominated in suchcurrency with, a Bank; and

(ii) in the case of Renminbi, by transfer from the relevant Paying Agent’s office outsidethe United States to a Renminbi account maintained by or on behalf of the Noteholderwith a Bank in Hong Kong.

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In this Condition 7(a) and in Condition 7(c), “Bank” means a bank in the principalfinancial centre for such currency or, in the case of euro, in a city in which banks haveaccess to the TARGET System.

Payments of principal and interest in respect of Bearer Notes held in the CMU will bemade to the CMU for their distribution to the person(s) for whose account(s) interests inthe relevant Bearer Note are credited as being held with the CMU in accordance with theCMU Rules (as defined in the Agency Agreement) at the relevant time and payment madein accordance thereof shall discharge the obligations of the Issuer in respect of thatpayment.

(b) Payments in the United States: Notwithstanding the foregoing, if any Bearer Notes aredenominated in U.S. dollars, payments in respect thereof may be made at the specifiedoffice of any Paying Agent in New York City in the same manner as aforesaid if (i) theIssuer shall have appointed Paying Agents with specified offices outside the United Stateswith the reasonable expectation that such Paying Agents would be able to make paymentof the amounts on the Notes in the manner provided above when due, (ii) payment in fullof such amounts at all such offices is illegal or effectively precluded by exchange controlsor other similar restrictions on payment or receipt of such amounts and (iii) such paymentis then permitted by United States law, without involving, in the opinion of the Issuer, anyadverse tax consequence to the Issuer.

(c) Registered Notes:

(i) Payments of principal (which for the purposes of this Condition 7(b) shall includefinal Instalment Amounts but not other Instalment Amounts) in respect of RegisteredNotes shall be made against presentation and surrender of the relevant Certificates atthe specified office of any of the Transfer Agents or of the Registrar and in themanner provided in Condition 7(b)(ii).

(ii) Interest (which for the purpose of this Condition 7(b) shall include all InstalmentAmounts other than final Instalment Amounts) on Registered Notes shall be paid tothe person shown on the Register at the close of business on the fifteenth day beforethe due date for payment thereof or in the case of Renminbi or otherwise specified,on the fifth day before the due date for payment thereof (the “Record Date”).Payments of interest on each Registered Note shall be made:

(A) in the case of a currency other than Renminbi, in the relevant currency bytransfer to an account in the relevant currency maintained by the payee with aBank; and

(B) in the case of Renminbi, by transfer to the registered account of the Noteholder.

In this Condition 7(c), “registered account” means the Renminbi account maintainedby or on behalf of the Noteholder with a bank in Hong Kong, details of which appearon the Register at the close of business on the fifth business day before the due datefor payment.

Payments of principal and interest in respect of Registered Notes held in the CMU will bemade to the CMU for their distribution to the person(s) for whose account(s) interests inthe relevant Registered Note are credited as being held with the CMU in accordance withthe CMU Rules at the relevant time and payment made in accordance thereof shalldischarge the obligations of the Issuer in respect of that payment.

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(d) Payments subject to Fiscal Laws: All payments are subject in all cases to (i) any fiscal

or other laws, regulations and directives applicable thereto in the place of payment but

without prejudice to the provisions of Condition 8 and (ii) any withholding or deduction

required pursuant to an agreement described in Section 1471(b) of the U.S. Internal

Revenue Code of 1986 (the “Code”) or otherwise imposed pursuant to Sections 1471

through 1474 of the Code, any regulations or agreements thereunder, any official

interpretations thereof, or (without prejudice to the provisions of Condition 8) any law

implementing an intergovernmental approach thereto.

(e) Appointment of Agents: The Principal Paying Agent, the CMU Lodging and Paying

Agent, the other Paying Agents, the Registrar, the Transfer Agents and the Calculation

Agent initially appointed by the Issuer and the Guarantor and their respective specified

offices are listed below. The Principal Paying Agent, the CMU Lodging and Paying Agent,

the other Paying Agents, the Registrar, the Transfer Agents and the Calculation Agent act

solely as agents of the Issuer and the Guarantor and do not assume any obligation or

relationship of agency or trust for or with any Noteholder or Couponholder. The Issuer and

the Guarantor reserve the right at any time with the prior written approval of the Trustee

(where required in accordance with the Agency Agreement) to vary or terminate the

appointment of the Principal Paying Agent, the CMU Lodging and Paying Agent, any other

Paying Agent, the Registrar, any Transfer Agent or the Calculation Agent(s) and to appoint

additional or other Paying Agents or Transfer Agents, provided that the Issuer shall at all

times maintain (i) a Principal Paying Agent, (ii) a Registrar in relation to Registered Notes,

(iii) a Transfer Agent in relation to Registered Notes, (iv) a CMU Lodging and Paying

Agent in relation to Notes accepted for clearance through the CMU, (v) one or more

Calculation Agent(s) where these Conditions so require and (vi) such other agents as may

be required by any other stock exchange on which the Notes may be listed.

In addition, the Issuer and the Guarantor shall forthwith appoint a Paying Agent in New

York City in respect of any Bearer Notes denominated in U.S. dollars in the circumstances

described in Condition 7(c) above.

Notice of any such termination or appointment or any change of any specified office of an

Agent shall promptly be given by the Issuer to the Noteholders.

(f) Unmatured Coupons and Receipts and unexchanged Talons:

(i) Upon the due date for redemption of Bearer Notes which comprise Fixed Rate Notes

(other than Dual Currency Notes or Index linked Notes), such Notes should be

surrendered for payment together with all unmatured Coupons (if any) relating

thereto, failing which an amount equal to the face value of each missing unmatured

Coupon (or, in the case of payment not being made in full, that proportion of the

amount of such missing unmatured Coupon that the sum of principal so paid bears to

the total principal due) shall be deducted from the Final Redemption Amount, Early

Redemption Amount or Optional Redemption Amount, as the case may be, due for

payment. Any amount so deducted shall be paid in the manner mentioned above

against surrender of such missing Coupon within a period of 10 years from the

Relevant Date for the payment of such principal (whether or not such Coupon has

become void pursuant to Condition 9).

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(ii) Upon the due date for redemption of any Bearer Note comprising a Floating RateNote, Dual Currency Note or Index Linked Note, unmatured Coupons relating to suchNote (whether or not attached) shall become void and no payment shall be made inrespect of them.

(iii) Upon the due date for redemption of any Bearer Note, any unexchanged Talonrelating to such Note (whether or not attached) shall become void and no Couponshall be delivered in respect of such Talon.

(iv) Upon the due date for redemption of any Bearer Note that is redeemable ininstalments, all Receipts relating to such Note having an Instalment Date falling onor after such due date (whether or not attached) shall become void and no paymentshall be made in respect of them.

(v) Where any Bearer Note that provides that the relative unmatured Coupons are tobecome void upon the due date for redemption of those Notes is presented forredemption without all unmatured Coupons, and where any Bearer Note is presentedfor redemption without any unexchanged Talon relating to it, redemption shall bemade only against the provision of such indemnity as the Issuer may require.

(vi) If the due date for redemption of any Note is not a due date for payment of interest,interest accrued from the preceding due date for payment of interest or the InterestCommencement Date, as the case may be, shall only be payable against presentation(and surrender if appropriate) of the relevant Bearer Note or Certificate representingit, as the case may be. Interest accrued on a Note that only bears interest after itsMaturity Date shall be payable on redemption of such Note against presentation ofthe relevant Note or Certificate representing it, as the case may be.

(g) Talons: On or after the Interest Payment Date for the final Coupon forming part of aCoupon sheet issued in respect of any Bearer Note, the Talon forming part of such Couponsheet may be surrendered at the specified office of the Principal Paying Agent in exchangefor a further Coupon sheet (and if necessary another Talon for a further Coupon sheet) (butexcluding any Coupons that may have become void pursuant to Condition 9).

(h) Non-Business Days: If any date for payment in respect of any Note, Receipt or Couponis not a business day, the holder shall not be entitled to payment until the next followingbusiness day nor to any interest or other sum in respect of such postponed payment. In thisCondition 7, “business day” means a day (other than a Saturday or a Sunday) on whichbanks and foreign exchange markets are generally open for business in the relevant placeof presentation (if presentation and/or surrender of such Notes, Receipt or Coupon isrequired), in such jurisdictions as shall be specified as “Financial Centres” hereon and:

(i) (in the case of a payment in a currency other than euro and Renminbi) where paymentis to be made by transfer to an account maintained with a bank in the relevantcurrency, on which foreign exchange transactions may be carried on in the relevantcurrency in the principal financial centre of the country of such currency; or

(ii) (in the case of a payment in euro) which is a TARGET Business Day; or

(iii) (in the case of a payment in Renminbi) on which banks and foreign exchange marketsare open for business and settlement of Renminbi payments in Hong Kong.

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8 TAXATION

All payments of principal and interest by or on behalf of the Issuer or the Guarantor in respect

of the Notes, the Receipts and the Coupons or under the Guarantee (as the case may be) shall

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

deduction for, or on account of, any taxes, duties, assessments or governmental charges of

whatever nature imposed, levied, collected, withheld or assessed by or within the Cayman

Islands or the PRC or, in each case, any political subdivision or authority therein or thereof

having power to tax, unless such withholding or deduction is required by law.

Where such withholding or deduction is made by the Issuer or, as the case may be, the

Guarantor, by or within the PRC at a rate of up to and including the aggregate rate applicable

on the Issue Date (the “Applicable Rate”), the Issuer or, as the case may be, the Guarantor, will

increase the amounts paid by it to the extent required, so that the net amount received by

Noteholders or Couponholders equals the amounts which would otherwise have been receivable

by them had no such withholding or deduction been required.

If (a) the Issuer is required to make any deduction or withholding by or within the Cayman

Islands, or (b) the Issuer or, as the case may be, the Guarantor, is required to make a deduction

or withholding by or within the PRC in excess of the Applicable Rate, the Issuer or, as the case

may be, the Guarantor, shall pay such additional amounts (“Additional Tax Amounts”) as will

result in receipt by the Noteholders and Couponholders of such amounts as would have been

received by them had no such withholding or deduction been required, except that no Additional

Tax Amounts shall be payable in respect of any Note, Receipt or Coupon or under the Guarantee

(as the case may be):

(i) to, or to a third party on behalf of, a Noteholder or Couponholder who is liable to such

taxes, duties, assessments or governmental charges in respect of such Note, Receipt or

Coupon by reason of his having some connection with the Cayman Islands (in the case of

payments made by the Issuer) or the PRC (in the case of payments made by the Issuer or

the Guarantor) other than the mere holding of the Note, Receipt or Coupon; or

(ii) presented (or in respect of which the Certificate representing it is presented) for payment

(where presentation is required) more than 30 days after the Relevant Date except to the

extent that the Noteholder or Couponholder would have been entitled to such Additional

Tax Amounts on presenting it for payment on the thirtieth day.

As used in these Conditions, “Relevant Date” in respect of any Note, Receipt or Coupon means

the date on which payment in respect of it first becomes due or (if any amount of the money

payable is improperly withheld or refused) the date on which payment in full of the amount

outstanding is made or (if earlier) the date seven days after that on which notice is duly given

to the Noteholders that, upon further presentation of the Note (or relative Certificate), Receipt

or Coupon being made in accordance with these Conditions, such payment will be made,

provided that payment is in fact made upon such presentation. References in these Conditions

to (A) “principal” shall be deemed to include any premium payable in respect of the Notes, all

Instalment Amounts, Final Redemption Amounts, Early Redemption Amounts, Optional

Redemption Amounts, Amortised Face Amounts and all other amounts in the nature of principal

payable pursuant to Condition 6 or any amendment or supplement to it, (B) “interest” shall be

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deemed to include all Interest Amounts and all other amounts payable pursuant to Condition 5

or any amendment or supplement to it and (C) “principal” and/or “interest” shall be deemed

to include any additional amounts that may be payable under this Condition 8 or any

undertaking given in addition to or in substitution for it under the Trust Deed.

For the avoidance of doubt, neither the Trustee nor any Agent shall be responsible or liable for

paying any tax, duty, charges, withholding or other payment referred to in this Condition 8 or

for determining whether such amounts are payable or the amount thereof, and none of the

Trustee or any of the Agents shall be responsible or liable for (I) determining whether the Issuer,

the Guarantor or any Noteholder, Receiptholder or Couponholder is liable to pay any taxes,

duty, charges, withholding or other payment referred to in this Condition 8; or (II) determining

the sufficiency or insufficiency of any amounts so paid. None of the Trustee or the Agents shall

be responsible or liable for any failure of the Issuer, the Guarantor, any Noteholder,

Receiptholder or Couponholder, or any other third party to pay such tax, duty, charges,

withholding or other payment in any jurisdiction or to provide any notice or information to the

Trustee or any Agent that would permit, enable or facilitate the payment of any principal,

premium (if any), interest or other amount under or in respect of the Notes without deduction

or withholding for or on account of any tax, duty, charge, withholding or other payment imposed

by or in any jurisdiction.

9 PRESCRIPTION

Claims against the Issuer and/or the Guarantor for payment in respect of the Notes, Receipts and

Coupons (which, for this purpose, shall not include Talons) shall be prescribed and become void

unless made within 10 years (in the case of principal) or five years (in the case of interest) from

the appropriate Relevant Date in respect of them.

10 EVENTS OF DEFAULT

If any of the following events (each an “Event of Default”) occurs, the Trustee at its discretion

may, and if so requested in writing by holders of at least 25 per cent. in aggregate nominal

amount of the Notes then outstanding or if so directed by an Extraordinary Resolution shall

(provided in any such case that the Trustee shall first have been indemnified and/or secured

and/or pre-funded to its satisfaction), give written notice to the Issuer and the Guarantor

declaring that the Notes are, and they shall immediately become, due and payable at (in the case

of Zero Coupon Notes) their Early Redemption Amount or (in the case of Notes other than Zero

Coupon Notes) their nominal amount together (if applicable) with accrued interest:

(a) Non-Payment: there is a failure to pay (i) the principal of any of the Notes when due; or

(ii) any interest on any of the Notes within seven days after any Interest Payment Date; or

(b) Breach of Other Obligations: the Issuer or the Guarantor does not perform or comply

with any one or more of its respective obligations under the Notes or the Deed of

Guarantee (other than where it gives rise to a right of redemption pursuant to Condition

6(d) or Condition 6(e)) or the Trust Deed (other than those referred to in Condition 10(a))

which default is in the opinion of the Trustee incapable of remedy or, if in the opinion of

the Trustee capable of remedy, is not remedied within 30 days after notice of such default

shall have been given to the Issuer and the Guarantor by the Trustee; or

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(c) Cross-Default: (i) any other present or future indebtedness of the Issuer, the Guarantor or

any of their respective Subsidiaries for or in respect of moneys borrowed or raised

becomes (or becomes capable of being declared) due and payable prior to its stated

maturity by reason of any actual or potential default, event of default or the like

(howsoever described), or (ii) any such indebtedness is not paid when due or, as the case

may be, within any originally applicable grace period, or (iii) the Issuer, the Guarantor or

any of their respective Subsidiaries fails to pay when due any amount payable by it under

any present or future guarantee for, or indemnity in respect of, any moneys borrowed or

raised provided that the aggregate amount of the relevant indebtedness, guarantees and

indemnities in respect of which one or more of the events mentioned above in this

Condition 10(c) have occurred equals or exceeds U.S.$25 million or its equivalent (on the

basis of the middle spot rate for the relevant currency against the U.S. dollar as quoted by

any leading bank on the day on which this Condition 10(c) operates); or

(d) Enforcement Proceedings: a distress, attachment, execution or other legal process is

levied, enforced or sued out on or against any material part of the property, assets or

revenues of the Issuer, the Guarantor or any of the Principal Subsidiaries (except for any

such distress, attachment, execution or other legal process levied, enforced or sued out as

a result of any breach of laws or regulations by a lessee of such property or assets, who

is not a Subsidiary of the Issuer or the Guarantor) and is not discharged or stayed within

30 days; or

(e) Security Enforced: any mortgage, charge, pledge, lien or other encumbrance, present or

future, created or assumed by the Issuer, the Guarantor or any of the Principal Subsidiaries

over all or a material part of the assets of the Issuer, the Guarantor or the Principal

Subsidiaries, becomes enforceable and any step is taken to enforce it (including the taking

of possession or the appointment of a receiver, administrative receiver, administrator,

manager or other similar person) and is not discharged or stayed within 30 days; or

(f) Insolvency: the Issuer, the Guarantor or any of the Principal Subsidiaries is (or is, or could

be, deemed by law or a court to be) insolvent or bankrupt or unable to pay its debts as and

when such debts fall due, stops, suspends or threatens to stop or suspend payment of all

or a material part of its debts, proposes or makes any agreement for the deferral,

rescheduling or other readjustment of all or a material part of its debts, proposes or makes

a general assignment or an arrangement or composition with or for the benefit of the

relevant creditors in respect of all or a material part of its debts or a moratorium is agreed

or declared in respect of or affecting all or a material part of the debts of the Issuer, the

Guarantor or any of the Principal Subsidiaries, as the case may be; or

(g) Winding-up: an administrator is appointed, an order of any court of competent

jurisdiction is made or an effective resolution is passed for the winding-up or dissolution

or administration of the Issuer, the Guarantor or any of the Principal Subsidiaries, or the

Issuer, the Guarantor or any of the Principal Subsidiaries ceases or threatens to cease to

carry on all or substantially all of its business or operations, except for (i) the purpose of

and followed by a reconstruction, amalgamation, reorganisation, merger or consolidation

(A) on terms approved by an Extraordinary Resolution of the Noteholders, or (B) whereby

the undertaking and assets of a Principal Subsidiary are transferred to or otherwise vested

in the Guarantor or any of its Subsidiaries; or (ii) a solvent winding up of any Principal

Subsidiary other than the Issuer or the Guarantor; or

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(h) Nationalisation: any step is taken by any person acting under the authority of any

material, regional or local government with a view to the seizure, compulsory acquisition

or expropriation of all or a material part of the assets of the Issuer, the Guarantor or any

of the Principal Subsidiaries; or

(i) Authorisation and Consents: any action, condition or thing (including the obtaining or

effecting of any necessary consent, approval, authorisation, exemption, filing, licence,

order, recording or registration) at any time required to be taken, fulfilled or done in order

(i) to enable the Issuer and the Guarantor lawfully to enter into, exercise their respective

rights and perform and comply with their respective obligations under the Notes, the Deed

of Guarantee or the Trust Deed, (ii) to ensure that those obligations are legally binding and

enforceable and (iii) to make the Notes, the Coupons, the Deed of Guarantee and the Trust

Deed admissible in evidence in the courts of Hong Kong is not taken, fulfilled or done; or

(j) Illegality: it is or will become unlawful for the Issuer or the Guarantor to perform or

comply with any one or more of its respective obligations under any of the Notes, the

Coupons, the Deed of Guarantee or the Trust Deed;

(k) Unenforceability of the Guarantee: except as permitted under the Trust Deed, any part

of the Guarantee is unenforceable or invalid or shall for any reason cease to be in full force

and effect or is claimed to be unenforceable, invalid or not in full force and effect by the

Guarantor; or

(l) Analogous Events: any event occurs which under the laws of any relevant jurisdiction has

an analogous effect to any of the events referred to in Conditions 10(d) to 10(h) (both

inclusive).

In this Condition 10, “Principal Subsidiary” means any Subsidiary of the Guarantor:

(i) whose revenue or (in the case of a Subsidiary which itself has Subsidiaries)

consolidated revenue, as shown by its latest audited income statement is at least 5 per

cent. of the consolidated revenue as shown by the latest published audited

consolidated income statement of the Guarantor and its Subsidiaries including, for

the avoidance of doubt, the Guarantor and its consolidated Subsidiaries’ share of

revenue of Subsidiaries not consolidated and of jointly controlled entities and after

adjustments for minority interests; or

(ii) whose gross profit or (in the case of a Subsidiary which itself has Subsidiaries)

consolidated gross profit, as shown by its latest audited income statement are at least

5 per cent. of the consolidated gross profit as shown by the latest published audited

consolidated income statement of the Guarantor and its Subsidiaries including, for

the avoidance of doubt, the Guarantor and its consolidated Subsidiaries’ share of

profits of Subsidiaries not consolidated and of jointly controlled entities and after

adjustments for minority interests; or

(iii) whose gross assets or (in the case of a Subsidiary which itself has Subsidiaries)

consolidated gross assets, as shown by its latest audited balance sheet are at least 5

per cent. of the amount which equals the amount included in the consolidated gross

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assets of the Guarantor and its Subsidiaries as shown by the latest published audited

consolidated balance sheet of the Guarantor and its Subsidiaries including, for the

avoidance of doubt, the investment of the Guarantor in each Subsidiary whose

accounts are not consolidated with the consolidated audited accounts of the

Guarantor and after adjustment for minority interests; or

(iv) to which is transferred the whole or substantially the whole of the assets of a

Subsidiary which immediately prior to such transfer was a Principal Subsidiary,

provided that (xx) the Principal Subsidiary which so transfers its assets shall

forthwith upon such transfer cease to be a Principal Subsidiary and the Subsidiary to

which the assets are so transferred shall forthwith become a Principal Subsidiary and

(yy) on or after the date on which the first published audited accounts (consolidated,

if appropriate) of the Guarantor prepared as of a date later than such transfer are

issued, whether such transferor Subsidiary or such transferee Subsidiary is or is not

a Principal Subsidiary shall be determined on the basis of such accounts by virtue of

the provisions of paragraphs (a), (b) or (c) above of this definition,

provided that, in relation to paragraphs (a), (b) and (c) above of this definition:

(i) in the case of a corporation or other business entity becoming a Subsidiary after the

(i) end of the financial period to which the latest consolidated audited accounts of

the Guarantor relate, the reference to the then latest consolidated audited

accounts of the Guarantor for the purposes of the calculation above shall, until

consolidated audited accounts of the Guarantor for the financial period in which

the relevant corporation or other business entity becomes a Subsidiary are

published be deemed to be a reference to the then latest consolidated audited

accounts of the Guarantor adjusted to consolidate the latest audited accounts

(consolidated in the case of a Subsidiary which itself has Subsidiaries) of such

Subsidiary in such accounts;

(ii) if at any relevant time in relation to the Guarantor or any Subsidiary which itself

has Subsidiaries no consolidated accounts are prepared and audited, revenue,

gross profit or gross assets of the Guarantor and/or any such Subsidiary shall be

determined on the basis of pro forma consolidated accounts prepared for this

purpose by the Guarantor;

(iii) if at any relevant time in relation to any Subsidiary, no accounts are audited, its

revenue, gross profit or gross assets (consolidated, if appropriate) shall be

determined on the basis of pro forma accounts (consolidated, if appropriate) of

the relevant Subsidiary prepared for this purpose by the Guarantor; and

(iv) if the accounts of any subsidiary (not being a Subsidiary referred to in proviso

(i) above) are not consolidated with those of the Guarantor, then the

determination of whether or not such subsidiary is a Principal Subsidiary shall

be based on a pro forma consolidation of its accounts (consolidated, if

appropriate) with the consolidated accounts (determined on the basis of the

foregoing) of the Guarantor.

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In addition, any Subsidiary which is not itself a Principal Subsidiary shall nevertheless betreated as a Principal Subsidiary if the revenue (or consolidated revenue if the Subsidiaryitself has Subsidiaries), gross profit (or consolidated gross profit if the Subsidiary itselfhas Subsidiaries) or gross assets (or consolidated gross assets if the Subsidiary itself hasSubsidiaries) attributable to such Subsidiary when aggregated with the revenue (orconsolidated revenue if appropriate), gross profit (or consolidated gross profit ifappropriate) or gross assets (or consolidated gross assets if appropriate) attributable to anyother Subsidiary which is not itself a Principal Subsidiary and with respect to which anyof the events referred to in this Condition 10 has occurred since the issue date of the Notesand is continuing, exceeds 5 per cent. of the consolidated revenue, consolidated grossprofit or consolidated gross assets of the Guarantor and its Subsidiaries.

Subject to compliance with the requirement set forth below, a certificate prepared by anAuthorised Signatory (as defined in the Trust Deed) of the Guarantor that in his or heropinion, a Subsidiary is or is not, or was or was not, a Principal Subsidiary shall, in theabsence of manifest error, be conclusive and binding on the Noteholders and all parties.The certificate must be accompanied by a report by an internationally recognised firm ofaccountants addressed to the directors of the Guarantor as to proper extraction and basisof the figures used by the Guarantor in determining the Principal Subsidiaries of theGuarantor and mathematical accuracy of the calculation.

11 MEETINGS OF NOTEHOLDERS, MODIFICATION, WAIVER AND SUBSTITUTION

(a) Meetings of Noteholders: The Trust Deed contains provisions for convening meetings ofNoteholders to consider matters affecting their interests, including without limitation thesanctioning by Extraordinary Resolution of a modification of any of these Conditions orany provisions of the Trust Deed, the Agency Agreement or the Deed of Guarantee. Sucha meeting may be convened by the Issuer, the Guarantor or the Trustee and shall beconvened by the Trustee if requested in writing to do so by Noteholders holding not lessthan 10 per cent. in aggregate nominal amount of the Notes for the time being outstandingand subject to the Trustee being indemnified and/or secured and/or pre-funded to itssatisfaction against all costs and expenses. The quorum for any meeting convened toconsider an Extraordinary Resolution shall be two or more persons holding or representingmore than 50 per cent. in aggregate nominal amount of the Notes for the time beingoutstanding, or at any adjourned meeting two or more persons being or representingNoteholders whatever the nominal amount of the Notes held or represented, unless thebusiness of such meeting includes consideration of proposals, inter alia:

(i) to amend the dates of maturity or redemption of the Notes, any Instalment Date orany date for payment of interest or Interest Amounts on the Notes;

(ii) to reduce or cancel the nominal amount of, or any Instalment Amount of, or anypremium payable on redemption of, the Notes;

(iii) to reduce the rate or rates of interest in respect of the Notes or to vary the methodor basis of calculating the rate or rates or amount of interest or the basis forcalculating any Interest Amount in respect of the Notes;

(iv) if a Minimum Rate of Interest and/or a Maximum Rate of Interest and/or anInstalment Amount and/or a Redemption Amount is shown hereon, to reduce any suchMinimum Rate of Interest and/or Maximum Rate of Interest and/or InstalmentAmount and/or Redemption Amount;

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(v) to vary any method of, or basis for, calculating the Final Redemption Amount, the

Early Redemption Amount or the Optional Redemption Amount, including the

method of calculating the Amortised Face Amount;

(vi) to vary the currency or currencies of payment or denomination of the Notes, (vii) to

modify the provisions concerning the quorum required at any meeting of Noteholders

or the majority required to pass an Extraordinary Resolution; or

(vii) to modify or cancel the Guarantee (subject to Condition 11(b)),

in which case the necessary quorum will be two or more persons holding or representing

not less than 75 per cent. or at any adjourned meeting not less than 25 per cent. in

aggregate nominal amount of the Notes for the time being outstanding. Any Extraordinary

Resolution duly passed shall be binding on Noteholders (whether or not they were present

at the meeting at which such resolution was passed) and on all Couponholders.

The Trust Deed provides that a resolution (x) in writing signed by or on behalf of the

holders of not less than 90 per cent. in aggregate nominal amount of the Notes for the time

being outstanding, or (y) passed by Electronic Consent (as defined in the Trust Deed) shall

for all purposes be as valid and effective as an Extraordinary Resolution passed at a

meeting of Noteholders duly convened and held. Such a resolution in writing may be

contained in one document or several documents in the same form, each signed by or on

behalf of one or more Noteholders. A resolution passed in writing or by Electronic Consent

will be binding on all Noteholders whether or not they participated in such resolution.

The Conditions may be amended, modified or varied in relation to any Series of Notes by

the terms of the relevant Pricing Supplement in relation to such Series.

(b) Modification of Agreements and Deeds: The Trustee may (but shall not be obliged to)

agree, without the consent of the Noteholders or Couponholders, to (i) any modification

of any of these Conditions or any of the provisions of the Trust Deed, the Agency

Agreement or the Deed of Guarantee that is in the opinion of the Trustee of a formal, minor

or technical nature or is made to correct a manifest error or is to comply with any

mandatory provision of applicable law, and (ii) any other modification (except as

mentioned in the Trust Deed), and any waiver or authorisation of any breach or proposed

breach, of any of these Conditions or any of the provisions of the Trust Deed, the Agency

Agreement or the Deed of Guarantee that is in the opinion of the Trustee not materially

prejudicial to the interests of the Noteholders. Any such modification, authorisation or

waiver shall be binding on the Noteholders and the Couponholders and, unless the Trustee

otherwise agrees, such modification, authorisation or waiver shall be notified by the Issuer

or the Guarantor to the Noteholders as soon as practicable thereafter.

(c) Substitution: The Trust Deed contains provisions permitting (but not obliging) the Trustee

to agree, subject to such amendment of the Trust Deed, the Agency Agreement and/or the

Deed of Guarantee and such other conditions as may be set out in the Trust Deed or as the

Trustee may require, but without the consent of the Noteholders or the Couponholders, to

the substitution of the Issuer’s successor in business or any Subsidiary as defined in the

Trust Deed of the Issuer or its successor in business or of the Guarantor or its successor

– 192 –

in business or any Subsidiary of the Guarantor or its successor in business in place of the

Issuer or the Guarantor, or of any previous substituted company, as principal debtor or

guarantor under the Trust Deed and the Notes. In the case of such a substitution the Trustee

may (but shall not be obliged to) agree, without the consent of the Noteholders or the

Couponholders, to a change of the law governing the Notes, the Receipts, the Coupons, the

Talons and/or the Trust Deed provided that such change would not in the opinion of the

Trustee be materially prejudicial to the interests of the Noteholders.

(d) Entitlement of the Trustee: In connection with the exercise of its functions, rights,

powers and discretions (including but not limited to those referred to in this Condition 11)

the Trustee shall have regard to the interests of the Noteholders as a class and shall not

have regard to the consequences of such exercise for individual Noteholders or

Couponholders, and the Trustee shall not be entitled to require on behalf of any

Noteholder, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer

or the Guarantor or the Trustee any indemnification or payment in respect of any tax

consequence of any such exercise upon individual Noteholders or Couponholders.

12 ENFORCEMENT

At any time after the Notes become due and payable, the Trustee may (but shall not be obliged

to) at its discretion and without further notice, take and/or institute such steps, actions and/or

proceedings against the Issuer or the Guarantor as it may think fit to enforce the terms of the

Trust Deed, the Notes, the Deed of Guarantee, the Receipts and the Coupons, but it need not take

and/or institute any such steps, actions and/or proceedings unless (a) it shall have been so

directed by an Extraordinary Resolution or so requested in writing by Noteholders holding at

least 25 per cent. in aggregate nominal amount of the Notes then outstanding, and (b) it shall

first have been indemnified and/or secured and/or pre-funded to its satisfaction. No Noteholder,

Receiptholder and/or Couponholder may proceed directly against the Issuer or the Guarantor

unless the Trustee, having become bound so to proceed, fails to do so within a reasonable time

and such failure is continuing.

13 INDEMNIFICATION OF THE TRUSTEE

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from

responsibility, including without limitation provisions relieving it from taking and/or instituting

any such steps, actions and/or proceedings to enforce payment unless first indemnified and/or

secured and/or pre-funded to its satisfaction. The Trustee is entitled to enter into business

transactions with the Issuer, the Guarantor and/or any entity related (directly or indirectly) to

the Issuer or the Guarantor without accounting for any profit.

None of the Trustee or any of the Agents shall be responsible for the performance by the Issuer,

the Guarantor and any other person appointed by the Issuer and/or the Guarantor in relation to

the Notes of the duties and obligations on their part expressed in respect of the same and, unless

it has written notice from the Issuer or the Guarantor to the contrary, the Trustee and each Agent

shall assume that the same are being duly performed. None of the Trustee or any Agent shall be

liable to any Noteholder or any other person for any action taken by the Trustee or such Agent

in accordance with the instructions of the Noteholders. The Trustee shall be entitled to rely on

any direction, request or resolution of Noteholders given by holders of the requisite nominal

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amount or percentage of Notes outstanding or passed at a meeting of Noteholders convened and

held in accordance with the Trust Deed. Whenever the Trustee is required or entitled by the

terms of the Trust Deed, the Deed of Guarantee, the Agency Agreement or these Conditions to

exercise any discretion or power, take any action, make any decision or give any direction, the

Trustee is entitled, prior to its exercising any such discretion or power, taking any such action,

making any such decision, or giving any such direction, to seek directions from the Noteholders

by way of an Extraordinary Resolution, and the Trustee is not responsible for any loss or

liability incurred by any person as a result of any delay in it exercising such discretion or power,

taking such action, making such decision, or giving such direction where the Trustee is seeking

such directions or in the event that no such directions are received. The Trustee shall have no

obligation to monitor whether any Event of Default, Potential Event of Default, Change of

Control or No Registration Event has occurred or to monitor compliance with the provisions of

the Trust Deed, the Agency Agreement, the Deed of Guarantee or these Conditions, and shall

not be liable to the Noteholders, Receiptholders and/or Couponholders or any other person for

not doing so.

The Trustee may rely without liability to Noteholders, Receiptholders and/or Couponholders on

any report, confirmation or certificate or any advice or opinion of any legal advisers,

accountants, financial advisers, financial institution or any other expert, whether or not

addressed to it and whether their liability in relation thereto is limited (by its terms or by any

engagement letter relating thereto entered into by the Trustee or any other person or in any other

manner) by reference to a monetary cap, methodology or otherwise. The Trustee may accept and

shall be entitled to rely on any such report, confirmation, certificate, advice or opinion and, in

such event, such report, confirmation, certificate, advice or opinion shall be binding on the

Issuer, the Guarantor and the Noteholders, Receiptholders and Couponholders.

14 REPLACEMENT OF NOTES, CERTIFICATES, RECEIPTS, COUPONS AND TALONS

If a Note, Certificate, Receipt, Coupon or Talon is lost, stolen, mutilated, defaced or destroyed,

it may be replaced, subject to the provisions of the Agency Agreement, applicable laws,

regulations and stock exchange or other relevant authority regulations, at the specified office of

the Principal Paying Agent (in the case of Bearer Notes, Receipts, Coupons or Talons) and of

the Registrar (in the case of Certificates) or such other Paying Agent or Transfer Agent, as the

case may be, as may from time to time be designated by the Issuer for that purpose and notice

of whose designation is given to Noteholders, in each case on payment by the claimant of the

fees and costs incurred in connection therewith and on such terms as to evidence, security and

indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyed Note,

Certificate, Receipt, Coupon or Talon is subsequently presented for payment or, as the case may

be, for exchange for further Coupons, there shall be paid to the Issuer on demand the amount

payable by the Issuer in respect of such Notes, Certificates, Receipts, Coupons or further

Coupons) and otherwise as the Issuer or the relevant Agent may require. Mutilated or defaced

Notes, Certificates, Receipts, Coupons or Talons must be surrendered before replacements will

be issued.

15 FURTHER ISSUES

The Issuer may from time to time without the consent of the Noteholders or Couponholders

create and issue further securities having the same terms and conditions as the Notes in all

respects (or in all respects except for the first payment of interest on them and if applicable, the

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timing for the notification to the NDRC and registration with SAFE) and so that such furtherissue shall be consolidated and form a single series with an outstanding Series. References inthese Conditions to the Notes include (unless the context requires otherwise) any such othersecurities issued pursuant to this Condition 15 and consolidated and forming a single series withthe Notes.

16 NOTICES

Notices to the holders of Registered Notes shall be in English and mailed to them at theirrespective addresses in the Register and deemed to have been given on the fourth weekday(being a day other than a Saturday or a Sunday) after the date of mailing and, so long as theNotes are listed on a stock exchange and the rules of that exchange so require, published at theexpense of the Issuer (failing whom the Guarantor) in a leading newspaper having generalcirculation in Asia (which is expected to be the Wall Street Journal Asia). Notices to the holdersof Bearer Notes shall be valid if published in a daily newspaper of general circulation in Asiaand, so long as the Notes are listed on a stock exchange and the rules of that exchange sorequire, published at the expense of the Issuer (failing whom the Guarantor) in a dailynewspaper with general circulation in Asia (which is expected to be the Wall Street JournalAsia). If any such publication is not practicable, notice shall be validly given if published inanother leading daily English language newspaper with general circulation in Asia. Any suchnotice shall be deemed to have been given on the date of such publication or, if published morethan once or on different dates, on the first date on which publication is made, as providedabove.

Couponholders shall be deemed for all purposes to have notice of the contents of any noticegiven to the holders of Bearer Notes in accordance with this Condition 16.

So long as any Global Note or Global Certificate is held in its entirety on behalf of Euroclearand Clearstream, any notice to the holders of the Notes shall be validly given by the deliveryof the relevant notice to Euroclear and Clearstream for communication by the relevant clearingsystem to entitled accountholders in substitution for notification as required by the Conditionsand shall be deemed to have been given on the date of delivery to such clearing system.

So long as the Global Note or Global Certificate is held on behalf of the operator of the CMUany notice to the holders of the Notes shall be validly given by the delivery of the relevant noticeto the accountholder shown in a CMU Issue Position Report issued by the operator of the CMUon the business day preceding the date of despatch of such notice as holding interests in theGlobal Note or Global Certificate.

17 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

Save as contemplated in these Conditions, no person shall have any right to enforce any termor condition of the Notes under the Contracts (Rights of Third Parties) Act 1999.

18 GOVERNING LAW AND JURISDICTION

(a) Governing Law: The Trust Deed, the Notes, the Receipts, the Coupons and the Talons, theAgency Agreement, the Deed of Guarantee and any non-contractual obligations arising outof or in connection with them, are governed by, and shall be construed in accordance with,English law.

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(b) Jurisdiction: The courts of Hong Kong are to have exclusive jurisdiction to settle any

disputes that may arise out of or in connection with the Notes, Receipts, Coupons or

Talons, the Deed of Guarantee and the Trust Deed and accordingly any legal action or

proceedings arising out of or in connection with any Notes, Receipts, Coupons, Talons, the

Deed of Guarantee or the Trust Deed (“Proceedings”) may be brought in the courts of

Hong Kong. Pursuant to the Trust Deed, each of the Issuer, the Guarantor and the Trustee

has irrevocably submitted to the jurisdiction of the courts of Hong Kong.

(c) Agent for Service of Process: Each of the Issuer and the Guarantor has irrevocably agreed

to receive service of process at the registered office of Soar Vast Limited currently at 3806

Central Plaza, 18 Harbour Road, Wan Chai, Hong Kong in any Proceedings in Hong Kong.

Such service shall be deemed completed on delivery to such process agent (whether or not

it is forwarded to and received by the Issuer or the Guarantor, as the case may be). If for

any reason Soar Vast Limited ceases to have a place of business in Hong Kong, each of

the Issuer and the Guarantor shall forthwith appoint an agent in Hong Kong to accept

service of process on behalf of the Issuer and the Guarantor and deliver to the Trustee a

copy of the new agent’s acceptance of that appointment within 30 days of Soar Vast

Limited ceasing to have a place of business in Hong Kong. Nothing in this Condition 18(c)

shall affect the right to serve process in any manner permitted by law.

(d) Independence and Waiver of Immunity:

(i) The Guarantor is a separate legal and independent entity organised under the

Company Law of the PRC; it is an enterprise undertaking commercial activities

independent from the PRC government with ownership of its assets and the capacity

independently to assume civil liabilities.

(ii) Each of the Issuer and the Guarantor hereby waives any right to claim sovereign or

other immunity from jurisdiction or execution and any similar defence, and

irrevocably consents to the giving of any relief or the issue of any process, including,

without limitation, the making, enforcement or execution against any property

whatsoever (irrespective of its use or intended use) of any order or judgment made

or given in connection with any Proceedings.

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TERMS AND CONDITIONS OF THE PERPETUAL CAPITAL SECURITIES

The following, other than the words in italics, is the text of the terms and conditions that, subject to

completion and amendment and as supplemented or varied in accordance with the provisions of the

relevant Pricing Supplement, shall be applicable to the Perpetual Capital Securities in definitive

form (if any) issued in exchange for the Global Security(ies) or the Global Certificate representing

each Series. Either (i) the full text of these terms and conditions together with the relevant provisions

of the Pricing Supplement or (ii) these terms and conditions as so completed, amended, supplemented

or varied (and subject to simplification by the deletion of non-applicable provisions), shall be

endorsed on such Bearer Perpetual Capital Securities or on the Certificates relating to such

Registered Perpetual Capital Securities. All capitalised terms that are not defined in the Conditions

will have the meanings given to them in the relevant Pricing Supplement. Those definitions will be

endorsed on the definitive Perpetual Capital Securities or Certificates, as the case may be.

References in the Conditions to “Perpetual Capital Securities” are to the Perpetual Capital

Securities of one Series only, not to all Perpetual Capital Securities that may be issued under the

Programme.

The Perpetual Capital Securities are issued by Soar Wise Limited (the “Issuer”) pursuant to the Trust

Deed (as defined below). The due payment of all sums expressed to be payable by the Issuer under

the Perpetual Capital Securities and the Trust Deed is guaranteed by AVIC International Leasing Co.,

Ltd. (the “Guarantor”) as specified hereon. The Perpetual Capital Securities are constituted by a

trust deed dated 22 October 2020 (as amended and/or supplemented as at the date of issue of the

Perpetual Capital Securities (the “Issue Date”), the “Trust Deed”) between the Issuer, the Guarantor

and DB Trustees (Hong Kong) Limited (the “Trustee”, which expression shall, where the context so

permits, include all persons for the time being the trustee or trustees under the Trust Deed) as trustee

for itself and the Perpetual Capital Securityholders (as defined below). These terms and conditions

(these “Conditions”) include summaries of, and are subject to, the detailed provisions of the Trust

Deed, which includes the form of the Bearer Perpetual Capital Securities, Certificates, Coupons and

Talons referred to below. An agency agreement dated 22 October 2020 (as amended and/or

supplemented as at the Issue Date, the “Agency Agreement”) has been entered into in relation to the

Perpetual Capital Securities between the Issuer, the Guarantor, the Trustee, Deutsche Bank AG, Hong

Kong Branch as initial paying agent, Deutsche Bank AG, Hong Kong Branch as lodging and paying

agent for Perpetual Capital Securities to be held in the Central Moneymarkets Unit Service operated

by the Hong Kong Monetary Authority (the “CMU”) and the other agents named in it. The principal

paying agent, the CMU lodging and paying agent, the other paying agents, the registrar, the transfer

agents and the calculation agent(s) for the time being (if any) are referred to below respectively as

the “Principal Paying Agent”, the “CMU Lodging and Paying Agent”, the “Paying Agents” (which

expression shall include the Principal Paying Agent and the CMU Lodging and Paying Agent), the

“Registrar”, the “Transfer Agents” and the “Calculation Agent(s)” (such Principal Paying Agent,

CMU Lodging and Paying Agent, Paying Agents, Registrar, Transfer Agents and Calculation Agent(s)

being together referred to as the “Agents”). The Perpetual Capital Securities will have the benefit of

a deed of guarantee dated the Issue Date (the “Deed of Guarantee”) entered into by the Guarantor

and the Trustee relating to the Perpetual Capital Securities. The giving of the Guarantee (as defined

in Condition 3(b)) was authorised by the resolutions of the board of directors of the Guarantor dated

29 May 2020 and the resolutions of shareholders’ meeting of the Guarantor dated 29 May 2020. For

the purposes of these Conditions, all references to the Principal Paying Agent shall, with respect to

a Series of Perpetual Capital Securities to be held in the CMU, be deemed to be a reference to the

CMU Lodging and Paying Agent and all such references shall be construed accordingly.

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Copies of the Deed of Guarantee, the Trust Deed and the Agency Agreement are available forinspection by Perpetual Capital Securityholders following prior written request and satisfactory proofof holding and identity at all reasonable times during usual business hours at the principal place ofbusiness of the Trustee (presently at 60/F, International Commerce Centre, 1 Austin Road West,Kowloon, Hong Kong) and at the specified office for the time being of the Principal Paying Agent.

The Perpetual Capital Securityholders, the holders of the distribution coupons (the “Coupons”)relating to Perpetual Capital Securities in bearer form and, where applicable in the case of suchPerpetual Capital Securities, talons for further Coupons (the “Talons”) (the “Couponholders”) areentitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of theTrust Deed and the Deed of Guarantee are deemed to have notice of those provisions applicable tothem of the Agency Agreement. The statements in these Conditions include summaries of, and aresubject to, the detailed provisions of the Deed of Guarantee, the Trust Deed and the AgencyAgreement.

As used in these Conditions, “Tranche” means Perpetual Capital Securities which are identical in allrespects, and “Series” means a Tranche of Perpetual Capital Securities together with any furtherTranche or Tranches of Perpetual Capital Securities which are (i) expressed to be consolidated andform a single series with such Tranche of Perpetual Capital Securities and (ii) identical in all respects(including as to listing and admission to trading) except for their respective Issue Dates, DistributionCommencement Dates and/or issue prices.

1 FORM, DENOMINATION AND TITLE

The Perpetual Capital Securities are issued in bearer form (“Bearer Perpetual CapitalSecurities”) or in registered form (“Registered Perpetual Capital Securities”) in each case inthe Specified Denomination(s) shown hereon.

This Perpetual Capital Security is a Fixed Rate Perpetual Capital Security, a Floating RatePerpetual Capital Security, an Index Linked Distribution Perpetual Capital Security, a DualCurrency Perpetual Capital Security or a Partly Paid Perpetual Capital Security, a combinationof any of the foregoing or any other kind of Perpetual Capital Security, depending upon theDistribution and Redemption Basis shown hereon.

Bearer Perpetual Capital Securities are serially numbered and are issued with Coupons (and,where appropriate, a Talon) attached.

Registered Perpetual Capital Securities are represented by registered certificates(“Certificates”) and, save as provided in Condition 2(c), each Certificate shall represent theentire holding of Registered Perpetual Capital Securities by the same holder.

Title to the Bearer Perpetual Capital Securities and the Coupons and Talons shall pass bydelivery. Title to the Registered Perpetual Capital Securities shall pass by registration in theregister that the Issuer shall procure to be kept by the Registrar in accordance with theprovisions of the Agency Agreement (the “Register”). Except as ordered by a court ofcompetent jurisdiction or as required by law, the holder (as defined below) of any PerpetualCapital Security, Coupon or Talon shall be deemed to be and may be treated as its absoluteowner for all purposes whether or not it is overdue and regardless of any notice of ownership,trust or an interest in it, any writing on it (or on the Certificate representing it) or its theft orloss (or that of the related Certificate) and no person shall be liable for so treating the holder.

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In these Conditions, “Perpetual Capital Securityholder” means the bearer of any Bearer

Perpetual Capital Security or the person in whose name a Registered Perpetual Capital Security

is registered (as the case may be), “holder” (in relation to a Perpetual Capital Security, Coupon

or Talon) means the bearer of any Bearer Perpetual Capital Security, Coupon or Talon or the

person in whose name a Registered Perpetual Capital Security is registered (as the case may be)

and capitalised terms have the meanings given to them hereon, the absence of any such meaning

indicating that such term is not applicable to the Perpetual Capital Securities.

2 NO EXCHANGE OF PERPETUAL CAPITAL SECURITIES AND TRANSFERS OF

REGISTERED PERPETUAL CAPITAL SECURITIES

(a) No Exchange of Perpetual Capital Securities: Registered Perpetual Capital Securities

may not be exchanged for Bearer Perpetual Capital Securities. Bearer Perpetual Capital

Securities of one Specified Denomination may not be exchanged for Bearer Perpetual

Capital Securities of another Specified Denomination. Bearer Perpetual Capital Securities

may not be exchanged for Registered Perpetual Capital Securities.

(b) Transfer of Registered Perpetual Capital Securities: One or more Registered Perpetual

Capital Securities may be transferred upon the surrender (at the specified office of the

Registrar or any Transfer Agent) of the Certificate representing such Registered Perpetual

Capital Securities to be transferred, together with the form of transfer endorsed on such

Certificate (or another form of transfer substantially in the same form and containing the

same representations and certifications (if any), unless otherwise agreed by the Issuer),

duly completed and executed by the holder or holders thereof or his or their attorney or

attorneys duly authorised in writing and any other evidence as the Registrar or the relevant

Transfer Agent may require. In the case of a transfer of part only of a holding of Registered

Perpetual Capital Securities represented by one Certificate, a new Certificate shall be

issued to the transferee in respect of the part transferred and a further new Certificate in

respect of the balance of the holding not transferred shall be issued to the transferor. In the

case of a transfer of Registered Perpetual Capital Securities to a person who is already a

holder of Registered Perpetual Capital Securities, a new Certificate representing the

enlarged holding shall only be issued against surrender of the Certificate representing the

existing holding. All transfers of Perpetual Capital Securities and entries on the Register

will be made in accordance with the detailed regulations concerning transfers of Perpetual

Capital Securities scheduled to the Agency Agreement. The regulations may be changed by

the Issuer, with the prior written approval of the Registrar and the Trustee, or by the

Registrar, with the prior written approval of the Trustee. A copy of the current regulations

will be made available by the Registrar to any Perpetual Capital Securityholder following

written request and proof of holding and identity satisfactory to the Registrar. No transfer

of title to any Perpetual Capital Securities will be valid unless and until entered on the

Register.

Transfers of interests in the Perpetual Capital Securities evidenced by the Global

Certificate will be effected in accordance with the rules of the relevant clearing systems.

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(c) Exercise of Options or Partial Redemption in Respect of Registered Perpetual Capital

Securities: In the case of an exercise of an Issuer’s option in respect of, or a partial

redemption of, a holding of Registered Perpetual Capital Securities represented by a single

Certificate, a new Certificate shall be issued to the holder to reflect the exercise of such

option or in respect of the balance of the holding not redeemed. In the case of a partial

exercise of an option resulting in Registered Perpetual Capital Securities of the same

holding having different terms, separate Certificates shall be issued in respect of those

Perpetual Capital Securities of that holding that have the same terms. New Certificates

shall only be issued against surrender of the existing Certificates to the Registrar or any

Transfer Agent. In the case of a transfer of Registered Perpetual Capital Securities to a

person who is already a holder of Registered Perpetual Capital Securities, a new

Certificate representing the enlarged holding shall only be issued against surrender of the

Certificate representing the existing holding.

(d) Delivery of New Certificates: Each new Certificate to be issued pursuant to Conditions

2(b) or 2(c) shall be made available for delivery within seven business days of receipt of

a duly completed form of transfer and surrender of the Certificate for exchange. Delivery

of the new Certificate(s) shall be made at the specified office of the Transfer Agent or of

the Registrar (as the case may be) to whom delivery or surrender of such form of transfer

or Certificate shall have been made or, at the option of the holder making such delivery

or surrender as aforesaid and as specified in the relevant form of transfer or otherwise in

writing, be mailed by uninsured post at the risk of the holder entitled to the new Certificate

(but free of charge to the holder and at the expense of the Issuer (failing whom the

Guarantor)) to such address as may be so specified, unless such holder requests otherwise

and pays in advance to the relevant Transfer Agent or the Registrar (as the case may be)

the costs of such other method of delivery and/or such insurance as it may specify. In this

Condition 2(d), “business day” means a day, other than a Saturday or Sunday or public

holiday, on which commercial banks are generally open for business in the place of the

specified office of the relevant Transfer Agent or the Registrar (as the case may be).

(e) Transfers Free of Charge: Transfers of Perpetual Capital Securities and Certificates on

registration, transfer, exercise of an option or partial redemption shall be effected without

charge by or on behalf of the Issuer, the Registrar or the Transfer Agents, but upon (i)

payment by the relevant Perpetual Capital Securityholders of any tax or other

governmental charges that may be imposed in relation to it (or the giving of such

indemnity and/or security and/or prefunding as the Registrar or the relevant Transfer Agent

may require); and (ii) the Registrar being satisfied in its absolute discretion with the

documents of title or identity of the person making the application.

(f) Closed Periods: No Perpetual Capital Securityholder may require the transfer of a

Registered Perpetual Capital Security to be registered (i) during the period of 15 days

ending on (and including) the due date for redemption of that Perpetual Capital Security,

(ii) during the period of seven days ending on (and including) any Record Date (as defined

in Condition 7(c)(ii)), or (iii) during the period of 15 days prior to (and including) any date

on which Perpetual Capital Securities may be called for redemption by the Issuer pursuant

to Condition 6.

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3 GUARANTEE AND STATUS

(a) Status of Perpetual Capital Securities: The Perpetual Capital Securities and the Couponsrelating to them constitute direct, unsubordinated, unconditional and (subject to Condition4(a)) unsecured obligations of the Issuer and shall at all times rank pari passu and withoutany preference among themselves. The payment obligations of the Issuer under thePerpetual Capital Securities and the Coupons relating to them shall, save for suchexceptions as may be provided by applicable legislation and subject to Condition 4(a), atall times rank at least equally with all other present and future unsecured andunsubordinated indebtedness and monetary obligations of the Issuer.

(b) Guarantee: The Guarantor has unconditionally and irrevocably guaranteed the duepayment of all sums expressed to be payable by the Issuer under the Trust Deed, thePerpetual Capital Securities and the Coupons. The Guarantor’s obligations in that respect(the “Guarantee”) are contained in the Deed of Guarantee. The payment obligations of theGuarantor under the Guarantee shall, save for such exceptions as may be provided byapplicable legislation and subject to Condition 4(a), at all times rank at least equally withall other present and future unsecured and unsubordinated indebtedness and monetaryobligations of the Guarantor.

4 NEGATIVE PLEDGE AND OTHER COVENANTS

(a) Negative Pledge: So long as any Perpetual Capital Security or Coupon remainsoutstanding (as defined in the Trust Deed), neither the Issuer nor the Guarantor will, andeach of the Issuer and the Guarantor shall ensure that none of their respective Subsidiarieswill, create or, have outstanding, any Security Interest (save for any Permitted SecurityInterest), upon the whole or any part of its present or future undertaking, assets or revenues(including any uncalled capital) to secure any Relevant Indebtedness or to secure anyguarantee or indemnity in respect of any Relevant Indebtedness, without at the same timeor prior thereto according to the Perpetual Capital Securities and the Coupons the samesecurity as is created or subsisting to secure any such Relevant Indebtedness, guarantee orindemnity or such other security as either (i) the Trustee shall in its absolute discretiondeem not materially less beneficial to the interest of the Perpetual Capital Securityholdersor (ii) shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) ofthe Perpetual Capital Securityholders.

(b) Issuer Activities: The Issuer shall not, and the Guarantor will procure that the Issuer willnot, so long as any Perpetual Capital Security or Coupon remains outstanding, carry on anybusiness activity whatsoever other than in connection with the Programme and thePerpetual Capital Securities and the Coupons (such activities in connection with theProgramme and the Perpetual Capital Securities and the Coupons shall, for the avoidanceof doubt, include (i) the offering, sale or issuance of the Perpetual Capital Securities andthe Coupons under the Programme; (ii) the activities related to the establishment and/ormaintenance of the Issuer’s corporate existence; and (iii) the on-lending of the proceeds ofthe issue of the Perpetual Capital Securities and the Coupons to the Guarantor or any otherSubsidiaries of the Guarantor and to cause such borrower to pay the interest and principalin respect of such intercompany loan on time).

(c) Financial Information: For so long as any Perpetual Capital Security or Coupon remainsoutstanding, each of the Issuer and the Guarantor will furnish the Trustee with a

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Compliance Certificate of each of the Issuer and the Guarantor (as the case may be) (on

which the Trustee may rely conclusively as to such compliance) within 180 days of the end

of each Relevant Period and within 14 days of any request therefor from the Trustee, and

the Guarantor will furnish the Trustee with (i) a copy of the relevant Guarantor Audited

Financial Reports within 180 days of the end of each Relevant Period prepared in

accordance with PRC GAAP (audited by a nationally or internationally recognised firm of

independent accountants) and if such statements shall be in the Chinese language, together

with an English translation of the same translated by (A) a nationally or internationally

recognised firm of independent accountants or (B) a professional translation service

provider and checked by a nationally or internationally recognised firm of independent

accountants, together with a certificate in English signed by an Authorised Signatory (as

defined in the Trust Deed) of the Guarantor certifying that such translation is complete and

accurate; and (ii) a copy of the Guarantor Unaudited Financial Reports within 90 days of

the end of each Relevant Period prepared on a basis consistent with the Guarantor Audited

Financial Reports and if such statements shall be in the Chinese language, together with

an English translation of the same translated by (A) a nationally or internationally

recognised firm of independent accountants or (B) a professional translation service

provider and checked by a nationally or internationally recognised firm of independent

accountants, together with a certificate in English signed by an Authorised Signatory (as

defined in the Trust Deed) of the Guarantor certifying that such translation is complete and

accurate; provided that, if at any time the capital stock of the Guarantor is listed for trading

on a recognised stock exchange, the Guarantor may furnish the Trustee, as soon as they are

available but in any event not more than 14 calendar days after any financial or other

reports of the Guarantor are filed with the exchange on which the Guarantor’s capital stock

is at such time listed for trading, with true and correct copies of any financial or other

report filed with such exchange in lieu of the financial reports identified in Conditions

4(c)(i) and 4(c)(ii) above, and if such financial or other reports of the Guarantor shall be

in the Chinese language, together with an English translation of the same translated by (A)

a nationally or internationally recognised firm of independent accountants or (B) a

professional translation service provider and checked by a nationally or internationally

recognised firm of independent accountants, together with a certificate in English signed

by an Authorised Signatory (as defined in the Trust Deed) of the Guarantor certifying that

such translation is complete and accurate.

(d) Notification to NDRC: Where it is specified hereon that the NDRC Circular applies to any

Perpetual Capital Security to be issued in accordance with these Conditions, each of the

Issuer and the Guarantor undertakes (as applicable) (i) to file or cause to be filed with the

NDRC the requisite information and documents within the prescribed timeframe in

accordance with the NDRC Circular and/or any other applicable PRC laws and regulations

specified hereon (the “NDRC Post-issue Filing”); and (ii) to provide the Trustee with the

Registration Documents within 10 Registration Business Days after submission of the

NDRC Post-issue Filing. The Trustee shall have no obligation to monitor whether or not,

or to assist with or ensure that, the NDRC Post-issue Filing is filed with the NDRC within

the prescribed timeframe in accordance with the NDRC Circular and/or any other

applicable PRC laws and regulations specified hereon and shall not be liable to Perpetual

Capital Securityholders or any other person for not doing so.

(e) Undertaking relating to the Guarantee: Where it is specified hereon that the Foreign

Exchange Administration Rules on Cross-border Security (跨境擔保外匯管理規定)

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(“Cross-border Security Registration”) applies to any Perpetual Capital Security to beissued in accordance with these Conditions, the Guarantor undertakes that it will (i) submitor cause to be submitted an application for the registration of the Deed of Guarantee withSAFE in accordance with, and within the time period prescribed by, the Cross-borderSecurity Registration so long as such rules are still in effect, (ii) use its best endeavoursto complete the Cross-border Security Registration and obtain a registration record fromSAFE on or before the Registration Deadline, (iii) comply with all applicable PRC lawsand regulations in relation to the Guarantee, and (iv) within ten Registration Business Daysafter receipt of the registration record from SAFE (or any other document evidencingcompletion of registration issued by SAFE), (A) procure that the Issuer delivers to thePrincipal Paying Agent a notice from the Issuer addressed to the Perpetual CapitalSecurityholders for the Principal Paying Agent to release or distribute to the PerpetualCapital Securityholders, confirming the completion of the Cross-border SecurityRegistration and (B) provide the Trustee with the Registration Documents. The Trusteeshall have no obligation to monitor whether or not, or to assist with or ensure that, theregistration of the Deed of Guarantee with SAFE is completed on or before theRegistration Deadline and shall not be liable to Perpetual Capital Securityholders or anyother person for not doing so.

(f) Definitions

In these Conditions:

“Asset-Backed Securities” means any Relevant Indebtedness that:

(i) by the terms of such indebtedness it is expressly provided that recourse by the holdersof such indebtedness is limited to the properties or assets of the Guarantor and therevenues to be generated by the operation of, or loss of or damage to, such propertiesor assets, for repayment of the moneys advanced and payment of interest thereon; and

(ii) such indebtedness is not guaranteed by the Guarantor or any of its Subsidiaries;

“Breach of Covenants Event” means the occurrence of a Covenant Breach;

“Compliance Certificate” means a certificate substantially in the form scheduled to theTrust Deed of each of the Issuer and the Guarantor (as the case may be) signed by anAuthorised Signatory of the Issuer or the Guarantor (as the case may be) that, having madeall reasonable enquiries, to the best of the knowledge, information and belief of the Issueror the Guarantor (as the case may be) as at a date (the “Certification Date”) not more thanfive days before the date of the certificate:

(i) no Change of Control Event, Breach of Covenants Event, Relevant IndebtednessDefault Event, Dividend Stopper Breach Event and Non-Payment Event (asapplicable) had occurred since the Certification Date of the last such certificate or (ifnone) the date of the Trust Deed or, if such an event had occurred, giving details ofit; and

(ii) each of the Issuer and the Guarantor (as the case may be) has complied with all itsobligations under the Deed of Guarantee, the Trust Deed and the Perpetual CapitalSecurities (as applicable);

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“Compulsory Distribution Payment Event” means circumstances in which during the

Reference Period (as specified hereon) ending on the day before the relevant scheduled

Distribution Payment Date either or both of the following have occurred:

(i) a discretionary dividend, discretionary distribution or other discretionary payment

has been declared or paid by the Issuer on or in respect of any of the Issuer’s Parity

Securities or Junior Securities (except (A) in relation to the Parity Securities of the

Issuer, on a pro-rata basis or (B) in connection with any employee benefit plan or

similar arrangements with or for the benefit of employees, officers, directors or

consultants of the Issuer); or

(ii) the Issuer has at its discretion repurchased, redeemed or otherwise acquired any of its

Parity Securities prior to its stated maturity or its Junior Securities (except (A) in

relation to the Parity Securities of the Issuer on a pro-rata basis, (B) in connection

with any employee benefit plan or similar arrangements with or for the benefit of

employees, officers, directors or consultants of the Issuer or (C) as a result of the

exchange or conversion of its Parity Securities for its Junior Securities);

“Covenant Breach” means a non-compliance and/or non-performance by the Issuer and/or

the Guarantor of any one or more of their respective obligations and covenants set out in

Condition 4;

“Dividend Stopper Breach Event” means a non-compliance by the Issuer or the

Guarantor with any of the restrictions set out in Condition 5(k)(v);

“Guarantor Audited Financial Reports” means, for a Relevant Period, the annual

audited consolidated balance sheet, income statement, statement of cash flows and

statement of changes in owners’ equity of the Guarantor together with any statements,

reports (including any directors’ and auditors’ reports) and notes attached to or intended

to be read with any of them;

“Guarantor Unaudited Financial Reports” means, for a Relevant Period, the semi-

annual (or any other interim reporting period required by applicable law or regulations)

unaudited consolidated balance sheet, income statement, statement of cash flows and

statement of changes in owners’ equity of the Guarantor;

“Independent Investment Bank” means an independent investment bank of international

repute (acting as an expert) selected by the Issuer or the Guarantor (at the expense of the

Issuer, failing whom, the Guarantor) and notified in writing to the Trustee;

“Junior Securities” means:

(i) in respect of the Issuer, any class of the Issuer’s share(s) (including without limitation

any preference shares) and any Subordinated Indebtedness issued or guaranteed by

the Issuer; and

(ii) in respect of the Guarantor, any class of the Guarantor’s share capital (including

without limitation any preference shares) and any Subordinated Indebtedness issued

or guaranteed by the Guarantor;

– 204 –

“NDRC” means the National Development and Reform Commission of the PRC or its

local counterparts;

“NDRC Circular” means the Circular on Promoting the Reform of the Administrative

System on the Issuance by Enterprises of Foreign Debt Filings and Registrations (國家發展改革委關於推進企業發行外債備案登記制管理改革的通知(發改外資[2015]2044

號)) issued by NDRC and which came into effect on 14 September 2015, and any

implementation rules or applicable policies in relation thereto as issued by NDRC from

time to time;

“Non-Payment Event” means the occurrence of the events set out in Condition 10;

“Parity Securities” means:

(i) in respect of the Issuer, any instrument or security issued, entered into or guaranteed

by the Issuer, which ranks or is expressed to rank, by its terms or by operation of law,

pari passu with the Perpetual Capital Securities; and

(ii) in respect of the Guarantor, any instrument or security issued, entered into or

guaranteed by the Guarantor which ranks or is expressed to rank, by its terms or by

operation of law, pari passu with the Guarantee;

“Payment Business Day” means a day other than a Saturday, a Sunday or a public holiday

on which banks and foreign exchange markets are generally open for business in the places

in which the respective specified offices of the Principal Paying Agent and the Registrar

are located and, in the case of surrender of a Certificate, the place in which the Certificate

is surrendered and on which foreign exchange transactions may be carried on in U.S.

dollars in New York City;

“Permitted Security Interest” means:

(i) any Security Interest over any assets (or related documents of title) purchased by the

Guarantor or any of its Subsidiaries as Security Interest for all or part of the purchase

price of such assets and any substitute Security Interest created on those assets in

connection with the refinancing (together with interest, fees and other charges

attributable to such refinancing) of the indebtedness secured on those assets,

provided that in the case of refinancing, the principal or nominal amount of such

refinancing is not greater than the amount of the original financing;

(ii) any Security Interest over any assets (or related documents of title) purchased by the

Guarantor or any of its Subsidiaries subject to such Security Interest and any

substitute Security Interest created on those assets in connection with the refinancing

(together with interest, fees and other charges attributable to such refinancing) of the

indebtedness secured on those assets, provided that in the case of refinancing, the

principal or nominal amount of such refinancing is not greater than the amount of the

original financing; and

(iii) any Security Interest created to secure Asset-Backed Securities issued by a

Subsidiary of the Guarantor,

– 205 –

provided that the aggregate value of the relevant assets subject to the Security Interest

pursuant to this provision do not exceed 10 per cent. of the total consolidated assets of the

Guarantor and its Subsidiaries measured in accordance with PRC GAAP based on the latest

Guarantor Audited Financial Reports or the Guarantor Unaudited Financial Reports, as the

case may be;

“PRC” means the People’s Republic of China which, for the purposes of these Conditions,

shall not include the Hong Kong Special Administrative Region of the People’s Republic

of China, the Macau Special Administrative Region of the People’s Republic of China and

Taiwan;

“PRC GAAP” means the Accounting Standards for Business Enterprises in the PRC;

“Qualifying Securities” means securities that:

(i) have terms not materially less favourable to an investor than the terms of the

Perpetual Capital Securities, and provided that certification to such effect (and

confirming that the conditions set out in (x) to (z) below of this definition have been

satisfied) of:

(A) an Authorised Signatory of the Issuer; and

(B) an Independent Investment Bank,

shall have been delivered to the Trustee prior to the substitution or variation of the

relevant Perpetual Capital Securities upon which certificates the Trustee shall rely

absolutely), provided that (x) they are issued by the Issuer or any wholly-owned

direct or indirect Subsidiary of the Guarantor; (y) they are unconditionally and

irrevocably guaranteed by the Guarantor; and (z) they (or, as appropriate, the

guarantee as aforesaid) shall rank pari passu with the Perpetual Capital Securities on

a Winding-Up of the issuer or the guarantor thereof, shall preserve the Perpetual

Capital Securityholders’ rights to any Arrears of Distribution, any Additional

Distribution Amount and any other payment that has accrued with respect to the

relevant securities, and shall contain terms which provide at least for the same

Distribution Rate, Distribution Payment Dates and redemption events, from time to

time applying to the Perpetual Capital Securities and otherwise have substantially

identical (as reasonably determined by the Issuer) terms to the Perpetual Capital

Securities, save where any modifications to such terms are required to be made to

avoid the occurrence of a Gross-Up Event or, as the case may be, an Equity

Disqualification Event; and

(ii) are listed on The Stock Exchange of Hong Kong Limited or such other stock

exchange of international standing regularly used for the listing and quotation of debt

securities;

“Registration Business Day” means a day, other than a Saturday, Sunday or public

holiday, on which commercial banks are generally open for business in Beijing;

“Registration Deadline” means 120 calendar days after the Issue Date;

– 206 –

“Registration Documents” means, in relation to Condition 4(d) or Condition 4(e), as

applicable:

(i) a certificate in English substantially in the form scheduled to the Trust Deed signed

by an Authorised Signatory of the Guarantor confirming the completion of the

applicable registration or filing procedures in accordance with the relevant NDRC or

SAFE requirements (as applicable);

(ii) copies of the relevant documents evidencing the applicable registration or filing

procedures in accordance with the relevant NDRC or SAFE requirements (as

applicable), each certified in English by an Authorised Signatory of the Guarantor as

being a true and complete copy of the original; and

(iii) such other documents as specified hereon.

“Relevant Indebtedness” means any indebtedness outside the PRC which is in the form

of, or represented or evidenced by, bonds, notes, debentures, loan stock or other securities

which for the time being are, or are intended to be or capable of being, quoted, listed or

dealt in or traded on any stock exchange or over-the-counter or other securities market;

“Relevant Indebtedness Default Event” means the occurrence of one or more of the

following events:

(i) any other present or future indebtedness of the Issuer or the Guarantor or any of their

respective Subsidiaries for or in respect of moneys borrowed or raised becomes due

and payable prior to its stated maturity by reason of any actual or potential default,

event of default or the like (howsoever described);

(ii) any such indebtedness is not paid when due or, as the case may be, within any

originally applicable grace period; or

(iii) the Issuer, the Guarantor or any of their respective Subsidiaries fails to pay when due

any amount payable by it under any present or future guarantee for, or indemnity in

respect of, any moneys borrowed or raised provided that the aggregate amount of the

relevant indebtedness, guarantees and indemnities in respect of which one or more of

the events mentioned above in this provision have occurred equals or exceeds

U.S.$25,000,000 or its equivalent in any other currency (on the basis of the middle

spot rate for the relevant currency against the U.S. dollar as quoted by any leading

bank on the day on which this provision operates);

“Relevant Period” means:

(i) in relation to the Guarantor Audited Financial Reports, each period of twelve months

ending on the last day of its financial year (being 31 December of that financial year);

and

(ii) in relation to the Guarantor Unaudited Financial Reports, each period of six months

ending on the last day of its first half financial year (being 30 June of that financial

year);

– 207 –

“SAFE” means the State Administration of Foreign Exchange of the PRC or its local

branches;

“Security Interest” means any mortgage, charge, pledge, lien or other security interest;

“Special Event” means a Gross-Up Event, an Equity Disqualification Event or any

combination of the foregoing;

“Step-Up Event” means the occurrence of a Change of Control Event, a Breach of

Covenants Event, a Relevant Indebtedness Default Event and/or a Dividend Stopper

Breach Event;

“Subordinated Indebtedness” means all indebtedness for money borrowed or raised

which, in the event of the Winding-Up of the borrower or the issuer thereof, ranks or is

expressed to rank, by its terms or by operation of law, in right of payment behind the

claims of unsecured and unsubordinated creditors of such borrower or issuer, and for this

purpose indebtedness shall include all liabilities, whether actual or contingent;

a “Subsidiary” of any person means:

(i) any company or other business entity of which that person owns or controls (either

directly or through one or more other Subsidiaries) more than 50 per cent. of the

issued share capital or other ownership interest having ordinary voting power to elect

directors, managers or trustees of such company or other business entity; or

(ii) any company or other business entity which at any time has its accounts consolidated

with those of that person or which, under the law, regulations or generally accepted

accounting principles of the jurisdiction of incorporation of such person from time to

time, should have its accounts consolidated with those of that person; and

“Winding-Up” means a final and effective court order or effective resolution for the

winding-up, liquidation or similar proceedings in respect of the Issuer or the Guarantor (as

applicable) (except, in any such case, a solvent winding-up solely for the purposes of a

reorganisation, reconstruction or amalgamation or the substitution in place of the Issuer or

the Guarantor, as the case may be, of a successor in business (as defined in the Trust Deed),

the terms of which reorganisation, reconstruction, amalgamation or substitution have been

previously approved by an Extraordinary Resolution (as defined in the Trust Deed)).

5 DISTRIBUTION AND OTHER CALCULATIONS

(a) Distribution on Fixed Rate Perpetual Capital Securities:

(i) Subject to Condition 5(k), each Fixed Rate Perpetual Capital Security confers a right

to receive distribution (each a “Distribution”) on its outstanding nominal amount

from and including the Distribution Commencement Date at the rate per annum

(expressed as a percentage) equal to the Distribution Rate, such Distribution being

payable in arrear on each Distribution Payment Date. The amount of Distribution

payable shall be determined in accordance with Condition 5(g).

– 208 –

(ii) The Distribution Rate applicable to each Fixed Rate Perpetual Capital Security shall

be:

(A) for the period from (and including) the Distribution Commencement Date to

(but excluding) the First Reset Date specified hereon, the rate shown on the face

of such Perpetual Security; and

(B) for the period from (and including) the First Reset Date and each Reset Date (as

shown hereon) falling thereafter to (but excluding) the immediately following

Reset Date, the Reset Distribution Rate (as specified hereon).

The amount of Distribution payable shall be determined in accordance with

Condition 5(g).

(iii) Determination and Publication of Reset Distribution Rate: The Calculation Agent

shall, on the second Business Day prior to each Reset Date, calculate the applicable

Reset Distribution Rate and cause the Reset Distribution Rate to be notified to the

Trustee, the Issuer, each of the Paying Agents, the Perpetual Capital Securityholders,

any other Calculation Agent appointed in respect of the Perpetual Capital Securities

that is to make a further calculation upon receipt of such information and, if the

Perpetual Capital Securities are listed on a stock exchange and the rules of such

exchange or other relevant authority so require, such exchange or other relevant

authority as soon as possible after their determination but in no event later than:

(A) the commencement of the relevant Distribution Period, if determined prior to

such time, in the case of notification to such exchange of a Distribution Rate

and Distribution Amount; or

(B) in all other cases, the fourth Business Day after such determination.

The determination of any rate, the obtaining of each quotation and the making of each

determination or calculation by the Calculation Agent(s) shall (in the absence of

manifest error) be final and binding upon all parties.

If Treasury Rate is specified for the Reference Rate (as specified hereon), then it

means the rate notified by the Calculation Agent to the Issuer, the Trustee, the

Principal Paying Agent and the Perpetual Capital Securityholders (in accordance with

Condition 15) in per cent. per annum equal to the yield, under the heading that

represents the average for the week immediately prior to two business days prior to

each Reset Date for calculating the relevant Reset Distribution Rate under Condition

5(a)(ii), appearing in the most recently published statistical release designated

“H.15(519)” or any successor publication that is published weekly by the Board of

Governors of the Federal Reserve System and that establishes yields on actively

traded U.S. Treasury Securities adjusted to constant maturity under the caption

“Treasury constant maturities” for the maturity corresponding to the Comparable

Treasury Issue. If such release (or any successor release) is not published during the

week preceding the relevant date referred to above in this definition (as applicable)

or does not contain such yields, “Treasury Rate” means the rate in per cent. per

– 209 –

annum equal to the semi-annual equivalent yield to maturity of the Comparable

Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed

as a percentage of its principal amount) equal to the Comparable Treasury Price for

the applicable Reset Date. Whereas “Comparable Treasury Issue” means the

Treasury Security selected by the Calculation Agent as having a maturity equal to the

Reset Period (as specified hereon) that would be utilised, at the time of selection and

in accordance with customary financial practice, in pricing new issues of corporate

debt securities with a maturity equal to the Reset Period (as specified hereon).

(b) Distribution on Floating Rate Perpetual Capital Securities and Index Linked

Distribution Perpetual Capital Securities:

(i) Distribution Payment Dates: Subject to Condition 5(k), each Floating Rate

Perpetual Capital Security confers a right to receive Distribution on its outstanding

nominal amount from (and including) the Distribution Commencement Date at the

rate per annum (expressed as a percentage) equal to the Distribution Rate, such

Distribution being payable in arrear on each Distribution Payment Date. The amount

of Distribution payable shall be determined in accordance with Condition 5(g). Such

Distribution Payment Date(s) is/are either shown hereon as Specified Distribution

Payment Dates or, if no Specified Distribution Payment Date(s) is/are shown hereon,

Distribution Payment Date shall mean each date which falls the number of months or

other period shown hereon as the Distribution Period after the preceding Distribution

Payment Date or, in the case of the first Distribution Payment Date, after the

Distribution Commencement Date.

(ii) Business Day Convention: If any date referred to in these Conditions that is

specified to be subject to adjustment in accordance with a Business Day Convention

would otherwise fall on a day that is not a Business Day, then, if the Business Day

Convention specified is:

(A) the Floating Rate Business Day Convention, such date shall be postponed to the

next day that is a Business Day unless it would thereby fall into the next

calendar month, in which event (x) such date shall be brought forward to the

immediately preceding Business Day and (y) each subsequent such date shall be

the last Business Day of the month in which such date would have fallen had

it not been subject to adjustment;

(B) the Following Business Day Convention, such date shall be postponed to the

next day that is a Business Day;

(C) the Modified Following Business Day Convention, such date shall be postponed

to the next day that is a Business Day unless it would thereby fall into the next

calendar month, in which event such date shall be brought forward to the

immediately preceding Business Day; or

(D) the Preceding Business Day Convention, such date shall be brought forward to

the immediately preceding Business Day.

– 210 –

(iii) Distribution Rate for Floating Rate Perpetual Capital Securities: The

Distribution Rate in respect of Floating Rate Perpetual Capital Securities for each

Distribution Accrual Period shall be determined in the manner specified hereon and

the provisions below relating to either ISDA Determination or Screen Rate

Determination shall apply, depending upon which is specified hereon.

(A) ISDA Determination for Floating Rate Perpetual Capital Securities

Where ISDA Determination is specified hereon as the manner in which the

Distribution Rate is to be determined, the Distribution Rate for each

Distribution Accrual Period shall be determined by the Calculation Agent as a

rate equal to the relevant ISDA Rate. For the purposes of this sub-paragraph

(A), “ISDA Rate” for a Distribution Accrual Period means a rate equal to the

Floating Rate that would be determined by the Calculation Agent under a Swap

Transaction under the terms of an agreement incorporating the ISDA Definitions

and under which:

(x) the Floating Rate Option is as specified hereon

(y) the Designated Maturity is a period specified hereon and

(z) the relevant Reset Date is the first day of that Distribution Accrual Period

unless otherwise specified hereon.

For the purposes of this sub-paragraph (A), “Floating Rate”, “CalculationAgent”, “Floating Rate Option”, “Designated Maturity”, “Reset Date” and

“Swap Transaction” have the meanings given to those terms in the ISDA

Definitions.

(B) Screen Rate Determination for Floating Rate Perpetual Capital Securities

(x) Where Screen Rate Determination is specified hereon as the manner in

which the Distribution Rate is to be determined, the Distribution Rate for

each Distribution Accrual Period will, subject as provided below, be

either:

(1) the offered quotation; or

(2) the arithmetic mean of the offered quotations,

(expressed as a percentage rate per annum) for the Reference Rate which

appears or appear, as the case may be, on the Relevant Screen Page as at

either 11:00 a.m. (London time in the case of LIBOR or Brussels time in

the case of EURIBOR or Hong Kong time in the case of HIBOR) or 11:15

a.m. (Hong Kong time in the case of CNH HIBOR) or if, at or around that

time it is notified that the fixing will be published at 2:30 p.m. (Hong

Kong time), then as of 2:30 p.m. (Hong Kong time in the case of CNH

HIBOR), as the case may be, on the Distribution Determination Date in

– 211 –

question as determined by the Calculation Agent. If five or more of such

offered quotations are available on the Relevant Screen Page, the highest

(or, if there is more than one such highest quotation, one only of such

quotations) and the lowest (or, if there is more than one such lowest

quotation, one only of such quotations) shall be disregarded by the

Calculation Agent for the purpose of determining the arithmetic mean of

such offered quotations.

If the Reference Rate from time to time in respect of Floating Rate

Perpetual Capital Securities is specified hereon as being other than LIBOR

or EURIBOR or HIBOR or CNH HIBOR, the Distribution Rate in respect

of such Perpetual Capital Securities will be determined as provided

hereon.

(y) If the Relevant Screen Page is not available or if sub-paragraph (x)(1)

applies and no such offered quotation appears on the Relevant Screen Page

or if sub-paragraph (x)(2) above applies and fewer than three such offered

quotations appear on the Relevant Screen Page, in each case as at the time

specified above, subject as provided below, the Calculation Agent shall

promptly notify the Issuer and the Issuer shall use all commercially

reasonable endeavours to appoint an Independent Investment Bank and

procure such Independent Investment Bank to request, if the Reference

Rate is LIBOR, the principal London office of each of the Reference

Banks or, if the Reference Rate is EURIBOR, the principal Euro-zone

office of each of the Reference Banks or, if the Reference Rate is HIBOR

or CNH HIBOR, the principal Hong Kong office of each of the Reference

Banks, to provide the Independent Investment Bank and the Calculation

Agent with its offered quotation (expressed as a percentage rate per

annum) for the Reference Rate if the Reference Rate is LIBOR, at

approximately 11:00 a.m. (London time), or if the Reference Rate is

EURIBOR, at approximately 11:00 a.m. (Brussels time) or, if the

Reference Rate is HIBOR or CNH HIBOR, at approximately 11:00 a.m.

(Hong Kong time) on the Distribution Determination Date in question. If

two or more of the Reference Banks provide the Independent Investment

Bank and the Calculation Agent with such offered quotations, the

Distribution Rate for such Distribution Accrual Period shall be the

arithmetic mean of such offered quotations as determined by the

Calculation Agent.

(z) If paragraph (y) above applies and the Calculation Agent has received

offered quotations from fewer than two Reference Banks, subject as

provided below, the Distribution Rate shall be the arithmetic mean of the

rates per annum (expressed as a percentage) as communicated at the

request of the Independent Investment Bank to the Independent Investment

Bank and the Calculation Agent by the Reference Banks or any two or

more of them, at which such banks were offered, if the Reference Rate is

LIBOR, at approximately 11:00 a.m. (London time) or, if the Reference

Rate is EURIBOR, at approximately 11:00 a.m. (Brussels time) or, if the

Reference Rate is HIBOR or CNH HIBOR, at approximately 11:00 a.m.

– 212 –

(Hong Kong time) on the relevant Distribution Determination Date,

deposits in the Specified Currency for a period equal to that which would

have been used for the Reference Rate by leading banks in, if the

Reference Rate is LIBOR, the London inter-bank market or, if the

Reference Rate is EURIBOR, the Euro-zone inter-bank market, or, if the

Reference Rate is HIBOR or CNH HIBOR, the Hong Kong inter-bank

market, as the case may be, or, if fewer than two of the Reference Banks

provide the Independent Investment Bank and the Calculation Agent with

such offered rates, the offered rate for deposits in the Specified Currency

for a period equal to that which would have been used for the Reference

Rate, or the arithmetic mean of the offered rates for deposits in the

Specified Currency for a period equal to that which would have been used

for the Reference Rate, at which, if the Reference Rate is LIBOR, at

approximately 11:00 a.m. (London time) or, if the Reference Rate is

EURIBOR, at approximately 11:00 a.m. (Brussels time), or, if the

Reference Rate is HIBOR or CNH HIBOR, at approximately 11:00 a.m.

(Hong Kong time) on the relevant Distribution Determination Date, any

one or more banks (which bank or banks is or are in the opinion of the

Independent Investment Bank suitable for such purpose) informs the

Independent Investment Bank and the Calculation Agent it is quoting to

leading banks in, if the Reference Rate is LIBOR, the London inter-bank

market or, if the Reference Rate is EURIBOR, the Euro-zone inter-bank

market, or, if the Reference Rate is HIBOR or CNH HIBOR, the Hong

Kong inter-bank market, as the case may be, provided that, if the

Distribution Rate cannot be determined in accordance with the foregoing

provisions of this paragraph, the Distribution Rate shall be determined as

at the last preceding Distribution Determination Date (though substituting,

where a different Margin or Maximum Distribution Rate or Minimum

Distribution Rate is to be applied to the relevant Distribution Accrual

Period from that which applied to the last preceding Distribution Accrual

Period, the Margin or Maximum Distribution Rate or Minimum

Distribution Rate relating to the relevant Distribution Accrual Period, in

place of the Margin or Maximum Distribution Rate or Minimum

Distribution Rate relating to that last preceding Distribution Accrual

Period).

For the purposes of this Condition 5(b)(iii)(B), “Independent InvestmentBank” means an independent financial institution of international repute

or an independent financial adviser with appropriate experience (which

shall not be the Calculation Agent) selected and appointed by the Issuer (at

the expense of the Issuer, failing whom the Guarantor) for the purposes of

this Condition 5(b)(iii)(B) and notified in writing by the Issuer to the

Calculation Agent and the Trustee.

(iv) Distribution Rate for Index Linked Distribution Perpetual Capital Securities:The Distribution Rate in respect of Index Linked Distribution Perpetual Capital

Securities for each Distribution Accrual Period shall be determined in the manner

specified hereon and Distribution will accrue by reference to an Index or Formula as

specified hereon.

– 213 –

(c) Dual Currency Perpetual Capital Securities: In the case of Dual Currency Perpetual

Capital Securities, if the rate or amount of Distribution falls to be determined by reference

to a Rate of Exchange or a method of calculating Rate of Exchange, the rate or amount of

Distribution payable shall be determined in the manner specified hereon.

(d) Partly Paid Perpetual Capital Securities: In the case of Partly Paid Perpetual Capital

Securities, Distribution will accrue as aforesaid on the paid-up nominal amount of such

Perpetual Capital Securities and otherwise as specified hereon.

(e) Accrual of Distribution: Subject to Condition 5(k), Distribution shall cease to accrue on

each Perpetual Capital Security on the due date for redemption unless, upon due

presentation, payment is improperly withheld or refused, in which event distributions shall

continue to accrue (both before and after judgment) at the Distribution Rate in the manner

provided in this Condition 5 to the Relevant Date (as defined in Condition 8).

(f) Margin, Maximum Distribution Rate/Minimum Distribution Rate, MaximumRedemption Amount/Minimum Redemption Amount and Rounding:

(i) If any Margin is specified hereon (either (x) generally, or (y) in relation to one or

more Distribution Accrual Periods), an adjustment shall be made to all Distribution

Rates, in the case of (x), or the Distribution Rates for the specified Distribution

Accrual Periods, in the case of (y), calculated in accordance with Condition 5(b)

above by adding (if a positive number) or subtracting the absolute value (if a negative

number) of such Margin, subject always to Condition 5(f)(ii) below.

(ii) If any Maximum Distribution Rate or Minimum Distribution Rate or Maximum

Redemption Amount or Minimum Redemption Amount is specified hereon, then any

Distribution Rate or Redemption Amount shall be subject to such maximum or

minimum, as the case may be.

(iii) For the purposes of any calculations required pursuant to these Conditions (unless

otherwise specified), (x) all percentages resulting from such calculations shall be

rounded, if necessary, to the nearest one hundred-thousandth of a percentage point

(with 0.000005 of a percentage point being rounded up), (y) all figures shall be

rounded to seven significant figures (provided that if the eighth significant figure is

a 5 or greater, the seventh significant figure shall be rounded up) and (z) all currency

amounts that fall due and payable shall be rounded to the nearest unit of such

currency (with half a unit being rounded up), save in the case of yen, which shall be

rounded down to the nearest yen. For these purposes “unit” means the lowest amount

of such currency that is available as legal tender in the country or countries of such

currency.

(g) Calculations: The amount of Distribution payable per Calculation Amount in respect of

any Perpetual Capital Security for any Distribution Accrual Period shall be equal to the

product of the Distribution Rate, the Calculation Amount specified hereon, and the Day

Count Fraction for such Distribution Accrual Period, unless a Distribution Amount (or a

formula for its calculation) is applicable to such Distribution Accrual Period, in which case

the amount of Distribution payable per Calculation Amount in respect of such Perpetual

– 214 –

Capital Security for such Distribution Accrual Period shall equal such Distribution Amount

(or be calculated in accordance with such formula). Where any Distribution Period

comprises two or more Distribution Accrual Periods, the amount of Distribution payable

per Calculation Amount in respect of such Distribution Period shall be the sum of the

Distribution Amounts payable in respect of each of those Distribution Accrual Periods. In

respect of any other period for which Distribution is required to be calculated, the

provisions above shall apply save that the Day Count Fraction shall be for the period for

which Distribution is required to be calculated.

(h) Determination and Publication of Distribution Rate, Distribution Amounts andOptional Redemption Amounts: The Calculation Agent shall, as soon as practicable on

each Distribution Determination Date, or such other time on such date as the Calculation

Agent may be required to calculate any rate or amount, obtain any quotation or make any

determination or calculation, determine such rate and calculate the Distribution Amounts

for the relevant Distribution Accrual Period, calculate the Early Redemption Amount or

Optional Redemption Amount, obtain such quotation or make such determination or

calculation, as the case may be, and cause the Distribution Rate and the Distribution

Amounts for each Distribution Accrual Period and the relevant Distribution Payment Date

and, if required to be calculated, the Early Redemption Amount or Optional Redemption

Amount to be notified to the Trustee, the Issuer, each of the Paying Agents, the Perpetual

Capital Securityholders, any other Calculation Agent appointed in respect of the Perpetual

Capital Securities that is to make a further calculation upon receipt of such information

and, if the Perpetual Capital Securities are listed on a stock exchange and the rules of such

exchange or other relevant authority so require, such exchange or other relevant authority

as soon as possible after their determination but in no event later than (i) the

commencement of the relevant Distribution Period, if determined prior to such time, in the

case of notification to such exchange of a Distribution Rate and Distribution Amount, or

(ii) in all other cases, the fourth Business Day after such determination. Where any

Distribution Payment Date or Distribution Period Date is subject to adjustment pursuant

to Condition 5(b)(ii), the Distribution Amounts and the Distribution Payment Date so

published may subsequently be amended (or appropriate alternative arrangements made

with the consent of the Trustee by way of adjustment) without notice in the event of an

extension or shortening of the Distribution Period. If the Perpetual Capital Securities

become due and payable under Condition 10, the accrued Distribution and the Distribution

Rate payable in respect of the Perpetual Capital Securities shall nevertheless continue to

be calculated as previously in accordance with this Condition 5 but no publication of the

Distribution Rate or the Distribution Amount so calculated need be made unless the

Trustee otherwise requires. The determination of any rate or amount and the making of

each determination or calculation by the Calculation Agent(s) shall (in the absence of

manifest error) be final and binding upon all parties and the Perpetual Capital

Securityholders.

(i) Benchmark discontinuation:

(i) Independent Adviser

If a Benchmark Event occurs in relation to an Original Reference Rate when any

Distribution Rate (or any component part thereof) remains to be determined by

reference to such Original Reference Rate, then the Issuer shall use its reasonable

– 215 –

endeavours to appoint, at the expense of the Issuer, failing whom the Guarantor, anIndependent Adviser, as soon as reasonably practicable, to determine a SuccessorRate, failing which an Alternative Rate (in accordance with Condition 5(i)(ii)) and,in either case, an Adjustment Spread and any Benchmark Amendments (in accordancewith Condition 5(i)(iv)). In making such determination, the Independent Adviserappointed pursuant to this Condition 5(i) shall act in good faith and in a commerciallyreasonable manner as an expert. In the absence of bad faith or fraud, the IndependentAdviser shall have no liability whatsoever to the Issuer, the Trustee, the PayingAgents or the Perpetual Capital Securityholders or the Couponholders for anydetermination made by it pursuant to this Condition 5(i).

If (A) the Issuer is unable to appoint an Independent Adviser; or (B) the IndependentAdviser appointed by it fails to determine a Successor Rate or, failing which, anAlternative Rate in accordance with this Condition 5(i) prior to the relevantDistribution Determination Date, the Distribution Rate applicable to the nextsucceeding Distribution Period shall be equal to the Distribution Rate last determinedin relation to the Perpetual Capital Securities in respect of the immediately precedingDistribution Period. If there has not been a first Distribution Payment Date, theDistribution Rate shall be the initial Distribution Rate. Where a different Margin orMaximum Distribution Rate or Minimum Distribution Rate is to be applied to therelevant Distribution Period from that which applied to the last precedingDistribution Period, the Margin or Maximum Distribution Rate or MinimumDistribution Rate relating to the relevant Distribution Period shall be substituted inplace of the Margin or Maximum Distribution Rate or Minimum Distribution Raterelating to that last preceding Distribution Period. For the avoidance of doubt, thisCondition 5(i) shall apply to the relevant next succeeding Distribution Period onlyand any subsequent Distribution Periods are subject to the subsequent operation of,and to adjustment as provided in, the first paragraph of this Condition 5(i)(i).

(ii) Successor Rate or Alternative Rate

If the Independent Adviser determines that:

(A) there is a Successor Rate, then such Successor Rate and the applicableAdjustment Spread shall subsequently be used in place of the OriginalReference Rate to determine the Distribution Rate (or the relevant componentpart thereof) for all future payments of Distribution on the Perpetual CapitalSecurities (subject to the operation of this Condition 5(i)); or

(B) there is no Successor Rate but that there is an Alternative Rate, then suchAlternative Rate and the applicable Adjustment Spread shall subsequently beused in place of the Original Reference Rate to determine the Distribution Rate(or the relevant component part thereof) for all future payments of Distributionon the Perpetual Capital Securities (subject to the operation of this Condition5(i)).

(iii) Adjustment Spread

The Adjustment Spread shall be applied to the Successor Rate or the Alternative Rate(as the case may be). If the Independent Adviser is unable to determine the quantum

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of, or a formula or methodology for determining, such Adjustment Spread, then the

Successor Rate or the Alternative Rate (as applicable) will apply without an

Adjustment Spread.

(iv) Benchmark Amendments

If any Successor Rate or Alternative Rate and, in either case, the applicable

Adjustment Spread is determined in accordance with this Condition 5(i) and the

Independent Adviser determines (A) that amendments to these Conditions and/or the

Trust Deed are necessary to ensure the proper operation of such Successor Rate or

Alternative Rate and/or (in either case) the applicable Adjustment Spread (such

amendments, the “Benchmark Amendments”) and (B) the terms of the Benchmark

Amendments, then the Issuer shall, subject to giving notice thereof in accordance

with Condition 5(i)(v), without any requirement for the consent or approval of

Perpetual Capital Securityholders, vary these Conditions and/or the Trust Deed to

give effect to such Benchmark Amendments with effect from the date specified in

such notice.

At the written request of the Issuer, but subject to receipt by the Trustee of a

certificate signed by an Authorised Signatory of the Issuer pursuant to Condition

5(i)(v), the Trustee shall (at the expense of the Issuer, failing whom the Guarantor),

without any requirement for the consent or approval of the Perpetual Capital

Securityholders, be obliged to concur with the Issuer in effecting any Benchmark

Amendments (including, inter alia, by the execution of a deed supplemental to or

amending the Trust Deed), provided that the Trustee shall not be obliged so to concur

if in the opinion of the Trustee doing so would impose more onerous obligations upon

it or expose it to any additional duties, responsibilities or liabilities or reduce or

amend the protective provisions afforded to the Trustee in these Conditions or the

Trust Deed (including, for the avoidance of doubt, any supplemental trust deed) in

any way.

Notwithstanding any other provision of this Condition 5(i), neither the Calculation

Agent nor any Paying Agent is obliged to concur with the Issuer or the Independent

Adviser in respect of any changes or amendments as contemplated under this

Condition 5(i) to which, in the sole opinion of the Calculation Agent or the relevant

Paying Agent, as the case may be, would impose more onerous obligations upon it or

expose it to any additional duties, responsibilities or liabilities or reduce or amend the

protective provisions afforded to the Calculation Agent or the relevant Paying Agent

(as applicable) in the Agency Agreement and/or these Conditions.

In connection with any such variation in accordance with this Condition 5(i)(iv), the

Issuer shall comply with the rules of any stock exchange on which the Perpetual

Capital Securities are for the time being listed or admitted to trading.

(v) Notices, etc.

Any Successor Rate, Alternative Rate, Adjustment Spread and the specific terms of

any Benchmark Amendments, determined under this Condition 5(i) will be notified

promptly by the Issuer to the Trustee, the Calculation Agent, the Paying Agents. In

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accordance with Condition 15, notice shall be provided to the Perpetual Capital

Securityholders promptly thereafter. Such notice shall be irrevocable and shall

specify the effective date of the Benchmark Amendments, if any.

No later than notifying the Perpetual Capital Securityholders of the same, the Issuer

shall deliver to the Trustee, the Calculation Agent and the Paying Agents a certificate

signed by an Authorised Signatory of the Issuer:

(A) confirming (I) that a Benchmark Event has occurred, (II) the Successor Rate or,

as the case may be, the Alternative Rate, (III) the applicable Adjustment Spread

and (IV) the specific terms of the Benchmark Amendments (if any), in each case

as determined in accordance with the provisions of this Condition 5(i); and

(B) certifying that the Benchmark Amendments (if any) are necessary to ensure the

proper operation of such Successor Rate or Alternative Rate and (in either case)

the applicable Adjustment Spread.

Each of the Trustee, the Calculation Agent and the Paying Agents shall be entitled to

accept without verification or investigation and to rely conclusively on such

certificate (without liability to any person) as sufficient evidence thereof. The

Successor Rate or Alternative Rate and the Adjustment Spread and the Benchmark

Amendments (if any) specified in such certificate will (in the absence of manifest

error or bad faith in the determination of the Successor Rate or Alternative Rate and

the Adjustment Spread and the Benchmark Amendments (if any) and without

prejudice to the Trustee’s or the Calculation Agent’s or the Paying Agents’ ability to

rely on such certificate as aforesaid) be binding on the Issuer, the Trustee, the

Calculation Agent, the Paying Agents and the Perpetual Capital Securityholders. The

Trustee shall be protected and shall have no liability to any Perpetual Capital

Securityholder, the Issuer, the Guarantor or any other person for so accepting and

relying on any such certificate and/or opinion.

Notwithstanding any other provision of this Condition 5(i), if in the Calculation

Agent’s opinion there is any uncertainty between two or more alternative courses of

action in making any determination or calculation under this Condition 5(i), the

Calculation Agent shall promptly notify the Issuer thereof and the Issuer shall direct

the Calculation Agent in writing as to which alternative course of action to adopt. If

the Calculation Agent is not promptly provided with such direction, or is otherwise

unable (other than due to its own gross negligence, wilful default or fraud) to make

such calculation or determination for any reason, it shall notify the Issuer thereof and

the Calculation Agent shall be under no obligation to make such calculation or

determination and (in the absence of such gross negligence, wilful default or fraud)

shall not incur any liability to any person for not doing so.

(vi) Survival of Original Reference Rate

Without prejudice to the obligations of the Issuer under Conditions 5(i)(i), 5(i)(ii),

5(i)(iii) and 5(i)(iv), the Original Reference Rate and the fallback provisions

provided for in Condition 5(b)(B) will continue to apply unless and until a

Benchmark Event has occurred.

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(vii) Definitions

As used in this Condition 5(i):

“Adjustment Spread” means either (a) a spread (which may be positive, negative orzero) or (b) a formula or methodology for calculating a spread, in each case to beapplied to the Successor Rate or the Alternative Rate (as the case may be) and is thespread, formula or methodology which:

(i) in the case of a Successor Rate, is formally recommended in relation to thereplacement of the Original Reference Rate with the Successor Rate by anyRelevant Nominating Body; or (if no such recommendation has been made, orin the case of an Alternative Rate);

(ii) the Independent Adviser determines, is customarily applied to the relevantSuccessor Rate or the Alternative Rate (as the case may be) in international debtcapital markets transactions to produce an industry-accepted replacement ratefor the Original Reference Rate; or (if the Independent Adviser determines thatno such spread is customarily applied);

(iii) the Independent Adviser determines is recognised or acknowledged as being theindustry standard for over-the-counter derivative transactions which referencethe Original Reference Rate, where such rate has been replaced by the SuccessorRate or the Alternative Rate (as the case may be);

“Alternative Rate” means an alternative benchmark or screen rate which theIndependent Adviser, determines in accordance with Condition 5(i)(ii) is customarilyapplied in international debt capital markets transactions for the purposes ofdetermining rates of Distribution (or the relevant component part thereof) in the sameSpecified Currency as the Perpetual Capital Securities;

“Benchmark Amendments” has the meaning given to it in Condition 5(i)(iv);

“Benchmark Event” means:

(i) the Original Reference Rate ceasing to be published for a period of at least fiveBusiness Days or ceasing to exist; or

(ii) a public statement by the administrator of the Original Reference Rate that it hasceased or that it will cease publishing the Original Reference Rate permanentlyor indefinitely (in circumstances where no successor administrator has beenappointed that will continue publication of the Original Reference Rate); or

(iii) a public statement by the supervisor of the administrator of the OriginalReference Rate, that the Original Reference Rate has been or will bepermanently or indefinitely discontinued; or

(iv) a public statement by the supervisor of the administrator of the OriginalReference Rate as a consequence of which the Original Reference Rate will beprohibited from being used either generally, or in respect of the PerpetualCapital Securities; or

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(v) a public statement by the supervisor of the administrator of the Original

Reference Rate that, with effect from a date after 31 December 2021, the

Original Reference Rate is or will be (or is or will be deemed by such supervisor

to be) no longer representative of its relevant underlying market; or

(vi) it has become unlawful for any Paying Agent, the Calculation Agent, the Issuer

or other party to calculate any payments due to be made to any Perpetual Capital

Securityholder using the Original Reference Rate,

provided that the Benchmark Event shall be deemed to occur (A) in the case of

sub-paragraphs (ii) and (iii) above of this definition, on the date of the cessation of

publication of the Original Reference Rate or the discontinuation of the Original

Reference Rate, as the case may be, (B) in the case of sub-paragraph (iv) above of

this definition, on the date of the prohibition of use of the Original Reference Rate

and (C) in the case of sub-paragraph (v) above of this definition, on the date with

effect from which the Original Reference Rate will no longer be (or will be deemed

by the relevant supervisor to no longer be) representative of its relevant underlying

market and which is specified in the relevant public statement, and, in each case, not

the date of the relevant public statement.

The occurrence of a Benchmark Event shall be determined by the Issuer and promptly

notified to the Trustee, the Calculation Agent and the Paying Agents. For the

avoidance of doubt, none of the Trustee, the Calculation Agent or the Paying Agents

shall have any responsibility or liability for making such determination and shall

have no obligation to monitor whether any Benchmark Event has occurred;

“business day” means a day, other than a Saturday or Sunday, on which banks are

open for business in the place of the specified office of the Calculation Agent;

“Independent Adviser” means an independent financial institution of international

repute or an independent financial adviser with appropriate expertise selected and

appointed by the Issuer (at the expense of the Issuer, failing whom the Guarantor)

under Condition 5(i)(i);

“Original Reference Rate” means the originally-specified benchmark or screen rate

(as applicable) used to determine the Distribution Rate (or any component part

thereof) on the Perpetual Capital Securities;

“Relevant Nominating Body” means, in respect of a benchmark or screen rate (as

applicable):

(i) the central bank for the currency to which the benchmark or screen rate (as

applicable) relates, or any central bank or other supervisory authority which is

responsible for supervising the administrator of the benchmark or screen rate (as

applicable); or

(ii) any working group or committee sponsored by, chaired or co-chaired by or

constituted at the request of (A) the central bank for the currency to which the

benchmark or screen rate (as applicable) relates, (B) any central bank or other

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supervisory authority which is responsible for supervising the administrator of

the benchmark or screen rate (as applicable), (C) a group of the aforementioned

central banks or other supervisory authorities or (D) the Financial Stability

Board or any part thereof; and

“Successor Rate” means a successor to or replacement of the Original Reference

Rate which is formally recommended by any Relevant Nominating Body.

(j) Determination or Calculation by Trustee: If the Calculation Agent does not at any time

for any reason determine or calculate the Distribution Rate for a Distribution Accrual

Period or any Distribution Amount, Early Redemption Amount or Optional Redemption

Amount, the Trustee may but shall not be obliged to do so (or may but shall not be obliged

to appoint, at the cost of the Issuer, failing whom the Guarantor, an agent on its behalf to

do so) and such determination or calculation shall be deemed for all purposes to have been

made by the Calculation Agent. Any person so appointed by the Trustee shall not be an

agent of the Trustee for any purpose. In doing so, the Trustee or such agent appointed by

it shall apply the foregoing provisions of this Condition 5, with any necessary

consequential amendments, to the extent that, in its opinion, it can do so, and, in all other

respects it shall do so in such manner as it shall deem fair and reasonable in all the

circumstances.

(k) Distribution Deferral

(i) Optional Deferral: If Distribution Deferral is specified hereon, the Issuer may, at its

sole discretion, elect to defer (in whole or in part) any Distribution which is otherwise

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

Date by giving notice (an “Optional Deferral Notice”) to the Perpetual Capital

Securityholders (in accordance with Condition 15) and to the Trustee and the

Principal Paying Agent in writing (substantially in the form scheduled to the Trust

Deed) not more than ten Payment Business Days nor less than five Payment Business

Days prior to a scheduled Distribution Payment Date (an “Optional DeferralEvent”). Any partial payment of any Distribution by the Issuer shall be shared by the

Perpetual Capital Securityholders of all outstanding Perpetual Capital Securities on

a pro-rata basis.

If Dividend Pusher is specified hereon, the Issuer may not elect to defer (in whole or

in part) any Distribution if, during the Reference Period (as specified hereon) ending

on the day before that scheduled Distribution Payment Date, a Compulsory

Distribution Payment Event has occurred.

(ii) No obligation to pay: If Distribution Deferral is specified hereon and subject to

Condition 5(k)(v) and Condition 5(k)(vi), the Issuer shall have no obligation to pay

any Distribution (including any Arrears of Distribution and any Additional

Distribution Amount) on any Distribution Payment Date if it validly elects not to do

so in accordance with Condition 5(k)(i).

(iii) Requirements as to Notice: If Distribution Deferral is specified hereon, each

Optional Deferral Notice shall be accompanied, in the case of notice by the Issuer to

the Trustee and the Principal Paying Agent, by a certificate substantially in the form

– 221 –

scheduled to the Trust Deed signed by any Authorised Signatory of the Issuer

confirming that no Compulsory Distribution Payment Event has occurred. The

Trustee shall be entitled to accept without investigation the certificate and such

Optional Deferral Notice as sufficient evidence of the occurrence of an Optional

Deferral Event and that no Compulsory Distribution Payment Event has occurred in

which event the same shall be conclusive and binding on the Perpetual Capital

Securityholders.

(iv) Cumulative Deferral: Any Distribution deferred pursuant to this Condition 5(k) shall

constitute “Arrears of Distribution”. The Issuer may, at its sole discretion, elect (in

the circumstances set out in Condition 5(k)(i)) to further defer (in whole or in part)

any Arrears of Distribution by complying with the foregoing notice requirement

applicable to any deferral of an accrued Distribution. The Issuer is not subject to any

limit as to the number of times distributions and Arrears of Distribution can or shall

be deferred pursuant to this Condition 5(k) except that Condition 5(k)(v) shall be

complied with until all outstanding Arrears of Distribution and Additional

Distribution Amount have been paid in full.

Each amount of Arrears of Distribution shall accrue Distributions as if it constituted

the principal of the Perpetual Capital Securities at the prevailing Distribution Rate

and the amount of such Distribution (the “Additional Distribution Amount”) with

respect to Arrears of Distribution shall be due and payable pursuant to this Condition

5 and shall be calculated by applying the applicable Distribution Rate to the amount

of the Arrears of Distribution and otherwise mutatis mutandis as provided in the

foregoing provisions of this Condition 5. The Additional Distribution Amount

accrued up to any Distribution Payment Date shall be added (for the purpose of

calculating the Additional Distribution Amount accruing thereafter) to the amount of

Arrears of Distribution remaining unpaid on such Distribution Payment Date so that

it will itself become Arrears of Distribution.

(v) Restrictions in the case of Deferral: If Dividend Stopper is specified hereon and on

any Distribution Payment Date, payment of all Distribution payments scheduled to be

made on such date (including any Distribution accrued but unpaid on the Perpetual

Capital Securities (including any Arrears of Distribution and any Additional

Distribution Amount)) is not made in full, each of the Issuer and the Guarantor shall

not:

(A) declare or pay any discretionary dividends or distributions or make any other

discretionary payment, and will procure that no discretionary dividend,

distribution or other discretionary payment is made, in each case, on any Parity

Securities or Junior Securities of the Issuer or the Guarantor (except (1) in

relation to the Parity Securities of the Issuer or the Guarantor, as the case may

be, on a pro-rata basis, or (2) in connection with any employee benefit plan or

similar arrangements with or for the benefit of employees, officers, directors or

consultants of the Issuer or the Guarantor, as the case may be); or

(B) at its discretion redeem, reduce, cancel, buy-back or otherwise acquire for any

consideration any Parity Securities or Junior Securities of the Issuer or the

Guarantor prior to its stated maturity (except (1) in relation to the Parity

– 222 –

Securities of the Issuer or the Guarantor, as the case may be, on a pro-rata basis,or (2) in connection with any employee benefit plan or similar arrangementswith or for the benefit of employees, officers, directors or consultants of theIssuer or the Guarantor, as the case may be, or (3) as a result of the exchangeor conversion of its Parity Securities for its Junior Securities),

in each case, unless and until (x) the Issuer has satisfied in full all outstanding Arrearsof Distribution and the Additional Distribution Amount; or (y) the Issuer is permittedto do so by an Extraordinary Resolution of the Perpetual Capital Securityholders.

For the avoidance of doubt, the Issuer’s right of optional deferral pursuant toCondition 5(k)(i) will not be affected solely as a result of the incurrence of any ParitySecurities or Junior Securities.

In addition, the incurrence of any senior indebtedness, Parity Securities or JuniorSecurities itself will not constitute a Compulsory Distribution Payment Event. Anon-discretionary payment on, or redemption of, Parity Securities or JuniorSecurities (such as a scheduled payment of principal and interest on such Parity orJunior Securities, which the Issuer thereof has no right to defer) does not constitutea Compulsory Distribution Payment Event.

(vi) Satisfaction of Arrears of Distribution by payment: The Issuer:

(A) may satisfy any Arrears of Distribution and Additional Distribution Amount (inwhole or in part) at any time by giving notice of such election to the PerpetualCapital Securityholders (in accordance with Condition 15) and to the Trusteeand the Principal Paying Agent in writing not more than ten nor less than fivePayment Business Days prior to the relevant payment date specified in suchnotice (which notice is irrevocable and shall oblige the Issuer to pay the relevantArrears of Distribution and all Additional Distribution Amounts, on the paymentdate specified in such notice); and

(B) in any event shall satisfy any outstanding Arrears of Distribution and AdditionalDistribution Amount (in whole but not in part) on the earliest of:

(1) the date of redemption of the Perpetual Capital Securities in accordancewith the redemption events set out in Condition 6 (as applicable);

(2) the next Distribution Payment Date following the occurrence of a breachof Condition 5(k)(v) or (if Dividend Pusher is specified hereon) theoccurrence of a Compulsory Distribution Payment Event;

(3) the date such amount becomes due under Condition 10 or on a Winding-Upof the Issuer; and

(4) the date of any substitution or variation in accordance with Condition11(c).

The Guarantor undertakes as a primary obligation to pay all outstanding Arrears ofDistribution and Additional Distribution Amount upon a Winding-Up of theGuarantor.

– 223 –

Any partial payment of outstanding Arrears of Distribution and any Additional

Distribution Amount, as the case may be, by the Issuer shall be shared by the

Perpetual Capital Securityholders of all outstanding Perpetual Capital Securities on

a pro-rata basis.

(vii) No default: Notwithstanding any other provision in these Conditions or in the Trust

Deed, the deferral of any Distribution in accordance with this Condition 5(k) shall

not constitute a default for any purpose (including, without limitation, pursuant to

Condition 10) on the part of the Issuer under the Perpetual Capital Securities or the

Guarantor under the Guarantee.

(l) Increase in Distribution Rate following occurrence of Step-Up Event:

(i) Increase in Distribution Rate: Upon the occurrence of a Step-Up Event, unless:

(A) an irrevocable notice to redeem the Perpetual Capital Securities has been given

to Perpetual Capital Securityholders by the Issuer pursuant to Condition 6 by

the 30th day following the occurrence of such Step-Up Event; or

(B) the Step-Up Event is remedied by the 30th day following the occurrence of such

Step-Up Event,

the Distribution Rate will increase by the Step-Up Margin (as specified hereon) with

effect from:

(1) the next Distribution Payment Date immediately following the occurrence

of such Step-Up Event; or

(2) if the date on which such Step-Up Event occurs is prior to the most recent

preceding Distribution Payment Date, such Distribution Payment Date,

provided that the maximum aggregate increase in the Distribution Rate pursuant to

this Condition 5(l) shall be the Step-Up Margin (as specified hereon).

Any increase in the Distribution Rate pursuant to this Condition 5(l) shall be notified

by the Issuer to the Perpetual Capital Securityholders (in accordance with Condition

15) and to the Trustee and the Agents in writing, (x) in the case of a Step-Up Event

which is a Change of Control Event, no later than the 60th day following the

occurrence of the Change of Control Event; or (y) in the case of any other Step-Up

Event, no later than upon the occurrence of that Step-Up Event.

(ii) Decrease in Distribution Rate: If following an increase in the Distribution Rate

after a Step-Up Event pursuant to Condition 5(l)(i), such Step-Up Event is cured or

no longer exists, upon written notice of such facts being given by the Issuer to the

Perpetual Capital Securityholders and the Trustee, the Distribution Rate shall be

decreased by the Step-Up Margin (as specified hereon) with effect from (and

including) the Distribution Payment Date immediately following the day falling 30

days after the date on which the Trustee receives written notice of the cure of such

– 224 –

Step-Up Event, provided that the maximum aggregate decrease in the Distribution

Rate pursuant to this Condition 5(l) shall be the Step-Up Margin (as specified

hereon). The Trustee shall be entitled to rely conclusively on any written notice

received by it as contemplated in this Condition 5(l)(ii).

(m) Definitions: In these Conditions, unless the context otherwise requires, the following

defined terms shall have the meanings set out below:

“Business Day” means:

(i) in the case of a currency other than euro or Renminbi, a day (other than a Saturday

or Sunday) on which commercial banks and foreign exchange markets settle

payments in the principal financial centre for such currency; and/or

(ii) in the case of euro, a day on which the TARGET System is operating (a “TARGETBusiness Day”); and/or

(iii) in the case of Renminbi, a day (other than a Saturday, Sunday or public holiday) on

which commercial banks and foreign exchange markets are generally open for

business and settlement of Renminbi payments in Hong Kong; and/or

(iv) in the case of a currency and/or one or more Business Centres a day (other than a

Saturday or a Sunday) on which commercial banks and foreign exchange markets

settle payments in such currency in the Business Centre(s) or, if no currency is

indicated, generally in each of the Business Centres;

“Day Count Fraction” means, in respect of the calculation of an amount of Distribution

on any Perpetual Capital Security for any period of time (from and including the first day

of such period to but excluding the last) (whether or not constituting a Distribution Period

or a Distribution Accrual Period, the “Calculation Period”):

(i) if “Actual/Actual” or “Actual/Actual – ISDA” is specified hereon, the actual

number of days in the Calculation Period divided by 365 (or, if any portion of that

Calculation Period falls in a leap year, the sum of (A) the actual number of days in

that portion of the Calculation Period falling in a leap year divided by 366 and (B)

the actual number of days in that portion of the Calculation Period falling in a

non-leap year divided by 365);

(ii) if “Actual/365 (Fixed)” is specified hereon, the actual number of days in the

Calculation Period divided by 365;

(iii) if “Actual/365 (Sterling)” is specified hereon, the actual number of days in the

Calculation Period divided by 365 or, in the case of a Distribution Payment Date

falling in a leap year, 366;

(iv) if “Actual/360” is specified hereon, the actual number of days in the Calculation

Period divided by 360;

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(v) if “30/360”, “360/360” or “Bond Basis” is specified hereon, the number of days inthe Calculation Period divided by 360, calculated on a formula basis as follows:

Day Count Fraction =[360 × (Y2 – Y1)] + [30 × (M2 – M1)] + (D2 – D1)

360

where:

“Y1” is the year, expressed as a number, in which the first day of the CalculationPeriod falls;

“Y2” is the year, expressed as a number, in which the day immediately following thelast day included in the Calculation Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of theCalculation Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediatelyfollowing the last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period,unless such number would be 31, in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last dayincluded in the Calculation Period, unless such number would be 31 and D1 isgreater than 29, in which case D2 will be 30;

(vi) if “30E/360” or “Eurobond Basis” is specified hereon, the number of days in theCalculation Period divided by 360, calculated on a formula basis as follows:

Day Count Fraction =[360 × (Y2 – Y1)] + [30 × (M2 – M1)] + (D2 – D1)

360

where:

“Y1” is the year, expressed as a number, in which the first day of the CalculationPeriod falls;

“Y2” is the year, expressed as a number, in which the day immediately following thelast day included in the Calculation Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of theCalculation Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediately

following the last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period,

unless such number would be 31, in which case D1 will be 30; and

– 226 –

“D2” is the calendar day, expressed as a number, immediately following the last day

included in the Calculation Period, unless such number would be 31, in which

case D2 will be 30;

(vii) if “30E/360 (ISDA)” is specified hereon, the number of days in the Calculation

Period divided by 360, calculated on a formula basis as follows:

Day Count Fraction =[360 × (Y2 – Y1)] + [30 × (M2 – M1)] + (D2 – D1)

360

where:

“Y1” is the year, expressed as a number, in which the first day of the Calculation

Period falls;

“Y2” is the year, expressed as a number, in which the day immediately following the

last day included in the Calculation Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of the

Calculation Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediately

following the last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period,

unless (i) that day is the last day of February or (ii) such number would be 31,

in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last day

included in the Calculation Period, unless (i) that day is the last day of February

but not the Maturity Date or (ii) such number would be 31, in which case D2 will

be 30;

(viii) if “Actual/Actual-ICMA” is specified hereon,

(A) if the Calculation Period is equal to or shorter than the Determination Period

during which it falls, the number of days in the Calculation Period divided by

the product of (x) the number of days in such Determination Period and (y) the

number of Determination Periods normally ending in any year; and

(B) if the Calculation Period is longer than one Determination Period, the sum of:

(x) the number of days in such Calculation Period falling in the Determination

Period in which it begins divided by the product of (1) the number of days

in such Determination Period and (2) the number of Determination Periods

normally ending in any year; and

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(y) the number of days in such Calculation Period falling in the next

Determination Period divided by the product of (1) the number of days in

such Determination Period and (2) the number of Determination Periods

normally ending in any year

where:

“Determination Period” means the period from and including a Determination

Date in any year to but excluding the next Determination Date;

“Determination Date” means the date(s) specified as such hereon or, if none is

so specified, the Distribution Payment Date(s);

“Distribution Accrual Period” means the period beginning on (and including)

the Distribution Commencement Date and ending on (but excluding) the first

Distribution Period Date and each successive period beginning on (and

including) a Distribution Period Date and ending on (but excluding) the next

succeeding Distribution Period Date;

“Distribution Amount” means:

(i) in respect of a Distribution Accrual Period, the amount of Distribution

payable per Calculation Amount for that Distribution Accrual Period and

which, in the case of Fixed Rate Perpetual Capital Securities, and unless

otherwise specified hereon, shall mean the Fixed Coupon Amount or

Broken Amount specified hereon as being payable on the Distribution

Payment Date ending the Distribution Period of which such Distribution

Accrual Period forms part; and

(ii) in respect of any other period, the amount of Distribution payable per

Calculation Amount for that period;

“Distribution Commencement Date” means the Issue Date or such other date

as may be specified hereon;

“Distribution Determination Date” means, with respect to a Distribution Rate

and Distribution Accrual Period, the date specified as such hereon or, if none is

so specified, (i) the first day of such Distribution Accrual Period if the Specified

Currency is Sterling or Hong Kong dollars or Renminbi other than where the

Specified Currency is Renminbi and the Reference Rate is CNH HIBOR or (ii)

the day falling two Business Days in London for the Specified Currency prior

to the first day of such Distribution Accrual Period if the Specified Currency is

neither Sterling nor euro nor Hong Kong dollars nor Renminbi or (iii) the day

falling two TARGET Business Days prior to the first day of such Distribution

Accrual Period if the Specified Currency is euro or (iv) the day falling two

Business Days in Hong Kong prior to the first day of such Distribution Accrual

Period if the Specified Currency is Renminbi and the Reference Rate is CNH

HIBOR;

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“Distribution Period” means the period beginning on and including the

Distribution Commencement Date and ending on but excluding the first

Distribution Payment Date and each successive period beginning on and

including a Distribution Payment Date and ending on but excluding the next

succeeding Distribution Payment Date;

“Distribution Period Date” means each Distribution Payment Date unless

otherwise specified hereon;

“Distribution Rate” means the rate of Distribution payable from time to time

in respect of this Perpetual Capital Security and that is either specified or

calculated in accordance with the provisions hereon;

“Euro-zone” means the region comprised of member states of the European

Union that adopt the single currency in accordance with the Treaty establishing

the European Community, as amended;

“ISDA Definitions” means the 2006 ISDA Definitions, as published by the

International Swaps and Derivatives Association, Inc., unless otherwise

specified hereon;

“Reference Banks” means, in the case of a determination of LIBOR, the

principal London office of four major banks in the London inter-bank market

and, in the case of a determination of EURIBOR, the principal Euro-zone office

of four major banks in the Euro-zone inter-bank market and, in the case of a

determination of HIBOR, the principal Hong Kong office of four major banks

in the Hong Kong inter-bank market and, in the case of a determination of CNH

HIBOR, the principal Hong Kong office of four major banks dealing in

Renminbi in the Hong Kong inter-bank market, in each case selected by the

Issuer or as specified hereon;

“Reference Rate” means the rate specified as such hereon;

“Relevant Screen Page” means such page, section, caption, column or other

part of a particular information service as may be specified hereon (or any

successor or replacement page, section, caption column or other part of a

particular information service);

“Specified Currency” means the currency specified as such hereon or, if none

is specified, the currency in which the Perpetual Capital Securities are

denominated; and

“TARGET System” means the Trans-European Automated Real-Time Gross

Settlement Express Transfer (known as TARGET2) System which was launched

on 19 November 2007 or any successor thereto.

(n) Calculation Agent: The Issuer shall procure that there shall at all times be one or more

Calculation Agents if provision is made for it or them hereon and for so long as any

Perpetual Capital Security or Coupon is outstanding (as defined in the Trust Deed). Where

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more than one Calculation Agent is appointed in respect of the Perpetual Capital

Securities, references in these Conditions to the Calculation Agent shall be construed as

each Calculation Agent performing its respective duties under these Conditions. If the

Calculation Agent is unable or unwilling to act as such or if the Calculation Agent fails

duly to establish the Distribution Rate for a Distribution Accrual Period or to calculate any

Distribution Amount, Early Redemption Amount or Optional Redemption Amount, as the

case may be, or to comply with any other requirement, the Issuer shall (with the prior

written approval of the Trustee) appoint a leading bank or financial institution engaged in

the interbank market (or, if appropriate, money, swap or over-the-counter index options

market) that is most closely connected with the calculation or determination to be made by

the Calculation Agent (acting through its principal London office or any other office

actively involved in such market) to act as such in its place. The Calculation Agent may

not resign its duties without a successor having been appointed as aforesaid.

6 REDEMPTION, PURCHASE AND OPTIONS

(a) No Fixed Redemption: The Perpetual Capital Securities are perpetual securities in respect

of which there is no fixed redemption date and the Issuer shall (without prejudice to

Condition 9) only have the right (but not the obligation) to redeem or purchase them in

accordance with the following provisions of this Condition 6.

(b) Redemption for Taxation Reasons: The Perpetual Capital Securities may be redeemed at

the option of the Issuer in whole, but not in part, on any Distribution Payment Date (if this

Perpetual Capital Security is either a Floating Rate Perpetual Capital Security or an Index

Linked Distribution Perpetual Capital Securities) or, at any time (if this Perpetual Capital

Security is neither a Floating Rate Perpetual Capital Security nor an Index Linked

Distribution Perpetual Capital Securities), on giving not less than 30 nor more than 60

days’ notice to the Perpetual Capital Securityholders (or such other notice period as may

be specified hereon) in accordance with Condition 15 (which notice shall be irrevocable)

and in writing to the Trustee and the Principal Paying Agent, at their principal amount

together with any Distribution accrued (including any Arrears of Distribution and any

Additional Distribution Amount) up to but excluding the date fixed for redemption, if the

Issuer (or, if the Guarantee was called, the Guarantor) satisfies the Trustee immediately

prior to the giving of such notice that (i) it (or, if the Guarantee was called, the Guarantor)

has or will become obliged to pay Additional Tax Amounts as provided or referred to in

Condition 8 as a result of any change in, or amendment to, the laws or regulations of the

Cayman Islands or the PRC or, in each case, any political subdivision or any authority

thereof or therein having power to tax, or any change in the application or official

interpretation of, such laws or regulations, which change or amendment becomes effective

on or after the date on which agreement is reached to issue the first Tranche of the

Perpetual Capital Securities, and (ii) such obligation cannot be avoided by the Issuer (or

the Guarantor, as the case may be) taking reasonable measures available to it (a “Gross-Up

Event”), provided that no such notice of redemption shall be given earlier than 90 days

prior to the earliest date on which the Issuer (or the Guarantor, as the case may be) would

be obliged to pay such Additional Tax Amounts were a payment in respect of the Perpetual

Capital Securities (or the Guarantee, as the case may be) then due.

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Prior to the giving of any notice of redemption pursuant to this Condition 6(c), the Issuer(or the Guarantor, as the case may be) shall deliver to the Trustee (A) a certificate signedby an Authorised Signatory of the Issuer (or by an Authorised Signatory of the Guarantor,as the case may be) stating that the obligation referred to in (i) above of this Condition 6(c)cannot be avoided by the Issuer (or the Guarantor, as the case may be) taking reasonablemeasures available to it and (B) an opinion, addressed to and in form and substancesatisfactory to the Trustee, of independent tax or legal advisers of recognised standing tothe effect that the Issuer or the Guarantor (as the case may be) has or will become obligedto pay such Additional Tax Amounts as a result of such change or amendment, and theTrustee shall be entitled to accept such certificate and opinion as sufficient evidence of thesatisfaction of the conditions precedent set out in (i) and (ii) above of this Condition 6(c)without further enquiry and without liability to any Perpetual Capital Securityholder, inwhich event the same shall be conclusive and binding on the Perpetual CapitalSecurityholders.

(c) Redemption for Change of Control: The Perpetual Capital Securities may be redeemedat the option of the Issuer in whole, but not in part, at any time on giving not more than60 nor less than 30 days’ notice to the Perpetual Capital Securityholders (or such othernotice period as may be specified hereon) in accordance with Condition 15 (which noticeshall be irrevocable) and in writing to the Trustee and the Principal Paying Agent, at:

(i) 101 per cent. of their principal amount (together with any Distribution accrued to butexcluding the date fixed for redemption (including any Arrears of Distribution andany Additional Distribution Amount)), at any time before the First Reset Rate; or

(ii) their principal amount (together with any Distribution accrued to but excluding thedate fixed for redemption (including any Arrears of Distribution and any AdditionalDistribution Amount)), at any time on or after the First Reset Rate,

if a Change of Control Event occurs.

Prior to the publication of any notice of redemption pursuant to this Condition 6(c), theIssuer shall deliver or procure that there is delivered to the Trustee a certificate in English,signed by an Authorised Signatory of the Guarantor, stating that the circumstances referredto above in this Condition 6(c) prevail and setting out the details of such circumstances.

The Trustee shall be entitled without investigation to accept such certificate as sufficientevidence of the satisfaction of the circumstances set out above in this Condition 6(c), inwhich event it shall be conclusive and binding on the Perpetual Capital Securityholders.

Upon the expiry of any such notice as is referred to in this Condition 6(c), the Issuer shallbe bound to redeem the Perpetual Capital Securities in accordance with this Condition6(c).

In these Conditions:

a “Change of Control Event” occurs when:

(i) (A) SASAC; and

(B) any other person directly or indirectly controlled by SASAC or the centralgovernment of the PRC (such person and SASAC, a “PRC GovernmentPerson”),

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together cease to directly or indirectly control the Guarantor;

(ii) the Guarantor ceases to directly or indirectly hold or own 100 per cent. of the issuedshare capital of the Issuer; or

(iii) the Guarantor consolidates with or merges into or sells or transfers all or substantiallyall of the Guarantor’s assets to any other person or persons, acting together, exceptwhere such person(s) (in the case of asset transfer) or the surviving entity (in the caseof consolidation or merger) is/are controlled by a PRC Government Person;

“control” means:

(i) the ownership or control of more than 30 per cent. of the Voting Rights of the issuedshare capital of a person;

(ii) the nomination, designation or removal of no less than half of the members then inoffice of a person’s board of directors or other governing body, whether obtaineddirectly or indirectly, and whether obtained by ownership of share capital, thepossession of Voting Rights, contract or otherwise; or

(iii) the possession, directly or indirectly, of the power to direct or cause the direction ofthe management policies of a person.

For the avoidance of doubt, a person is deemed to control another person so long as itfulfils one of the three foregoing requirements. The terms “controlling” and “controlled”have meanings correlative to the foregoing;

“SASAC” means the State-owned Assets Supervision and Administration Commission ofthe State Council of the PRC or its successor; and

“Voting Rights” means the right generally to vote at a general meeting of shareholders ofa person (irrespective of whether or not, at the time, stock of any other class or classesshall have, or might have, voting power by reason of the happening of any contingency,and any such voting power shall therefore be excluded for the purpose of this definition);

(d) Redemption for Accounting Reasons: The Perpetual Capital Securities may be redeemedat the option of the Issuer in whole, but not in part, at any time on the Issuer giving notmore than 60 nor less than 30 days’ notice to the Perpetual Capital Securityholders inaccordance with Condition 15 (which notice shall be irrevocable) and in writing to theTrustee and the Principal Paying Agent, at their principal amount, together withDistribution accrued to but excluding the date fixed for redemption (including any Arrearsof Distribution and any Additional Distribution Amount), if the Issuer satisfies the Trusteeimmediately before giving such notice that as a result of any changes or amendments toPRC GAAP or any other generally accepted accounting standards that may be adopted bythe Guarantor for the purposes of preparing its consolidated financial statements (the“Relevant Accounting Standards”), or any change or amendment to the application orinterpretation of the Relevant Accounting Standards, the Perpetual Capital Securities mustnot or must no longer be recorded as “equity” in the consolidated financial statements ofthe Guarantor pursuant to the Relevant Accounting Standards (an “EquityDisqualification Event”).

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Prior to the publication of any notice of redemption pursuant to this Condition 6(d), theIssuer shall deliver or procure that there is delivered to the Trustee:

(i) a certificate in English, signed by any Authorised Signatory of the Guarantor, statingthat the Issuer is entitled to effect such redemption and setting forth a statement offacts showing that the conditions precedent to the right of the Issuer so to redeemhave occurred; and

(ii) an opinion, in form and substance satisfactory to the Trustee, of the Guarantor’sindependent auditors stating that an Equity Disqualification Event has occurred(irrespective of whether such amendment or change is effective) and the date onwhich the relevant change or amendment to the Relevant Accounting Standards is dueto take effect,

provided, however that no notice of redemption may be given under this Condition 6(d)earlier than 90 days prior to the date on which the relevant change or amendment to, orchange or amendment to the application or interpretation of, the Relevant AccountingStandards is due to take effect in relation to the Issuer and/or the Guarantor.

The Trustee shall be entitled without investigation to accept such certificate and opinionas sufficient evidence of the satisfaction of the conditions precedent set out in (i) and (ii)of this Condition 6(d), in which event the same shall be conclusive and binding on thePerpetual Capital Securityholders. Upon the expiry of any such notice as is referred to inthis Condition 6(d), the Issuer shall be bound to redeem the Perpetual Capital Securitiesin accordance with this Condition 6(d).

(e) Redemption on the Occurrence of a Breach of Covenants Event: The Perpetual CapitalSecurities may be redeemed at the option of the Issuer in whole, but not in part, at anytime, on giving not more than 60 nor less than 30 days’ notice to the Perpetual CapitalSecurityholders in accordance with Condition 15 (which notice shall be irrevocable) andin writing to the Trustee and the Principal Paying Agent at their principal amount (togetherwith any Distribution accrued to but excluding the date fixed for redemption (includingany Arrears of Distribution and any Additional Distribution Amount)) upon the occurrenceof a Breach of Covenants Event.

Upon the expiry of any such notice as is referred to in this Condition 6(e), the Issuer shallbe bound to redeem the Perpetual Capital Securities in accordance with this Condition6(e).

(f) Redemption on the Occurrence of a Relevant Indebtedness Default Event: ThePerpetual Capital Securities may be redeemed at the option of the Issuer in whole, but notin part, at any time, on giving not more than 60 nor less than 30 days’ notice to thePerpetual Capital Securityholders in accordance with Condition 15 (which notice shall beirrevocable) and in writing to the Trustee and the Principal Paying Agent at their principalamount (together with any Distribution accrued to but excluding the date fixed forredemption (including any Arrears of Distribution and any Additional DistributionAmount)) upon the occurrence of a Relevant Indebtedness Default Event.

Upon the expiry of any such notice as is referred to in this Condition 6(f), the Issuer shallbe bound to redeem the Perpetual Capital Securities in accordance with this Condition 6(f).

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(g) Redemption at the Option of the Issuer: The Issuer may, on giving not less than 15 nor

more than 30 days’ irrevocable notice to the Perpetual Capital Securityholders (or such

other notice period as may be specified hereon) and in writing to the Trustee and the

Principal Paying Agent, elect to redeem all, but not some only, of the Perpetual Capital

Securities on any Optional Redemption Date specified hereon. Any such redemption of

Perpetual Capital Securities shall be at their Optional Redemption Amount specified

hereon, together with Distribution accrued (including any Arrears of Distribution and any

Additional Distribution Amount) up to and excluding the date fixed for redemption.

All Perpetual Capital Securities in respect of which any such notice is given shall be

redeemed on the date specified in such notice in accordance with this Condition 6(g).

(h) Redemption for Minimum Outstanding Amount: The Perpetual Capital Securities may

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

not more than 60 nor less than 30 days’ notice to the Perpetual Capital Securityholders (or

such other notice period as may be specified hereon) in accordance with Condition 15

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

Agent, at their principal amount (together with any Distribution accrued to but excluding

the date fixed for redemption (including any Arrears of Distribution and any Additional

Distribution Amount)) if prior to the date fixed for redemption at least 90 per cent. in

principal amount of the Perpetual Capital Securities originally issued has already been

redeemed or purchased and cancelled.

Upon the expiry of any such notice as is referred to in this Condition 6(h), the Issuer shall

be bound to redeem the Perpetual Capital Securities in accordance with this Condition

6(h).

(i) Redemption on the Occurrence of a Dividend Stopper Breach Event: If Dividend

Stopper is specified hereon, the Perpetual Capital Securities may be redeemed at the option

of the Issuer in whole, but not in part, at any time on giving not more than 60 nor less than

30 days’ notice to the Perpetual Capital Securityholders in accordance with Condition 15

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

Agent, at their principal amount (together with any Distribution accrued to but excluding

the date fixed for redemption (including any Arrears of Distribution and any Additional

Distribution Amount)) upon the occurrence of a Dividend Stopper Breach Event.

Upon the expiry of any such notice as is referred to in this Condition 6(i), the Issuer shall

be bound to redeem the Perpetual Capital Securities in accordance with this Condition 6(i).

(j) No Other Redemption: The Issuer shall not be entitled to redeem the Perpetual Capital

Securities and the Issuer shall not have any obligation to make any payment of principal

in respect of the Perpetual Capital Securities otherwise than as provided in Conditions 6(a)

to 6(i) inclusive.

(k) Notice of Redemption: All Perpetual Capital Securities in respect of which any notice of

redemption is given under this Condition 6 shall be redeemed on the date, in such place

and in such manner as specified in such notice in accordance with this Condition 6. If there

is more than one notice of redemption given in respect of any Perpetual Capital Security,

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the notice given first in time shall prevail and in the event of two notices being given on

the same date, the first to be given shall prevail. Neither the Trustee nor any of the Agents

shall be responsible for calculating or verifying any calculations of any amounts payable

under any notice of redemption and shall not be liable to the Perpetual Capital

Securityholders, the Issuer, the Guarantor or any other person for not doing so.

(l) Purchases: The Issuer, the Guarantor and their respective Subsidiaries may at any time

purchase Perpetual Capital Securities (provided that all unmatured Coupons and

unexchanged Talons relating thereto are attached thereto or surrendered therewith) in the

open market or otherwise at any price. The Perpetual Capital Securities so purchased,

while held by or on behalf of the Issuer, the Guarantor or any such Subsidiary, shall not

entitle the holder to vote at any meetings of the Perpetual Capital Securityholders and shall

not be deemed to be outstanding for the purposes of, among other things, calculating

quorums at meetings of the Perpetual Capital Securityholders or for the purposes of

Conditions 10, 11(a) and 12.

(m) Cancellation: All Perpetual Capital Securities purchased by or on behalf of the Issuer, the

Guarantor or any of their respective Subsidiaries shall be surrendered for cancellation, in

the case of Bearer Perpetual Capital Securities, by surrendering each such Perpetual

Capital Security together with all unmatured Coupons and all unexchanged Talons to the

Principal Paying Agent and, in the case of Registered Perpetual Capital Securities, by

surrendering the Certificate representing such Perpetual Capital Securities to the Registrar

and, in each case, if so surrendered, shall, together with all Perpetual Capital Securities

redeemed by the Issuer, be cancelled forthwith (together with all unmatured Coupons and

unexchanged Talons attached thereto or surrendered therewith). Any Perpetual Capital

Securities so surrendered for cancellation may not be reissued or resold and the obligations

of the Issuer and the Guarantor in respect of any such Perpetual Capital Securities shall be

discharged.

7 PAYMENTS AND TALONS

(a) Bearer Perpetual Capital Securities: Payments of principal and Distribution in respect

of Bearer Perpetual Capital Securities shall, subject as mentioned below, be made against

presentation and surrender of the relevant Perpetual Capital Securities (in the case of all

other payments of principal and, in the case of Distribution, as specified in Condition

7(f)(vi)) or Coupons (in the case of Distribution, save as specified in Condition 7(f)(ii)),

as the case may be:

(i) in the case of a currency other than Renminbi, at the specified office of any Paying

Agent outside the United States by transfer to an account denominated in such

currency with, a Bank; and

(ii) in the case of Renminbi, by transfer from the relevant Paying Agent’s office outside

the United States to a Renminbi account maintained by or on behalf of the Perpetual

Capital Securityholder with a Bank in Hong Kong.

In this Condition 7(a) and in Condition 7(c), “Bank” means a bank in the principal

financial centre for such currency or, in the case of euro, in a city in which banks have

access to the TARGET System.

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(b) Payments in the United States: Notwithstanding the foregoing, if any Bearer Perpetual

Capital Securities are denominated in U.S. dollars, payments in respect thereof may be

made at the specified office of any Paying Agent in New York City in the same manner as

aforesaid if (i) the Issuer shall have appointed Paying Agents with specified offices outside

the United States with the reasonable expectation that such Paying Agents would be able

to make payment of the amounts on the Perpetual Capital Securities in the manner

provided above when due, (ii) payment in full of such amounts at all such offices is illegal

or effectively precluded by exchange controls or other similar restrictions on payment or

receipt of such amounts and (iii) such payment is then permitted by United States law,

without involving, in the opinion of the Issuer, any adverse tax consequence to the Issuer.

(c) Registered Perpetual Capital Securities:

(i) Payments of principal in respect of Registered Perpetual Capital Securities shall be

made against presentation and surrender of the relevant Certificates at the specified

office of any of the Transfer Agents or of the Registrar and in the manner provided

in Condition 7(b)(ii).

(ii) Distribution on Registered Perpetual Capital Securities shall be paid to the person

shown on the Register at the close of business on the fifteenth day before the due date

for payment thereof or in the case of Renminbi or otherwise specified, on the fifth

day before the due date for payment thereof (the “Record Date”). Payments of

Distribution on each Registered Perpetual Capital Security shall be made:

(A) in the case of a currency other than Renminbi, in the relevant currency by

transfer to an account in the relevant currency maintained by the payee with a

Bank; and

(B) in the case of Renminbi, by transfer to the registered account of the Perpetual

Capital Securityholder.

In this Condition 7(c), “registered account” means the Renminbi account maintained

by or on behalf of the Perpetual Capital Securityholder with a bank in Hong Kong,

details of which appear on the Register at the close of business on the fifth business

day before the due date for payment.

(d) Payments subject to Fiscal Laws: All payments are subject in all cases to (i) any fiscal

or other laws, regulations and directives applicable thereto in the place of payment but

without prejudice to the provisions of Condition 8 and (ii) any withholding or deduction

required pursuant to an agreement described in Section 1471(b) of the U.S. Internal

Revenue Code of 1986 (the “Code”) or otherwise imposed pursuant to Sections 1471

through 1474 of the Code, any regulations or agreements thereunder, any official

interpretations thereof, or (without prejudice to the provisions of Condition 8) any law

implementing an intergovernmental approach thereto.

(e) Appointment of Agents: The Principal Paying Agent, the CMU Lodging and Paying

Agent, the other Paying Agents, the Registrar, the Transfer Agents and the Calculation

Agent initially appointed by the Issuer and the Guarantor and their respective specified

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offices are listed below. The Principal Paying Agent, the CMU Lodging and Paying Agent,the other Paying Agents, the Registrar, the Transfer Agents and the Calculation Agent actsolely as agents of the Issuer and the Guarantor and do not assume any obligation orrelationship of agency or trust for or with any Perpetual Capital Securityholder orCouponholder. The Issuer and the Guarantor reserve the right at any time with the priorwritten approval of the Trustee (where required in accordance with the Agency Agreement)to vary or terminate the appointment of the Principal Paying Agent, the CMU Lodging andPaying Agent, any other Paying Agent, the Registrar, any Transfer Agent or the CalculationAgent(s) and to appoint additional or other Paying Agents or Transfer Agents, providedthat the Issuer shall at all times maintain (i) a Principal Paying Agent, (ii) a Registrar inrelation to Registered Perpetual Capital Securities, (iii) a Transfer Agent in relation toRegistered Perpetual Capital Securities, (iv) a CMU Lodging and Paying Agent in relationto Perpetual Capital Securities accepted for clearance through the CMU, (v) one or moreCalculation Agent(s) where these Conditions so require and (vi) such other agents as maybe required by any other stock exchange on which the Perpetual Capital Securities may belisted.

In addition, the Issuer and the Guarantor shall forthwith appoint a Paying Agent in NewYork City in respect of any Bearer Perpetual Capital Securities denominated in U.S. dollarsin the circumstances described in Condition 7(c) above.

Notice of any such termination or appointment or any change of any specified office of anAgent shall promptly be given by the Issuer to the Perpetual Capital Securityholders.

(f) Unmatured Coupons and unexchanged Talons:

(i) Upon the due date for redemption of Bearer Perpetual Capital Securities whichcomprise Fixed Rate Perpetual Capital Securities (other than Dual CurrencyPerpetual Capital Securities or Index Linked Distribution Perpetual CapitalSecurities), such Perpetual Capital Securities should be surrendered for paymenttogether with all unmatured Coupons (if any) relating thereto, failing which anamount equal to the face value of each missing unmatured Coupon (or, in the case ofpayment not being made in full, that proportion of the amount of such missingunmatured Coupon that the sum of principal so paid bears to the total principal due)shall be deducted from the Early Redemption Amount or Optional RedemptionAmount, as the case may be, due for payment. Any amount so deducted shall be paidin the manner mentioned above against surrender of such missing Coupon within aperiod of 10 years from the Relevant Date for the payment of such principal (whetheror not such Coupon has become void pursuant to Condition 9).

(ii) Upon the due date for redemption of any Bearer Perpetual Capital Securitycomprising a Floating Rate Perpetual Capital Security, Dual Currency PerpetualCapital Security or Index Linked Distribution Perpetual Capital Security, unmaturedCoupons relating to such Perpetual Capital Security (whether or not attached) shallbecome void and no payment shall be made in respect of them.

(iii) Upon the due date for redemption of any Bearer Perpetual Capital Security, anyunexchanged Talon relating to such Perpetual Capital Security (whether or notattached) shall become void and no Coupon shall be delivered in respect of suchTalon.

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(iv) Where any Bearer Perpetual Capital Security that provides that the relative

unmatured Coupons are to become void upon the due date for redemption of those

Perpetual Capital Securities is presented for redemption without all unmatured

Coupons, and where any Bearer Perpetual Capital Security is presented for

redemption without any unexchanged Talon relating to it, redemption shall be made

only against the provision of such indemnity as the Issuer may require.

(v) If the due date for redemption of any Perpetual Capital Security is not a due date for

payment of Distribution, Distribution accrued from the preceding due date for

payment of Distribution or the Distribution Commencement Date, as the case may be,

shall only be payable against presentation (and surrender if appropriate) of the

relevant Bearer Perpetual Capital Security or Certificate representing it, as the case

may be.

(g) Talons: On or after the Distribution Payment Date for the final Coupon forming part of a

Coupon sheet issued in respect of any Bearer Perpetual Capital Security, the Talon forming

part of such Coupon sheet may be surrendered at the specified office of the Principal

Paying Agent in exchange for a further Coupon sheet (and if necessary another Talon for

a further Coupon sheet) (but excluding any Coupons that may have become void pursuant

to Condition 9).

(h) Non-Business Days: If any date for payment in respect of any Perpetual Capital Security

or Coupon is not a business day, the holder shall not be entitled to payment until the next

following business day nor to any Distribution or other sum in respect of such postponed

payment. In this Condition 7, “business day” means a day (other than a Saturday or a

Sunday) on which banks and foreign exchange markets are generally open for business in

the relevant place of presentation (if presentation and/or surrender of such Perpetual

Capital Securities or Coupon is required), in such jurisdictions as shall be specified as

“Financial Centres” hereon and:

(i) (in the case of a payment in a currency other than euro and Renminbi) where payment

is to be made by transfer to an account maintained with a bank in the relevant

currency, on which foreign exchange transactions may be carried on in the relevant

currency in the principal financial centre of the country of such currency; or

(ii) (in the case of a payment in euro) which is a TARGET Business Day; or

(iii) (in the case of a payment in Renminbi) on which banks and foreign exchange markets

are open for business and settlement of Renminbi payments in Hong Kong.

8 TAXATION

All payments of principal and Distribution by or on behalf of the Issuer or the Guarantor in

respect of the Perpetual Capital Securities and the Coupons or under the Guarantee (as the case

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

withholding or deduction for or on account of, any taxes, duties, assessments or governmental

charges of whatever nature imposed, levied, collected, withheld or assessed by or within the

Cayman Islands or the PRC or, in each case, any political subdivision or authority therein or

thereof having power to tax, unless such withholding or deduction is required by law.

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Where such withholding or deduction is made by the Issuer or, as the case may be, the

Guarantor, by or within the PRC at a rate of up to and including the aggregate rate applicable

on the Issue Date (the “Applicable Rate”), the Issuer or, as the case may be, the Guarantor, will

increase the amounts paid by it to the extent required, so that the net amount received by

Perpetual Capital Securityholders or Couponholders equals the amounts which would otherwise

have been receivable by them had no such withholding or deduction been required.

If (a) the Issuer is required to make any deduction or withholding by or within the Cayman

Islands, or (b) the Issuer or, as the case may be, the Guarantor, is required to make a deduction

or withholding by or within the PRC in excess of the Applicable Rate, the Issuer or, as the case

may be, the Guarantor, shall pay such additional amounts (“Additional Tax Amounts”) as will

result in receipt by the Perpetual Capital Securityholders and Couponholders of such amounts

as would have been received by them had no such withholding or deduction been required,

except that no Additional Tax Amounts shall be payable in respect of any Perpetual Capital

Security or Coupon or under the Guarantee (as the case may be):

(i) to, or to a third party on behalf of, a Perpetual Capital Securityholder or Couponholder

who is liable to such taxes, duties, assessments or governmental charges in respect of such

Perpetual Capital Security or Coupon by reason of his having some connection with the

Cayman Islands (in the case of payments made by the Issuer) or the PRC (in the case of

payments made by the Issuer or the Guarantor) other than the mere holding of the

Perpetual Capital Security or Coupon; or

(ii) presented (or in respect of which the Certificate representing it is presented) for payment

(where presentation is required) more than 30 days after the Relevant Date except to the

extent that the Perpetual Capital Securityholder or Couponholder would have been entitled

to such Additional Tax Amounts on presenting it for payment on the thirtieth day.

As used in these Conditions, “Relevant Date” in respect of any Perpetual Capital Security or

Coupon means the date on which payment in respect of it first becomes due or (if any amount

of the money payable is improperly withheld or refused) the date on which payment in full of

the amount outstanding is made or (if earlier) the date seven days after that on which notice is

duly given to the Perpetual Capital Securityholders that, upon further presentation of the

Perpetual Capital Security (or relative Certificate) or Coupon being made in accordance with

these Conditions, such payment will be made, provided that payment is in fact made upon such

presentation. References in these Conditions to (A) “principal” shall be deemed to include any

premium payable in respect of the Perpetual Capital Securities, Early Redemption Amounts,

Optional Redemption Amounts and all other amounts in the nature of principal payable pursuant

to Condition 6 or any amendment or supplement to it, (B) “Distribution” shall be deemed to

include all Distribution Amounts and all other amounts payable pursuant to Condition 5 or any

amendment or supplement to it and (C) “principal” and/or “Distribution” shall be deemed to

include any additional amounts that may be payable under this Condition 8 or any undertaking

given in addition to or in substitution for it under the Trust Deed.

For the avoidance of doubt, neither the Trustee nor any Agent shall be responsible or liable for

paying any tax, duty, charges, withholding or other payment referred to in this Condition 8 or

for determining whether such amounts are payable or the amount thereof, and none of the

Trustee or any of the Agents shall be responsible or liable for (I) determining whether the Issuer,

– 239 –

the Guarantor or any Perpetual Capital Securityholder or Couponholder is liable to pay anytaxes, duty, charges, withholding or other payment referred to in this Condition 8; or (II)determining the sufficiency or insufficiency of any amounts so paid. None of the Trustee or theAgents shall be responsible or liable for any failure of the Issuer, the Guarantor, any PerpetualCapital Securityholder or Couponholder, or any other third party to pay such tax, duty, charges,withholding or other payment in any jurisdiction or to provide any notice or information to theTrustee or any Agent that would permit, enable or facilitate the payment of any principal,premium (if any), distribution or other amount under or in respect of the Perpetual CapitalSecurities without deduction or withholding for or on account of any tax, duty, charge,withholding or other payment imposed by or in any jurisdiction.

9 PRESCRIPTION

Claims against the Issuer and/or the Guarantor for payment in respect of the Perpetual CapitalSecurities and Coupons (which, for this purpose, shall not include Talons) shall be prescribedand become void unless made within 10 years (in the case of principal) or five years (in the caseof Distribution) from the appropriate Relevant Date in respect of them.

10 NON-PAYMENT

(a) Non-payment when due

Notwithstanding any of the provisions below in this Condition 10, the right to instituteproceedings for Winding-Up of the Issuer or the Guarantor is limited to circumstanceswhere payment in respect of the Perpetual Capital Securities has become due. In the caseof any Distribution, such Distribution will not be due if the Issuer has elected to defer thatDistribution in accordance with Condition 5(k). In addition, nothing in this Condition 10,including any restriction on commencing proceedings, shall in any way restrict or limit anyrights of the Trustee or any of its directors, officers, employees or Appointees (as definedin the Trust Deed) to claim from or to otherwise take any action against the Issuer or theGuarantor in respect of any costs, charges, fees, expenses or liabilities incurred by suchparty pursuant to or in connection with the Trust Deed, the Guarantee or the PerpetualCapital Securities.

(b) Proceedings for Winding-Up

(i) If there is a Winding-Up of the Issuer, or the Issuer shall not make payment in respectof the Perpetual Capital Securities or under the Trust Deed for a period of 14 daysor more after the date on which such payment is due, the Issuer shall be deemed tobe in default under the Trust Deed and the Perpetual Capital Securities and theTrustee may, subject to the provisions of Condition 10(d), institute proceedings forthe Winding-Up of the Issuer and/or prove in the Winding-Up of the Issuer and/orclaim in the liquidation of the Issuer for such payment.

(i) If there is a Winding-Up of the Guarantor, or the Guarantor shall not make paymentin respect of the Guarantee or under the Trust Deed for a period of 14 days or moreafter the date on which such payment is due, the Guarantor shall be deemed to be indefault under the Trust Deed and the Guarantee and the Trustee may, subject to theprovisions of Condition 10(d), institute proceedings for the Winding-Up of theGuarantor and/or prove in the Winding-Up of the Guarantor and/or claim in theliquidation of the Guarantor for such payment.

– 240 –

(c) Enforcement

Without prejudice to Condition 10(b) but subject to the provisions of Condition 10(d), the

Trustee may (but shall not be obliged to) at its discretion and without notice to the Issuer

or the Guarantor take such steps and/or actions and/or institute such proceedings against

the Issuer and/or the Guarantor as it may think fit to enforce any term or condition binding

on the Issuer and/or the Guarantor under the Trust Deed, the Guarantee or the Perpetual

Capital Securities (other than any payment obligation of the Issuer and/or the Guarantor

under or arising from the Perpetual Capital Securities, the Trust Deed or the Guarantee

including, without limitation, payment of any principal or distributions (including any

Arrears of Distribution and any Additional Distribution Amount) in respect of the

Perpetual Capital Securities, including any damages awarded for breach of any

obligations) and in no event shall the Issuer or the Guarantor, by virtue of the taking of any

such steps and/or actions and/or the institution of any such proceedings, be obliged to pay

any sum or sums, in cash or otherwise, sooner than the same would otherwise have been

payable by it.

(d) Entitlement of Trustee

The Trustee shall not be obliged to take any of the actions referred to in Condition 10(b)

or Condition 10(c) above against the Issuer or the Guarantor to enforce the terms of the

Trust Deed, the Guarantee or the Perpetual Capital Securities unless (i) it shall have been

so requested by an Extraordinary Resolution of the Perpetual Capital Securityholders or in

writing by the Perpetual Capital Securityholders of at least 25 per cent. in principal amount

of the Perpetual Capital Securities then outstanding and (ii) it shall have been indemnified

and/or secured and/or pre-funded to its satisfaction.

(e) Right of Perpetual Capital Securityholders

No Perpetual Capital Securityholder shall be entitled to proceed directly against the Issuer

or the Guarantor or to institute proceedings for the Winding-Up of the Issuer or the

Guarantor or claim in the liquidation of the Issuer or the Guarantor or to prove in such

Winding-Up unless the Trustee, having become so bound to proceed or being able to prove

in such Winding-Up or claim in such liquidation, fails to do so within a reasonable period

and such failure shall be continuing, in which case the Perpetual Capital Securityholder

shall have only such rights against the Issuer or the Guarantor as those which the Trustee

is entitled to exercise as set out in this Condition 10.

(f) Extent of Perpetual Capital Securityholders’ remedy

No remedy against the Issuer or the Guarantor, other than as referred to in this Condition

10, shall be available to the Trustee or the Perpetual Capital Securityholders, whether for

the recovery of amounts owing in respect of the Perpetual Capital Securities or under the

Trust Deed or in respect of any breach by the Issuer and/or the Guarantor of any of their

respective other obligations under or in respect of the Perpetual Capital Securities, the

Guarantee or the Trust Deed.

– 241 –

11 MEETINGS OF PERPETUAL CAPITAL SECURITYHOLDERS, MODIFICATION,WAIVER AND SUBSTITUTION

(a) Meetings of Perpetual Capital Securityholders: The Trust Deed contains provisions for

convening meetings of Perpetual Capital Securityholders to consider matters affecting

their interests, including without limitation the sanctioning by Extraordinary Resolution of

a modification of any of these Conditions or any provisions of the Trust Deed, the Agency

Agreement or the Deed of Guarantee. Such a meeting may be convened by the Issuer, the

Guarantor or the Trustee and shall be convened by the Trustee if requested in writing to

do so by Perpetual Capital Securityholders holding not less than 10 per cent. in aggregate

nominal amount of the Perpetual Capital Securities for the time being outstanding and

subject to the Trustee being indemnified and/or secured and/or pre-funded to its

satisfaction against all costs and expenses. The quorum for any meeting convened to

consider an Extraordinary Resolution shall be two or more persons holding or representing

more than 50 per cent. in aggregate nominal amount of the Perpetual Capital Securities for

the time being outstanding, or at any adjourned meeting two or more persons being or

representing Perpetual Capital Securityholders whatever the nominal amount of the

Perpetual Capital Securities held or represented, unless the business of such meeting

includes consideration of proposals, inter alia:

(i) to modify the circumstances in which the Perpetual Capital Securities may be

redeemed or the circumstances in which distributions (including any Arrears of

Distribution or Additional Distribution Amounts) are payable in respect of the

Perpetual Capital Securities;

(ii) to reduce or cancel the nominal amount of, or any premium payable on redemption

of, or distributions (including any Arrears of Distribution or Additional Distribution

Amounts) on or to vary the method of calculating the Distribution Rate or to reduce

the Distribution Rate on, the Perpetual Capital Securities;

(iii) to vary the method or basis of calculating the Distribution (including the Reset

Distribution Rate and any Arrears of Distribution or Additional Distribution

Amounts) or principal with respect of any Perpetual Capital Security;

(iv) to vary any method of, or basis for, calculating the Early Redemption Amount or the

Optional Redemption Amount;

(v) to vary the currency or currencies of payment or denomination of the Perpetual

Capital Securities;

(vi) to modify the provisions concerning the quorum required at any meeting of Perpetual

Capital Securityholders or the majority required to pass an Extraordinary Resolution;

or

(vii) to modify or cancel the Guarantee (subject to Condition 11(b)),

in which case the necessary quorum will be two or more persons holding or representing

not less than 75 per cent. or at any adjourned meeting not less than 25 per cent. in

aggregate nominal amount of the Perpetual Capital Securities for the time being

– 242 –

outstanding. Any Extraordinary Resolution duly passed shall be binding on Perpetual

Capital Securityholders (whether or not they were present at the meeting at which such

resolution was passed) and on all Couponholders.

The Trust Deed provides that a resolution (x) in writing signed by or on behalf of the

holders of not less than 90 per cent. in aggregate nominal amount of the Perpetual Capital

Securities for the time being outstanding, or (y) passed by Electronic Consent (as defined

in the Trust Deed) shall for all purposes be as valid and effective as an Extraordinary

Resolution passed at a meeting of Perpetual Capital Securityholders duly convened and

held. Such a resolution in writing may be contained in one document or several documents

in the same form, each signed by or on behalf of one or more Perpetual Capital

Securityholders. A resolution passed in writing or by Electronic Consent will be binding

on all Perpetual Capital Securityholders whether or not they participated in such

resolution.

The Conditions may be amended, modified or varied in relation to any Series of Perpetual

Capital Securities by the terms of the relevant Pricing Supplement in relation to such

Series.

(b) Modification of Agreements and Deeds: The Trustee may (but shall not be obliged to)

agree, without the consent of the Perpetual Capital Securityholders or Couponholders, to

(i) any modification of any of these Conditions or any of the provisions of the Trust Deed,

the Agency Agreement or the Deed of Guarantee that is in the opinion of the Trustee of a

formal, minor or technical nature or is made to correct a manifest error or is to comply with

any mandatory provision of applicable law, and (ii) any other modification (except as

mentioned in the Trust Deed), and any waiver or authorisation of any breach or proposed

breach, of any of these Conditions or any of the provisions of the Trust Deed, the Agency

Agreement or the Deed of Guarantee that is in the opinion of the Trustee not materially

prejudicial to the interests of the Perpetual Capital Securityholders. Any such

modification, authorisation or waiver shall be binding on the Perpetual Capital

Securityholders and the Couponholders and, unless the Trustee otherwise agrees, such

modification, authorisation or waiver shall be notified by the Issuer or the Guarantor to the

Perpetual Capital Securityholders as soon as practicable thereafter in accordance with

Condition 15.

(c) Substitution or Variation: If a Special Event has occurred and is continuing, then the

Issuer may at its option, subject to Condition 5 (without any requirement for the consent

or approval of the Perpetual Capital Securityholders) and subject to it having satisfied the

Trustee immediately prior to the giving of any notice referred to in this Condition 11(c)

that the provisions of this Condition 11(c) have been complied with, and having given not

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

Securityholders in accordance with Condition 15 and to the Trustee and the Principal

Paying Agent in writing, at any time either:

(i) substitute all, but not some only, of the Perpetual Capital Securities for; or

(ii) vary the terms of the Perpetual Capital Securities with the effect that they remain or

become (as the case may be), Qualifying Securities,

– 243 –

and the Trustee shall (subject to the following provisions of this Condition 11(c) and

subject to the receipt by it of the certificate signed by any Authorised Signatory of the

Issuer referred to in the definition of Qualifying Securities) agree to such substitution or

variation.

Upon expiry of such notice, the Issuer shall either vary the terms of or, as the case may

be, substitute the Perpetual Capital Securities in accordance with this Condition 11(c). In

connection therewith, any outstanding Arrears of Distribution (including any Additional

Distribution Amount) shall be satisfied in full in accordance with the provisions of

Condition 5(k)(vi).

In connection with any substitution or variation in accordance with this Condition 11(c),

the Issuer shall comply with the rules of any stock exchange on which the Perpetual

Capital Securities are for the time being listed or admitted to trading.

Any such substitution or variation in accordance with the foregoing provisions of this

Condition 11(c) shall not be permitted if any such substitution or variation would itself

give rise to a Special Event with respect to the Perpetual Capital Securities or the

Qualifying Securities.

(d) Entitlement of the Trustee: In connection with the exercise of its functions, rights,

powers and discretions (including but not limited to those referred to in this Condition 11)

the Trustee shall have regard to the interests of the Perpetual Capital Securityholders as a

class and shall not have regard to the consequences of such exercise for individual

Perpetual Capital Securityholders or Couponholders, and the Trustee shall not be entitled

to require on behalf of any Perpetual Capital Securityholder, nor shall any Perpetual

Capital Securityholder or Couponholder be entitled to claim, from the Issuer or the

Guarantor or the Trustee any indemnification or payment in respect of any tax consequence

of any such exercise upon individual Perpetual Capital Securityholders or Couponholders.

12 INDEMNIFICATION OF THE TRUSTEE

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from

responsibility, including without limitation provisions relieving it from taking and/or instituting

any such steps, actions and/or proceedings to enforce payment unless first indemnified and/or

secured and/or pre-funded to its satisfaction. The Trustee is entitled to enter into business

transactions with the Issuer, the Guarantor and/or any entity related (directly or indirectly) to

the Issuer or the Guarantor without accounting for any profit.

None of the Trustee or any of the Agents shall be responsible for the performance by the Issuer,

the Guarantor and any other person appointed by the Issuer and/or the Guarantor in relation to

the Perpetual Capital Securities of the duties and obligations on their part expressed in respect

of the same and, unless it has written notice from the Issuer or the Guarantor to the contrary,

the Trustee and each Agent shall assume that the same are being duly performed. None of the

Trustee or any Agent shall be liable to any Perpetual Capital Securityholder or any other person

for any action taken by the Trustee or such Agent in accordance with the instructions of the

Perpetual Capital Securityholders. The Trustee shall be entitled to rely on any direction, request

or resolution of Perpetual Capital Securityholders given by holders of the requisite nominal

– 244 –

amount or percentage of Perpetual Capital Securities outstanding or passed at a meeting of

Perpetual Capital Securityholders convened and held in accordance with the Trust Deed.

Whenever the Trustee is required or entitled by the terms of the Trust Deed, the Deed of

Guarantee, the Agency Agreement or these Conditions to exercise any discretion or power, take

any action, make any decision or give any direction, the Trustee is entitled, prior to its

exercising any such discretion or power, taking any such action, making any such decision, or

giving any such direction, to seek directions from the Perpetual Capital Securityholders by way

of an Extraordinary Resolution, and the Trustee is not responsible for any loss or liability

incurred by any person as a result of any delay in it exercising such discretion or power, taking

such action, making such decision, or giving such direction where the Trustee is seeking such

directions or in the event that no such directions are received. The Trustee shall have no

obligation to monitor whether any Change of Control Event, Breach of Covenants Event,

Relevant Indebtedness Default Event, Dividend Stopper Breach Event and Non-Payment Event

has occurred or to monitor compliance with the provisions of the Trust Deed, the Agency

Agreement, the Deed of Guarantee or these Conditions, and shall not be liable to the Perpetual

Capital Securityholders and/or Couponholders or any other person for not doing so.

The Trustee may rely without liability to Perpetual Capital Securityholders and/or

Couponholders on any report, confirmation or certificate or any advice or opinion of any legal

advisers, accountants, financial advisers, financial institution or any other expert, whether or not

addressed to it and whether their liability in relation thereto is limited (by its terms or by any

engagement letter relating thereto entered into by the Trustee or any other person or in any other

manner) by reference to a monetary cap, methodology or otherwise. The Trustee may accept and

shall be entitled to rely on any such report, confirmation, certificate, advice or opinion and, in

such event, such report, confirmation, certificate, advice or opinion shall be binding on the

Issuer, the Guarantor and the Perpetual Capital Securityholders and Couponholders.

13 REPLACEMENT OF PERPETUAL CAPITAL SECURITIES, CERTIFICATES,

COUPONS AND TALONS

If a Perpetual Capital Security, Certificate, Coupon or Talon is lost, stolen, mutilated, defaced

or destroyed, it may be replaced, subject to the provisions of the Agency Agreement, applicable

laws, regulations and stock exchange or other relevant authority regulations, at the specified

office of the Principal Paying Agent (in the case of Bearer Perpetual Capital Securities, Coupons

or Talons) and of the Registrar (in the case of Certificates) or such other Paying Agent or

Transfer Agent, as the case may be, as may from time to time be designated by the Issuer for

that purpose and notice of whose designation is given to Perpetual Capital Securityholders, in

each case on payment by the claimant of the fees and costs incurred in connection therewith and

on such terms as to evidence, security and indemnity (which may provide, inter alia, that if the

allegedly lost, stolen or destroyed Perpetual Capital Security, Certificate, Coupon or Talon is

subsequently presented for payment or, as the case may be, for exchange for further Coupons,

there shall be paid to the Issuer on demand the amount payable by the Issuer in respect of such

Perpetual Capital Securities, Certificates, Coupons or further Coupons) and otherwise as the

Issuer or the relevant Agent may require. Mutilated or defaced Perpetual Capital Securities,

Certificates, Coupons or Talons must be surrendered before replacements will be issued.

– 245 –

14 FURTHER ISSUES

The Issuer may from time to time without the consent of the Perpetual Capital Securityholders

or Couponholders create and issue further securities having the same terms and conditions as the

Perpetual Capital Securities in all respects (or in all respects except for the first payment of

Distribution on them and if applicable, the timing for the notification to the NDRC and

registration with SAFE) and so that such further issue shall be consolidated and form a single

series with an outstanding Series. References in these Conditions to the Perpetual Capital

Securities include (unless the context requires otherwise) any such other securities issued

pursuant to this Condition 14 and consolidated and forming a single series with the Perpetual

Capital Securities.

15 NOTICES

Notices to the holders of Registered Perpetual Capital Securities shall be in English and mailed

to them at their respective addresses in the Register and deemed to have been given on the fourth

weekday (being a day other than a Saturday or a Sunday) after the date of mailing and, so long

as the Perpetual Capital Securities are listed on a stock exchange and the rules of that exchange

so require, published at the expense of the Issuer (failing whom the Guarantor) in a leading

newspaper having general circulation in Asia (which is expected to be the Wall Street Journal

Asia). Notices to the holders of Bearer Perpetual Capital Securities shall be valid if published

in a daily newspaper of general circulation in Asia and, so long as the Perpetual Capital

Securities are listed on a stock exchange and the rules of that exchange so require, published

at the expense of the Issuer (failing whom the Guarantor) in a daily newspaper with general

circulation in Asia (which is expected to be the Wall Street Journal Asia). If any such publication

is not practicable, notice shall be validly given if published in another leading daily English

language newspaper with general circulation in Asia. Any such notice shall be deemed to have

been given on the date of such publication or, if published more than once or on different dates,

on the first date on which publication is made, as provided above.

Couponholders shall be deemed for all purposes to have notice of the contents of any notice

given to the holders of Bearer Perpetual Capital Securities in accordance with this Condition 15.

So long as any Global Security or Global Certificate is held in its entirety on behalf of

Euroclear and Clearstream, any notice to the holders of the Perpetual Capital Securities shall

be validly given by the delivery of the relevant notice to Euroclear and Clearstream for

communication by the relevant clearing system to entitled accountholders in substitution for

notification as required by the Conditions and shall be deemed to have been given on the date

of delivery to such clearing system.

So long as the Global Security or Global Certificate is held on behalf of the operator of the

CMU any notice to the holders of the Perpetual Capital Securities shall be validly given by the

delivery of the relevant notice to the accountholder shown in a CMU Issue Position Report

issued by the operator of the CMU on the business day preceding the date of despatch of such

notice as holding interests in the Global Security or Global Certificate.

– 246 –

16 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

Save as contemplated in these Conditions, no person shall have any right to enforce any term

or condition of the Perpetual Capital Securities under the Contracts (Rights of Third Parties) Act

1999.

17 GOVERNING LAW AND JURISDICTION

(a) Governing Law: The Trust Deed, the Perpetual Capital Securities, the Coupons and the

Talons, the Agency Agreement, the Deed of Guarantee and any non-contractual obligations

arising out of or in connection with them, are governed by, and shall be construed in

accordance with, English law.

(b) Jurisdiction: The courts of Hong Kong are to have exclusive jurisdiction to settle any

disputes that may arise out of or in connection with the Perpetual Capital Securities,

Coupons or Talons, the Deed of Guarantee and the Trust Deed and accordingly any legal

action or proceedings arising out of or in connection with any Perpetual Capital Securities,

Coupons, Talons, the Deed of Guarantee or the Trust Deed (“Proceedings”) may be

brought in the courts of Hong Kong. Pursuant to the Trust Deed, each of the Issuer, the

Guarantor and the Trustee has irrevocably submitted to the jurisdiction of the courts of

Hong Kong.

(c) Agent for Service of Process: Each of the Issuer and the Guarantor has irrevocably agreed

to receive service of process at the registered office of Soar Vast Limited currently at 3806

Central Plaza, 18 Harbour Road, Wan Chai, Hong Kong in any Proceedings in Hong Kong.

Such service shall be deemed completed on delivery to such process agent (whether or not

it is forwarded to and received by the Issuer or the Guarantor, as the case may be). If for

any reason Soar Vast Limited ceases to have a place of business in Hong Kong, each of

the Issuer and the Guarantor shall forthwith appoint an agent in Hong Kong to accept

service of process on behalf of the Issuer and the Guarantor and deliver to the Trustee a

copy of the new agent’s acceptance of that appointment within 30 days of Soar Vast

Limited ceasing to have a place of business in Hong Kong. Nothing in this Condition 17(c)

shall affect the right to serve process in any manner permitted by law.

(d) Independence and Waiver of Immunity:

(i) The Guarantor is a separate legal and independent entity organised under the

Company Law of the PRC; it is an enterprise undertaking commercial activities

independent from the PRC government with ownership of its assets and the capacity

independently to assume civil liabilities.

(ii) Each of the Issuer and the Guarantor hereby waives any right to claim sovereign or

other immunity from jurisdiction or execution and any similar defence, and

irrevocably consents to the giving of any relief or the issue of any process, including,

without limitation, the making, enforcement or execution against any property

whatsoever (irrespective of its use or intended use) of any order or judgment made

or given in connection with any Proceedings.

– 247 –

SUMMARY OF PROVISIONS RELATING TO THE INSTRUMENTSWHILE IN GLOBAL FORM

Terms used in this section that are not otherwise defined shall have the meanings given to them in

“Terms and Conditions of the Notes” and “Terms and Conditions of the Perpetual Capital

Securities”.

INITIAL ISSUE OF INSTRUMENTS

Global Instruments and Global Certificates may be delivered on or prior to the original issue date of

the Tranche to a common depositary for Euroclear and Clearstream (the “Common Depositary”) or

a sub-custodian for the CMU.

Upon the initial deposit of a Global Instrument or a Global Certificate with the Common Depositary

or with a sub-custodian for the CMU or registration of Registered Instruments in the name of (i) any

nominee for the Common Depositary or for Euroclear and Clearstream or (ii) the Hong Kong

Monetary Authority as operator of the CMU and delivery of the relevant Global Instrument or Global

Certificate to the Common Depositary or the sub-custodian for the CMU (as the case may be),

Euroclear or Clearstream or the CMU (as the case may be) will credit each subscriber with a nominal

amount of Instruments equal to the nominal amount thereof for which it has subscribed and paid.

Instruments that are initially deposited with the Common Depositary may also be credited to the

accounts of subscribers with (if indicated in the relevant Pricing Supplement) other clearing systems

through direct or indirect accounts with Euroclear and Clearstream held by such other clearing

systems. Conversely, Instruments that are initially deposited with any other clearing system may

similarly be credited to the accounts of subscribers with Euroclear, Clearstream or other clearing

systems.

RELATIONSHIP OF ACCOUNTHOLDERS WITH CLEARING SYSTEMS

Each of the persons shown in the records of Euroclear, Clearstream or any other clearing system (an

“Alternative Clearing System”) as the holder of an Instrument represented by a Global Instrument

or a Global Certificate must look solely to Euroclear, Clearstream or any such Alternative Clearing

System (as the case may be) for his share of each payment made by the Issuer to the bearer of such

Global Instrument or the holder of the underlying Registered Instruments, as the case may be, and

in relation to all other rights arising under the Global Instruments or Global Certificates, subject to

and in accordance with the respective rules and procedures of Euroclear, Clearstream or such

Alternative Clearing System (as the case may be). Such persons shall have no claim directly against

the Issuer in respect of payments due on the Instruments for so long as the Instruments are

represented by such Global Instrument or Global Certificate and such obligations of the Issuer will

be discharged by payment to the bearer of such Global Instrument or the holder of the underlying

Registered Instruments, as the case may be, in respect of each amount so paid.

If a Global Instrument or a Global Certificate is lodged with a sub-custodian for or registered with

the CMU, the person(s) for whose account(s) interests in such Global Instrument or Global Certificate

are credited as being held in the CMU in accordance with the CMU Rules shall be the only person(s)

entitled or in the case of Registered Instruments, directed or deemed by the CMU as entitled to

receive payments in respect of Instruments represented by such Global Instrument or Global

– 248 –

Certificate and the Issuer will be discharged by payment to, or to the order of, such person(s) for

whose account(s) interests in such Global Instrument or Global Certificate are credited as being held

in the CMU in respect of each amount so paid. Each of the persons shown in the records of the CMU

as the beneficial holder of a particular nominal amount of Instruments represented by such Global

Instrument or Global Certificate must look solely to the CMU for his share of each payment so made

by the Issuer in respect of such Global Instrument or Global Certificate.

EXCHANGE

Temporary Global Instruments

Each Temporary Global Instrument will be exchangeable, free of charge to the holder, on or after its

Exchange Date (as defined below):

(i) if the relevant Pricing Supplement indicates that such Global Instrument is issued in compliance

with TEFRA C or in a transaction to which TEFRA is not applicable (as to which, see “Summary

of the Programme – Selling Restrictions”), in whole, but not in part, for the Definitive

Instruments defined and described below; and

(ii) otherwise, in whole or in part upon certification as to non-U.S. beneficial ownership in the form

set out in the Agency Agreement for interests in a Permanent Global Instrument or, if so

provided in the relevant Pricing Supplement, for Definitive Instruments.

The CMU may require that any such exchange for a Permanent Global Instrument is made in whole

and not in part and in such event, no such exchange will be effected until all relevant account holders

(as set out in a CMU Issue Position Report or any other relevant notification supplied to the CMU

Lodging and Paying Agent by the CMU) have so certified.

The holder of a Temporary Global Instrument will not be entitled to collect any payment of interest,

principal or other amount due on or after the Exchange Date unless, upon due certification as to

non-U.S. beneficial ownership in the form set out in the Agency Agreement, exchange of the

Temporary Global Instrument for an interest in a Permanent Global Instrument or for Definitive

Instruments is improperly withheld or refused. The payments in respect of an Instrument issued under

TEFRA D pursuant to Conditions 7(d), 6(e) and 6(f) of the Terms and Conditions of the Notes (in

relation to Notes) and Conditions 7(d), 6(e) and 6(f) of the Terms and Conditions of the Perpetual

Capital Securities (in relation to Perpetual Capital Securities) may not be collected without

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

Permanent Global Instruments

Each Permanent Global Instrument will be exchangeable, free of charge to the holder, on or after the

Exchange Date in whole but not in part for the Definitive Instruments if the Permanent Global

Instrument is held on behalf of Euroclear, Clearstream, the CMU or an Alternative Clearing System

and any such clearing system is closed for business for a continuous period of 14 days (other than

by reason of holidays, statutory or otherwise) or announces an intention permanently to cease

business or does in fact do so.

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In the event that a Global Instrument is exchanged for Definitive Instruments, such DefinitiveInstruments shall be issued in Specified Denomination(s) only. An Instrumentholder who holds aprincipal amount of less than the minimum Specified Denomination will not receive a DefinitiveInstrument in respect of such holding and would need to purchase a principal amount of Instrumentssuch that it holds an amount equal to one or more Specified Denominations.

Global Certificates

The following will apply in respect of transfers of Instruments held in Euroclear, Clearstream, theCMU or an Alternative Clearing System. These provisions will not prevent the trading of interests inthe Instruments within a clearing system whilst they are held on behalf of such clearing system, butwill limit the circumstances in which the Instruments may be withdrawn from the relevant clearingsystem. Transfers of the holding of Instruments represented by any Global Certificate pursuant toCondition 2(b) of the Terms and Conditions of the Notes or the Terms and Conditions of the PerpetualCapital Securities, as the case may be, may only be made in part if the Instruments represented bysuch Global Certificate are held on behalf of Euroclear, Clearstream, the CMU or an AlternativeClearing System and any such clearing system is closed for business for a continuous period of 14days (other than by reason of holidays, statutory or otherwise) or announces an intention permanentlyto cease business or does in fact do so.

In the event that a Global Certificate is exchanged for a definitive certificate, such definitivecertificate shall be issued in Specified Denomination(s) only. An Instrumentholder who holds aprincipal amount of less than the minimum Specified Denomination will not receive a definitivecertificate in respect of such holding and would need to purchase a principal amount of Instrumentssuch that it holds an amount equal to one or more Specified Denominations.

Delivery of Instruments

On or after any due date for exchange, the holder of a Global Instrument may surrender such GlobalInstrument or, in the case of a partial exchange, present it for endorsement to or to the order of thePrincipal Paying Agent (or, in the case of Instruments lodged with the CMU, the CMU Lodging andPaying Agent).

In exchange for any Global Instrument, or the part thereof to be exchanged, the Issuer will (i) in thecase of a Temporary Global Instrument exchangeable for a Permanent Global Instrument, deliver, orprocure the delivery of, a Permanent Global Instrument in an aggregate nominal amount equal to thatof the whole or that part of a Temporary Global Instrument that is being exchanged or, in the caseof a subsequent exchange, endorse, or procure the endorsement of, a Permanent Global Instrumentto reflect such exchange or (ii) in the case of a Global Instrument exchangeable for DefinitiveInstruments, deliver, or procure the delivery of, an equal aggregate nominal amount of duly executedand authenticated Definitive Instruments. Global Instruments, Global Certificates and DefinitiveInstruments will be delivered outside the United States and its possessions. In this Offering Circular,“Definitive Instruments” means, in relation to any Global Instrument, the definitive BearerInstruments for which such Global Instrument may be exchanged (if appropriate, having attached tothem all Coupons and Receipts in respect of interest or Instalment Amounts that have not alreadybeen paid on the Global Instrument and a Talon). Definitive Instruments will be security printed inaccordance with applicable legal and stock exchange requirements substantially in the forms set outin the Schedules to the Trust Deed. On exchange in full of each Permanent Global Instrument, theIssuer will, if the holder so requests, procure that it is cancelled and returned to the holder togetherwith the relevant Definitive Instruments.

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Exchange Date

“Exchange Date” means, in relation to a Temporary Global Instrument, the first day following theexpiry of 40 days after its issue date and, in relation to a Permanent Global Instrument, a day fallingnot less than 60 days after that on which the notice requiring exchange is given and on which banksare open for business in the city in which the specified office of the Principal Paying Agent (or, inthe case of Instruments lodged with the CMU, the CMU Lodging and Paying Agent) is located andin the city in which the relevant clearing system is located.

Amendment to Conditions

The Temporary Global Instruments, Permanent Global Instruments and Global Certificates containprovisions that apply to the Instruments that they represent, some of which modify the effect of theTerms and Conditions of the Notes (in relation to Notes) or the Terms and Conditions of the PerpetualCapital Securities (in relation to Perpetual Capital Securities), as the case may be, set out in thisOffering Circular. The following is a summary of certain of those provisions:

Payments

No payment falling due after the Exchange Date will be made on any Global Instrument unlessexchange for an interest in a Permanent Global Instrument or for Definitive Instruments is improperlywithheld or refused.

Payments due in respect of any Temporary Global Instrument issued in compliance with TEFRA Dbefore the Exchange Date will only be made against presentation of certification as to non-U.S.beneficial ownership in the form set out in the Agency Agreement. All payments in respect ofInstruments represented by a Global Instrument (except with respect to a Global Instrument heldthrough the CMU) will be made against presentation and, if no further payment falls to be made inrespect of the Instruments, surrender of that Global Instrument at the specified office of the PrincipalPaying Agent (or, in the case of Instruments lodged with the CMU, the CMU Lodging and PayingAgent) or of any other Paying Agent. A record of each payment so made will be endorsed on eachGlobal Instrument, which endorsement will be prima facie evidence that the payment in question hasbeen made. For the purpose of any payments made in respect of a Global Instrument, the words “inthe relevant place of presentation” shall not apply in the definition of “business day” in Condition7(h) of the Terms and Conditions of the Notes and in Condition 7(h) of the Terms and Conditions ofthe Perpetual Capital Securities.

The Issuer, for value received, will promise to pay to the Registered Holder (as defined in the relevantGlobal Certificate) of the Instruments represented by a Global Certificate (subject to surrender ofsuch Global Certificate if no further payment falls to be made in respect of such Instruments) on theMaturity Date (or on such earlier date as the amount payable upon redemption under the Terms andConditions of the Notes may become repayable in accordance with the Terms and Conditions of theNotes) or upon redemption under the Terms and Conditions of the Perpetual Capital Securities, as thecase may be, the amount payable upon redemption under the Terms and Conditions of the Notes orthe Terms and Conditions of the Perpetual Capital Securities (as the case may be) in respect of theInstruments represented by such Global Certificate and to pay interest or Distribution (as applicable)in respect of such Instruments from the Interest Commencement Date or, as the case may be, fromthe Distribution Commencement Date in arrear at the rates, on the dates for payment, and inaccordance with the method of calculation provided for in the Terms and Conditions of the Notes orthe Terms and Conditions of the Perpetual Capital Securities, as the case may be, save that thecalculation is made in respect of the total aggregate amount of the Instruments represented by suchGlobal Certificate, together with such other sums and additional amounts (if any) as may be payable

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under the Terms and Conditions of the Notes or the Terms and Conditions of the Perpetual CapitalSecurities, as the case may be, in accordance with the Terms and Conditions of the Notes or the Termsand Conditions of the Perpetual Capital Securities, as the case may be.

All payments in respect of Instruments represented by a Global Certificate (other than a GlobalCertificate held through the CMU) will be made to, or to the order of, the person whose name isentered on the Register at the close of business on the record date which shall be on the ClearingSystem Business Day immediately prior to the date for payment, where “Clearing System BusinessDay” means Monday to Friday inclusive except 25 December and 1 January.

In respect of a Global Instrument or Global Certificate representing Instruments held through theCMU, payments of principal, interest or Distribution (as applicable) by the CMU Lodging and PayingAgent to the person(s) for whose account(s) relevant interests in the Global Instrument or GlobalCertificate are credited (as set out in the records of the CMU) at the close of business on the ClearingSystem Business Day immediately prior to the date for payment and, save in the case of finalpayment, no presentation of the relevant bearer Global Note or Global Certificate shall be requiredfor such purpose. For the purposes of this paragraph, “Clearing System Business Day” means a dayon which the CMU is operating and open for business.

Prescription

Claims in respect of principal and interest in respect of a Permanent Global Instrument will becomevoid unless it is presented for payment within a period of 10 years (in the case of principal) and fiveyears (in the case of interest) from the appropriate Relevant Date (as defined in Condition 8 of theTerms and Conditions of the Notes and Condition 9 of the Terms and Conditions of the PerpetualCapital Securities).

Meetings

The holder of a Permanent Global Instrument or the Registered Holder of the Instruments representedby a Global Certificate shall (unless such Permanent Global Instrument or Global Certificate, as thecase may be, represents only one Instrument) be treated as being two persons for the purposes of anyquorum requirements of a meeting of Instrumentholders and, at any such meeting, as having one votein respect of each integral currency unit of the Specified Currency of the Instruments. All holders ofRegistered Instruments are entitled to one vote in respect of each integral currency unit of theSpecified Currency of the Instruments comprising such Instrumentholders holding, whether or notrepresented by a Global Certificate.

Cancellation

Cancellation of any Instrument represented by a Global Instrument that is required by the Terms andConditions of the Notes or the Terms and Conditions of the Perpetual Capital Securities, as the casemay be, to be cancelled (other than upon its redemption) will be effected by reduction in the nominalamount of such Global Instrument representing the Instrument on its presentation to or to the orderof the Principal Paying Agent (or, in the case of Instruments lodged with the CMU, the CMU Lodgingand Paying Agent) for endorsement in the relevant schedule thereto or, in the case of a GlobalCertificate, by reduction in aggregate principal amount of the Certificates in the Register, whereuponthe nominal amount thereof shall be reduced for all purposes by the amount so cancelled andendorsed.

Purchase

Instruments represented by a Permanent Global Instrument or by a Global Certificate may only bepurchased by the Issuer, the Guarantor or any of their respective subsidiaries if they are purchasedtogether with the right to receive all future payments of interest or Distribution and InstalmentAmounts (if any) thereon.

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Issuer’s Option

Any option of the Issuer provided for in the Terms and Conditions of the Notes or the Terms and

Conditions of the Perpetual Capital Securities (as the case may be) while such Instruments are

represented by a Permanent Global Instrument or by a Global Certificate shall be exercised by the

Issuer giving notice to the Instrumentholders within the time limits set out in and containing the

information required by the Terms and Conditions of the Notes or the Terms and Conditions of the

Perpetual Capital Securities (as the case may be), except that the notice shall not be required to

contain the serial numbers of Instruments drawn in the case of a partial exercise of an option and

accordingly no drawing of Instruments shall be required. In the event that any option of the Issuer

is exercised in respect of some but not all of the Instruments of any Series, the rights of

accountholders with a clearing system in respect of the Instruments will be governed by the standard

procedures of Euroclear, Clearstream, the CMU or any other clearing system (as the case may be).

Instrumentholders’ Options

Any option of the Instrumentholders of any Instruments provided for in the Terms and Conditions of

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

such Instruments are represented by a Permanent Global Instrument or a Global Certificate may be

exercised by the holder of the Permanent Global Instrument or the Global Certificate (as the case may

be) giving notice to the Principal Paying Agent (or, in the case of Instruments lodged with the CMU,

the CMU Lodging and Paying Agent) within the time limits relating to the deposit of Instruments with

a Paying Agent set out in the Terms and Conditions of the Notes or the Terms and Conditions of the

Perpetual Capital Securities (as the case may be) substantially in the form of the notice available from

any Paying Agent, except that the notice shall not be required to contain the certificate numbers of

the Instruments in respect of which the option has been exercised, and stating the nominal amount

of Instruments in respect of which the option is exercised and at the same time presenting the

Permanent Global Instrument or Global Certificate (as the case may be) to the Principal Paying Agent

(or, in the case of Instruments lodged with the CMU, the CMU Lodging and Paying Agent), for

notation. Any option of the Instrumentholders provided for in the Terms and Conditions of the Notes

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

Instruments are represented by a Permanent Global Instrument or a Global Certificate may be

exercised in respect of all or some of the Instruments represented by the Permanent Global Instrument

or the Global Certificate (as the case may be).

Trustee’s Powers

In considering the interests of Instrumentholders while any Global Instrument is, or any Instruments

represented by a Global Certificate are, held on behalf of, or registered in the name of any nominee

for, a clearing system, the Trustee may have regard to any certificate, report or any other information

provided to it by such clearing system or its operator as to the identity (either individually or by

category) of its accountholders with entitlements to such Global Instrument or Global Certificate, as

the case may be (including without limitation a CMU Issue Position Report in the case of Instruments

held through the CMU) and may consider such interests as if such accountholders were the holders

of the Instruments represented by any such Global Instrument or Global Certificate, as the case may

be.

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Notices

So long as any Instruments are represented by a Global Instrument or a Global Certificate and such

Global Instrument or Global Certificate is held on behalf of (i) Euroclear and/or Clearstream or any

other clearing system (except as provided in (ii) below), notices to the holders of Instruments of that

Series may be given by delivery of the relevant notice to that clearing system for communication by it

to entitled accountholders in substitution for publication or mailing to the addresses in the Register,

as the case may be, as required by the Conditions or (in case of Global Instruments only) by delivery

of the relevant notice to the holder of the Global Instrument or (ii) the CMU, notices to the holders

of Instruments of that Series may be given by delivery of the relevant notice to the CMU in

substitution for publication as required by the Conditions or by delivery of the relevant notice to the

holder of the Global Instrument or the relevant Global Certificate, and any such notice shall be

deemed to have been given to the Noteholders on the day on which such notice is delivered to the

CMU.

Partly Paid Instruments

The provisions relating to Partly Paid Instruments are not set out in this Offering Circular, but will

be contained in the relevant Pricing Supplement and thereby in the Global Instrument. While any

instalments of the subscription moneys due from the holder of Partly Paid Instruments are overdue,

no interest in a Global Instrument representing such Instruments may be exchanged for an interest

in a Permanent Global Instrument or for Definitive Instruments (as the case may be). If any

Instrumentholder fails to pay any instalment due on any Partly Paid Instruments within the time

specified, the Issuer may forfeit such Instruments and shall have no further obligation to their holders

in respect of them.

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TAXATION

The following summary of certain Irish, Hong Kong, PRC and U.S. tax consequences of the purchase,ownership and disposition of Instruments is based upon applicable laws, regulations, rulings anddecisions in effect as at the date of this Offering Circular, all of which are subject to change (possiblywith retroactive effect). This discussion does not purport to be a comprehensive description of all thetax considerations that may be relevant to a decision to purchase, own or dispose of Instruments anddoes not purport to deal with consequences applicable to all categories of investors, some of whichmay be subject to special rules. Neither these statements nor any other statements in this OfferingCircular are to be regarded as advice on the tax position of any Instrumentholder or any personsacquiring, selling or otherwise dealing in the Instruments or on any tax implications arising from theacquisition, sale or other dealings in respect of the Instruments. Persons considering the purchaseof the Instruments should consult their own tax advisers concerning the tax consequences of thepurchase, ownership and disposition of Instruments. Prospective investors should consult theirprofessional advisers on the possible tax consequences of buying, holding or selling any Instrumentsunder the laws of their country of citizenship, residence or domicile.

IRELAND

The following is a summary of the principal Irish tax consequences for individuals and companies ofownership of the Instruments based on the laws and practice of the Irish Revenue Commissionerscurrently in force in Ireland and may be subject to change. It deals with Instrumentholders whobeneficially own their Instruments as an investment. Particular rules not discussed below may applyto certain classes of taxpayers holding Instruments, such as dealers in securities, trusts etc. Thesummary does not constitute tax or legal advice and the comments below are of a general nature only.Prospective investors in the Instruments should consult their professional advisers on the taximplications of the purchase, holding, redemption or sale of the Instruments and the receipt of interestthereon under the laws of their country of residence, citizenship or domicile.

Taxation of Instrumentholders

Withholding Tax

In general, tax at the standard rate of income tax (currently 20 per cent.), is required to be withheldfrom payments of Irish source interest which should include interest payable on the Instruments. TheIssuer will not be obliged to make a withholding or deduction for or on account of Irish income taxfrom a payment of interest on an Instrument so long as the interest paid on the relevant Instrumentfalls within one of the following categories and meets the relevant conditions:

(a) Interest paid on a quoted Eurobond:

A quoted Eurobond is a security which is issued by a company (such as the Issuer), is listed ona recognised stock exchange (such as the Hong Kong Stock Exchange) and carries a right tointerest. Provided that the Instruments issued under this Programme carry an amount in respectof interest and are listed on the Hong Kong Stock Exchange (or any other recognised stockexchange), interest paid on them can be paid free of withholding tax provided:

(i) the person by or through whom the payment is made is not in Ireland, or if such personis in Ireland, either:

(A) the Instrument is held in a clearing system recognised by the Irish RevenueCommissioners; (DTC, Euroclear and Clearstream, Luxembourg are, amongst others,so recognised); or

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(B) the person who is the beneficial owner of the quoted Eurobond and who isbeneficially entitled to the interest is not resident in Ireland and has made adeclaration to a relevant person (such as a paying agent located in Ireland) in theprescribed form; and

(ii) where the payment constitutes a payment which is deemed to be dependent upon the resultsof the Issuer’s business, or is deemed to be more than a reasonable commercial return, oneof the following conditions is satisfied:

(A) the Instrumentholder is resident for tax purposes in Ireland; or

(B) the Instrumentholder is subject, without any reduction computed by reference to theamount of such interest or other Distribution, to a tax in a relevant territory whichgenerally applies to profits, income or gains received in that territory, by persons,from sources outside that territory; or

(C) the Instrumentholder is not:

(I) a company which, directly or indirectly, controls the Issuer, is controlled by theIssuer, or is controlled by a third company which also directly or indirectlycontrols the Issuer; or

(II) a person or persons who are connected with each other (within the meaning ofSection 10 of the TCA):

i. from whom the Issuer has acquired assets;

ii. to whom the Issuer has made loans or advances;

iii. to whom loans or advances held by the Issuer were made; or

iv. with whom the Issuer has entered into a swap agreement,

where the aggregate value of such assets, loans, advances or swap agreementsrepresents not less than 75 per cent. of the aggregate value of the assets of theIssuer;

For the purposes of this paragraph, a person has control of a company where thatperson has:

(I) the power to secure:

i. by means of the holding of shares or the possession of voting power in orin relation to that or any other company; or

ii. by virtue of any powers conferred by the constitution, articles ofassociation or other document regulating that or any other company, thatthe affairs of the first-mentioned company are conducted in accordancewith the wishes of that person; or

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(II) significant influence, which means the ability to participate in the financial and

operating decisions of the company, and holds, directly or indirectly, more than:

i. 20 per cent. of the issued share capital of the company;

ii. 20 per cent. of the principal value of any Instruments; or

iii. the right to 20 per cent. of the interest or other Distribution payable in

respect of the Instruments.

(D) at the time of issue of the Instruments, the Issuer was not in possession, or aware, of

any information which could reasonably be taken to indicate whether or not the

beneficial owner of the Instruments would be subject to tax on any interest payments,

where the term:

“relevant territory” means a member state of the European Union (other than Ireland) or

a country with which Ireland has signed a double tax treaty (“Relevant Territory”); and

“swap agreement” means any agreement, arrangement or understanding that–

(I) provides for the exchange, on a fixed or contingent basis, of one or more payments

based on the value, rate or amount of one or more interest or other rates, currencies,

commodities, securities, instruments of indebtedness, indices, quantitative measures,

or other financial or economic interests or property of any kind, or any interest

therein or based on the value thereof, and

(II) transfers to a person who is a party to the agreement, arrangement or understanding

or to a person connected with that person, in whole or in part, the financial risk

associated with a future change in any such value, rate or amount without also

conveying a current or future direct or indirect ownership interest in an asset

(including any enterprise or investment pool) or liability that incorporates the

financial risk so transferred.

Thus, so long as the Instruments continue to be quoted on the Hong Kong Stock Exchange,

are held in a recognised clearing system (such as Euroclear or Clearstream) and one of the

conditions set out in paragraph (a)(ii) above is met, interest on the Instruments can be paid

by any paying agent acting on behalf of the Issuer without any withholding or deduction

for or on account of Irish income tax.

If the Instruments continue to be quoted but are not or cease to be held in a recognised

clearing system, interest on the Instruments may be paid without any withholding or

deduction for or on account of Irish income tax provided such payment is made through

a paying agent outside Ireland and one of the conditions set out in paragraph (a)(ii) above

is met.

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(b) Short interest:

Short interest is interest payable on a debt for a fixed period that is not intended to exceed, and,

in fact, does not exceed, 364 days. The test is a commercial test applied to the commercial intent

of each series of Instruments issued under the Programme. For example, if there is an

arrangement or understanding (whether legally binding or not) for the relevant series of

Instruments (or particular Instrument within a series) to have a life of 365 days or more, the

interest paid on the relevant Instrument(s) will not be short interest and, unless an exemption

applies, a withholding will arise. Short interest paid on the Instruments can be paid free of

withholding tax provided one of the following conditions is satisfied:

(A) the Instrumentholder is resident for tax purposes in Ireland; or

(B) the Instrumentholder is a pension fund, government body or other person (which satisfies

paragraph (a)(ii)(C) above), which is resident in a Relevant Territory and which, under the

laws of that territory, is exempted from tax that generally applies to profits, income or

gains in that territory; or

(C) the Instrumentholder is subject, without any reduction computed by reference to the

amount of such interest or other Distribution, to a tax in a Relevant Territory which

generally applies to profits, income or gains received in that territory, by persons, from

sources outside that territory.

(c) Interest or Distribution paid on a wholesale debt instrument:

A “wholesale debt instrument” includes commercial paper (as defined in Section 246A(1) of

TCA. In that context “commercial paper” means a debt instrument, either in physical or

electronic form, relating to money in any currency, which is issued by a company, recognises

an obligation to pay a stated amount, carries a right to interest or is issued at a discount or at

a premium, and matures within 2 years. The exemption from Irish withholding tax applies if:

(i) the wholesale debt instrument is held in a recognised clearing system (which includes

Clearstream, DTC and Euroclear); and

(ii) the wholesale debt instrument is of an approved denomination; and in this context anapproved denomination means a denomination of not less than:

(A) in the case of an instrument denominated in euro, C500,000;

(B) in the case of an instrument denominated in United States Dollars, U.S.$500,000; or

(C) in the case of an instrument denominated in a currency other than euro or UnitedStates Dollars, the equivalent in that other currency of C500,000 (using theconversion rate applicable at the time the programme under which the instrument isto be issued is first publicised); and

(iii) one of the conditions in paragraph (a)(ii) is satisfied.

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(d) Interest or Distribution paid by a qualifying company or in the ordinary course of business tocertain non-residents:

If, for any reason, the exemptions referred to above cease to apply, interest payments may stillbe made free of withholding tax provided that:

(i) either:

(A) the Issuer remains a “qualifying company” as defined in Section 110 of TCA and theInstrumentholder is a person which is resident in a Relevant Territory, and where therecipient is a company, the interest is not paid to it in connection with a trade orbusiness carried on by it in Ireland through a branch or agency; or

(B) the interest is paid in the ordinary course of the Issuer’s business and theInstrumentholder is:

(I) a company which (1) by virtue of the law of a Relevant Territory, is resident inthe Relevant Territory for the purposes of tax, and that Relevant Territoryimposes a tax that generally applies to interest receivable in that RelevantTerritory by companies from sources outside that Relevant Territory, and(2) does not receive the interest payment in connection with a trade or businesswhich is carried on in Ireland by it through a branch or agency; or

(II) a company where (1) the interest payable to it is exempted from the charge toincome tax under a double taxation treaty in force between Ireland and anotherterritory, or would be exempted from the charge to income tax if a doubletaxation treaty made between Ireland and another territory on or before the dateof payment, but not yet in force, had the force of law when the interest was paid,and (2) it does not receive the interest payment in connection with a trade orbusiness which is carried on in Ireland by it through a branch or agency; and

(ii) one of the following conditions is satisfied:

(A) the Instrumentholder is a pension fund, government body or other person (whichsatisfies paragraph (a)(ii)(C) above), who is resident in a Relevant Territory and who,under the laws of that territory, is exempted from tax that generally applies to profits,income or gains in that territory; or

(B) the Instrumentholder is subject, without any reduction computed by reference to theamount of such interest or other Distribution, to a tax in a Relevant Territory whichgenerally applies to profits, income or gains received in that territory, by persons,from sources outside that territory.

The Issuer must be satisfied that the respective terms of the exemptions are satisfied. The testof residence in each case is determined by reference to the law of the Relevant Territory inwhich the holder claims to be resident.

For other holders of Instruments, interest may be paid free of withholding tax if the Instrumentholderis resident in a double tax treaty country and under the provisions of the relevant treaty with Irelandsuch Instrumentholder is exempt from Irish tax on the interest and clearance in the prescribed formhas been received by the Issuer before the interest is paid.

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Encashment Tax

Irish tax will be required to be withheld at a rate of 25 per cent. from interest on any Instrument,where such interest is collected or realised by a bank or encashment agent in Ireland on behalf of anyInstrumentholder. There is an exemption from encashment tax where the beneficial owner of theinterest is not resident in Ireland and has made a declaration to this effect in the prescribed form tothe encashment agent or bank.

Income Tax, PRSI and Universal Social Charge

Notwithstanding that an Instrumentholder may receive interest on the Instruments free of withholdingtax, the Instrumentholder may still be liable to pay Irish tax with respect to such interest.Instrumentholders resident or ordinarily resident in Ireland who are individuals may be liable to payIrish income tax, social insurance (PRSI) contributions and the universal social charge in respect ofinterest they receive on the Instruments.

Interest paid on the Instruments may have an Irish source and therefore may be within the charge toIrish income tax, notwithstanding that the Instrumentholder is not resident in Ireland. In the case ofInstrumentholders who are non-resident individuals such Instrumentholders may also be liable to paythe universal social charge in respect of interest they receive on the Instruments.

Ireland operates a self-assessment system in respect of tax and any person, including a person whois neither resident nor ordinarily resident in Ireland, with Irish source income comes within its scope.

There are a number of exemptions from Irish income tax available to certain non-residents. Firstly,interest paid by the Issuer is exempt from income tax so long as the Issuer is a qualifying companyfor the purposes of Section 110 of TCA, the recipient is not resident in Ireland and is resident in aRelevant Territory and, the interest is paid out of the assets of the Issuer. Secondly, interest paymentsmade by the Issuer (where it has ceased to be a qualifying company for the purposes of Section 110of TCA) to a company are exempt from income tax provided the recipient is not resident in Irelandand is either resident for tax purposes in a Relevant Territory which imposes a tax that generallyapplies to interest receivable in that territory by companies from sources outside that territory or theinterest is exempted from the charge to Irish income tax under the terms of a double tax agreementwhich is either in force or which will come into force once all ratification procedures have beencompleted. Thirdly, interest paid by the Issuer free of withholding tax under the quoted Eurobondexemption or under the wholesale debt instruments exemption is exempt from income tax where therecipient is a person not resident in Ireland and resident in a Relevant Territory or is a company notresident in Ireland which is under the control, whether directly or indirectly, of person(s) who byvirtue of the law of a Relevant Territory is resident for the purposes of tax in a Relevant Territoryand are not under the control of person(s) who are not so resident, or is a company not resident inIreland where the principal class of shares of the company or its 75 per cent. parent is substantiallyand regularly traded on a recognised stock exchange. For the purposes of these exemptions and wherenot specified otherwise, residence is determined under the terms of the relevant double taxationagreement or in any other case, the law of the country in which the recipient claims to be resident.Interest falling within the above exemptions is also exempt from the universal social charge, in thecase of Instrumentholders who are individuals.

Notwithstanding these exemptions from income tax, a corporate recipient that carries on a trade inIreland through a branch or agency in respect of which the Instruments are held or attributed, mayhave a liability to Irish corporation tax on the interest.

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Relief from Irish income tax may also be available under the specific provisions of a double tax treatybetween Ireland and the country of residence of the recipient.

Interest on the Instruments which does not fall within the above exemptions is within the charge toincome tax, and, in the case of Instrumentholders who are individuals, the charge to the universalsocial charge.

Capital Gains Tax

A holder of Instruments will not be subject to Irish tax on capital gains on a disposal of Instrumentsunless such holder is either resident or ordinarily resident in Ireland and carries on a trade or businessin Ireland through a branch or agency in respect of which the Instruments were used or held or towhich or to whom the Instruments are attributable.

Capital Acquisitions Tax

A gift or inheritance comprising of Instruments will be within the charge to capital acquisitions tax(which subject to available exemptions and reliefs, is currently levied at 33 per cent.) if either (i) thedisponer or the donee/successor in relation to the gift or inheritance is resident or ordinarily residentin Ireland (or, in certain circumstances if the disponer is domiciled in Ireland irrespective of hisresidence or that of the donee/successor) on the relevant date or (ii) if the Instruments are regardedas property situate in Ireland. The Instruments may be regarded as situated in Ireland regardless oftheir physical location or the location of the register as they are secured over Irish property, and theythemselves secure a debt due by an Irish resident debtor. Accordingly, if such Instruments arecomprised in a gift or inheritance, the gift or inheritance may be within the charge to tax regardlessof the residence status of the disponer or the donee/successor.

Stamp Duty

No stamp duty or similar tax is imposed in Ireland (on the basis of an exemption provided for inSection 85(2)(c) of the Irish Stamp Duties Consolidation Act, 1999 so long as the Issuer is aqualifying company for the purposes of Section 110 of TCA and the proceeds of the Instruments areused in the course of the Issuer’s business) on the issue, transfer or redemption of the Instruments.

Qualifying Companies Holding Irish Specified Mortgages

Section 110(5A) of TCA restricts the tax deductibility of interest payable by qualifying companieswhich carry on a business of holding, managing or both holding and managing “specified mortgages”,units in an IREF (as defined in Section 739K of TCA) or shares that derive their value, or the greaterpart of their value from Irish land.

As such, the restrictions on deductibility should not apply provided the Issuer does not hold ormanage specified mortgages.

FATCA Implementation in Ireland

The governments of Ireland and the United States have signed an Agreement to Improve InternationalTax Compliance and to Implement FATCA (the “Ireland-U.S. IGA”). The Ireland-U.S. IGA is of atype commonly known as a “model 1” agreement. In July 2014, Ireland enacted Financial AccountsReporting (United States of America) Regulations 2014 (the “Irish FATCA Regulations”).

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The Ireland-U.S. IGA and Irish FATCA Regulations provide for the automatic reporting and exchange

of information in relation to accounts held in Irish “financial institutions” by U.S. persons and the

reciprocal exchange or information regarding U.S. financial accounts held by Irish residents.

The Issuer expects to be treated as a reporting “Financial Institution” for FATCA purposes and

intends to carry on its business in such a way as to ensure that it is treated as complying with FATCA

pursuant to the terms of the Ireland-U.S. IGA and the Irish FATCA Regulations. Unless an exemption

applies, the Issuer shall be required to register with the US Internal Revenue Service as a “reporting

financial institution” for FATCA purposes. In order for the Issuer to comply with its FATCA

obligations it will be required to report certain information to the Irish Revenue Commissioners

relating to Instrumentholders who, for FATCA purposes, are specified U.S. persons, non-participating

financial institutions or passive non-financial foreign entities (NFFEs) that are controlled by

specified U.S. persons. Any information reported by the Issuer to the Irish Revenue Commissioners

will be communicated to the U.S Internal Revenue Service pursuant to the Ireland-U.S. IGA. It is

possible that the Irish Revenue Commissioners may also communicate this information to other tax

authorities pursuant to the terms of any applicable double tax treaty, intergovernmental agreement or

exchange of information regime.

The Issuer or its agents shall be entitled to require Instrumentholders to provide any information

regarding their FATCA status, identity or residency required by the Issuer to satisfy its FATCA

obligations. Instrumentholders will be deemed, by their subscription for or holding of Instruments to

have authorised the automatic disclosure of such information by the Issuer or any other authorised

person to the relevant tax authorities.

The Issuer should not generally be subject to FATCA withholding tax in respect of its U.S. source

income for so long as it complies with its FATCA obligations. However, FATCA withholding tax may

arise on U.S. source payments to the Issuer if the Issuer does not comply with its FATCA registration

and reporting obligations and the U.S. Internal Revenue Service specifically identified the Issuer as

being a “non-participating financial institution” for FATCA purposes. In addition, the Issuer may be

unable to comply with its FATCA obligations if Instrumentholders do not provide the required

certifications or information.

Instrumentholders should consult their own tax advisors as to the potential implication of the

reporting requirements imposed on the Issuer by FATCA before investing.

The Common Reporting Standard (CRS) in Ireland

On 21 July 2014, the Standard for Automatic Exchange of Financial Account Information in Tax

Matters was published by the OECD and this includes the CRS. The CRS provides that certain

entities (known as Financial Institutions) shall identify “Accounts” (as defined, broadly equity and

debt interests in the Financial Institution) held by persons who are tax resident in other CRS

participating jurisdiction. That information is then subject to annual automatic exchange between

governments in CRS participating jurisdictions.

Directive 2014/107/EU on Administrative Cooperation in the Field of Taxation (“DAC II”)

implemented CRS in a European context and creates a mandatory obligation for all EU Member

States to exchange financial account information in respect of residents in other EU Member States

on an annual basis commencing in 2017 in respect of the 2016 calendar year. Ireland has provided

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for the implementation of CRS through Section 89 1F of TCA and the enactment of the Returns of

Certain Information by Reporting Financial Institutions Regulations 2015. The Irish Revenue

Commissioners have indicated that Irish Financial Institutions are obliged to make a single return in

respect of CRS and DAC II. CRS has applied in Ireland from 1 January 2016.

The Issuer may constitute a Financial Institution for CRS purposes. In order to comply with its

obligations under CRS and DAC II, the Issuer shall be entitled to require Instrumentholders to

provide certain information in respect of the Instrumentholder’s and, in certain circumstances, their

controlling persons’ tax status, identity or residence. Instrumentholders will be deemed, by their

holding of the Instruments, to have authorised the automatic disclosure of such information by the

Issuer (or any nominated service provider) to the Irish Revenue Commissioners. The information will

be reported by the Issuer to the Irish Revenue Commissioners who will then exchange the information

with the tax or governmental authorities of other participating jurisdiction, as applicable. To the

extent that the Instruments are held within a recognised clearing system, the Issuer should have no

reportable accounts in a tax year.

Provided the Issuer complies with these obligations, it should be deemed compliant for CRS and

DAC II purposes. Failure by the Issuer to comply with its CRS and DAC II obligations may result

in it being deemed to be non-compliant in respect of its CRS obligations and monetary penalties may

be imposed pursuant to the Irish implementing legislation.

DAC6 – Disclosure Requirements for Reportable Cross-border Tax Arrangements

On 25 June 2018, Council Directive (EU) 2018/822 (“DAC6”) introduced rules regarding the

mandatory automatic exchange of information in the field of taxation in relation to reportable

cross-border arrangements.

DAC6 imposes mandatory reporting requirements on EU-based intermediaries who design, market,

organize, make available for implementation or manage the implementation of potentially aggressive

cross-border tax-planning schemes. It also covers persons who provide aid, assistance or advice in

relation to potentially aggressive cross-border tax-planning schemes, where they can be reasonably

expected to know that they have performed that function. If the intermediary is located outside the

EU or is bound by legal professional privilege, the obligation to report may pass to the taxpayer.

DAC6 was required to be transposed by each EU member state by the end of 2019 with the measures

taking effect from 1 July 2020. In addition, arrangements implemented between 25 June 2018 and

30 June 2020 are also subject to the reporting requirements. Intermediaries and/or taxpayers will be

required to report any reportable cross-border arrangements within 30 days from the earliest of:

(i) the day after the arrangement is made available for implementation;

(ii) the day after the arrangement is ready for implementation; or

(iii) when the first step in the implementation of the arrangement was taken.

Under the provisions of DAC6, the first reports were required by 31 August 2020. However, as a

result of the COVID-19 pandemic, the EU Council approved a deferral of the reporting requirements.

It is up to individual EU member states to determine whether to avail of the option to defer. Ireland

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chose to defer reporting. Further to the deferral, in Ireland the reporting deadline for reportable

cross-border arrangements implemented between 25 June 2018 and 30 June 2020 was 28 February

2021 and the 30 day period for arrangements implemented after 1 July 2020 commenced from

1 January 2021.

The transactions contemplated under this Offering Circular may fall within the scope of mandatory

disclosure rules under DAC6 or equivalent local law provisions and thus may qualify as reportable

cross-border arrangements within the meaning of such provisions. If that were the case, any person

that falls within the definition of an “intermediary” with respect to the Issuer may have to report

certain transactions entered into by the Issuer to the relevant EU tax authority.

CAYMAN ISLANDS

Under the laws of the Cayman Islands, payments of interest, principal or premium on the Instruments

will not be subject to taxation and no withholding will be required on the payment of interest,

principal or premium to any holder of the Instruments, as the case may be, nor will gains derived from

the disposal of the Instruments be subject to Cayman Islands income or corporation tax. The Cayman

Islands currently have no income, corporation or capital gains tax and no estate duty, inheritance tax

or gift tax. The Cayman Islands are not party to any double taxation treaties.

No stamp duty is payable in respect of the issue of the Instruments. The holder of any Instruments

(or a legal personal representative of such holder) whose Instruments are brought into the Cayman

Islands may in certain circumstances be liable to pay stamp duty imposed under the laws of the

Cayman Islands in respect of such Instruments. Certificates evidencing registered Instruments, to

which title is not transferable by delivery, will not attract Cayman Islands stamp duty. However, an

instrument transferring title to a registered Instrument, if brought to or executed in the Cayman

Islands, would be subject to nominal Cayman Islands stamp duty. Stamp duty will be payable on any

documents executed by the Issuer if any such documents are executed in or brought into the Cayman

Islands or produced before the Cayman Islands Courts.

The Cayman Islands does not have any income tax treaty arrangement with any country, however the

Cayman Islands has entered into tax information exchange agreements with a number of countries.

HONG KONG

Withholding Tax

No withholding tax is payable in Hong Kong in respect of payments of principal or interest (in the

case of Notes) or Distribution (in the case of Perpetual Capital Securities) on the Instruments or in

respect of any capital gains arising from the sale of the Instruments.

Profits Tax

Hong Kong profits tax is chargeable on every person carrying on a trade, profession or business in

Hong Kong in respect of profits arising in or derived from Hong Kong from such trade, profession

or business (excluding profits arising from the sale of capital assets).

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Interest on the Instruments may be deemed to be profits arising in or derived from Hong Kong froma trade, profession or business carried on in Hong Kong in the following circumstances:

(i) interest on the Instruments is derived from Hong Kong and is received by or accrues to acorporation carrying on a trade, profession or business in Hong Kong;

(ii) interest on the Instruments is derived from Hong Kong and is received by or accrues to a person,

other than a corporation, carrying on a trade, profession or business in Hong Kong and is in

respect of the funds of that trade, profession or business;

(iii) interest on the Instruments is received by or accrues to a financial institution (as defined in the

Inland Revenue Ordinance (Cap. 112) of Hong Kong (the “IRO”)) and arises through or from

the carrying on by the financial institution of its business in Hong Kong; or

(iv) interest on the Instruments is received by or accrues to a corporation, other than a financial

institution, and arises through or from the carrying on in Hong Kong by the corporation of its

intra-group financing business (within the meaning of Section 16(3) of the IRO).

Sums received by or accrued to a financial institution by way of gains or profits arising through or

from the carrying on by the financial institution of its business in Hong Kong from the sale, disposal

and redemption of Instruments will be subject to Hong Kong profits tax. Sums received by or accrued

to a corporation, other than a financial institution, by way of gains or profits arising through or from

the carrying on in Hong Kong by the corporation of its intra-group financing business (within the

meaning of Section 16(3) of the IRO) from the sale, disposal or other redemption of Instruments will

be subject to Hong Kong profits tax.

Sums derived from the sale, disposal or redemption of Instruments will be subject to Hong Kong

profits tax where received by or accrued to a person, other than a financial institution, who carries

on a trade, profession or business in Hong Kong and the sum has a Hong Kong source unless

otherwise exempted. The source of such sums will generally be determined by having regard to the

manner in which the Instruments are acquired and disposed of.

In certain circumstances, Hong Kong profits tax exemptions (such as concessionary tax rates) may

be available. Investors are advised to consult their own tax advisors to ascertain the applicability of

any exemptions to their individual position.

Stamp Duty

Stamp duty will not be payable on the issue of Bearer Instruments provided that either:

(i) such Bearer Instruments are denominated in a currency other than the currency of Hong Kong

and are not repayable in any circumstances in the currency of Hong Kong; or

(ii) such Bearer Instruments constitute loan capital (as defined in the Stamp Duty Ordinance

(Cap. 117) of Hong Kong (the “SDO”)).

If stamp duty is payable, it is payable by the Issuer on the issue of Bearer Instruments at a rate of

3 per cent. of the market value of the Bearer Instruments at the time of issue. No stamp duty will be

payable on any subsequent transfer of Bearer Instruments.

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No stamp duty is payable on the issue of Registered Instruments. Stamp duty may be payable on any

transfer of Registered Instruments if the relevant transfer is required to be registered in Hong Kong.

Stamp duty will, however, not be payable on any transfer of Registered Instruments provided that

either:

(i) such Registered Instruments are denominated in a currency other than the currency of Hong

Kong and are not repayable in any circumstances in the currency of Hong Kong; or

(ii) such Registered Instruments constitute loan capital (as defined in the SDO).

If stamp duty is payable in respect of the transfer of Registered Instruments it will be payable at the

rate of 0.26 per cent. (of which 0.13 per cent. is payable by the seller and 0.13 per cent. is payable

by the purchaser) normally by reference to the consideration or its value, whichever is higher. In

addition, stamp duty is payable at the fixed rate of HK$5 on each instrument of transfer executed in

relation to any transfer of the Registered Instruments if the relevant transfer is required to be

registered in Hong Kong.

PRC

Enterprise Income Tax and Value-Added Tax

Pursuant to the EIT Law, the IIT Law and the implementation regulations in relation to both the EIT

Law and the IIT Law, PRC income tax at a rate of 10 per cent. or 20 per cent. is normally applicable

to PRC-source income derived by non-resident enterprises or individuals, respectively, subject to

adjustment by applicable treaty. If the Issuer is deemed a PRC resident enterprise for tax purposes,

interest (in respect of Notes) or Distribution (in respect of Perpetual Capital Securities) paid to

non-resident Instrumentholders may be regarded as PRC-sourced, and therefore be subject to PRC

income tax at a rate of 10 per cent. for non-resident enterprise Instrumentholders and at a rate of 20

per cent. for non-resident individual Instrumentholders (or a lower treaty rate, if any).

Such income tax shall be withheld by the Issuer that is acting as the obligatory withholder and such

PRC enterprise shall withhold the tax amount from each payment or payment due. To the extent that

the PRC has entered into arrangements relating to the avoidance of double taxation with any

jurisdiction, such as Hong Kong, that allow a lower rate of withholding tax, such lower rate may

apply to qualified non-PRC resident enterprise Instrumentholders.

Under Circular 36 which introduced a new VAT from 1 May 2016 to replace business tax, VAT is

applicable where the entities or individuals provide services within the PRC. The revenues generated

from the provision of taxable sale of services by entities and individuals, such as financial services,

shall be subject to PRC VAT if the seller or buyer of the services is within PRC. In the event that

foreign entities or individuals do not have a business establishment in the PRC, the purchaser of

services shall act as the withholding agent. According to the Explanatory Instruments to Sale of

Services, Intangible Assets and Real Property attached to Circular 36, financial services refer to the

business activities of financial and insurance operation, including loan processing services, financial

services of direct charges, insurance services and the transfer of financial instruments, and the VAT

rate is 6 per cent. Accordingly, the interest (in respect of Notes) or Distribution (in respect of

Perpetual Capital Securities) and other interest (in respect of Notes) or Distribution (in respect of

Perpetual Capital Securities) like earnings received by a non-PRC resident Instrumentholder from the

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Issuer will be subject to PRC VAT at the rate of 6 per cent. In the event the Issuer is deemed to bea PRC resident enterprise by the PRC tax authorities, the Instrumentholders may be regarded asproviding financial services within the PRC and consequently, the Issuer will be obligated towithhold VAT of 6 per cent. on payments of interest (in respect of Notes) or Distribution (in respectof Perpetual Capital Securities) and certain other amounts on the Instruments paid by the Issuer toInstrumentholders that are non-resident enterprises or individuals. In addition, the Instrumentholdershall be subject to the local levies at approximately 12 per cent. of the VAT payment andconsequently, the combined rate of VAT and local levies would be around 6.72 per cent. However,there is uncertainty as to whether gains derived from a sale or exchange of Instruments consummatedoutside of the PRC between non-PRC resident Instrumentholders will be subject to PRC VAT. VATis unlikely to be applicable to any transfer of Instruments between entities or individuals locatedoutside of the PRC and therefore unlikely to be applicable to gains realised upon such transfers ofInstruments, but there is uncertainty as to the applicability of VAT if either the seller or buyer ofInstruments is located inside the PRC. Circular 36 together with other laws and regulations pertainingto VAT are relatively new, the interpretation and enforcement of such laws and regulations involveuncertainties. However, despite the withholding of the PRC tax by the Issuer, the Issuer has agreedto pay additional amounts to holders of the Instruments so that holders of the Instruments wouldreceive the full amount of the scheduled payment, as further set out in “Terms and Conditions of theNotes”.

Under the EIT Law and its implementation rules, any gains realised on the transfer of the Instrumentsby holders who are deemed under the EIT Law as non-resident enterprises may be subject to PRCenterprise income tax if such gains are regarded as income derived from sources within the PRC.Under the EIT Law, a “non-resident enterprise” means an enterprise established under the laws ofa jurisdiction other than the PRC and whose actual administrative organisation is not in the PRC,which has established offices or premises in the PRC, or which has not established any offices orpremises in the PRC but has obtained income derived from sources within the PRC. There remainsuncertainty as to whether the gains realised on the transfer of the Instruments by enterprise holderswould be treated as incomes derived from sources within the PRC and be subject to PRC enterpriseincome tax. In addition, under the IIT Law, any individual who has no domicile and does not livewithin the territory of the PRC or who has no domicile but has lived within the territory of China forless than one year shall pay individual income tax for any income obtained within the PRC. Thereis uncertainty as to whether gains realised on the transfer of the Instruments by individual holderswho are not PRC citizens or residents will be subject to PRC individual income tax. If such gains aresubject to PRC income tax, the 10 per cent. enterprise income tax rate and 20 per cent. individualincome tax rate will apply respectively unless there is an applicable tax treaty or arrangement thatreduces or exempts such income tax. The taxable income will be the balance of the total incomeobtained from the transfer of the Instruments minus all costs and expenses that are permitted underPRC tax laws to be deducted from the income. According to the Taxation Arrangement,Instrumentholders who are Hong Kong residents, including both enterprise holders and individualholders, will be exempted from PRC income tax on capital gains derived from a sale or exchange ofthe Instruments if such capital gains are not connected with an office or establishment that theInstrumentholders have in the PRC and all the other relevant conditions are satisfied.

Stamp Duty

No PRC stamp duty will be imposed on non-PRC Instrumentholders either upon issuance of theInstruments or upon a subsequent transfer of Instruments to the extent that the register of holders ofthe Instruments is maintained outside the PRC and the issuance and the sale of the Instruments ismade outside of the PRC.

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FATCA

Pursuant to certain provisions of the U.S. Internal Revenue Code of 1986, commonly known as

FATCA, a “foreign financial institution” may be required to withhold on certain payments it makes

(“foreign passthru payments”) to persons that fail to meet certain certification, reporting, or related

requirements. The Issuer may be a foreign financial institution for these purposes. A number of

jurisdictions (including the Cayman Islands and Hong Kong) have entered into, or have agreed in

substance to, intergovernmental agreements with the United States to implement FATCA (“IGAs”),

which modify the way in which FATCA applies in their jurisdictions. Certain aspects of the

application of the FATCA provisions and IGAs to instruments such as the Instruments, including

whether withholding would ever be required pursuant to FATCA or an IGA with respect to payments

on instruments such as the Instruments, are uncertain and may be subject to change. Even if

withholding would be required pursuant to FATCA or an IGA with respect to payments on instruments

such as the Instruments, such withholding would not apply prior to the date that is two years after

the date on which final regulations defining foreign passthru payments are published in the U.S.

Federal Register. Holders should consult their own tax advisors regarding how these rules may apply

to their investment in the Instruments.

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PRC REGULATIONS

This section is a high-level overview of the PRC legal system and a summary of the principal PRC

laws and regulations relevant to the issue of the Instruments by the Issuer. As this is a summary, it

does not contain a detailed analysis of PRC laws and regulations.

THE MEASURES FOR FINANCE LEASING ENTERPRISES

The Measures for Finance Leasing Enterprises (融資租賃企業監督管理辦法) (the “Measures for

Finance Leasing Enterprises”) was promulgated by MOFCOM on 18 September 2013 and became

effective on 1 October 2013 to strengthen regulation over both domestic and foreign-invested finance

leasing enterprises.

According to the Measures for Finance Leasing Enterprises, MOFCOM and the provincial-level

commerce authorities are in charge of the supervision and administration of finance leasing

companies. A finance leasing company shall, according to the requirements of MOFCOM, report the

relevant data in a timely and truthful manner through the National Finance Leasing Enterprise

Management Information System (全國融資租賃企業管理信息系統). Specifically, a finance leasing

company shall, within 15 working days after the end of each quarter, submit the statistics on and

summary of its operations in the preceding quarter, and prior to 30 April of each year, submit the

statistics on and summary of its operations in the preceding year as well as its financial and

accounting report (including the notes appended thereto) audited by an audit body for the preceding

year. In the event of a change of name, relocation to another region, increase or decrease of registered

capital, change of organizational form, adjustment of ownership structure or other changes, a finance

leasing company shall report to the competent provincial-level commerce authority in advance. A

foreign-invested finance leasing company that undergoes the said changes shall go through approval

and other procedures in compliance with relevant provisions. A finance leasing company shall, within

five working days after completing registration changes with the State Administration for Industry

and Commerce of the PRC or its delegated authority at the provincial, municipal or other local level,

log into the National Finance Leasing Enterprise Management Information System to modify the

relevant information.

The Measures for Finance Leasing Enterprises explicitly stipulate the business scope of a finance

leasing company. A finance leasing company may conduct its finance leasing activities by way of a

direct lease, sublease, leaseback, leveraged lease, entrusted lease and joint lease within the limits of

applicable laws, regulations and rules. A finance leasing company shall operate finance leasing and

other leasing businesses as its main business, and may engage in the purchase of leased properties,

disposal of residual value of leased properties, maintenance of leased properties, lease transaction

consultancy and guarantee services, assignment of accounts receivable to a third party institution,

receiving lease deposits and other businesses approved by the competent authority. A finance leasing

company shall not engage in deposit taking (吸收存款), lending (發放貸款), entrusted lending (受託發放貸款), and without the approval of the competent authority, shall not engage in inter-bank

borrowing.

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The Measures for Finance Leasing Enterprises also require the finance leasing companies to

strengthen their internal risk controls, to establish good systems for classifying at-risk assets, and to

adopt a credit appraisal system for the lessee, an ex post recovery and disposal system and a risk alert

mechanism. A finance leasing company shall also establish an affiliated transaction management

system, and exclude related parties from the voting or decision making process of affiliated

transactions. In the event of a purchase of equipment from an affiliated production enterprise, the

settlement price for such equipment shall not be evidently lower than the price offered by such

enterprise to any third party for such equipment or for equipment of the same batch. A finance leasing

company shall manage its assets under trust lease and assets under sublease separately and keep

separate accounts therefor. A finance leasing company shall strengthen the management of its major

lessees, limit the proportion of business with a single lessee and with lessees that are affiliates, and

pay attention to the prevention and diversification of operational risks.

The Measures for Finance Leasing Enterprises also contain regulatory provisions specifically on

sale-leaseback transactions. The subject matter of a sale-leaseback transaction shall be properties that

can give play to their economic functions and produce continuous economic benefits. A finance

leasing company shall not accept any property to which a lessee has no disposal rights, or on which

any mortgage has been created, or which has been sealed or seized by any judicial organs, or whose

ownership has any other defects as the subject matter of a sale-leaseback transaction. A finance

leasing company shall give adequate consideration to and objectively evaluate assets leased back, set

reasonable purchase prices for them in compliance with accounting principles, and shall not purchase

any asset at a price in excess of its value.

On 8 May 2018, the General Office of MOFCOM issued the 2018 Notice, according to which the

authority of rule-making on operation and regulation of finance leasing companies, factoring

companies and pawnshops shall be transferred to CBIRC. Although the competent authority has

changed, the relevant governing laws and regulations of the finance leasing industry are still in force

in the PRC.

The Interim Measures for the Supervision and Administration of Finance Leasing Companies (融資租賃公司監督管理暫行辦法) (the “The Interim Measures for Finance Leasing Enterprises”) was

promulgated by CBIRC on 26 May 2020 and became effective on 26 May 2020 to implement

regulatory responsibilities, standardised supervision and administration, guide compliant operations

of finance leasing companies, and promote standardised development of the finance leasing industry.

The Interim Measures for Finance Leasing Enterprises stipulate that the total amount of risk assets

of finance leasing companies shall not exceed eight times of their net assets.

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PRC CURRENCY CONTROLS

Renminbi is not a freely convertible currency. The remittance of Renminbi into and outside the PRC

is subject to control imposed under PRC law.

CURRENT ACCOUNT ITEMS

Under the PRC foreign exchange control regulations, current account item payments include

payments for imports and exports of goods and services, payments of income and current transfers

into and outside the PRC.

Prior to July 2009, all current account items were required to be settled in foreign currencies. Since

July 2009, the PRC has commenced a pilot scheme pursuant to which Renminbi may be used for

settlement of imports and exports of goods between approved pilot enterprises in five designated

cities in the PRC including Shanghai, Guangzhou, Dongguan, Shenzhen and Zhuhai and enterprises

in designated offshore jurisdictions including Hong Kong and Macau. In June 2010, July 2011 and

February 2012 respectively, the PRC government promulgated the Circular on Issues concerning the

Expansion of the Scope of the Pilot Programme of Renminbi Settlement of Cross-border Trades, the

Circular on Expanding the Regions of Cross-border Trade Renminbi Settlement and the Notice on

Matters Relevant to the Administration of Enterprises Engaged in Renminbi Settlement of Export

Trade in Goods (together, the “Circulars”) with regard to the expansion of designated cities and

offshore jurisdictions implementing the pilot Renminbi settlement scheme for cross-border trades.

Pursuant to these Circulars, (i) Renminbi settlement of imports and exports of goods and of services

and other current account items became permissible, (ii) the list of designated pilot districts were

expanded to cover all provinces and cities in the PRC, (iii) the restriction on designated offshore

districts has been lifted and (iv) any enterprise qualified for the export and import business is

permitted to use Renminbi as settlement currency for exports of goods, provided that the relevant

provincial government has submitted to PBOC and five other PRC authorities (the “Six Authorities”)

a list of key enterprises subject to supervision and the Six Authorities have verified and signed off

such list (the “Supervision List”).

Accordingly, offshore enterprises are entitled to use Renminbi to settle imports of goods and services

and other current account items between them. Renminbi remittance for exports of goods from the

PRC may only be effected by (a) enterprises with the foreign trading right and incorporated in a

province which has already submitted the Supervision List (for the avoidance of doubt, that PRC

enterprise does not necessarily need to be included in the Supervision List) or (b) enterprises that

have been approved as a pilot enterprise for using Renminbi for exports if the relevant province has

not submitted the Supervision List.

As new regulations, the Circulars will be subject to interpretation and application by the relevant PRC

authorities. Local authorities may adopt different practices in applying these circulars and impose

conditions for settlement of current account items.

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CAPITAL ACCOUNT ITEMS

Under PRC foreign exchange control regulations, capital account items include cross-border transfers

of capital, direct investments, securities investments, derivative products and loans. Capital account

payments are generally subject to approval of, and/or registration or filing with, the relevant PRC

authorities.

Until recently, settlement of capital account items, for example, the capital contribution of foreign

investors to foreign invested enterprises in the PRC, were generally required to be made in foreign

currencies. Under progressive reforms, foreign enterprises are now permitted use Renminbi to settle

all capital account items that can be settled in foreign currencies. Cross-border Renminbi payment

infrastructure and trading facilities are being improved. Approval, registration and filing

requirements specifically for capital account payments in Renminbi are being removed gradually.

PRC entities are also permitted to borrow Renminbi-denominated loans from foreign lenders (which

are referred to as “foreign debt”) and lend Renminbi-denominated loans to foreign borrowers (which

are referred to as “outbound loans”), as long as such PRC entities have the necessary quota, approval

or registration. PRC entities may also denominate security or guarantee arrangements in Renminbi

and make Renminbi payments thereunder to parties in the PRC as well as other jurisdictions (which

is referred to as “cross-border security”). Under current rules promulgated by SAFE and PBOC,

foreign debts borrowed, outbound loans extended, and the cross-border security provided by a PRC

onshore entity (including a financial institution) in Renminbi shall, in principle, be regulated under

the current PRC foreign debt, outbound loan and cross-border security regimes applicable to foreign

currencies. After piloting in the free trade zones, PBOC and SAFE launched a nation-wide system of

macro-prudential management on cross-border financing in 2016, which provides for a unified

regime for financings denominated in both foreign currencies and Renminbi.

Since September 2015, qualified multinational enterprise groups can extend Renminbi-denominated

loans to, or borrow Renminbi-denominated loans from, eligible offshore member entities within the

same group by leveraging the cash pooling arrangements. The Renminbi funds will be placed in a

special deposit account and may not be used to invest in stocks, financial derivatives, or non-self-use

real estate assets, or purchase wealth management products or extend loans to enterprises outside the

group.

The securities markets, specifically the Renminbi Qualified Foreign Institutional Investor (“RQFII”)

regime and the China Interbank Bond Market (“CIBM”), have been further liberalised for foreign

investors. PBOC has relaxed the quota control for RQFII, and has also expanded the list of eligible

foreign investors in CIBM, removed quota restriction, and granted more flexibility for the settlement

agents to provide the relevant institutions with more trading facilities (for example, in relation to

derivatives for hedging foreign exchange risk).

Interbank foreign exchange market is also opening-up. In January 2016, the China Foreign Exchange

Trade System (the “CFETS”) set forth qualifications, application materials and procedure for foreign

participating banks (which needs to have a relatively large scale of Renminbi purchase and sale

business and international influence) to access the inter-bank foreign exchange market.

– 272 –

Recent reforms introduced were aimed at controlling the remittance of Renminbi for payment of

transactions categorised as capital account items. There can be no assurance that the PRC government

will continue to gradually liberalise the control over Renminbi payments of capital account item

transactions in the future. The relevant regulations are relatively new and will be subject to

interpretation and application by the relevant PRC authorities. Further, if any new PRC regulations

are promulgated in the future which have the effect of permitting or restricting (as the case may be)

the remittance of Renminbi for payment of transactions categorised as capital account items, then

such remittances will need to be made subject to the specific requirements or restrictions set out in

such rules.

– 273 –

SUBSCRIPTION AND SALE

The Dealers have, in an amended and restated dealer agreement dated 20 September 2021, as

amended and/or supplemented from time to time (the “Dealer Agreement”), agreed with the Issuer

and the Guarantor a basis on which they or any of them may from time to time agree to subscribe

Instruments. Any such agreement will extend to those matters stated under “Terms and Conditions of

the Notes” and “Terms and Conditions of the Perpetual Capital Securities”. Under the terms of the

Dealer Agreement, the Issuer (failing whom, the Guarantor) will pay each relevant Dealer a

commission (if any) agreed between the Issuer, the Guarantor and the relevant Dealer in respect of

Instruments subscribed by it. The Issuer, failing whom the Guarantor, has agreed to reimburse the

Arrangers for certain of their expenses properly incurred in connection with the establishment of the

Programme and any future update of the Programme and the Dealers for certain of their activities in

connection with the Programme.

Each of the Issuer and the Guarantor has agreed to indemnify the Dealers against certain liabilities

in connection with the offer and sale of the Instruments. The Dealer Agreement entitles the Dealers

to terminate any agreement that they make to subscribe Instruments in certain circumstances prior to

payment for such Instruments being made to the Issuer.

The Dealers and certain of their affiliates may have performed certain investment banking and

advisory services for each of the Issuer and the Guarantor and/or their affiliates from time to time for

which they have received customary fees and expenses and may, from time to time, engage in

transactions with and perform services for the Issuer and/or its affiliates in the ordinary course of

their business.

In connection with each Tranche of Instruments issued under the Programme, the Dealers or certain

of their affiliates may purchase Instruments and be allocated Instruments for asset management

and/or proprietary purposes but not with a view to distribution. Further, the Dealers or their

respective affiliates may purchase Instruments for its or their own account and enter into transactions,

including credit derivatives, such as asset swaps, repackaging and credit default swaps relating to

such Instruments and/or other securities of the Issuer and the Guarantor or their subsidiaries or

affiliates at the same time as the offer and sale of each Tranche of Instruments or in secondary market

transactions. Such transactions would be carried out as bilateral trades with selected counterparties

and separately from any existing sale or resale of the Tranche of Instruments to which a particular

Pricing Supplement relates (notwithstanding that such selected counterparties may also be purchasers

of such Tranche of Instruments).

SELLING RESTRICTIONS

United States of America

The Instruments and the Guarantee have not been and will not be registered under the Securities Act,

and may not be offered or sold within the United States or to, or for the account or benefit of, U.S.

persons except in accordance with Regulation S or pursuant to an exemption from the registration

requirements of the Securities Act. The Instruments are being offered and sold outside the United

States to non-U.S. persons in reliance on Regulation S. Each Dealer has represented and agreed, and

each further Dealer appointed under the Programme will be required to represent and agree, that it

has offered or sold any Instruments and the Guarantee, and will offer or sell any Instruments and the

– 274 –

Guarantee (i) as part of their distribution at any time and (ii) otherwise until 40 days after the

completion of the distribution of an identifiable tranche of which such Instruments are a part, as

determined and certified as provided below, only in accordance with Rule 903 of Regulation S. Terms

used in this paragraph have the meanings given to them by Regulation S. Accordingly, neither it, its

affiliates nor any persons acting on its or their behalf have engaged or will engage in any directed

selling efforts with respect to the Instruments and the Guarantee, and it and they have complied and

shall comply with the offering restrictions requirement of Regulation S. Each Dealer who has

subscribed for Instruments of a Tranche (or in the case of a sale of a Tranche of Instruments issued

to or through more than one Dealer, each of such Dealers as to the Instruments of such Tranche

purchased by or through it or, in the case of a syndicated issue, the relevant lead manager) shall

determine and certify to the Principal Paying Agent the completion of the distribution of the

Instruments of such Tranche. Each Dealer and its affiliates has also agreed, and each further Dealer

appointed under the Programme will be required to agree, that, at or prior to confirmation of sale of

Instruments and the Guarantee, it will have sent to each distributor, dealer or person receiving a

selling concession, fee or other remuneration that purchases Instruments and the Guarantee from it

during the distribution compliance period a confirmation or notice to substantially the following

effect:

“The Securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the

“Securities Act”) and may not be offered or sold within the United States or to, or for the account

or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days

after the completion of the distribution of an identifiable tranche of Instruments of which such

Instruments are a part, except in either case in accordance with Regulation S under the Securities Act.

Terms used above have the meanings given to them by Regulation S under the Securities Act.”

Until 40 days after the commencement of the offering of any identifiable tranche of Instruments and

the Guarantee, an offer or sale of such Instruments and the Guarantee within the United States by any

dealer (whether or not participating in the offering) may violate the registration requirements of the

Securities Act if such offer or sale is made otherwise than in accordance with an available exemption

from registration under the Securities Act.

Each issuance of Instruments which are also Dual Currency Instruments shall be subject to such

additional U.S. selling restrictions as the Issuer and the relevant Dealer may agree as a term of the

issuance and purchase of such Instruments, which additional selling restrictions shall be set out in the

relevant Pricing Supplement.

Each issuance of index-, commodity- or currency-linked Instruments shall be subject to such

additional U.S. selling restrictions as the relevant Dealer(s) shall agree with the Issuer as a term of

the issuance and purchase or, as the case may be, subscription of such Instruments. Each relevant

Dealer has agreed that it shall offer, sell and deliver such Instruments only in compliance with such

additional U.S. selling restrictions.

The Bearer Instruments are subject to U.S. tax law requirements and may not be offered, sold or

delivered within the United States or its possessions, or, where the Pricing Supplement relating to a

Tranche of Bearer Instruments specifies that TEFRA D rules are applicable (“TEFRA DInstruments”), to a United States person, except in certain transactions permitted by U.S. tax

regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal

Revenue Code of 1986, as amended, and regulations thereunder. Each Dealer has agreed that it will

– 275 –

not offer, sell or deliver any Bearer Instruments within the United States or, in the case of TEFRA DInstruments, to U.S. persons, except as permitted by the Dealer Agreement. The relevant PricingSupplement will identify whether TEFRA C rules or TEFRA D rules apply or whether TEFRA is notapplicable.

This Offering Circular has been prepared by the Issuer for use in connection with the offer and sale

of the Instruments outside the United States. The Issuer, the Guarantor and the Dealers reserve the

right to reject any offer to purchase the Instruments, in whole or in part, for any reason. This Offering

Circular does not constitute an offer to any person in the United States. Distribution of this Offering

Circular by any non-U.S. person outside the United States to any U.S. person or to any other person

within the United States, is unauthorised and any disclosure without the prior written consent of the

Issuer and the Guarantor of any of its contents to any such U.S. person or other person within the

United States, is prohibited.

European Economic Area

Prohibition of Sales to EEA Retail Investors

Unless the relevant Pricing Supplement in respect of any Instruments specifies the “Prohibition of

Sales to EEA Retail Investors” as “Not Applicable”, each Dealer has represented and agreed, and each

further Dealer appointed under the Programme will be required to represent and agree, that it has not

offered, sold or otherwise made available and will not offer, sell or otherwise make available any

Instruments which are the subject of the offering contemplated by this Offering Circular as completed

by the relevant Pricing Supplement in relation thereto to any retail investor in the European Economic

Area.

For the purposes of this section:

(i) the expression “retail investor” means a person who is one (or more) of the following:

(a) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended,

“MiFID II”); or

(b) a customer within the meaning of Directive (EU) 2016/97 (the “Insurance DistributionDirective”), where that customer would not qualify as a professional client as defined in

point (10) of Article 4(1) of MiFID II; or

(c) not a qualified investor as defined in Regulation (EU) 2017/1129 (the “ProspectusRegulation”); and

(ii) the expression an “offer” includes the communication in any form and by any means of

sufficient information on the terms of the offer and the Instruments to be offered so as to enable

an investor to decide to purchase or subscribe for the Instruments.

Public Offer Selling Restrictions under the Prospectus Regulation

If the Pricing Supplement in respect of any Instruments specifies the “Prohibition of Sales to EEA

Retail Investors” as “Not Applicable”, in relation to each Member State of the European Economic

Area (each, a “Relevant State”), each Dealer has represented and agreed, and each further Dealer

– 276 –

appointed under the Programme will be required to represent and agree, that it has not made and will

not make an offer of Instruments which are the subject of the offering contemplated by this Offering

Circular as completed by the relevant Pricing Supplement in relation thereto to the public in that

Relevant State except that it may make an offer of such Instruments to the public in that Relevant

State:

(i) if the Pricing Supplement in relation to the Instruments specify that an offer of those

Instruments may be made other than pursuant to Article 1(4) of the Prospectus Regulation in that

Relevant State (a “Non-exempt Offer”), following the date of publication of an offering

circular in relation to such Instruments which has been approved by the competent authority in

that Relevant State or, where appropriate, approved in another Relevant State and notified to the

competent authority in that Relevant State, provided that any such offering circular has

subsequently been completed by the Pricing Supplement contemplating such Non-exempt Offer,

in accordance with the Prospectus Regulation, in the period beginning and ending on the dates

specified in such prospectus or Pricing Supplement, as applicable, and the Issuer has consented

in writing to its use for the purpose of that Non-exempt Offer;

(ii) at any time to any legal entity which is a qualified investor as defined in the Prospectus

Regulation;

(iii) at any time to fewer than 150 natural or legal persons (other than qualified investors as defined

in the Prospectus Regulation), subject to obtaining the prior consent of the relevant Dealer or

Dealers nominated by the Issuer for any such offer; or

(iv) at any time in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of Instruments referred to in (ii) to (iv) above shall require the Issuer or

any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement

a prospectus pursuant to Article 23 of the Prospectus Regulation.

For the purposes of this section, the expression an “offer of Instruments to the public” in relation

to any Instruments in any Relevant State means the communication in any form and by any means

of sufficient information on the terms of the offer and the Instruments to be offered so as to enable

an investor to decide to purchase or subscribe for the Instruments; and the expression “ProspectusRegulation” means Regulation (EU) 2017/1129.

United Kingdom

Prohibition of Sales to UK Retail Investors

Unless the relevant Pricing Supplement in respect of any Instruments specifies the “Prohibition of

Sales to EEA and UK Retail Investors” as “Not Applicable”, each Dealer has represented and agreed,

and each further Dealer appointed under the Programme will be required to represent and agree, that

it has not offered, sold or otherwise made available and will not offer, sell or otherwise make

available any Instruments which are the subject of the offering contemplated by this Offering Circular

as completed by the relevant Pricing Supplement in relation thereto to any retail investor in the

United Kingdom.

– 277 –

For the purposes of this section:

(i) the expression “retail investor” means a person who is one (or more) of the following:

(a) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as itforms part of domestic law by virtue of the European Union (Withdrawal) Act 2018(EUWA); or

(b) a customer within the meaning of the provisions of the FSMA and any rules or regulationsmade under the FSMA to implement Directive (EU) 2016/97, where that customer wouldnot qualify as a professional client as defined in point (8) of Article 2(1) of Regulation(EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or

(c) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129 as it formspart of domestic law by virtue of the EUWA; and

(ii) the expression an “offer” includes the communication in any form and by any means ofsufficient information on the terms of the offer and the Instruments to be offered so as to enablean investor to decide to purchase or subscribe for the Instruments.

If the Pricing Supplement in respect of any Instruments specifies the “Prohibition of Sales to UKRetail Investors” as “Not Applicable”, each Dealer has represented and agreed, and each furtherDealer appointed under the Programme will be required to represent and agree, that it has not madeand will not make an offer of Instruments which are the subject of the offering contemplated by thisOffering Circular as completed by the Pricing Supplement in relation thereto to the public in theUnited Kingdom except that it may make an offer of such Instruments to the public in the UnitedKingdom:

(i) if the Pricing Supplement in relation to the Instruments specify that an offer of thoseInstruments may be made other than pursuant to Section 86 of the FSMA (a “Public Offer”),following the date of publication of an offering circular in relation to such Instruments whicheither (i) has been approved by the Financial Conduct Authority, or (ii) is to be treated as if ithad been approved by the Financial Conduct Authority in accordance with the transitionalprovision in Regulation 74 of the Prospectus (Amendment etc.) (EU Exit) Regulations 2019,provided that any such offering circular has subsequently been completed by final termscontemplating such Public Offer, in the period beginning and ending on the dates specified insuch prospectus or final terms, as applicable, and the relevant Issuer has consented in writingto its use for the purpose of that Public Offer;

(ii) at any time to any legal entity which is a qualified investor as defined in Article 2 of the UKProspectus Regulation;

(iii) at any time to fewer than 150 persons (other than qualified investors as defined in Article 2 ofthe UK Prospectus Regulation) in the United Kingdom subject to obtaining the prior consent ofthe relevant Dealer or Dealers nominated by the relevant Issuer for any such offer; or

(iv) at any time in any other circumstances falling within Section 86 of the FSMA,

provided that no such offer of Instruments referred to in (ii) to (iv) above shall require the relevantIssuer or any Dealer to publish a prospectus pursuant to Section 85 of the FSMA or supplement aprospectus pursuant to Article 23 of the UK Prospectus Regulation.

– 278 –

For the purposes of this provision, the expression “offer of Instruments to the public” in relation

to any Instruments means the communication in any form and by any means of sufficient information

on the terms of the offer and the Instruments to be offered so as to enable an investor to decide to

purchase or subscribe the Instruments and the expression “UK Prospectus Regulation” means

Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the EUWA.

Other UK Regulatory Restrictions

Each Dealer has represented, warranted and agreed, and each further Dealer appointed under the

Programme will be required to represent, warrant and agree, that:

(i) in relation to any Instruments which have a maturity of less than one year, (i) it is a person

whose ordinary activities involve it in acquiring, holding, managing or disposing of investments

(as principal or agent) for the purposes of its business and (ii) it has not offered or sold and will

not offer or sell any Instruments other than to persons whose ordinary activities involve them

in acquiring, holding, managing or disposing of investments (as principal or as agent) for the

purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or

dispose of investments (as principal or agent) for the purposes of their businesses where the

issue of the Instruments would otherwise constitute a contravention of Section 19 of the FSMA

by the Issuer;

(ii) it has only communicated or caused to be communicated and will only communicate or cause

to be communicated an invitation or inducement to engage in investment activity (within the

meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any

Instruments in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer

or the Guarantor; and

(iii) it has complied and will comply with all applicable provisions of the FSMA with respect to

anything done by it in relation to any Instruments in, from or otherwise involving the United

Kingdom.

Hong Kong

Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will

be required to represent and agree, that:

(i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document,

any Instruments except for Instruments which are a “structured product” as defined in the

Securities and Futures Ordinance (Cap. 571) of Hong Kong (the “SFO”) other than (i) to

“professional investors” as defined in the SFO and any rules made under the SFO; or (ii) in other

circumstances which do not result in the document being a “prospectus” as defined in the

Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong (the

“C(WUMP)O”) or which do not constitute an offer to the public within the meaning of the

C(WUMP)O; and

(ii) it has not issued or had in its possession for the purposes of issue, and will not issue or have

in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any

advertisement, invitation or document relating to any Instruments, which is directed at, or the

– 279 –

contents of which are likely to be accessed or read by, the public of Hong Kong (except if

permitted to do so under the securities laws of Hong Kong) other than with respect to

Instruments which are or are intended to be disposed of only to persons outside Hong Kong or

only to “professional investors” as defined in the SFO and any rules made under the SFO.

Singapore

Each Dealer has acknowledged, and each further Dealer appointed under the Programme will be

required to acknowledge, that this Offering Circular has not been registered as a prospectus with the

Monetary Authority of Singapore. Accordingly, each Dealer has represented, warranted and agreed,

and each further Dealer appointed under the Programme will be required to represent, warrant and

agree, that it has not offered or sold any Instruments or caused the Instruments to be made the subject

of an invitation for subscription or purchase and will not offer or sell any Instruments or cause the

Instruments to be made the subject of an invitation for subscription or purchase, and has not

circulated or distributed, nor will it circulate or distribute, this Offering Circular, any pricing

supplement or any other document or material in connection with the offer or sale, or invitation for

subscription or purchase, of the Instruments, whether directly or indirectly, to any person in

Singapore other than (i) to an institutional investor (as defined in Section 4A of the SFA) pursuant

to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant

to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in

accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and

in accordance with the conditions of, any other applicable provision of the SFA.

Where Instruments are subscribed or purchased under Section 275 of the SFA by a relevant person

which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole

business of which is to hold investments and the entire share capital of which is owned by one

or more individuals, each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold

investments and each beneficiary of the trust is an individual who is an accredited investor,

securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA)

of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall

not be transferred within six months after that corporation or that trust has acquired the Instruments

pursuant to an offer made under Section 275 of the SFA except:

(i) to an institutional investor or to a relevant person, or to any person arising from an offer referred

to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

(ii) where no consideration is or will be given for the transfer;

(iii) where the transfer is by operation of law;

(iv) as specified in Section 276(7) of the SFA; or

(v) as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities

and Securities-based Derivatives Contracts) Regulations 2018.

– 280 –

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

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

determined, and hereby notifies all relevant persons that the Instruments are prescribed capital

markets products and are Excluded Investment Products.

PRC

Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will

be required to represent and agree, that it has not offered or sold and will not offer or sell any of the

Instruments in the PRC (for such purposes, not including Hong Kong, the Macau Special

Administrative Region of the People’s Republic of China or Taiwan) or to residents of the PRC,

except as permitted by all applicable laws and regulations of the PRC.

Japan

The Instruments have not been and will not be registered under the Financial Instruments and

Exchange Act of Japan (Act No. 25 of 1948, as amended, the “Financial Instruments and ExchangeAct”). Accordingly, each Dealer has represented and agreed that it has not, directly or indirectly,

offered or sold and will not, directly or indirectly, offer or sell any Instruments in Japan or to, or for

the benefit of, any resident of Japan (which term as used herein means any person resident in Japan,

including any corporation or other entity organised under the laws of Japan) or to others for

re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan

except pursuant to an exemption from the registration requirements of, and otherwise in compliance

with, the Financial Instruments and Exchange Act and any other relevant laws and regulations of

Japan.

Taiwan

Each Dealer has represented, warranted and agreed that it has not offered, sold or delivered, and will

not offer, sell or deliver, at any time, directly or indirectly, any Instruments acquired by it as part of

the offering in Taiwan or to, or for the account or benefit of, any resident of Taiwan, unless otherwise

permitted by the laws and regulations of Taiwan.

The Cayman Islands

Each Dealer has represented, warranted and agreed, and each further Dealer appointed under the

Programme will be required to represent, warrant and agree, that it has not made and will not make

any invitation to the public in the Cayman Islands or a natural person who is a Cayman Islands

resident or citizen to offer or sell the Instruments and the Instruments are not being offered or sold

and may not be offered or sold, directly or indirectly, in the Cayman Islands, except as otherwise

permitted by Cayman Islands law.

General

Each Dealer has agreed, and each further Dealer appointed under the Programme will be required to

agree, that it will (to the best of its knowledge and belief) comply in all material respect with all

applicable securities laws, regulations and directives in each jurisdiction in which it purchases,

offers, sells or delivers Instruments or has in its possession or distributes this Offering Circular, any

other offering material or any Pricing Supplement, in all cases at its own expense.

– 281 –

Neither the Issuer, the Guarantor, the Trustee nor any of the Dealers represents that Instruments may

at any time lawfully be sold in compliance with any applicable registration or other requirements in

any jurisdiction, or pursuant to any exemption available thereunder, or assumes any responsibility for

facilitating any such sale. With regard to each Tranche, the relevant Dealer(s) will be required to

comply with any additional restrictions agreed between the Issuer, the Guarantor and the relevant

Dealer(s) and set out in the relevant Pricing Supplement.

– 282 –

DESCRIPTION OF CERTAIN DIFFERENCESBETWEEN PRC GAAP AND IFRS

The consolidated financial statements of the Guarantor included in this Offering Circular have been

prepared and presented in accordance with PRC GAAP. PRC GAAP is substantially in line with IFRS,

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

following is a general summary of certain differences between PRC GAAP and IFRS on recognition

and presentation as applicable to the Guarantor. Since the summary is not meant to be exhaustive,

there can be no assurance regarding the completeness of the financial information and related

footnote disclosure between PRC GAAP and IFRS and no attempt has been made to quantify such

differences. Neither the Issuer nor the Guarantor has prepared a complete reconciliation of the

consolidated financial information and related footnote disclosure between PRC GAAP and IFRS or

has quantified such differences. Had any such quantification or reconciliation been undertaken by the

Issuer or the Guarantor, other potentially significant accounting and disclosure differences may have

been required that are not identified below. In addition, no attempt has been made to identify possible

future differences between PRC GAAP and IFRS as a result of prescribed changes in accounting

standards. Regulatory bodies that promulgate PRC GAAP and IFRS have significant ongoing projects

that could affect future comparisons or events that may occur in the future.

Accordingly, there can be no assurance that the following summary of differences between PRC

GAAP and IFRS is complete. In making an investment decision, each investor must rely upon its own

examination of the Guarantor, the terms of the offering and other disclosure contained herein. Each

investor should consult its own professional advisers for an understanding of the differences between

PRC GAAP and IFRS and/or between PRC GAAP and other generally accepted accounting

principles, and how those differences might affect the financial information contained herein.

Reversal of an Impairment Loss

Under PRC GAAP, once an impairment loss is recognised for a long term asset (including fixed

assets, intangible assets and goodwill, etc.), it shall not be reversed in any subsequent period. Under

IFRS, an impairment loss recognised in prior periods for an asset other than goodwill could be

reversed if there has been a change in the estimates used to determine the asset’s recoverable amount

since the last impairment loss was recognised.

Related Party Disclosures

Under PRC GAAP, state owned enterprises are not considered as related parties only because they are

controlled by the state; therefore, such transactions are not required to be disclosed as related party

transactions. IFRS however provides for a partial exemption so differences are minor.

– 283 –

GENERAL INFORMATION

Each of the Issuer and the Guarantor has obtained all necessary consents, approvals and

authorisations in connection with the establishment of the Programme, the future update of the

Programme and the issue of the Instruments thereunder. The establishment of the Programme and the

issue of the Instruments thereunder was authorised by the resolutions of the board of directors of the

Issuer dated 28 September 2018. The giving and performance of the Guarantee was authorised by the

resolutions of the board of directors of the Guarantor dated 11 June 2021 and the resolutions of

shareholders’ meeting of the Guarantor dated 11 June 2021. The update of the Programme was

authorised by the minutes of the meeting of the board of directors of the Issuer dated 15 September

2021, the resolutions of the board of directors of the Guarantor dated 11 June 2021 and the

shareholders’ resolutions of the Guarantor dated 11 June 2021. PRC counsel to the Issuer, the

Guarantor and the Dealers have advised that no approvals or consents are required from any

regulatory authorities or other relevant authorities in the PRC for the Issuer and the Guarantor to

enter into the Trust Deed and the Guarantor to enter into the Deed of Guarantee.

LITIGATION

Except as otherwise disclosed in this Offering Circular, as at 30 June 2021, none of the Guarantor or

its subsidiaries was involved in any litigation or arbitration proceedings which could have a material

adverse effect on its business, financial condition and results of operations nor is the Guarantor aware

of any such litigation or proceedings pending or threatened against it or any of their respective

subsidiaries which is material in the context of the offering of the Instruments.

NO MATERIAL ADVERSE CHANGE

Except as otherwise disclosed in this Offering Circular, there has been no material adverse change,

nor any development or event involving a prospective material adverse change, in or affecting the

general affairs, financial condition, results of operations or prospects of the Issuer and the Guarantor

and any of its subsidiaries since 30 June 2021.

DOCUMENTS AVAILABLE

For so long as Instruments may be issued pursuant to this Offering Circular, copies of the following

documents will be available (following written request and satisfactory proof of holding and

identity), at all reasonable times during usual business hours on any weekday (Saturdays, Sundays

and public holidays excepted), for inspection at the principal place of business of the Trustee, being

at the date of this Offering Circular at 60/F, International Commerce Centre, 1 Austin Road West,

Kowloon, Hong Kong:

(i) the trust deed (the “Trust Deed”) (which includes the form of the Deed of Guarantee, the Global

Instruments, the Global Certificates, the Instruments in definitive form, the Coupons, the

Receipts and the Talons);

(ii) the agency agreement (the “Agency Agreement”);

– 284 –

(iii) (subject to receipt by the Trustee from the Issuer of the same) each Pricing Supplement (save

that a Pricing Supplement related to an unlisted Series of Instruments will only be available for

inspection by a holder of any such Instruments and such holder must produce evidence

satisfactory to the Issuer or the Trustee as to its holding of Instruments and identity); and

(iv) (subject to receipt by the Trustee from the Issuer of the same) a copy of this Offering Circular

together with any supplement to this Offering Circular and any other documents incorporated

herein or therein referenced.

CLEARING OF THE INSTRUMENTS

The Legal Entity Identifier of the Issuer is 2138001423MK8G3BNM68. The Instruments may be

accepted for clearance through Euroclear, Clearstream and the CMU. The appropriate ISIN and

common code or CMU Instrument Number in relation to the Instruments of each Tranche will be

specified in the relevant Pricing Supplement. If the Instruments are to be cleared through any

additional or alternative Clearing System, the appropriate information will be specified in the

relevant Pricing Supplement.

FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements, which are included elsewhere in this Offering

Circular, have been audited by ZSZH. The Reviewed Consolidated Interim Financial Statements,

which are included elsewhere in this Offering Circular, have been reviewed by Dahua. Such financial

statements of the Guarantor were prepared and presented in accordance with PRC GAAP. The

Guarantor has not prepared the Audited Consolidated Financial Statements or the Reviewed

Consolidated Interim Financial Statements in accordance with IFRS.

LISTING OF INSTRUMENTS

Application has been made to the Hong Kong Stock Exchange for the listing of the Programme under

which Instruments may be issued during the 12-month period after the date of this Offering Circular

on the Hong Kong Stock Exchange by way of debt issues to Professional Investors only. Separate

application may be made for the listing of the Instruments on the Hong Kong Stock Exchange.

The issue price of Instruments listed on the Hong Kong Stock Exchange will be expressed as a

percentage of their nominal amount. Transactions will normally be effected for settlement in the

relevant Specified Currency and for delivery by the end of the second trading day after the date of

the transaction. It is expected that dealings will, if permission is granted to deal in and for the listing

of such Instruments, commence on or about the next business day following the date of listing of the

relevant Instruments. Instruments to be listed on the Hong Kong Stock Exchange are required to be

traded with a board lot size of at least HK$500,000 (or equivalent in other currencies).

– 285 –

INDEX TO FINANCIAL STATEMENTS

Page

The Audited Financial Statements of the Guarantor as at and

for the year ended 31 December 2019

Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2

Consolidated and the Company Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5

Consolidated and the Company Income Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7

Consolidated and the Company Cash Flow Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8

Consolidated Statement of Changes in Owners’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9

Company Statement of Changes in Owners’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-11

The Audited Financial Statements of the Guarantor as at and

for the year ended 31 December 2020

Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-137

Consolidated and the Company Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-140

Consolidated and the Company Income Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-142

Consolidated and the Company Cash Flow Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-143

Consolidated Statement of Changes in Owners’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-144

Company Statement of Changes in Owners’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-145

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-146

The Reviewed but Unaudited Financial Statements of the Guarantor as at and

for the six months ended 30 June 2021

Independent Review Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-265

Consolidated and Company Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-267

Consolidated and Company Income Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-269

Consolidated and Company Cash Flow Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-270

Consolidated Statements of Changes in Owners’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . F-271

Company Statements of Changes in Owners’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-272

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-273

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ISSUER GUARANTOR

Soar Wise LimitedCricket Square, Hutchins DrivePO Box 2681, Grand Cayman

KY1-1111, Cayman Islands

AVIC International Leasing Co., Ltd.17-18/F., No. 212, Jiangning Rd.

Jing’an DistrictShanghai, 200041, China

TRUSTEE PRINCIPAL PAYING AGENT,REGISTRAR AND TRANSFER AGENT

CMU LODGING ANDPAYING AGENT

DB Trustees(Hong Kong) Limited

60/F, International CommerceCentre

1 Austin Road West,Kowloon

Hong Kong

Deutsche BankAktiengesellschaft

Hong Kong Branch60/F, International CommerceCentre 1 Austin Road West,

KowloonHong Kong

Deutsche BankAktiengesellschaft

Hong Kong Branch60/F, International Commerce

Centre1 Austin Road West,Kowloon Hong Kong

ARRANGERS AND DEALERS

Agricultural Bankof China Limited

Hong Kong Branch5/F, AgriculturalBank of China

Tower50 Connaught RoadCentral Hong Kong

Bank of ChinaLimited

7th Floor, Bank ofChina Tower

1 Garden RoadHong Kong

BNP Paribas63/F, Two

InternationalFinance Centre

8 Finance StreetCentral Hong Kong

BOCI Asia Limited26/F, Bank ofChina Tower

1 Garden RoadCentral, Hong Kong

DBS Bank Ltd.10th Floor,The Center

99 Queen’s RoadCentral

Central Hong Kong

Haitong InternationalSecurities Company

Limited22/F, Li Po Chun

Chambers189 Des Voeux RoadCentral Hong Kong

ICBC InternationalSecurities Limited37/F, ICBC Tower

3 Garden RoadHong Kong

Industrial andCommercial

Bank of China (Asia)Limited

28/F ICBC TowerGarden Road

Central Hong Kong

Shanghai PudongDevelopment

Bank Co., Ltd.,Hong Kong Branch

30/F., SPD Bank Tower,One Hennessy,

1 Hennessy Road,Hong Kong

LEGAL ADVISERS TO THE ISSUER AND THE GUARANTOR

As to English law As to Cayman Islands law As to PRC law

Deacons5th Floor, Alexandra House

18 Chater RoadCentral, Hong Kong

Maples and Calder (Singapore) LLP1 Raffles Place

#36-01 One Raffles PlaceSingapore 048616

Dentons15/16 Floor, Shanghai Tower

501 Yincheng Road (M)Shanghai, PRC

LEGAL ADVISERS TO THE ARRANGERS AND DEALERS

As to English law As to PRC law

Linklaters11th Floor, Alexandra House

18 Chater RoadCentral, Hong Kong

King & Wood Mallesons25th Floor

Guangzhou CTF Finance CentreNo. 6 Zhujiang East Road

Zhujiang New TownTianhe District, GuangzhouGuangdong 510623, PRC

LEGAL ADVISERS TO THE TRUSTEE

As to English law

Linklaters11th Floor, Alexandra House

18 Chater RoadCentral, Hong Kong

INDEPENDENT AUDITORS OF THE GUARANTOR

For the years ended 31 December 2018, 2019 and 2020Zhongshenzhonghuan Certified Public

Accountants (SGP)(formerly known as Mazars Certified Public

Accountants (SGP))25F, Tower A, Pacific Century

No. 2 Gongti North RoadChaoyang District, Beijing 100027, PRC

For the six months ended 30 June 2021Dahua Certified Public Accountants

(Special General Partnership)Building 10, Shou Hui Plaza

78 West Fourth Ring Middle RoadFengtai District, Beijing

APPENDIX 2 – PRICING SUPPLEMENT DATED 28 SEPTEMBER 2021

EXECUTION VERSION

Pricing Supplement

Singapore SFA Product Classification: In connection with Section 309B of the Securities and Futures Act (Chapter 289) of Singapore (the “SFA”) and the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the “CMP Regulations 2018”), the Issuer has determined, and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA), that the Notes are prescribed capital markets products (as defined in the CMP Regulations 2018) and are Excluded Investment Products (as defined in the MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendation on Investment Products).

This document is for distribution to professional investors (as defined in Chapter 37 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) (“Professional Investors”) only.

Notice to Hong Kong investors: The Issuer and the Guarantor confirm that the Notes are intended for purchase by Professional Investors only and will be listed on the Hong Kong Stock Exchange on that basis. Accordingly, the Issuer and the Guarantor confirm that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

The Hong Kong Stock Exchange has not reviewed the contents of this document, other than to ensure that the prescribed form disclaimer and responsibility statements, and a statement limiting distribution of this document to Professional Investors only have been reproduced in this document. Listing of the Programme and the Notes on the Hong Kong Stock Exchange is not to be taken as an indication of the commercial merits or credit quality of the Programme, the Notes or the Issuer or the Guarantor or the Group or quality of disclosure in this document. Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.

This document, together with the Offering Circular (as defined below), includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Issuer, the Guarantor and the Group. The Issuer and the Guarantor accept full responsibility for the accuracy of the information contained in this document and each confirms, having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

WARNING: The contents of this Pricing Supplement have not been reviewed by any regulatory authority of any jurisdiction. You are advised to exercise caution in relation to the offering of the Notes. If you are in any doubt about any of the contents of this Pricing Supplement, you should obtain independent professional advice. 28 September 2021

SOAR WISE LIMITED

Issue of U.S.$300,000,000 1.65 per cent. Guaranteed Notes due 2024 (the “Notes”)

Guaranteed by AVIC International Leasing Co., Ltd. under its U.S.$3,500,000,000

Guaranteed Medium Term Note and Perpetual Capital Securities Programme

This document constitutes the Pricing Supplement relating to the issue of Notes described herein.

Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions of the Notes (the “Conditions”) set forth in the Offering Circular dated 20 September 2021 (the “Offering Circular”). This Pricing Supplement contains the final terms of the Notes and must be read in conjunction with such Offering Circular. Full information on the Issuer, the Guarantor and the offer of the Notes is only available on the basis of the combination of this Pricing Supplement and the Offering Circular.

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1 (i) Issuer: Soar Wise Limited

(ii) Guarantor: AVIC International Leasing Co., Ltd.

2 (i) Series Number: 007

(ii) Tranche Number: 1

(iii) Date on which the Notes become fungible:

Not Applicable

3 Specified Currency or Currencies: United States dollars (“U.S.$”)

4 Aggregate Nominal Amount: U.S.$300,000,000

5 (i) Issue Price: 99.863 per cent. of the Aggregate Nominal Amount

(ii) Net proceeds: Approximately U.S.$298,600,000.00

6 (i) Specified Denominations: U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof

(ii) Calculation Amount: U.S.$1,000

7 (i) Issue Date: 8 October 2021

(ii) Interest Commencement Date: Issue Date

8 Maturity Date: 8 October 2024

9 Interest Basis: 1.65 per cent. Fixed Rate

(further particulars specified below)

10 Redemption/Payment Basis: Redemption at par

11 Change of Interest Basis or Redemption/Payment Basis:

Not Applicable

12 Put/Call Options: Change of Control Put Option

No Registration Put Option

(further particulars specified below)

13 Date of Board approval for issuance of Notes and Guarantee obtained:

15 September and 11 June 2021, respectively

14 Date of the NDRC Registration Certificate: 16 October 2020

15 Listing: The Stock Exchange of Hong Kong Limited

Expected effective listing date of the Notes: 11 October 2021

16 Method of distribution: Syndicated

Provisions Relating to Interest (if any) Payable

17 Fixed Rate Note Provisions Applicable

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(i) Rate of Interest: 1.65 per cent. per annum, payable semi-annually in arrear

(ii) Interest Payment Date(s): 8 April and 8 October in each year, commencing on 8 April 2022

(iii) Fixed Coupon Amount(s): U.S.$8.25 per Calculation Amount

(iv) Broken Amount(s): Not Applicable

(v) Day Count Fraction: 30/360

(vi) Determination Date(s): Not Applicable

(vii) Other terms relating to the method of calculating interest for Fixed Rate Notes:

None

18 Floating Rate Note Provisions Not Applicable

19 Zero Coupon Note Provisions: Not Applicable

20 Index Linked Interest Note Provisions Not Applicable

21 Dual Currency Interest Note Provisions Not Applicable

Provisions Relating to Redemption

22 Issuer Call: Not Applicable

23 Investor Put: Not Applicable

24 Change of Control Put: Applicable

At any time following the occurrence of a Change of Control, the holder of any Note will have the right, at such holder’s option, to require the Issuer to redeem all but not some only of that holder’s Notes on the CoC Put Settlement Date at 101 per cent. of their nominal amount, together with accrued interest up to but excluding the CoC Put Settlement Date.

(Please see Condition 6(d) for further details)

25 No Registration Put Applicable

At any time following the occurrence of a No Registration Event, the holder of any Note will have the right, at such holder’s option, to require the Issuer to redeem all but not some only of that holder’s Notes on the No Registration Put Settlement Date at 100 per cent. of their nominal amount, together with accrued interest up to but excluding such No Registration Put Settlement Date.

(Please see Condition 6(e) for further details)

(i) Registration Deadline The day falling 120 Registration Business Days after the Issue Date of the Notes.

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(ii) Registration Documents (i) a certificate in English substantially in the form scheduled to the Trust Deed signed by an Authorised Signatory of the Guarantor confirming the completion of the applicable registration or filing procedures in accordance with the relevant NDRC or SAFE requirements (as applicable) as specified on the Conditions; and

(ii) copies of the relevant documents evidencing the applicable registration or filing procedures in accordance with the relevant NDRC or SAFE requirements (as applicable), each certified in English by an Authorised Signatory of the Guarantor as being a true and complete copy of the original.

(Please see Condition 6(e) for further details)

26 Final Redemption Amount: U.S.$1,000 per Calculation Amount

27 Early Redemption Amount payable on redemption for taxation reasons or on event of default and/or the method of calculating the same:

U.S.$1,000 per Calculation Amount

General Provisions Applicable to the Notes

28 Form of Notes: Registered Notes:

Global Certificate exchangeable for Individual Note Certificates in the limited circumstances described in the Global Certificate

29 Additional Financial Centre(s) or other special provisions relating to Payment Dates:

Not Applicable

30 Talons for future Coupons or Receipts to be attached to Definitive Bearer Notes (and dates on which such Talons mature):

No

31 Details relating to Partly Paid Notes: amount of each payment comprising the Issue Price and date on which each payment is to be made and consequences of failure to pay, including any right of the Issuer to forfeit the Notes and interest due on late payment:

Not Applicable

32 Details relating to Instalment Notes:

(i) Instalment Amount(s): Not Applicable

(ii) Instalment Date(s): Not Applicable

33 Redenomination applicable: Redenomination not applicable

34 Consolidation provisions: Not Applicable

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35 Notification to PRC Authorities Provide to NDRC and SAFE the requisite information and documents within the prescribed timeframe in accordance with the NDRC Circular and the Cross-border Security Registration and/or any other applicable PRC laws and regulations.

(Please see Condition 4(d) and Condition 4(e) for further details)

36 Other terms or special conditions: Not Applicable

Distribution

37 (i) If syndicated, names and addresses of Managers / relevant Dealer and commitments:

Bank of China Limited 7/F Bank of China Tower 1 Garden Road Central Hong Kong Bank of Communications Co., Ltd. Hong Kong Branch 20 Pedder Street Central Hong Kong BOCI Asia Limited 26/F, Bank of China Tower 1 Garden Road Central Hong Kong BOCOM International Securities Limited 9/F, Man Yee Building 68 Des Voeux Road Central Hong Kong China Securities (International) Corporate Finance Company Limited 18/F, Two Exchange Square Central Hong Kong DBS Bank Ltd. 10/F, The Centre 99 Queen’s Road Central Hong Kong Guotai Junan Securities (Hong Kong) Limited 27/F, Low Block, Grand Millennium Plaza 181 Queen’s Road Central Hong Kong Haitong International Securities Company Limited 28/F, One International Finance Centre 1 Harbour View. Street

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Central, Hong Kong ICBC International Securities Limited 37/F ICBC Tower 3 Garden Road Central Hong Kong Industrial and Commercial Bank of China (Asia) Limited 28/F ICBC Tower 3 Garden Road Central Hong Kong

Industrial and Commercial Bank of China Limited, Singapore Branch 6 Raffles Quay #23-01 Singapore 048580

ABCI Capital Limited 11/F, Agricultural Bank of China Tower 50 Connaught Road Central Hong Kong CMBC Securities Company Limited 45/F One Exchange Square 8 Connaught Place Central Hong Kong

CNCB (Hong Kong) Capital Limited 2801, Lippo Centre Tower Two 89 Queensway Hong Kong Hua Xia Bank Co., Limited Hong Kong Branch 18/F, Two International Finance Centre 8 Finance Street Central Hong Kong Industrial Bank Co., Ltd. Hong Kong Branch 10-12/F, One International Finance Centre 1 Harbour View Street Central Hong Kong Luso International Banking Ltd. Avenida Dr. Mario Soares, No. 47 Macau Natixis 47, quai d’Austerlitz 75013 Paris

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Shanghai Pudong Development Bank Co., Ltd., Hong Kong Branch 30/F, SPD Bank Tower One Hennessy 1 Hennessy Road Hong Kong SMBC Nikko Securities (Hong Kong) Limited Room 607-614, 6/F, One International Finance Centre 1 Harbour View Street Central Hong Kong

(ii) Date of Subscription Agreement: 28 September 2021

(iii) Stabilisation Manager(s) (if any): Any of the Joint Lead Managers other than DBS Bank Ltd. appointed and acting in its capacity as a stabilisation manager

38 If non-syndicated, name of relevant Dealer: Not Applicable

39 Total commission and concession: As set out in Fee Letters

40 U.S. Selling Restrictions: Reg. S Category 2; TEFRA not applicable

41 Additional selling restrictions: Not Applicable

42 Prohibition of Sales to EEA Retail Investors:

Not Applicable

43 Prohibition of Sales to UK Retail Investors: Not Applicable

Operational Information

44 ISIN: XS2387065134

45 Common Code: 238706513

46 CMU Instrument Number: Not Applicable

47 Legal Entity Identifier (LEI): 2138001423MK8G3BNM68

48 Any clearing system(s) other than Euroclear or Clearstream and the relevant identification number(s):

Not Applicable

49 Delivery: Delivery against payment

(insert here any other relevant codes)

General

50 Rating: The Programme has been assigned a rating of “A-” by Fitch Ratings Ltd. (“Fitch”) and the Notes to be issued under the Programme have been assigned an expected rating of “A-” by Fitch and “Baa1” by Moody’s Investors Service, Inc..

A rating is not a recommendation to buy, sell or hold the Notes and may be subject to revision,

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suspension or withdrawal at any time by the assigning rating organization.

51 Governing Law: English Law

STABILISATION

In connection with this issue, any of the Joint Lead Managers (other than DBS Bank Ltd.) appointed and acting in its capacity as stabilisation manager (the “Stabilisation Manager”) (or persons acting on behalf of any Stabilisation Manager) may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail for a limited period after the closing date of the relevant Tranche of Notes. However, there is no obligation on such Stabilisation Manager (or persons acting on behalf of any Stabilisation Manager) to do this. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may cease at any time, but must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the relevant Stabilisation Manager (or persons acting on behalf of any Stabilisation Manager) in accordance with all applicable laws and rules.

LISTING APPLICATION

This Pricing Supplement comprises the final terms required for the issue of Notes described herein pursuant to the U.S.$3,500,000,000 Guaranteed Medium Term Note and Perpetual Capital Securities Programme of Soar Wise Limited.

MATERIAL ADVERSE CHANGE STATEMENT

Except as disclosed in the Offering Circular, there has been no significant change in the financial or trading position of the Issuer, the Guarantor or the Group since 30 June 2021 and no material adverse change in the financial position or prospects of the Issuer, the Guarantor or the Group since 30 June 2021.