HNA Group - Irish Stock Exchange

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FINAL

HNA Group (International) Company Limited (incorporated with limited liability in Hong Kong)

U.S.$50,000,000 8.125 per cent. Guaranteed Notes due 2018 (to be consolidated and form a single series with the U.S.$335,000,000 8.125 per cent. Guaranteed Notes due 2018 issued under U.S.$1,000,000,000 Medium Term Note Programme on 3 December 2015, 28 December 2015 and 4 February 2016) Unconditionally and irrevocably guaranteed by

HNA Group Co., Limited (incorporated with limited liability in the People’s Republic of China)

Issue Price: 100.1 per cent. The 8.125 per cent. guaranteed notes due 2018 (the “Further Notes”) will be issued in the aggregate principal amount of U.S.$50,000,000 by HNA Group (International) Company Limited (the “Issuer”) and will be consolidated and form a single series with the U.S.$335,000,000 8.125 per cent. Guaranteed Notes due 2018 issued on 3 December 2015, 28 December 2015 and 4 February 2016 (the “Original Notes”, and together with the Further Notes, the “Notes”). The Notes are in registered form in the denomination of U.S.$200,000 each and integral multiples of U.S.$1,000 in excess thereof. Unless otherwise defined herein, terms defined in the supplemental offering circular dated 1 February 2016 relating to the Original Notes, which is supplemental to the offering circular dated 17 March 2015, and as further supplemented on 1 December 2015 and 21 December 2015 (together the “Offering Circular”), shall have the same meaning when used in this Supplement (the “Supplement”). This Supplement is supplemental to, and should be read in conjunction with, the Offering Circular, and forms part of this Supplement. This Supplement amends and supersedes the Offering Circular to the extent it is inconsistent therewith. References in the Offering Circular to the “Notes” shall, where the context permits, include the Further Notes. The Further Notes will be unconditionally and irrevocably guaranteed (“Guarantee of the Further Notes”) by HNA Group Co., Limited (the “Guarantor”). The Guarantor entered into a deed of guarantee (the “Further Deed of Guarantee”) in respect of the Further Notes on 3 March 2016. The Guarantor will be required to register or cause to be registered with the State Administration of Foreign Exchange (“SAFE”) the Further Deed of Guarantee following the issue of the Further Notes in accordance with the Provision on Foreign Exchange Administration of Cross-Border Guarantees promulgated by SAFE. The Guarantor shall submit for registration the Further Deed of Guarantee and complete the registration of the Further Deed of Guarantee with SAFE as soon as practicable. The issue of the Further Notes is conditional on such registration with SAFE being completed among other things. The Guarantor has made an application for the pre-issuance registration (the “Pre-Issuance Registration”) in respect of the issue of the Notes with the National Development and Reform Commission (“NDRC”) in accordance with the Circular on Promoting the Reform of the Filing and Registration System for Issuance of Foreign Debt by Enterprises (Fa Gai Wai Zi [2015] No 2044 ( 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), the “NDRC Circular”) issued by the NDRC and which came into effect on 14 September 2015 and obtained from the NDRC an Enterprise Foreign Debt Pre-Issuance Registration Certificate (企業發行外債備案登記證明) dated 20 November 2015. Furthermore, the Guarantor undertakes under Special Condition 2 of the Terms and Conditions of the Further Notes to file or cause to be filed with NDRC the requisite information and documents within 10 China Business Days after the issue date of the Further Notes (the “Issue Date”) in accordance with the NDRC Circular. Approval-in-principle has been received from the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for the listing and quotation of the Further Notes. There is no assurance that the application to the Official List of the SGX-ST for the listing of the Further Notes of any Series will be approved. The Offering Circular and the Supplement together comprise of the listing particulars (the “Listing Particulars”) for the purpose of listing the Further Notes on the Global Exchange Market of the Irish Stock Exchange. Application has been made to the Irish Stock Exchange for the approval of such Listing Particulars. Application has been made to the Irish Stock Exchange for the Further Notes to be admitted to the Official List of the Irish Stock Exchange and trading on the Global Exchange Market. The expenses in relation to the admission of the Notes to trading on the Global Exchange Market of the Irish Stock Exchange will be €4,500. Save as disclosed in the Offering Circular and this Supplement, there has been no material adverse change in the prospects of the Issuer, the Guarantor or the Group since 31 December 2014 and there has been no significant change in the financial or trading position of the Issuer, the Guarantor or the Group since 30 September 2015. None of the Issuer, the Guarantor or any member of the Group is involved in any litigation or arbitration proceedings, which the Issuer, the Guarantor or the Group, as the case may be, believes may have, or have had during the 12 months period prior to the date of this Supplement, a significant adverse effect on the financial position or profitability of the Issuer, the Guarantor or the Group and, so far as the Issuer or the Guarantor is aware, no such litigation or arbitration proceedings are pending or threatened. Each of the Issuer and the Guarantor accepts responsibility for the information contained in the Offering Circular and this Supplement. To the best of the knowledge of the Issuer and the Guarantor (having taken all reasonable care to ensure that such is the case), the information contained in these Listing Particulars is in accordance with the facts and does not omit anything likely to affect the import of such information. The Notes will be represented by beneficial interest in a global note certificate (the “Global Note Certificate”) in registered form, which will be registered in the name of a nominee for, and shall be deposited on or about the Issue Date, with a common depositary for Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, S.A. (“Clearstream, Luxembourg”). Beneficial interests in the Global Note Certificate will be shown on, and transfer thereof will be effected through, records maintained by Euroclear and Clearstream, Luxembourg. The provisions governing the exchange of interests in a Global Note for other Global Notes or Definitive Notes or a Global Note Certificate for Certificates are described in “Forms of Notes” in the Offering Circular. The Notes and the Guarantee of the Further Notes have not been and will not be registered under the United States Securities Act of 1933, as amended, or with any securities regulatory authority of any state or other jurisdiction of the United States. The Notes may not be offered, sold, or delivered within the United States or to, or for the benefit or account of U.S. persons (as defined in Regulation S under the Securities Act) except in accordance with Regulation S under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Notes may be subject to additional selling restrictions as set out in “Pricing Supplement”. Investing in the Notes involves certain risks and may not be suitable for all investors. Investors should have sufficient knowledge and experience in financial and business matters to evaluate the information contained in the Offering Circular, this Supplement and in the Pricing Supplement and the merits and risks of investing in the issue of the Notes in the context of their financial position and particular circumstances. Investors also should have the financial capacity to bear the risks associated with an investment in the Notes. Investors should not purchase the Notes unless they understand and are able to bear risks associated with Notes. See the section “Risk Factors” in the Offering Circular for a discussion of factors that investors should consider carefully before investing in the Notes.

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Dealers Guotai Junan Securities (Hong Kong) Limited

VTB Capital plc

Supplemental Offering Circular dated 15 March 2016.

TABLE OF CONTENTS Page PRICING SUPPLEMENT ................................................................................................................... 1 ANNEXURE 1 – UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE ISSUER AS AT AND FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2015 .............A-1 ANNEXURE 2 – UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE GUARANTOR AS AT AND FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2015 .A-7 ANNEXURE 3 – SUPPLEMENTAL OFFERING CIRCULAR DATED 1 FEBRUARY 2016 ... A-11

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PRICING SUPPLEMENT Pricing Supplement dated 3 March 2016

HNA GROUP (INTERNATIONAL) COMPANY LIMITED Issue of U.S.$ 50,000,000 8.125 per pent. Guaranteed Notes due 2018 (to be consolidated and form a single series with the U.S.$300,000,000 8.125 per cent. Guaranteed Notes due 2018 issued on 3 December 2015, 28 December 2015 and 4 February 2016) Guaranteed by HNA GROUP CO., LIMITED under the U.S.$1,000,000,000 Medium Term Note Programme The 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 Conditions (the “Conditions”) set forth in the Offering Circular dated 17 March 2015. This Pricing Supplement contains the final terms of the Notes and must be read in conjunction with such Offering Circular and the supplemental Offering Circular dated 26 November 2015. The Guarantor is a private company and therefore there is less publicly available information about the Guarantor than a public company. In particular, they are not required to publish periodic financial statements. Where interest, discount income (not including discount income arising from secondary trading), prepayment fee, redemption premium or break cost is derived from any Notes by any person who is not resident in Singapore and who carries on any operations in Singapore through a permanent establishment in Singapore, the tax exemption available (subject to certain conditions) under the Income Tax Act, Chapter 134 of Singapore (the “ITA”), shall not apply if such person acquires such Notes using the funds and profits of such person’s operations through a permanent establishment in Singapore. Any person whose interest, discount income (not including discount income arising from secondary trading), prepayment fees, redemption premium or break cost derived from the Notes is not exempt from tax (including for the reasons described above) shall include such income in a return of income made under the ITA. 1

2

3

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(i)

Issuer:

HNA Group (International) Company Limited

(ii) Guarantor:

HNA Group Co., Limited

(i)

2

Series Number:

(ii) Tranche Number:

4

(iii) Date on which the Notes become fungible:

Issue Date

Specified Currency or Currencies:

U.S. dollars

1

4

Aggregate Nominal Amount: (i)

Series:

U.S.$385,000,000

(ii) Tranche:

U.S.$50,000,000 (to be consolidated and form a single series with the U.S.$335,000,000 8.125 per cent. Guaranteed Notes due 2018 issued on 3 December 2015, 28 December 2015 and 4 February 2016)

5

6

7

(i)

Issue Price:

100.1 per cent. of the Aggregate Nominal Amount, plus accrued interest on the Notes from (and including) 3 December 2015 to (and excluding) 17 March 2015

(ii) Net Proceeds

U.S.$50,586,698

(i)

U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof

Specified Denominations

(ii) Calculation Amount:

U.S.$1,000

(i)

17 March 2016

Issue Date:

(ii) Interest Commencement Date:

3 December 2015

8

Maturity Date:

3 December 2018

9

Interest Basis:

8.125 per cent. Fixed Rate (further particulars specified below)

10

Redemption/Payment Basis:

Redemption at par

11

Change of Interest or Redemption/ Payment Basis:

Not Applicable

12

Put/Call Options:

Not Applicable

13

Date of Board approval for issuance of Notes and Guarantee of the Notes respectively obtained

16 March 2015 and 3 March 2016, respectively

14

Listing:

Singapore Exchange Securities Trading Limited (“SGX-ST”) and The Irish Stock Exchange plc (“ISE”) Listing of the Notes on the SGX-ST is expected to become effective on 18 March 2016 and listing of the Notes on the ISE is expected to become effective on 18 March 2016.

15

Method of distribution:

Syndicated

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE 16

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Fixed Rate Note Provisions

Applicable

(i)

8.125 per cent. per annum payable semi-

Rate of Interest:

2

annually in arrear (ii) Interest Payment Date(s):

3 June and 3 December in each year with no adjustments

(iii) Fixed Coupon Amount:

U.S.$40.625 per Calculation Amount

(iv) Broken Amount(s):

Not Applicable

(v) Day Count Fraction:

30/360

(vi) Determination Dates:

Not Applicable

(vii) Other terms relating to the method of calculating interest for Fixed Rate Notes:

Not Applicable

17

Floating Rate Note Provisions

Not Applicable

18

Zero Coupon Note Provisions

Not Applicable

19

Index-Linked Interest Note/other variable-linked interest Note Provisions

Not Applicable

20

Dual Currency Note Provisions

Not Applicable

PROVISIONS RELATING TO REDEMPTION 21

Call Option

Not Applicable

22

Put Option

Not Applicable

23

Final Redemption Amount of each Note

U.S.$1,000 per Calculation Amount

24

Early Redemption Amount Early Redemption Amount (Tax) per Calculation Amount payable on redemption for taxation reasons and/or the method of calculating the same (if required or if different from that set out in the Conditions):

U.S.$1,000 per Calculation Amount

(ii) Early Redemption Amount (Change of Control) per Calculation Amount payable on redemption on change of control triggering event and/or the method of calculating the same (if required or if different from that set out in the Conditions):

U.S.$1,010 per Calculation Amount

(iii) Early Redemption Amount (No Registration Event) per Calculation Amount payable on mandatory redemption on a no-registration event and/or the method of calculating the same (if required or if different from that set out in the Conditions):

U.S.$1,000 per Calculation Amount

(iv) Early Termination Amount per Calculation Amount payable on

U.S.$1,000 per Calculation Amount

(i)

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mandatory redemption on event of default or other early redemption and/or the method of calculating the same (if required or if different from that set out in the Conditions): GENERAL PROVISIONS APPLICABLE TO THE NOTES 25

Form of the Notes:

Registered Notes: Global Note Certificate exchangeable for Individual Note Certificates in the limited circumstances described in the Global Note Certificate

26

Additional Financial Centre(s) or other special provisions relating to payment dates:

Not Applicable

27

Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature):

Not Applicable

28

Details relating to Partly Paid Notes: amount of each payment comprising the Issue Price and date on which each payment is to be made:

Not Applicable

29

Details relating to Instalment Notes: amount of each instalment, date on which each payment is to be made:

Not Applicable

30

Redenomination, renominalisation and reconventioning provisions:

Not Applicable

31

Consolidation provisions:

The provisions in Condition 20 (Further Issues) apply

32

Any applicable currency disruption/ fallback provisions:

Not Applicable

33

Escrow Arrangement:

Applicable

34

Other terms or special conditions:

Refer to Appendix

DISTRIBUTION 35

(i)

If syndicated, names of Managers:

Guotai Junan Securities (Hong Kong) Limited and VTB Capital plc

(ii) Stabilising Manager(s) (if any):

Each of the Managers is appointed to act as stabilising manager

36

If non-syndicated, name and address of Dealer:

Not Applicable

37

Total commission and concession:

Applicable

38

U.S. Selling Restrictions:

The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United

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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. Unless otherwise defined herein, terms used in this paragraph have the meanings given to them by Regulation S. TEFRA Not Applicable 39

Additional selling restrictions:

Not Applicable

OPERATIONAL INFORMATION 40

ISIN Code:

XS1259361050

41

Common Code:

125936105

42

CMU Instrument Number:

Not Applicable

43

Any clearing system(s) other than Euroclear/Clearstream, Luxembourg, the CMU Service and CDP and the relevant identification number(s):

Not Applicable

44

Delivery:

Free of payment

45

Additional Paying Agent(s) (if any):

Not Applicable

GENERAL 46

Private Bank Rebate/Commission:

Applicable

47

The aggregate principal amount of the Notes issued has been translated into United States dollars at the rate of [●], producing a sum of (for Notes not denominated in United States dollars):

Not Applicable

48

Ratings:

The Notes to be issued have not been rated.

PURPOSE OF PRICING SUPPLEMENT This Pricing Supplement comprises the final terms required for issue and admission to the Official List of the SGX-ST and the Global Exchange Market of the ISE of the Notes described herein pursuant to the U.S.$1,000,000,000 Medium Term Note Programme of the Issuer.

RESPONSIBILITY Neither the SGX-ST nor the ISE takes any responsibility for the correctness of any of the statements made or opinions expressed or reports contained in this Pricing Supplement. The admission of the Notes to the Official List of the SGX-ST and the Global Exchange Market of the ISE is not to be taken as an indication of the merits of the Issuer, the Guarantor, the Programme or the Notes.

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The Issuer and the Guarantor each accepts responsibility for the information contained in this Pricing Supplement.

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Appendix

SPECIAL CONDITIONS Set out below are the special conditions (“Special Conditions”) referred to in item 34 (Other terms or special conditions) of this Pricing Supplement. These Special Conditions are applicable only to the Series of Notes governed by this Pricing Supplement. 1

Interpretation: All provisions in the Conditions stipulating that any two directors or duly authorised officers will issue a certificate or notice or will do an act on behalf of the Guarantor shall be construed to mean any director or duly authorised officer will do so on behalf of the Guarantor.

2

Notification to NDRC The Guarantor undertakes to file or cause to be filed with the National Development and Reform Commission of the PRC (the “NDRC”) the requisite information and documents within 10 China Business Days after the relevant Issue Date in accordance with the Circular on Promoting the Reform of the Filing and Registration System for Issuance of Foreign Debt by Enterprises (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), the “NDRC Circular”) issued by the NDRC and which came into effect on 14 September 2015, and any implementation rules as issued by the NDRC from time to time (the “NDRC Post-issue Filing”). The Guarantor shall complete the NDRC Post-issue Filing and obtain such document(s) evidencing due filing with the NDRC within the prescribed timeframe and shall comply with all applicable PRC laws and regulations in connection with the Notes. The Guarantor shall within three China Business Days after submission of such NDRC Post-issue Filing provide the Trustee with a certified copy of the submission of the NDRC Post-issue Filing.

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ANNEXURE 1 – UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE ISSUER AS AT AND FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2015

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A-2

A-3

A-4

A-5

A-6

ANNEXURE 2 – UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE GUARANTOR AS AT AND FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2015

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A-7

A-8

A-9

A-10

ANNEXURE 3 – SUPPLEMENTAL OFFERING CIRCULAR DATED 1 FEBRUARY 2016

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HNA Group (International) Company Limited (incorporated with limited liability in Hong Kong)

U.S.$35,000,000 8.125 per cent. Guaranteed Notes due 2018 (to be consolidated and form a single series with the U.S.$300,000,000 8.125 per cent. Guaranteed Notes due 2018 issued under U.S.$1,000,000,000 Medium Term Note Programme on 3 December 2015 and 28 December 2015) Unconditionally and irrevocably guaranteed by

HNA Group Co., Limited (incorporated with limited liability in the People’s Republic of China)

Issue Price: 99.50 per cent. The 8.125 per cent. guaranteed notes due 2018 (the “Further Notes”) will be issued in the aggregate principal amount of U.S.$35,000,000 by HNA Group (International) Company Limited (the “Issuer”) and will be consolidated and form a single series with the U.S.$300,000,000 8.125 per cent. Guaranteed Notes due 2018 issued on 3 December 2015 (the “Original Notes”, and together with the Further Notes, the “Notes”). The Notes are in registered form in the denomination of U.S.$200,000 each and integral multiples of U.S.$1,000 in excess thereof. Unless otherwise defined herein, terms defined in the supplemental offering circular dated 21 December 2015 relating to the Original Notes, which is supplemental to the offering circular dated 17 March 2015 and first supplemented on 1 December 2015 (together the “Offering Circular”), shall have the same meaning when used in this Supplement (the “Supplement”). This Supplement is supplemental to, and should be read in conjunction with, the Offering Circular, and forms part of this Supplement. This Supplement amends and supersedes the Offering Circular to the extent it is inconsistent therewith. References in the Offering Circular to the “Notes” shall, where the context permits, include the Further Notes. The Further Notes will be unconditionally and irrevocably guaranteed (“Guarantee of the Further Notes”) by HNA Group Co., Limited (the “Guarantor”). The Guarantor entered into a deed of guarantee (the “Further Deed of Guarantee”) in respect of the Further Notes on 17 December 2015. The Guarantor will be required to register or cause to be registered with the State Administration of Foreign Exchange (“SAFE”)the Further Deed of Guarantee following the issue of the Further Notes in accordance with the Provision on Foreign Exchange Administration of Cross-Border Guarantees promulgated by SAFE. The Guarantor shall submit for registration the Further Deed of Guarantee and complete the registration of the Further Deed of Guarantee with SAFE as soon as practicable. The issue of the Further Notes is conditional on such registration with SAFE being completed among other things. The Guarantor has made an application for the pre-issuance registration (the “Pre-Issuance Registration”) in respect of the issue of the Notes with the National Development and Reform Commission (“NDRC”) in accordance with the Circular on Promoting the Reform of the Filing and Registration System for Issuance of Foreign Debt by Enterprises (Fa Gai Wai Zi [2015] No 2044 ( 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), the “NDRC Circular”) issued by the NDRC and which came into effect on 14 September 2015 and obtained from the NDRC an Enterprise Foreign Debt Pre-Issuance Registration Certificate (企業發行外債備案登記證明) dated 20 November 2015. Furthermore, the Guarantor undertakes under Special Condition 2 of the Terms and Conditions of the Further Notes to file or cause to be filed with NDRC the requisite information and documents within 10 China Business Days after the issue date of the Further Notes (the “Issue Date”) in accordance with the NDRC Circular. Approval-in-principle has been received from the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for the listing and quotation of the Further Notes. There is no assurance that the application to the Official List of the SGX-ST for the listing of the Further Notes of any Series will be approved. The Offering Circular and the Supplement together comprise of the listing particulars (the “Listing Particulars”) for the purpose of listing the Further Notes on the Global Exchange Market of the Irish Stock Exchange. Application has been made to the Irish Stock Exchange for the approval of such Listing Particulars. Application has been made to the Irish Stock Exchange for the Further Notes to be admitted to the Official List of the Irish Stock Exchange and trading on the Global Exchange Market. The expenses in relation to the admission of the Notes to trading on the Global Exchange Market of the Irish Stock Exchange will be €4,500. Save as disclosed in the Offering Circular and this Supplement, there has been no material adverse change in the financial or trading position or prospects of the Issuer, the Guarantor and the Group since 31 December 2014. None of the Issuer, the Guarantor or any member of the Group is involved in any litigation or arbitration proceedings, which the Issuer, the Guarantor or the Group, as the case may be, believes may have, or have had during the 12 months period prior to the date of this Supplement, a significant adverse effect on the financial position or profitability of the Issuer, the Guarantor or the Group and, so far as the Issuer or the Guarantor is aware, no such litigation or arbitration proceedings are pending or threatened. Each of the Issuer and the Guarantor accepts responsibility for the information contained in the Offering Circular and this Supplement. To the best of the knowledge of the Issuer and the Guarantor (having taken all reasonable care to ensure that such is the case), the information contained in these Listing Particulars is in accordance with the facts and does not omit anything likely to affect the import of such information. The Notes will be represented by beneficial interest in a global note certificate (the “Global Note Certificate”) in registered form, which will be registered in the name of a nominee for, and shall be deposited on or about the Issue Date, with a common depositary for Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”). Beneficial interests in the Global Note Certificate will be shown on, and transfer thereof will be effected through, records maintained by Euroclear and Clearstream, Luxembourg. The provisions governing the exchange of interests in a Global Note for other Global Notes or Definitive Notes or a Global Note Certificate for Certificates are described in “Forms of Notes” in the Offering Circular. The Notes and the Guarantee of the Further Notes have not been and will not be registered under the United States Securities Act of 1933, as amended, or with any securities regulatory authority of any state or other jurisdiction of the United States. The Notes may not be offered, sold, or delivered within the United States or to, or for the benefit or account of U.S. persons (as defined in Regulation S under the Securities Act) except in accordance with Regulation S under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Notes may be subject to additional selling restrictions as set out in “Pricing Supplement”. Investing in the Notes involves certain risks and may not be suitable for all investors. Investors should have sufficient knowledge and experience in financial and business matters to evaluate the information contained in the Offering Circular, this Supplement and in the Pricing Supplement and the merits and risks of investing in the issue of the Notes in the context of their financial position and particular circumstances. Investors also should have the financial capacity to bear the risks associated with an investment in the Notes. Investors should not purchase the Notes unless they understand and are able to bear risks associated with Notes. See the section “Risk Factors” in the Offering Circular for a discussion of factors that investors should consider carefully before investing in the Notes.

Dealers Guotai Junan Securities (Hong Kong) Limited

VTB Capital plc

Supplemental Offering Circular dated 1 February 2016.

TABLE OF CONTENTS Page PRICING SUPPLEMENT ................................................................................................................... 1 ANNEXURE – SUPPLEMENTAL OFFERING CIRCULAR DATED 21 DECEMBER 2015 .....A-1

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PRICING SUPPLEMENT

Pricing Supplement dated 28 January 2016

HNA GROUP (INTERNATIONAL) COMPANY LIMITED Issue of U.S.$35,000,000 8.125 per pent. Guaranteed Notes due 2018 (to be consolidated and form a single series with the U.S.$300,000,000 8.125 per cent. Guaranteed Notes due 2018 issued on 3 December 2015 and 28 December 2015) Guaranteed by HNA GROUP CO., LIMITED under the U.S.$1,000,000,000 Medium Term Note Programme The 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 Conditions (the “Conditions”) set forth in the Offering Circular dated 17 March 2015. This Pricing Supplement contains the final terms of the Notes and must be read in conjunction with such Offering Circular and the supplemental Offering Circular dated 26 November 2015. The Guarantor is a private company and therefore there is less publicly available information about the Guarantor than a public company. In particular, they are not required to publish periodic financial statements. Where interest, discount income (not including discount income arising from secondary trading), prepayment fee, redemption premium or break cost is derived from any Notes by any person who is not resident in Singapore and who carries on any operations in Singapore through a permanent establishment in Singapore, the tax exemption available (subject to certain conditions) under the Income Tax Act, Chapter 134 of Singapore (the “ITA”), shall not apply if such person acquires such Notes using the funds and profits of such person’s operations through a permanent establishment in Singapore. Any person whose interest, discount income (not including discount income arising from secondary trading), prepayment fees, redemption premium or break cost derived from the Notes is not exempt from tax (including for the reasons described above) shall include such income in a return of income made under the ITA. 1

2

3

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(i)

Issuer:

HNA Group (International) Company Limited

(ii) Guarantor:

HNA Group Co., Limited

(i)

2

Series Number:

(ii) Tranche Number:

3

(iii) Date on which the Notes become fungible:

Issue Date

Specified Currency or Currencies:

U.S. dollars

1

4

Aggregate Nominal Amount: (i)

Series:

U.S.$335,000,000

(ii) Tranche:

U.S.$35,000,000 (to be consolidated and form a single series with the U.S.$300,000,000 8.125 per cent. Guaranteed Notes due 2018 issued on 3 December 2015 and 28 December 2015)

5

6

7

(i)

Issue Price:

99.5 per cent. of the Aggregate Nominal Amount, plus accrued interest on the Notes from (and including) 3 December 2015 to (and excluding) the Issue Date

(ii) Net Proceeds

U.S.$34,823,364

(i)

U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof

Specified Denominations

(ii) Calculation Amount:

U.S.$1,000

(i)

4 February 2016

Issue Date:

(ii) Interest Commencement Date:

3 December 2015

8

Maturity Date:

3 December 2018

9

Interest Basis:

8.125 per cent. Fixed Rate (further particulars specified below)

10

Redemption/Payment Basis:

Redemption at par

11

Change of Interest or Redemption/ Payment Basis:

Not Applicable

12

Put/Call Options:

Not Applicable

13

Date of Board approval for issuance of Notes and Guarantee of the Notes respectively obtained

16 March 2015 and 27 January 2016, respectively

14

Listing:

Singapore Exchange Securities Trading Limited (“SGX-ST”) and The Irish Stock Exchange plc (“ISE”) Listing of the Notes on the SGX-ST is expected to become effective on 5 February 2016 and listing of the Notes on the ISE is expected to become effective on 5 February 2016.

15

Method of distribution:

Syndicated

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE 16

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Fixed Rate Note Provisions

Applicable

(i)

8.125 per cent. per annum payable semiannually in arrear

Rate of Interest:

2

(ii) Interest Payment Date(s):

3 June and 3 December in each year with no adjustments

(iii) Fixed Coupon Amount:

U.S.$40.625 per Calculation Amount

(iv) Broken Amount(s):

Not Applicable

(v) Day Count Fraction:

30/360

(vi) Determination Dates:

Not Applicable

(vii) Other terms relating to the method of calculating interest for Fixed Rate Notes:

Not Applicable

17

Floating Rate Note Provisions

Not Applicable

18

Zero Coupon Note Provisions

Not Applicable

19

Index-Linked Interest Note/other variable-linked interest Note Provisions

Not Applicable

20

Dual Currency Note Provisions

Not Applicable

PROVISIONS RELATING TO REDEMPTION 21

Call Option

Not Applicable

22

Put Option

Not Applicable

23

Final Redemption Amount of each Note

U.S.$1,000 per Calculation Amount

24

Early Redemption Amount (i)

A31215313

Early Redemption Amount (Tax) per Calculation Amount payable on redemption for taxation reasons and/or the method of calculating the same (if required or if different from that set out in the Conditions):

U.S.$1,000 per Calculation Amount

(ii) Early Redemption Amount (Change of Control) per Calculation Amount payable on redemption on change of control triggering event and/or the method of calculating the same (if required or if different from that set out in the Conditions):

U.S.$1,010 per Calculation Amount

(iii) Early Redemption Amount (No Registration Event) per Calculation Amount payable on mandatory redemption on a no-registration event and/or the method of calculating the same (if required or if different from that set out in the Conditions):

U.S.$1,000 per Calculation Amount

(iv) Early Termination Amount per Calculation Amount payable on mandatory redemption on event of

U.S.$1,000 per Calculation Amount

3

default or other early redemption and/or the method of calculating the same (if required or if different from that set out in the Conditions): GENERAL PROVISIONS APPLICABLE TO THE NOTES 25

Form of the Notes:

Registered Notes: Global Note Certificate exchangeable for Individual Note Certificates in the limited circumstances described in the Global Note Certificate

26

Additional Financial Centre(s) or other special provisions relating to payment dates:

Not Applicable

27

Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature):

Not Applicable

28

Details relating to Partly Paid Notes: amount of each payment comprising the Issue Price and date on which each payment is to be made:

Not Applicable

29

Details relating to Instalment Notes: amount of each instalment, date on which each payment is to be made:

Not Applicable

30

Redenomination, renominalisation and reconventioning provisions:

Not Applicable

31

Consolidation provisions:

The provisions in Condition 20 (Further Issues) apply

32

Any applicable currency disruption/ fallback provisions:

Not Applicable

33

Escrow Arrangement:

Applicable

34

Other terms or special conditions:

Refer to Appendix

DISTRIBUTION 35

(i)

If syndicated, names of Managers:

Guotai Junan Securities (Hong Kong) Limited and VTB Capital plc

(ii) Stabilising Manager(s) (if any):

Each of the Managers is appointed to act as stabilising manager

36

If non-syndicated, name and address of Dealer:

Not Applicable

37

Total commission and concession:

Applicable

38

U.S. Selling Restrictions:

The Notes 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,

A31215313

4

U.S. persons except in accordance with Regulation S or pursuant to an exemption from the registration requirements of the Securities Act. Unless otherwise defined herein, terms used in this paragraph have the meanings given to them by Regulation S. TEFRA Not Applicable 39

Additional selling restrictions:

Not Applicable

OPERATIONAL INFORMATION 40

ISIN Code:

XS1259361050

41

Common Code:

125936105

42

CMU Instrument Number:

Not Applicable

43

Any clearing system(s) other than Euroclear/Clearstream, Luxembourg, the CMU Service and CDP and the relevant identification number(s):

Not Applicable

44

Delivery:

Free of payment

45

Additional Paying Agent(s) (if any):

Not Applicable

GENERAL 46

Private Bank Rebate/Commission:

Applicable

47

The aggregate principal amount of the Notes issued has been translated into United States dollars at the rate of [●], producing a sum of (for Notes not denominated in United States dollars):

Not Applicable

48

Ratings:

The Notes to be issued have not been rated.

PURPOSE OF PRICING SUPPLEMENT This Pricing Supplement comprises the final terms required for issue and admission to the Official List of the SGX-ST and the Global Exchange Market of the ISE of the Notes described herein pursuant to the U.S.$1,000,000,000 Medium Term Note Programme of the Issuer.

RESPONSIBILITY Neither the SGX-ST nor the ISE takes any responsibility for the correctness of any of the statements made or opinions expressed or reports contained in this Pricing Supplement. The admission of the Notes to the Official List of the SGX-ST and the Global Exchange Market of the ISE is not to be taken as an indication of the merits of the Issuer, the Guarantor, the Programme or the Notes. The Issuer and the Guarantor each accepts responsibility for the information contained in this Pricing Supplement.

A31215313

5

Appendix

SPECIAL CONDITIONS Set out below are the special conditions (“Special Conditions”) referred to in item 34 (Other terms or special conditions) of this Pricing Supplement. These Special Conditions are applicable only to the Series of Notes governed by this Pricing Supplement. 1

Interpretation: All provisions in the Conditions stipulating that any two directors or duly authorised officers will issue a certificate or notice or will do an act on behalf of the Guarantor shall be construed to mean any director or duly authorised officer will do so on behalf of the Guarantor.

2

Notification to NDRC The Guarantor undertakes to file or cause to be filed with the National Development and Reform Commission of the PRC (the “NDRC”) the requisite information and documents within 10 China Business Days after the relevant Issue Date in accordance with the Circular on Promoting the Reform of the Filing and Registration System for Issuance of Foreign Debt by Enterprises (国家发展改革委关于推进企业发行外债备案登记制 管理改革的通知(发改外资[2015]2044 号), the “NDRC Circular”) issued by the NDRC and which came into effect on 14 September 2015, and any implementation rules as issued by the NDRC from time to time (the “NDRC Post-issue Filing”). The Guarantor shall complete the NDRC Post-issue Filing and obtain such document(s) evidencing due filing with the NDRC within the prescribed timeframe and shall comply with all applicable PRC laws and regulations in connection with the Notes. The Guarantor shall within three China Business Days after submission of such NDRC Post-issue Filing provide the Trustee with a certified copy of the submission of the NDRC Post-issue Filing.

A31215313

6

ANNEXURE – SUPPLEMENTAL OFFERING CIRCULAR DATED 21 DECEMBER 2015

A31215313

A-1

HNA Group (International) Company Limited (incorporated with limited liability in Hong Kong)

U.S.$50,000,000 8.125 per cent. Guaranteed Notes due 2018 (to be consolidated and form a single series with the U.S.$250,000,000 8.125 per cent. Guaranteed Notes due 2018 issued under U.S.$1,000,000,000 Medium Term Note Programme on 3 December 2015) Unconditionally and irrevocably guaranteed by

HNA Group Co., Limited (incorporated with limited liability in the People’s Republic of China)

Issue Price: 99.50 per cent. The 8.125 per cent. guaranteed notes due 2018 (the “Further Notes”) will be issued in the aggregate principal amount of U.S.$50,000,000 by HNA Group (International) Company Limited (the “Issuer”) and will be consolidated and form a single series with the U.S.$250,000,000 8.125 per cent. Guaranteed Notes due 2018 issued on 3 December 2015 (the “Original Notes”, and together with the Further Notes, the “Notes”). The Notes are in registered form in the denomination of U.S.$200,000 each and integral multiples of U.S.$1,000 in excess thereof. Unless otherwise defined herein, terms defined in the supplemental offering circular dated 1 December 2015 relating to the Original Notes, which is supplemental to the offering circular dated 17 March 2015 (together the “Offering Circular”), shall have the same meaning when used in this Supplement (the “Supplement”). This Supplement is supplemental to, and should be read in conjunction with, the Offering Circular, and forms part of this Supplement. This Supplement amends and supersedes the Offering Circular to the extent it is inconsistent therewith. References in the Offering Circular to the “Notes” shall, where the context permits, include the Further Notes. The Further Notes will be unconditionally and irrevocably guaranteed (“Guarantee of the Further Notes”) by HNA Group Co., Limited (the “Guarantor”). The Guarantor entered into a deed of guarantee (the “Further Deed of Guarantee”) in respect of the Further Notes on 17 December 2015. The Guarantor will be required to register or cause to be registered with the State Administration of Foreign Exchange (“SAFE”)the Further Deed of Guarantee following the issue of the Further Notes in accordance with the Provision on Foreign Exchange Administration of Cross-Border Guarantees promulgated by SAFE. The Guarantor shall submit for registration the Further Deed of Guarantee and complete the registration of the Further Deed of Guarantee with SAFE as soon as practicable. The issue of the Further Notes is conditional on such registration with SAFE being completed among other things. The Guarantor has made an application for the pre-issuance registration (the “Pre-Issuance Registration”) in respect of the issue of the Notes with the National Development and Reform Commission (“NDRC”) in accordance with the Circular on Promoting the Reform of the Filing and Registration System for Issuance of Foreign Debt by Enterprises (Fa Gai Wai Zi [2015] No 2044 ( 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), the “NDRC Circular”) issued by the NDRC and which came into effect on 14 September 2015 and obtained from the NDRC an Enterprise Foreign Debt Pre-Issuance Registration Certificate (企業發行外債備案登記證明) dated 20 November 2015. Furthermore, the Guarantor undertakes under Special Condition 2 of the Terms and Conditions of the Further Notes to file or cause to be filed with NDRC the requisite information and documents within 10 China Business Days after the issue date of the Further Notes (the “Issue Date”) in accordance with the NDRC Circular. Approval-in-principle has been received from the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for the listing and quotation of the Further Notes. There is no assurance that the application to the Official List of the SGX-ST for the listing of the Further Notes of any Series will be approved. The Offering Circular and the Supplement together comprise of the listing particulars (the “Listing Particulars”) for the purpose of listing the Further Notes on the Global Exchange Market of the Irish Stock Exchange. Application has been made to the Irish Stock Exchange for the approval of such Listing Particulars. Application has been made to the Irish Stock Exchange for the Further Notes to be admitted to the Official List of the Irish Stock Exchange and trading on the Global Exchange Market. The expenses in relation to the admission of the Notes to trading on the Global Exchange Market of the Irish Stock Exchange will be €4,500. Each of the Issuer and the Guarantor accepts responsibility for the information contained in the Offering Circular and this Supplement. To the best of the knowledge of the Issuer and the Guarantor (having taken all reasonable care to ensure that such is the case), the information contained in these Listing Particulars is in accordance with the facts and does not omit anything likely to affect the import of such information. The Notes will be represented by beneficial interest in a global note certificate (the “Global Note Certificate”) in registered form, which will be registered in the name of a nominee for, and shall be deposited on or about the Issue Date, with a common depositary for Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”). Beneficial interests in the Global Note Certificate will be shown on, and transfer thereof will be effected through, records maintained by Euroclear and Clearstream, Luxembourg. The provisions governing the exchange of interests in a Global Note for other Global Notes or Definitive Notes or a Global Note Certificate for Certificates are described in “Forms of Notes” in the Offering Circular. The Notes and the Guarantee of the Further Notes have not been and will not be registered under the United States Securities Act of 1933, as amended, or with any securities regulatory authority of any state or other jurisdiction of the United States. The Notes may not be offered, sold, or delivered within the United States or to, or for the benefit or account of U.S. persons (as defined in Regulation S under the Securities Act) except in accordance with Regulation S under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Notes may be subject to additional selling restrictions as set out in “Pricing Supplement”. Investing in the Notes involves certain risks and may not be suitable for all investors. Investors should have sufficient knowledge and experience in financial and business matters to evaluate the information contained in the Offering Circular, this Supplement and in the Pricing Supplement and the merits and risks of investing in the issue of the Notes in the context of their financial position and particular circumstances. Investors also should have the financial capacity to bear the risks associated with an investment in the Notes. Investors should not purchase the Notes unless they understand and are able to bear risks associated with Notes. See the section “Risk Factors” in the Offering Circular for a discussion of factors that investors should consider carefully before investing in the Notes.

Dealer CITIC CLSA Securities Supplemental Offering Circular dated 21 December 2015.

TABLE OF CONTENTS Page PRICING SUPPLEMENT ................................................................................................................... 1 ANNEXURE – SUPPLEMENTAL OFFERING CIRCULAR DATED 1 DECEMBER 2015 .......A-1

A31003912

i

PRICING SUPPLEMENT

Pricing Supplement dated 17 December 2015

HNA GROUP (INTERNATIONAL) COMPANY LIMITED Issue of U.S.$50,000,000 8.125 per pent. Guaranteed Notes due 2018 (to be consolidated and form a single series with the U.S.$250,000,000 8.125 per cent. Guaranteed Notes due 2018 issued on 3 December 2015) Guaranteed by HNA GROUP CO., LIMITED under the U.S.$1,000,000,000 Medium Term Note Programme The 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 Conditions (the “Conditions”) set forth in the Offering Circular dated 17 March 2015. This Pricing Supplement contains the final terms of the Notes and must be read in conjunction with such Offering Circular and the supplemental Offering Circular dated 26 November 2015. The Guarantor is a private company and therefore there is less publicly available information about the Guarantor than a public company. In particular, they are not required to publish periodic financial statements. Where interest, discount income (not including discount income arising from secondary trading), prepayment fee, redemption premium or break cost is derived from any Notes by any person who is not resident in Singapore and who carries on any operations in Singapore through a permanent establishment in Singapore, the tax exemption available (subject to certain conditions) under the Income Tax Act, Chapter 134 of Singapore (the “ITA”), shall not apply if such person acquires such Notes using the funds and profits of such person’s operations through a permanent establishment in Singapore. Any person whose interest, discount income (not including discount income arising from secondary trading), prepayment fees, redemption premium or break cost derived from the Notes is not exempt from tax (including for the reasons described above) shall include such income in a return of income made under the ITA. 1

(i)

Issuer:

HNA Group (International) Company Limited

(ii) Guarantor: 2

3

A31003912

(i)

HNA Group Co., Limited

Series Number:

2

(ii) Tranche Number:

2

(iii) Date on which the Notes become fungible:

Issue Date

Specified Currency or Currencies:

U.S. dollars

1

4

Aggregate Nominal Amount: (i)

Series:

U.S.$300,000,000

(ii) Tranche:

U.S.$50,000,000 (to be consolidated and form a single series with the U.S.$250,000,000 8.125 per cent. Guaranteed Notes due 2018 issued on 3 December 2015)

5

(i)

Issue Price:

99.45 per cent. of the Aggregate Nominal Amount

(ii) Net Proceeds 6

(i)

U.S.$ 49,125,000

Specified Denominations

U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof

(ii) Calculation Amount: 7

(i)

U.S.$1,000

Issue Date:

28 December 2015

(ii) Interest Commencement Date:

3 December 2015

8

Maturity Date:

3 December 2018

9

Interest Basis:

8.125 per cent. Fixed Rate (further particulars specified below)

10

Redemption/Payment Basis:

Redemption at par

11

Change of Interest or Redemption/ Payment Basis:

Not Applicable

12

Put/Call Options:

Not Applicable

13

Date of Board approval for issuance of Notes and Guarantee of the Notes respectively obtained

16 March 2015 and 27 July 2015, respectively

14

Listing:

Singapore Exchange Securities Trading Limited (“SGX-ST”) and The Irish Stock Exchange plc (“ISE”) Listing of the Notes on the SGX-ST is expected to become effective on 29 December 2015 and listing of the Notes on the ISE is expected to become effective on 30 December 2015.

15

Method of distribution:

Non-syndicated

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE 16

Applicable

Fixed Rate Note Provisions (i)

Rate of Interest:

8.125 per cent. per annum payable semiannually in arrear

(ii) Interest Payment Date(s):

A31003912

3 June and 3 December in each year with no adjustments

2

(iii) Fixed Coupon Amount:

U.S.$40.625 per Calculation Amount

(iv) Broken Amount(s):

Not Applicable

(v) Day Count Fraction:

30/360

(vi) Determination Dates:

Not Applicable

(vii) Other terms relating to the method of calculating interest for Fixed Rate Notes:

Not Applicable

17

Floating Rate Note Provisions

Not Applicable

18

Zero Coupon Note Provisions

Not Applicable

19

Index-Linked Interest Note/other variable-linked interest Note Provisions

Not Applicable

20

Dual Currency Note Provisions

Not Applicable

PROVISIONS RELATING TO REDEMPTION 21

Call Option

Not Applicable

22

Put Option

Not Applicable

23

Final Redemption Amount of each Note

U.S.$1,000 per Calculation Amount

24

Early Redemption Amount Early Redemption Amount (Tax) per Calculation Amount payable on redemption for taxation reasons and/or the method of calculating the same (if required or if different from that set out in the Conditions):

U.S.$1,000 per Calculation Amount

(ii) Early Redemption Amount (Change of Control) per Calculation Amount payable on redemption on change of control triggering event and/or the method of calculating the same (if required or if different from that set out in the Conditions):

U.S.$1,010 per Calculation Amount

(iii) Early Redemption Amount (No Registration Event) per Calculation Amount payable on mandatory redemption on a no-registration event and/or the method of calculating the same (if required or if different from that set out in the Conditions):

U.S.$1,000 per Calculation Amount

(iv) Early Termination Amount per Calculation Amount payable on mandatory redemption on event of default or other early redemption and/or the method of calculating the

U.S.$1,000 per Calculation Amount

(i)

A31003912

3

same (if required or if different from that set out in the Conditions): GENERAL PROVISIONS APPLICABLE TO THE NOTES 25

Form of the Notes:

Registered Notes: Global Note Certificate exchangeable for Individual Note Certificates in the limited circumstances described in the Global Note Certificate

26

Additional Financial Centre(s) or other special provisions relating to payment dates:

Not Applicable

27

Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature):

Not Applicable

28

Details relating to Partly Paid Notes: amount of each payment comprising the Issue Price and date on which each payment is to be made:

Not Applicable

29

Details relating to Instalment Notes: amount of each instalment, date on which each payment is to be made:

Not Applicable

30

Redenomination, renominalisation and reconventioning provisions:

Not Applicable

31

Consolidation provisions:

The provisions in Condition 20 (Further Issues) apply

32

Any applicable currency disruption/ fallback provisions:

Not Applicable

33

Escrow Arrangement:

Applicable

34

Other terms or special conditions:

Refer to Appendix

DISTRIBUTION (v) If syndicated, names of Managers:

Not Applicable

(vi) Stabilising Manager(s) (if any):

Not Applicable

36

If non-syndicated, name and address of Dealer:

CLSA Limited

37

Total commission and concession:

Applicable

38

U.S. Selling Restrictions:

The Notes 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. Unless otherwise defined

35

A31003912

4

herein, terms used in this paragraph have the meanings given to them by Regulation S. TEFRA Not Applicable 39

Additional selling restrictions:

Not Applicable

OPERATIONAL INFORMATION 40

ISIN Code:

XS1259361050

41

Common Code:

125936105

42

CMU Instrument Number:

Not Applicable

43

Any clearing system(s) other than Euroclear/Clearstream, Luxembourg, the CMU Service and CDP and the relevant identification number(s):

Not Applicable

44

Delivery:

Free of payment

45

Additional Paying Agent(s) (if any):

Not Applicable

GENERAL 46

Private Bank Rebate/Commission:

Applicable

47

The aggregate principal amount of the Notes issued has been translated into United States dollars at the rate of [●], producing a sum of (for Notes not denominated in United States dollars):

Not Applicable

48

Ratings:

The Notes to be issued have not been rated.

PURPOSE OF PRICING SUPPLEMENT This Pricing Supplement comprises the final terms required for issue and admission to the Official List of the SGX-ST and the Global Exchange Market of the ISE of the Notes described herein pursuant to the U.S.$1,000,000,000 Medium Term Note Programme of the Issuer.

RESPONSIBILITY Neither the SGX-ST nor the ISE takes any responsibility for the correctness of any of the statements made or opinions expressed or reports contained in this Pricing Supplement. The admission of the Notes to the Official List of the SGX-ST and the Global Exchange Market of the ISE is not to be taken as an indication of the merits of the Issuer, the Guarantor, the Programme or the Notes. The Issuer and the Guarantor each accepts responsibility for the information contained in this Pricing Supplement.

A31003912

5

Appendix

SPECIAL CONDITIONS Set out below are the special conditions (“Special Conditions”) referred to in item 34 (Other terms or special conditions) of this Pricing Supplement. These Special Conditions are applicable only to the Series of Notes governed by this Pricing Supplement. 1

Interpretation: All provisions in the Conditions stipulating that any two directors or duly authorised officers will issue a certificate or notice or will do an act on behalf of the Guarantor shall be construed to mean any director or duly authorised officer will do so on behalf of the Guarantor.

2

Notification to NDRC The Guarantor undertakes to file or cause to be filed with the National Development and Reform Commission of the PRC (the “NDRC”) the requisite information and documents within 10 China Business Days after the relevant Issue Date in accordance with the Circular on Promoting the Reform of the Filing and Registration System for Issuance of Foreign Debt by Enterprises (国家发展改革委关于推进企业发行外债备案登记制 管理改革的通知(发改外资[2015]2044 号), the “NDRC Circular”) issued by the NDRC and which came into effect on 14 September 2015, and any implementation rules as issued by the NDRC from time to time (the “NDRC Post-issue Filing”). The Guarantor shall complete the NDRC Post-issue Filing and obtain such document(s) evidencing due filing with the NDRC within the prescribed timeframe and shall comply with all applicable PRC laws and regulations in connection with the Notes. The Guarantor shall within three China Business Days after submission of such NDRC Post-issue Filing provide the Trustee with a certified copy of the submission of the NDRC Post-issue Filing.

A31003912/0.8/21 Dec 2015

6

ANNEXURE – SUPPLEMENTAL OFFERING CIRCULAR DATED 1 DECEMBER 2015

A31003912

A-1

HNA Group (International) Company Limited (incorporated with limited liability in Hong Kong)

U.S.$250,000,000 8.125 per cent. Guaranteed Notes due 2018 issued under U.S.$1,000,000,000 Medium Term Note Programme unconditionally and irrevocably guaranteed by

HNA Group Co., Limited (incorporated with limited liability in the People’s Republic of China) This Supplement (the ‘‘Supplement’’) to the Offering Circular dated 17 March 2015 (the ‘‘Offering Circular’’) is prepared in connection with the U.S.$1,000,000,000 Medium Term Note Programme (the ‘‘Programme’’) established by HNA Group (International) Company Limited (the ‘‘Issuer’’), and the U.S.$250,000,000 8.125 per cent. Guaranteed notes due 2018 (the ‘‘Notes’’) issued by the Issuer under the Programme. This Supplement is supplemental to, forms part of and should be read in conjunction with, the Offering Circular. Terms defined in the Offering Circular have the same meaning when used in this Supplement. The Notes will be unconditionally and irrevocably guaranteed (‘‘Guarantee of the Notes’’) by HNA Group Co., Limited (the ‘‘Guarantor’’). The Guarantor will enter into a deed of guarantee (the ‘‘Deed of Guarantee’’) on 27 November 2015. The Guarantor will be required to register or cause to be registered with the State Administration of Foreign Exchange (‘‘SAFE‘‘)the Deed of Guarantee following the issue of the Notes in accordance with the Provision on Foreign Exchange Administration of Cross-Border Guarantees promulgated by SAFE. The Guarantor shall submit for registration the Deed of Guarantee within 15 China Business Days after its execution and complete the registration of the Deed of Guarantee with SAFE as soon as practicable and, in any event, before the Registration Deadline (being 90 China Business Days after 3 December 2015 (the ‘‘Issue Date’’). If such registration of the Deed of Guarantee with SAFE is completed on or before the Issue Date, the Net Proceeds (as defined in the Terms and Conditions of the Notes) of Notes shall be deposited into the designated account of the Issuer. If, however, the registration is not completed on or before the Issue Date, each of the Issuer and the Guarantor shall procure that the Net Proceeds from the offering of the Notes are deposited into the Escrow Account on the Issue Date, following which they may only be released to the Issuer after the completion of such registration on or before the Registration Deadline subject to the Terms and Conditions of the Notes and the Escrow Deed (as defined in the Terms and Conditions of the Notes). Following the occurrence of a Non-Registration Event (as defined in the Terms and Conditions of the Notes), the Issuer shall redeem on the Non-Registration Event Redemption Date (as defined in the Terms and Conditions of the Notes) all, and not some only, of the Notes subject to the Non-Registration Event at the Early Redemption Amount (No Registration Event), together with accrued interest up to, but excluding the Non-Registration Event Redemption Date. The obligations of the Guarantor under the Guarantee of the Notes shall, save for such exceptions as may be provided by applicable legislation and subject to Conditions 5(a) of the Terms and Conditions of the Notes at all times rank at least pari passu with all its other present and future unsecured and unsubordinated obligations. The Guarantor has made an application for the pre-issuance registration (the ‘‘Pre-Issuance Registration’’) in respect of the issue of the Notes with the National Development and Reform Commission (‘‘NDRC’’) in accordance with the Circular on Promoting the Reform of the Filing and Registration System for Issuance of Foreign Debt by Enterprises (Fa Gai Wai Zi [2015] No 2044) (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), the ‘‘NDRC Circular’’)issued by the NDRC and which came into effect on 14 September 2015 and obtained from the NDRC an Enterprise Foreign Debt PreIssuance Registration Certificate(企業發行外債備案登記證明)dated 20 November 2015. Furthermore, the Guarantor undertakes under Special Condition 2 of the Terms and Conditions of the Notes to file or cause to be filed with NDRC the requisite information and documents within 10 China Business Days after the Issue Date in accordance with the NDRC Circular. Approval-in-principle has been received from the Singapore Exchange Securities Trading Limited (the ‘‘SGX-ST’’) for the listing and quotation of the Notes. There is no assurance that the application to the Official List of the SGX-ST for the listing of the Notes of any Series will be approved. The Offering Circular and the Supplement together comprise of the listing particulars (the ‘‘Listing Particulars’’) for the purpose of listing the Notes on the Global Exchange Market of the Irish Stock Exchange. Application has been made to the Irish Stock Exchange for the approval of such Listing Particulars. Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List of the Irish Stock Exchange and trading on the Global Exchange Market. Each of the Issuer and the Guarantor accepts responsibility for the information contained in the Offering Circular and this Supplement. To the best of the knowledge of the Issuer and the Guarantor (having taken all reasonable care to ensure that such is the case), the information contained in these Listing Particulars is in accordance with the facts and does not omit anything likely to affect the import of such information. The financial information and tables containing such information as at and for the years ended 31 December 2013 and 2014 included in the sections, ‘‘Description of the Issuer Group’’ and ‘‘Description of the Guarantor Group’’ of this Supplement have been derived from the Group’s audited consolidated financial statements. The Notes will be represented by beneficial interest in a global note certificate (the ‘‘Global Note Certificate’’) in registered form, which will be registered in the name of a nominee for, and shall be deposited on or about the Issue Date, with a common depositary for Euroclear Bank S.A./N.V. (‘‘Euroclear’’) and Clearstream Banking, société anonyme (‘‘Clearstream, Luxembourg’’). Beneficial interests in the Global Note Certificate will be shown on, and transfer thereof will be effected through, records maintained by Euroclear and Clearstream, Luxembourg. The provisions governing the exchange of interests in a Global Note for other Global Notes or Definitive Notes or a Global Note Certificate for Certificates are described in ‘‘Forms of Notes’’ in the Offering Circular. The Notes and the Guarantee of the Notes have not been and will not be registered under the United States Securities Act of 1933, as amended, or with any securities regulatory authority of any state or other jurisdiction of the United States. The Notes may not be offered, sold, or delivered within the United States or to, or for the benefit or account of U.S. persons (as defined in Regulation S under the Securities Act) except in accordance with Regulation S under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Notes may be subject to additional selling restrictions as set out in ‘‘Pricing Supplement’’. Investing in the Notes involves certain risks and may not be suitable for all investors. Investors should have sufficient knowledge and experience in financial and business matters to evaluate the information contained in the Offering Circular, this Supplement and in the Pricing Supplement and the merits and risks of investing in the issue of the Notes in the context of their financial position and particular circumstances. Investors also should have the financial capacity to bear the risks associated with an investment in the Notes. Investors should not purchase the Notes unless they understand and are able to bear risks associated with Notes. See ‘‘Risk Factors’’ beginning on page 26 of the Offering Circular for a discussion of factors that investors should consider carefully before investing in the Notes.

Dealers Bank of China Limited

Bank of Communications China Merchants Securities CITIC CLSA Securities (HK) Co., Ltd. Hong Kong Branch

Guotai Junan Guoyuan Securities Securities Brokerage (Hong (Hong Kong) Limited Kong) Limited

Hong Kong International Securities Limited

Oversea-Chinese Banking Corporation Limited

Supplemental Offering Circular dated 1 December 2015

VTB Capital plc

CONTENTS Page IMPORTANT NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

PRICING SUPPLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE ISSUER . . . . . .

12

SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE GUARANTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20

CAPITALISATION AND INDEBTEDNESS OF THE ISSUER . . . . . . . . . . . . . . . . . . . . . . .

22

CAPITALISATION AND INDEBTEDNESS OF THE GUARANTOR . . . . . . . . . . . . . . . . .

23

DIRECTORS AND SENIOR MANAGEMENT OF THE ISSUER . . . . . . . . . . . . . . . . . . . . .

24

DESCRIPTION OF THE ISSUER GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26

DESCRIPTION OF THE GUARANTOR GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39

PRC REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

60

GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

61

ANNEXURE 1 — OFFERING CIRCULAR DATED 17 MARCH 2015 . . . . . . . . . . . . . . .

A-1

ANNEXURE 2 — ISSUER’S CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 . . . . . . . . . . . . . . . .

A-553

ANNEXURE 3 — GUARANTOR’S CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 . . . . . . . . . . . . . . . .

A-663

i

IMPORTANT NOTICE The section headed ‘‘Summary Consolidated Financial Information of the Issuer’’ of the Offering Circular should be replaced in its entirety with the section headed ‘‘Summary Consolidated Financial Information of the Issuer’’ of this Supplement. The section headed ‘‘Summary Consolidated Financial Information of the Guarantor’’ of the Offering Circular should be replaced in its entirety with the section headed ‘‘Summary Consolidated Financial Information of the Guarantor’’ of this Supplement. The section headed ‘‘Risk Factors – Risk Relating to Notes issued under the Programme and the Guarantee of the Notes’’ of the Offering Circular should be supplemented with the section headed ‘‘Risk Factors’’ of this Supplement. The section headed ‘‘Directors and Senior Management of the Issuer’’ of the Offering Circular should be replaced in its entirety with the section headed ‘‘Description of the Issuer Group’’ of this Supplement. The section headed ‘‘Description of the Issuer Group’’ of the Offering Circular should be replaced in its entirety with the section headed ‘‘Description of the Issuer Group’’ of this Supplement. The section headed ‘‘Description of the Guarantor Group’’ of the Offering Circular should be replaced in its entirety with the section headed ‘‘Description of the Issuer Group’’ of this Supplement. The section headed ‘‘Remittance of Renminbi into and Outside the PRC and PRC Regulations on the Guarantee of the Notes’’ of the Offering Circular should be supplemented with the section headed ‘‘PRC Regulations’’ of this Supplement. To the extent that there is any inconsistency between any statement in this Supplement and any other statement in the Offering Circular, the statements in this Supplement will prevail with effect from the date hereof. Save as disclosed in this Supplement, no other significant new factor, material mistake or inaccuracy relating to information included in the Offering Circular has arisen or been noted, as the case may be, since the publication of the Offering Circular. Each of the Issuer and the Guarantor, having made all reasonable enquiries, accepts full responsibility for the accuracy of the information contained in this Supplement and confirms that to the best of its knowledge and belief (i) this Supplement (to be read in conjunction with the Offering Circular to the extent that the Offering Circular is not supplemented or restated) contains all information with respect to the Guarantor and its subsidiaries (collectively, the ‘‘Group’’), the Notes and the Guarantee of the Notes, which is material in the context of the issue, offering, sale or distribution of the Notes (including all information which, according to the particular nature of the Issuer, the Guarantor, the Group, the Notes and the Guarantee of the Notes 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, the Guarantor, the Group and of the rights attaching to the Notes and the Guarantee of the Notes), (ii) the statements contained in this Supplement (to be read in conjunction with the Offering Circular to the extent that the Offering Circular is not supplemented or restated) relating to the Issuer, the Guarantor, the Group, the Notes and the Guarantee of the Notes are in all material respects true and accurate and not misleading, (iii) the statements of intention, opinions, belief or expectation relating to the Issuer, the Guarantor and the Group expressed in this Supplement (to be read in conjunction with the Offering Circular to the extent that the Offering Circular is not supplemented or restated) are honestly held, have been reached after considering all relevant circumstances and are based on reasonable assumptions, (iv) there are no other material facts relating to the Issuer, the Guarantor, the Group, the Notes and the Guarantee of the Notes, the omission of which would, in the context of the issue and offering of the Notes and the giving of the Guarantee of the Notes, make any statement in this Supplement (to be read in conjunction with the Offering Circular to the extent that the Offering Circular is not supplemented or restated), in light of the circumstances under which they were made, misleading, 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.

1

The distribution of this Supplement (including the Pricing Supplement herein) and the Offering Circular and the offering, sale and delivery of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this either this Supplement or the Offering Circular comes are required by the Issuer, the Guarantor, the Dealers to inform themselves about and to observe any such restrictions. None of the Issuer, the Guarantor, the Dealers, the Trustee or the Agents represents that may be lawfully distributed, or that any Notes 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. In particular, no action has been taken by the Issuer, the Guarantor, the Dealers, the Trustee or the Agents, which would permit a public offering of any Notes or distribution of this Supplement (including the Pricing Supplement therein) and the Offering Circular in any jurisdiction where action for such purposes is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and none of this Supplement (including the Pricing Supplement therein) and the Offering Circular 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. There are restrictions on the offer and sale of the Notes and the circulation of documents relating thereto, in certain jurisdictions including, but not limited to, the United States of America, the European Economic Area, the United Kingdom, the PRC, Hong Kong, Japan, Singapore and to persons connected therewith the Notes and the Guarantee of the Notes have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the ‘‘Securities Act’’) or with any securities regulatory authority of any state or other jurisdiction of the United States. Notes may not be offered or sold within the United States (as defined in Regulation S under the Securities Act (‘‘Regulation S’’)), or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except in accordance with Regulation S under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. For a description of certain restrictions on offers, sales and resales of the Notes and the distribution of this Supplement and the Offering Circular, see ‘‘Subscription and Sale’’ of the Offering Circular. This Supplement and the Offering Circular does not constitute an offer of, or an invitation to purchase, any of the Notes in any jurisdiction in which such offer or invitation would be unlawful. By purchasing any Notes, investors represent and agree to all of those provisions contained in that section of the Offering Circular. No person has been or is authorised in connection with the issue, offer, sale or distribution of the Notes to give any information or to make any representation not contained in or not consistent with this Supplement or any other document entered into in relation to the Programme and the sale of the Notes and, if given or made, such information or representation should not be relied upon as having been authorised by the Issuer, the Guarantor, the Group, the Dealers, the Trustee or any Agent or any of their respective affiliates (each, as defined in the Terms and Conditions of the Notes). Neither the delivery of this Supplement (including the Pricing Supplement therein) and the Offering Circular nor the offering, sale or delivery of any Note shall, in any circumstances, create any implication that the information contained in this Supplement is true subsequent to the date hereof or the date upon which this Supplement has been most recently amended or supplemented or that there has been no change, or any event reasonably likely to involve any change, in the prospects or financial or trading position of the Issuer, the Guarantor or the Group since the date thereof. Neither this Supplement nor any Pricing Supplement constitutes an offer or an invitation to subscribe for or purchase any Notes and should not be considered as a recommendation by the Issuer, the Guarantor, the Dealers, the Trustee, the Agents or any director, officer, employee, agent or affiliate of any such person or any of them that any recipient of this Supplement or any Pricing Supplement should subscribe for or purchase any Notes. Each recipient of this Supplement shall be taken to have made its own investigation and appraisal of the condition (financial or otherwise) of the Issuer, the Guarantor and/or the Group.

2

No representation or warranty, express or implied, is made or given by the Dealers, the Trustee or the Agents or any of their respective affiliates, directors or advisers as to the accuracy, completeness or sufficiency of the information contained in this Supplement, any Pricing Supplement or any other information supplied in connection with the Notes or the Guarantee of the Notes, and nothing contained in this Supplement is, or shall be relied upon as, a promise, representation or warranty by the Dealers, the Trustee or the Agents or any of their respective affiliates, directors or advisers. The Dealers, the Trustee and the Agents and their respective affiliates, directors or advisers have not independently verified any of the information contained in this Supplement and can give no assurance that this information is accurate, truthful or complete. To the fullest extent permitted by law, none of the Dealers, the Trustee or any Agent or any director, officer, employee, agent or affiliate of any such person makes any representation, warranty or undertaking, express or implied, or accepts any responsibility, with respect to the accuracy or completeness of any of the information in this Supplement or the contents of this Supplement or for any other statement made or purported to be made by the Dealers, the Trustee, the Agents, or any director, officer, employee, agent or affiliate of any such person or on its behalf in connection with the Issuer, the Guarantor, the Group, the Guarantee of the Notes, the Notes or the issue and offering of the Notes. The Dealers, the Trustee, each Agent and each of their respective affiliates, directors or advisers accordingly disclaim all and any liability whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in respect of this Supplement or any such statement. In connection with the issue of the Notes, the Dealer(s) (if any) named as the stabilising manager(s) (the ‘‘Stabilising Manager(s)’’) (or persons acting on behalf of any Stabilising Manager(s)) in the Pricing Supplement may, to the extent permitted by applicable laws and rules, over allot the 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. However, there is no assurance that the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the allotment of the Notes. Listing of the Notes on the SGX-ST and Irish Stock Exchange is not to be taken as an indication of the merits of the Issuer, the Guarantor, the Group or the Notes. 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. See ‘‘Risk Factors’’ for a discussion of certain factors to be considered in connection with an investment in the Notes. Any of the Dealer and their respective affiliates may purchase the Notes for its or their own account and enter into transactions, including credit derivatives, such as asset swaps, repackaging and credit default swaps relating to the Notes and/or other securities of the Issuer, the Guarantor or the Company or their respective subsidiaries or associates at the same time as the offer and sale of the Notes or in secondary market transactions. Such transactions may be carried out as bilateral trades with selected counterparties and separately from any existing sale or resale of the Notes to which this Supplement relates (notwithstanding that such selected counterparties may also be purchasers of the Notes). Furthermore, investors in the Notes may include entities affiliated with the Group. Investors are advised to read and understand the contents of these Listing Particulars before investing. If in doubt, investors should consult his or her adviser. The Issuer, the Guarantor, the Group, the Dealers, the Trustee and the Agents and their respective affiliates are not making any representation to any purchaser of the Notes regarding the legality of any investment in the Notes by such purchaser under any legal investment or similar laws or regulations. The contents of this Supplement should not be construed as providing legal, business, accounting or investment advice. Each person receiving these Listing Particulars acknowledges that such person has not relied on the Dealers, the Trustee, the Agents or any of their respective affiliates in connection with its investigation of the accuracy of such information or its investment decision.

3

This Supplement does not describe all of the risks and investment considerations (including those relating to each investor’s particular circumstances) of an investment in the Notes. Each potential purchaser of the Notes should refer to and consider carefully the Pricing Supplement for the issue of the Notes, which may describe additional risks and investment considerations associated with such Notes. The risks and investment considerations identified in this Supplement and the applicable Pricing Supplement are provided as general information only. Investors should consult their own financial and legal advisors as to the risks and investment considerations arising from an investment in an issue of the Notes and should possess the appropriate resources to analyse such investment and the suitability of such investment in their particular circumstances. Neither this Supplement nor any other information provided in connection with the Programme and the issue of the Notes are intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Issuer, the Guarantor, the Dealers, the Trustee or the Agents or any director, officer, employee, agent or affiliate of any such person that any recipient, of this Supplement or of any such information, should purchase the Notes. Each potential purchaser of the Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer, the Guarantor and the Group. Each potential purchaser of the Notes should determine for itself the relevance of the information contained in this Supplement and its purchase of the Notes should be based upon such investigation, as it deems necessary. None of the Dealers, the Trustee, the Agents or any of their respective affiliates, directors or advisers undertakes to review the financial condition or affairs of the Issuer, the Guarantor or the Group for so long as the Notes remain outstanding nor to advise any investor or potential investor of the Notes of any information coming to the attention of any of the Dealers, the Trustee, the Agents or their respective affiliates, directors or advisers. The contents of this Supplement have not been reviewed by any regulatory authority in any jurisdiction. Investors are advised to exercise caution in relation to the offer. If investors are in any doubt about any of the contents of this Supplement, investors should obtain independent professional advice.

4

PRICING SUPPLEMENT Pricing Supplement dated 26 November 2015

HNA GROUP (INTERNATIONAL) COMPANY LIMITED Issue of U.S.$250,000,000 8.125 per cent. Guaranteed Notes due 2018 Guaranteed by

HNA GROUP CO., LIMITED under the U.S.$1,000,000,000 Medium Term Note Programme The 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 Conditions (the ‘‘Conditions’’) set forth in the Offering Circular dated 17 March 2015. This Pricing Supplement contains the final terms of the Notes and must be read in conjunction with such Offering Circular and the supplemental Offering Circular dated 26 November 2015. The Guarantor is a private company and therefore there is less publicly available information about the Guarantor than a public company. In particular, they are not required to publish periodic financial statements. Where interest, discount income (not including discount income arising from secondary trading), prepayment fee, redemption premium or break cost is derived from any Notes by any person who is not resident in Singapore and who carries on any operations in Singapore through a permanent establishment in Singapore, the tax exemption available (subject to certain conditions) under the Income Tax Act, Chapter 134 of Singapore (the ‘‘ITA’’), shall not apply if such person acquires such Notes using the funds and profits of such person’s operations through a permanent establishment in Singapore. Any person whose interest, discount income (not including discount income arising from secondary trading), prepayment fees, redemption premium or break cost derived from the Notes is not exempt from tax (including for the reasons described above) shall include such income in a return of income made under the ITA. 1.

2.

(i)

Issuer:

HNA Group (International) Company Limited

(ii)

Guarantor:

HNA Group Co., Limited

(i)

Series Number:

2

(ii)

Tranche Number:

1

(iii) Date on which the Notes become fungible:

Not Applicable

3.

Specified Currency or Currencies:

U.S. dollars

4.

Aggregate Nominal Amount:

U.S.$250,000,000

5.

(i)

Issue Price:

100 per cent. of the Aggregate Nominal Amount

(ii)

Net Proceeds

Approximately U.S.$247,450,000

5

6.

7.

(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

(i)

Issue Date:

3 December 2015

(ii)

Interest Commencement Date:

Issue Date

8.

Maturity Date:

3 December 2018

9.

Interest Basis:

8.125 per cent. Fixed Rate (further particulars specified below)

10.

Redemption/Payment Basis:

Redemption at par

11.

Change of Interest or Redemption/ Payment Basis:

Not Applicable

12.

Put/Call Options:

Not Applicable

13.

Date of Board approval for issuance of Notes and Guarantee of the Notes respectively obtained

16 March 2015 and 27 July 2015, respectively

14.

Listing:

Singapore Exchange Securities Trading Limited (‘‘SGX-ST’’) and The Irish Stock Exchange plc (‘‘ISE’’) Listing of the Notes on the SGX-ST is expected to become effective on 4 December 2015 and listing of the Notes on the ISE is expected to become effective on 4 December 2015.

15.

Method of distribution:

Syndicated

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE 16.

Fixed Rate Note Provisions

Applicable

(i)

Rate of Interest:

8.125 per cent. per annum payable semi-annually in arrear

(ii)

Interest Payment Date(s):

3 June and 3 December in each year with no adjustments

(iii) Fixed Coupon Amount:

U.S.$40.625 per Calculation Amount

(iv) Broken Amount(s):

Not Applicable

(v)

30/360

Day Count Fraction:

(vi) Determination Dates:

Not Applicable

6

(vii) Other terms relating to the method of calculating interest for Fixed Rate Notes:

Not Applicable

17.

Floating Rate Note Provisions

Not Applicable

18.

Zero Coupon Note Provisions

Not Applicable

19.

Index-Linked Interest Note/other variable-linked interest Note Provisions

Not Applicable

20.

Dual Currency Note Provisions

Not Applicable

PROVISIONS RELATING TO REDEMPTION 21.

Call Option

Not Applicable

22.

Put Option

Not Applicable

23.

Final Redemption Amount of each Note

U.S.$1,000 per Calculation Amount

24.

Early Redemption Amount (i)

Early Redemption Amount (Tax) per Calculation Amount payable on redemption for taxation reasons and/or the method of calculating the same (if required or if different from that set out in the Conditions):

U.S.$1,000 per Calculation Amount

(ii)

Early Redemption Amount (Change of Control) per Calculation Amount payable on redemption on change of control triggering event and/or the method of calculating the same (if required or if different from that set out in the Conditions):

U.S.$1,010 per Calculation Amount

(iii) Early Redemption Amount (No Registration Event) per Calculation Amount payable on mandatory redemption on a no-registration event and/or the method of calculating the same (if required or if different from that set out in the Conditions):

U.S.$1,000 per Calculation Amount

7

(iv) Early Termination Amount per Calculation Amount payable on mandatory redemption on event of default or other early redemption and/or the method of calculating the same (if required or if different from that set out in the Conditions):

U.S.$1,000 per Calculation Amount

GENERAL PROVISIONS APPLICABLE TO THE NOTES 25.

Form of the Notes:

Registered Notes: Global Note Certificate exchangeable for Individual Note Certificates in the limited circumstances described in the Global Note Certificate

26.

Additional Financial Centre(s) or other special provisions relating to payment dates:

Not Applicable

27.

Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature):

Not Applicable

28.

Details relating to Partly Paid Notes: amount of each payment comprising the Issue Price and date on which each payment is to be made:

Not Applicable

29.

Details relating to Instalment Notes: amount of each instalment, date on which each payment is to be made:

Not Applicable

30.

Redenomination, renominalisation and reconventioning provisions:

Not Applicable

31.

Consolidation provisions:

The provisions in Condition 20 (Further Issues) apply

32.

Any applicable currency disruption/ fallback provisions:

Not Applicable

33.

Escrow Arrangement:

Applicable

34.

Other terms or special conditions:

Refer to Appendix

8

DISTRIBUTION 35.

(i)

If syndicated, names of Managers:

Bank of China Limited Bank of Communications Co., Ltd. Hong Kong Branch China Merchants Securities (HK) Co., Ltd. CLSA Limited Guotai Junan Securities (Hong Kong) Limited Guoyuan Securities Brokerage (Hong Kong) Limited Hong Kong International Securities Limited Oversea-Chinese Banking Corporation Limited VTB Capital plc

(ii)

Stabilising Manager(s) (if any):

Each of the Managers is appointed to act as stabilising manager

36.

If non-syndicated, name and address of Dealer:

Not Applicable

37.

Total commission and concession:

Applicable

38.

U.S. Selling Restrictions: TEFRA Not Applicable

Reg. S Category 2

39.

Additional selling restrictions:

Not Applicable

OPERATIONAL INFORMATION 40.

ISIN Code:

XS1259361050

41.

Common Code:

125936105

42.

CMU Instrument Number:

Not Applicable

43.

Any clearing system(s) other than Euroclear/Clearstream, Luxembourg, the CMU Service and CDP and the relevant identification number(s):

Not Applicable

44.

Delivery:

Free of payment

45.

Additional Paying Agent(s) (if any):

Not Applicable

9

GENERAL 46.

Private Bank Rebate/Commission:

Applicable

47.

The aggregate principal amount of the Notes issued has been translated into United States dollars at the rate of [•], producing a sum of (for Notes not denominated in United States dollars):

Not Applicable

48.

Ratings:

The Notes to be issued have not been rated.

STABILISING In connection with this issue, each of the Managers is appointed in its own capacity to act as stabilising manager (the ‘‘Stabilising Manager’’) (or persons acting on behalf of any Stabilising Manager) and 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. However, there is no assurance that the Stabilising Manager (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the allotment of the Notes. Any stabilisation action or over-allotment must be conducted by the relevant Stabilising Manager (or persons acting on behalf of any Stabilising Manager) in accordance with all applicable laws and rules. PURPOSE OF PRICING SUPPLEMENT This Pricing Supplement comprises the final terms required for issue and admission to the Official List of the SGX-ST and the Global Exchange Market of the ISE of the Notes described herein pursuant to the U.S.$1,000,000,000 Medium Term Note Programme of the Issuer. RESPONSIBILITY Neither the SGX-ST nor the ISE takes any responsibility for the correctness of any of the statements made or opinions expressed or reports contained in this Pricing Supplement. The admission of the Notes to the Official List of the SGX-ST and the Global Exchange Market of the ISE is not to be taken as an indication of the merits of the Issuer, the Guarantor, the Programme or the Notes. The Issuer and the Guarantor each accepts responsibility for the information contained in this Pricing Supplement. Signed on behalf of:

Signed on behalf of:

HNA GROUP (INTERNATIONAL) COMPANY LIMITED

HNA GROUP CO., LIMITED

By: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Duly authorised Name: Title:

By: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Duly authorised Name: Title:

10

APPENDIX SPECIAL CONDITIONS Set out below are the special conditions (‘‘Special Conditions’’) referred to in item 34 (Other terms or special conditions) of this Pricing Supplement. These Special Conditions are applicable only to the Series of Notes governed by this Pricing Supplement. 1.

Interpretation All provisions in the Conditions stipulating that any two directors or duly authorised officers will issue a certificate or notice or will do an act on behalf of the Guarantor shall be construed to mean any director or duly authorised officer will do so on behalf of the Guarantor.

2.

Notification to NDRC For the benefit of each Tranche of Notes to be consolidated with, and form a single Series of, the Notes governed by this Pricing Supplement, the Guarantor undertakes to file or cause to be filed with the National Development and Reform Commission of the PRC (the ‘‘NDRC’’) the requisite information and documents within 10 China Business Days after the relevant Issue Date in accordance with the Circular on Promoting the Reform of the Filing and Registration System for Issuance of Foreign Debt by Enterprises (Fa Gai Wai Zi [2015] No 2044) (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), the ‘‘NDRC Circular’’) issued by the NDRC and which came into effect on 14 September 2015, and any implementation rules as issued by the NDRC from time to time (the ‘‘NDRC Post-issue Filing’’). The Guarantor shall complete the NDRC Post-issue Filing and obtain such document(s) evidencing due filing with the NDRC within the prescribed timeframe and shall comply with all applicable PRC laws and regulations in connection with the Notes. The Guarantor shall within three China Business Days after submission of such NDRC Post-issue Filing provide the Trustee with a certified copy of the submission of the NDRC Post-issue Filing.

11

SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE ISSUER The following tables set forth the summary consolidated financial information of the Issuer as at and for the periods indicated. The summary financial information presented below as at and for the years ended 31 December 2013 and 2014, has been extracted from the Issuer’s audited consolidated financial statements for the years ended 31 December 2014. The information set out below should be read in conjunction with, and is qualified in its entirety by reference to, the consolidated financial information of the Issuer, as set out in the section headed ‘‘Financial Statements of the Issuer’’ in this Offering Circular. The Issuer’s audited consolidated financial statements and reviewed consolidated financial statements are presented in accordance with HKFRSs and have been prepared in accordance with Hong Kong Companies Ordinance (Cap. 622 of the Laws of Hong Kong). Consolidated Statement of Comprehensive Income of the Issuer Year ended 31 December 2014

2013

HK$ (Audited) TURNOVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other revenue and net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Administrative and operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,264,466,815 1,276,353,194 (2,814,482,831)

4,015,396,868 4,047,356,379 (3,344,835,692)

PROFIT FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share of results of associates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,726,337,178 (965,154,780) (107,340,413)

4,717,917,555 (948,055,935) (11,622,322)

PROFIT BEFORE TAXATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income tax credit/(expense). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

653,841,985 38,988,028

3,758,239,298 (78,625,472)

PROFIT FOR THE YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

692,830,013

3,679,613,826

693,045,432 (215,419)

3,667,858,304 11,755,522

692,830,013

3,679,613,826

Profit for the year attributable to: Equity shareholders of the company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

Year ended 31 December 2014

2013

HK$ (Audited) PROFIT FOR THE YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

692,830,013

OTHER COMPREHENSIVE (LOSS)/INCOME Items that will not be reclassified to profit or loss: Re-measurement of the defined benefits plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(16,204,400)

Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of financial statements of overseas subsidiaries and associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Available-for-sale financial assets: net movement in the investment revaluation reserve . . . . Cash flow hedge: net movement in the hedging reserve . . . . . . . . . . . . . . . . . . . . . . . . .

3,679,613,826

3,142,950

(716,550,228) 53,262,500 1,012,775 (662,274,953)

74,028,842 (6,500,056) 237,424,001 304,952,787

OTHER COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR (NET OF TAX) . . . .

(678,479,353)

308,095,737

TOTAL COMPREHENSIVE INCOME FOR THE YEAR . . . . . . . . . . . . . . . . . . . . . .

14,350,660

3,987,709,563

Total comprehensive income for the year attributable to: Equity shareholders of the company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,932,100 7,418,560

3,975,968,416 11,741,147

TOTAL COMPREHENSIVE INCOME FOR THE YEAR . . . . . . . . . . . . . . . . . . . . . .

14,350,660

3,987,709,563

13

Consolidated Balance Sheet of the Issuer As at 31 December 2014

2013 HK$ (Audited)

NON-CURRENT ASSETS Property, plant and equipment . . . Fleet . . . . . . . . . . . . . . . . . . . . Interests in associates . . . . . . . . . Goodwill . . . . . . . . . . . . . . . . . Other intangible assets . . . . . . . . Available-for-sale financial assets Deferred tax assets . . . . . . . . . . Other non-current assets . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

608,611,241 3,518,536,400 5,828,796,104 88,531,154 337,733,700 574,835,250 222,293,650 13,402,795,446

1,814,234,692 3,065,561,500 4,441,071,545 28,116,322 371,810,500 42,746,000 167,154,000 14,606,265,654

24,582,132,945

24,536,960,213

. . . . . . . . . . . . .

– 2,151,523,600 508,680,408 1,091,897,154 15,835,079 6,653,507,661 3,750,573,110 62,900,770 19,467,500 24,805,300 2,365,036,766 569,920,654 16,734,037

85,691,865 2,177,161,028 345,791,155 313,326,306 2,471,282 6,475,588,977 966,346,704 5,261,329,555 48,976,650 69,647,500 1,091,485,530 – –

Non-current assets classified as assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . .

17,230,882,039 9,540,500

16,837,816,552 8,572,000

17,240,422,539

16,846,388,552

494,723,465 691,882,952 11,448,600 14,787,951 74,958 1,554,697,142 44,840,350 6,943,851,940 – 2,704,731,750 459,697,369 19,397,574 7,632,400 14,292,632 – 1,029,537,051

341,977,226 549,357,241 26,787,500 8,226,842 11,543,059 1,552,467,744 42,860,000 7,132,701,220 61,030,724 934,653,160 – 27,591,691 13,929,500 48,658,138 2,236,683 –

13,991,596,134

10,754,020,728

CURRENT ASSETS Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable . . . . . . . . . . . . . . . . . . . . . . Deposits, prepayments and other receivables . . . . . Financial assets at fair value through profit or loss . Tax recoverable. . . . . . . . . . . . . . . . . . . . . . . . . Amount due from immediate holding company . . . Amounts due from fellow subsidiary companies. . . Amounts due from related companies . . . . . . . . . . Pledged bank deposits . . . . . . . . . . . . . . . . . . . . Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . Cash and bank balances . . . . . . . . . . . . . . . . . . . Other current financial assets . . . . . . . . . . . . . . . Deferred tax assets . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

CURRENT LIABILITIES Accounts payable . . . . . . . . . . . . . . . . . . . Accruals and other payables . . . . . . . . . . . . Other current financial liabilities . . . . . . . . . Amounts due to fellow subsidiary companies. Amounts due to related companies . . . . . . . . Amount due to an associate . . . . . . . . . . . . Security deposits . . . . . . . . . . . . . . . . . . . . Bank loans . . . . . . . . . . . . . . . . . . . . . . . . Obligations under finance leases . . . . . . . . . Interest bearing loans and borrowings. . . . . . Margin loan payable . . . . . . . . . . . . . . . . . Tax payable . . . . . . . . . . . . . . . . . . . . . . . Provisions . . . . . . . . . . . . . . . . . . . . . . . . Deferred revenues . . . . . . . . . . . . . . . . . . . Bank overdraft (unsecured) . . . . . . . . . . . . . Bonds payable . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

14

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

As at 31 December 2014

2013 HK$ (Audited)

NET CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,248,826,405

6,092,367,824

TOTAL ASSETS LESS CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . .

27,830,959,350

30,629,328,037

109,715,750 37,296,404 – – 87,712,695 35,776,875 41,978,200 1,597,500,000

99,649,500 33,216,500 285,892,900 91,077,500 2,776,340,279 540,594 67,289,097 1,012,852,405

1,909,979,924

4,366,858,775

25,920,979,426

26,262,469,262

Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21,606,011,408 4,273,550,415

20,264,155,617 5,879,125,472

Total equity attributable to equity shareholders of the company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,879,561,823 41,417,603

26,143,281,089 119,188,173

TOTAL EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,920,979,426

26,262,469,262

NON-CURRENT LIABILITIES Deferred tax liabilities . . . . . . . . . . . . Other non-current financial liabilities . . Obligations under finance leases . . . . . Net employee defined benefit liabilities Interest bearing loans and borrowings. . Provisions . . . . . . . . . . . . . . . . . . . . Deferred revenues . . . . . . . . . . . . . . . Bonds payable . . . . . . . . . . . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CAPITAL AND RESERVES

15

SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE GUARANTOR The following tables set forth the summary consolidated financial information and other data of the Guarantor as at and for the periods indicated. The summary financial information presented below as at and for the years ended 31 December 2013 and 2014, has been extracted from the Guarantor’s audited consolidated financial statements for the years ended 31 December 2014. The information set out below should be read in conjunction with, and is qualified in its entirety by reference to, the consolidated financial information of the Guarantor, as set out in the section headed Financial Statements of the Guarantor’’ in this Offering Circular. The Guarantor’s audited consolidated financial statements are presented in accordance with PRC Accounting Standards. The differences between PRC Accounting Standards and IFRS are summarised in Differences between PRC Accounting Standards and IFRS’’. Consolidated Income Statement of the Guarantor As at 31 December Items

2014

2013 CNY (Audited)

I.

II.

III.

IV. V.

VI. VII.

Total operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Including: Operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Handling charges and commission income. . . . . . . . . . . . . . . . Total operating cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Including: Operating cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Handling charges and commission expenses . . . . . . . . . . . . . . Business tax and surcharges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asset impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Add: Gains from changes in fair value . . . . . . . . . . . . . . . . . . . . . . . . . . Investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Including: Income from investment in associates and joint ventures . . Exchange gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Add: Non-operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Including: Gains on disposal of non-current assets . . . . . . . . . . . . . . Less: Non-operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Including: Losses on disposal of non-current assets . . . . . . . . . . . . . Total profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Income tax expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net profit attributable to shareholders of the parent company . . . . . . . . . . . Net (loss) profit attributable to minority interests . . . . . . . . . . . . . . . . . . . Other comprehensive income, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total comprehensive income attributable to owners of the parent company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total comprehensive income attributable to minority interests . . . . . . . . . .

16

67,502,512,303.53 65,802,689,980.11 613,402,617.98 1,086,419,705.44 68,923,256,917.20 50,023,542,517.94 380,710,176.51 66,300,008.75 1,286,738,677.03 3,406,665,095.46 6,490,136,430.32 6,857,567,464.62 411,596,546.57 2,546,216,014.39 1,543,516,743.24 181,810,559.93 245,095,904.21 2,914,084,048.17 1,383,432,126.36 69,071,586.46 181,489,548.71 4,128,855.66 4,116,026,625.82 1,690,022,859.65 2,426,003,766.17 558,723,277.86 1,867,280,488.31 (255,946,255.61) 2,170,057,510.56

56,007,786,270.96 54,417,004,796.49 579,872,763.97 1,010,908,710.50 57,338,478,653.01 41,339,495,678.79 257,924,739.29 75,388,981.65 1,060,225,541.82 3,303,891,939.87 5,566,775,281.07 5,406,125,060.29 328,651,430.23 675,840,126.72 2,075,100,141.30 – 111,844,669.22 1,532,092,555.19 1,413,979,379.33 – 209,932,701 25 – 2,736,139,233.27 1,184,048,732.72 1,552,090,500.55 475,727,844.78 1,076,362,655.77 (246,789,874.57) 1,305,300,625.98

292,656,971.78 1,877,400,538.78

228,937,970.21 1,076,362,655.77

Consolidated Balance Sheet Year ended 31 December 2014

2013 CNY (Audited)

Assets Current assets: Cash at bank and in hand . . . . . . . . . . . . . . . . . . . . Lending to banks and other financial institutions . . . . Financial assets at fair value through profit or loss . . . Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interests receivable . . . . . . . . . . . . . . . . . . . . . . . . Other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . Financial assets purchased under agreements to resell . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current assets due within one year. . . . . . . . . . . Other current assets . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .

58,817,502,915.84 – 5,305,523,473.68 74,551,655.07 4,736,000,720.18 5,337,139,595.24 57,292,193.16 5,966,996,516.09 149,576,008.77 38,548,916,360.11 7,819,384,971.92 679,061,708.31

35,680,627,927.70 100,000,000.00 2,725,707,903.37 115,775,581.32 4,445,654,667.04 5,233,571,887.03 26,805,034.62 5,014,291,961.50 26,100,261.00 36,181,722,914.96 5,161,238,124.26 460,112,702.30

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

127,491,946,118.37

95,171,608,965.10

. . . . . . . . . . . . . . . .

1,072,371,643.75 8,273,343,709.14 2,329,111,322.78 26,972,231,305.22 23,630,032,731.57 24,241,947,479.78 83,075,591,195.55 10,872,540,135.46 84,836.00 521,836.95 6,664,106,007.42 23,447,333.44 4,095,969,483.11 2,645,439,609.01 337,483,925.10 895,584,371.55

389,323,156.89 4,497,348,585.88 863,921,250.98 19,120,177,689.63 16,590,013,378.35 24,690,221,201.32 78,987,388,469.33 10,739,439,708.36 109,676.00 578,167.18 6,087,702,373.36 16,322,791.44 5,250,700,743.31 2,541,075,939.29 279,962,829.85 958,397,779.89

Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

195,129,806,925.83

171,012,683,741.06

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

322,621,753,044.20

266,184,292,706.16

Non-current assets: Entrusted loans and advances granted . Available-for-sale financial assets . . . Held-to-maturity investments. . . . . . . Long-term accounts receivable . . . . . Long-term equity investments . . . . . . Investment properties . . . . . . . . . . . . Fixed assets . . . . . . . . . . . . . . . . . . Construction in progress . . . . . . . . . . Construction materials . . . . . . . . . . . Disposal of fixed assets . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . Development expenditure . . . . . . . . . Goodwill . . . . . . . . . . . . . . . . . . . . Long-term prepaid expenses . . . . . . . Deferred income tax assets . . . . . . . . Other non-current assets . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

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. . . . . . . . . . . . . . . .

17

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

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. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

Year ended 31 December 2014

2013 CNY (Audited)

Liabilities and owner’s equity Current liabilities: Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits takings and deposits from banks and other financial institutions Lending from banks and other financial institutions . . . . . . . . . . . . . . . Financial liabilities at fair value through profit or loss . . . . . . . . . . . . . Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advances from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial assets sold under agreement to repurchase . . . . . . . . . . . . . . . Handling charges and commission payable . . . . . . . . . . . . . . . . . . . . . Employee benefits payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interests payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current liabilities due within one year . . . . . . . . . . . . . . . . . . . . . Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

52,920,913,909.09 344,277,068.67 200,000,000.00 9,031,457.08 4,265,762,028.36 7,007,059,414.27 4,840,267,023.02 137,500,000.00 2,221,950.56 592,608,113.22 1,136,630,963.74 894,106,581.02 89,408,062.57 7,811,099,347.59 13,895,986,618.99 2,958,810,750.94

42,790,611,658.92 458,560,000.00 100,000,000.00 81,645,081.05 5,510,898,386.15 6,085,388,775.02 6,567,361,189.34 144,400,000.00 1,318,728.82 645,187,403.98 982,056,154.70 692,234,338.06 96,637,200.52 7,610,471,358.78 11,003,209,439.52 516,951,324.52

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

97,105,683,289.12

83,286,931,039.38

. . . . . . . .

116,612,225,517.45 21,671,586,792.25 8,166,125,370.68 307,729,338.03 100,386,960.76 4,518,869,337.58 984,812,845.95 152,361,736,162.70

99,184,652,719.42 16,053,227,421.44 5,223,990,226.85 12,030,916.00 363,672,188.59 3,940,649,408.80 1,088,750,075.71 125,866,972,956.81

Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

249,467,419,451.82

209,153,903,996.19

. . . . . . . . .

11,151,800,000.00 5,888,592,858.72 (640,644,661.55) 3,096,672.27 229,022,305.85 209,854,248.62 2,361,656,701.94 19,203,378,125.85 53,950,955,466.53

11,151,800,000.00 6,019,103,000.93 (374,578,355.47) – 194,283,996.94 – 2,235,383,124.54 19,225,991,766.94 37,804,396,943.03

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

73,154,333,592.38

57,030,388,709.97

Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . .

322,621,753,044.20

266,184,292,706.16

Non-current liabilities: Long-term borrowings . . . . . . Bonds payable . . . . . . . . . . . Long-term payables . . . . . . . . Special payables . . . . . . . . . . Estimated liabilities . . . . . . . . Deferred income tax liabilities. Other non-current liabilities . . Total non-current liabilities . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

Shareholders’ equity (or owner’s equity): Share capital . . . . . . . . . . . . . . . . . . . Capital reserve . . . . . . . . . . . . . . . . . Other comprehensive income. . . . . . . . Special reserve . . . . . . . . . . . . . . . . . Surplus reserve . . . . . . . . . . . . . . . . . General risk provision . . . . . . . . . . . . Undistributed profits . . . . . . . . . . . . . Total equity attributable to shareholders Minority interests . . . . . . . . . . . . . . .

. . . . . . . .

. . . . . . . .

.. .. .. .. .. .. .. of ..

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. . . . . . . .

. . . . . . . .

.............. .............. .............. .............. .............. .............. .............. the parent company ..............

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18

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. . . . . . . . .

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. . . . . . . . . . . . . . . .

. . . . . . . .

. . . . . . . . .

Non-GAAP Financial Measures As at 31 December 2014

2013

(in CNY million, except for ratios and percentages) (Audited) EBITDA(1) . . . . . . . . . . . EBITDA margin(2) . . . . . . EBITDA/Interest expense . Total debt (3)/EBITDA . . . Total debt/Total capital (4) . Net gearing (5) . . . . . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

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. . . . . .

. . . . . .

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. . . . . .

. . . . . .

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18,928.03 28.04% 2.37x 10.12x 72.36% 1.81

12,790.91 22.84% 1.91x 12.39x 73.54% 2.15

Notes: (1)

EBITDA for any period consists of total profit, fixed asset depreciation, intangible asset amortisation, long-term deferred expenses and interest expense. EBITDA is not a standard measure under PRC GAAP. EBITDA is a widely used financial indicator of a company’s ability to service and incur debt. EBITDA should not be considered in isolation or construed as an alternative to cash flows, net income or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. EBITDA does not account for taxes, interest expense or other non-operating cash expenses. In evaluating EBITDA, investors should consider, among other things, the components of EBITDA such as sales and operating expenses and the amount by which EBITDA exceeds capital expenditures and other charges. EBITDA has been included because the Group believe it is a useful supplement to cash flow data as a measure of its performance and its ability to generate cash flow from operations to cover debt service and taxes. EBITDA presented herein may not be comparable to similarly titled measures presented by other companies. Investors should not compare the Group’s EBITDA to EBITDA presented by other companies because not all companies use the same definition.

(2)

EBITDA margin is calculated as EBITDA divided by total operating revenue.

(3)

Total debt consists of short-term borrowing, absorbing deposits and borrowing form other financial institutions, long-term borrowing and bonds payable.

(4)

Total capital consists of total debt and total owner’s equity.

(5)

Net gearing is total debt less cash at bank and in hand over total owner’s equity.

19

RISK FACTORS After the risk factor headed ‘‘If the Guarantor fails to complete the SAFE registration in connection with the Guarantee of each Tranche of Notes within the time period prescribed by SAFE, there may be logistical hurdles for cross-border payment under the Guarantee of the particular Tranche of the Notes’’ on pages 45 and 46 of the Offering Circular, the following risk factor is inserted: The National Development and Reform Commission (‘‘NDRC’’) issued the Circular on Promoting the Reform of the Filing and Registration System for Issuance of Foreign Debt by Enterprises( 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 ), the (‘‘NDRC Circular’’)on 14 September 2015, which came into effect on the same day. According to the NDRC Circular, domestic enterprises and their overseas controlled entities shall procure the registration of any debt securities or medium-to-long term loans issued or incurred outside the PRC with NDRC prior to the issue of the securities or drawings under the loans, and notify the particulars of the relevant issues or drawings within 10 working days after closing. The Guarantor has undertaken under Special Condition 2 of the Terms and Conditions of the Notes to perform the post-issue filing pursuant to the NDRC Circular within 10 China Business Days of the issuance of the Notes. As the NDRC Circular is a new regulation, it is still uncertain how NDRC will interpret, implement and enforce the NDRC Circular. Further, it is unclear whether the system for the acceptance of the post-issue filing is fully operational although the post-issue filing is a procedural process which involves the reporting of certain post-issue information in respect of the Notes by the Guarantor to NDRC, rather than a substantive approval or consent process. There is a risk that such post-issue filing cannot be completed in time or at all, as a result of such uncertainty. Any failure by the Guarantor to complete the post-issue filing in accordance with the NDRC Circular should not impact the validity or enforceability of the Notes and the issue documents although there is no assurance that the Guarantor will not be subject to penalties. Potential investors of the Notes are advised to exercise due caution when making their investment decisions. The risk factor entitled ‘‘Investment in the Renminbi Notes is subject to exchange rate risks’’ on page 54 of the Offering Circular shall be deleted in its entirety and replaced with the following: Investment in the Renminbi Notes is subject to exchange rate risks The value of Renminbi against other foreign currencies fluctuates from time to time and is affected by changes in the PRC and international political and economic conditions as well as many other factors. Recently, the PBoC implemented changes to the way it calculates the Renminbi’s daily mid-point against the U.S. dollar to take into account market-maker quotes before announcing such daily midpoint. This change, and others that may be implemented, may increase the volatility in the value of the Renminbi against foreign currencies. All payments of interest and principal will be made in Renminbi with respect to Renminbi Notes unless otherwise specified. As a result, the value of these Renminbi payments may vary with the changes in the prevailing exchange rates in the marketplace. If the value of Renminbi depreciates against another foreign currency, the value of the investment made by a holder of the Renminbi Notes in that foreign currency will decline. After the risk factor headed ‘‘Payments with respect to the Renminbi Notes may be made only in the manner designated in the terms and conditions of the Renminbi Notes’’ on page 54 of the Offering Circular, the following risk factor is inserted: Gains on the transfer of the Renminbi Notes may become subject to income taxes under PRC tax laws Under the PRC Enterprise Income Tax Law, the PRC Individual Income Tax Law and the relevant implementing rules, as amended from time to time, any gain realised on the transfer of Renminbi Notes by non-PRC resident enterprise or individual Holders may be subject to PRC enterprise income tax (‘‘EIT’’) or PRC individual income tax (‘‘IIT’’) if such gain is regarded as income derived from sources within the PRC. The PRC Enterprise Income Tax Law levies EIT at the rate of 20 per cent. of the gains

20

derived by such non-PRC resident enterprise or individual Holder from the transfer of Renminbi Notes but its implementation rules have reduced the enterprise income tax rate to 10 per cent. The PRC Individual Income Tax Law levies IIT at a rate of 20 per cent. of the gains derived by such non-PRC resident or individual Holder from the transfer of Renminbi Notes. However, uncertainty remains as to whether the gain realised from the transfer of Renminbi Notes by non-PRC resident enterprise or individual Holders would be treated as income derived from sources within the PRC and become subject to the EIT or IIT. This will depend on how the PRC tax authorities interpret, apply or enforce the PRC Enterprise Income Tax Law, the PRC Individual Income Tax Law and the relevant implementing rules. According to the arrangement between the PRC and Hong Kong, for avoidance of double taxation, Holders who are residents of Hong Kong, including enterprise Holders and individual Holders, will not be subject to EIT or IIT on capital gains derived from a sale or exchange of the Notes. Therefore, if non-PRC enterprise or individual resident Holders are required to pay PRC income tax on gains derived from the transfer of Renminbi Notes, unless there is an applicable tax treaty between PRC and the jurisdiction in which such non-PRC enterprise or individual resident holders of Renminbi Notes reside that reduces or exempts the relevant EIT or IIT, the value of their investment in Renminbi Notes may be materially and adversely affected.

21

CAPITALISATION AND INDEBTEDNESS OF THE ISSUER The following table sets forth the capitalisation and indebtedness of the Issuer as at 31 December 2014, as adjusted to give effect to the issue of the Notes and the use of proceeds discussed in ‘‘Use of Proceeds’’ before deducting the underwriting commission and estimated offering expenses payable by the Issuer. This table should be read in conjunction with the financial information and the accompanying Notes included elsewhere in the Offering Circular and this Supplement. The information set out below should be read in conjunction with, and is qualified in its entirety by reference to, the reviewed consolidated financial statements of the Issuer for the year ended 31 December 2014 included elsewhere in the Offering Circular and this Supplement. As at 31 December 2014

Current liabilities Accounts payable . . . . . . . . . . . . . . . . . . . Accruals and other payables . . . . . . . . . . . . Other current financial liabilities . . . . . . . . . Amounts due to fellow subsidiary companies. Amounts due to related companies . . . . . . . . Amount due to an associate . . . . . . . . . . . . Security deposits . . . . . . . . . . . . . . . . . . . . Bank loans . . . . . . . . . . . . . . . . . . . . . . . . Interest bearing loans and borrowings. . . . . . Margin loan payable . . . . . . . . . . . . . . . . . Tax payable . . . . . . . . . . . . . . . . . . . . . . . Provisions . . . . . . . . . . . . . . . . . . . . . . . . Deferred revenues . . . . . . . . . . . . . . . . . . . Bonds payable . . . . . . . . . . . . . . . . . . . . .

494,723,465 691,882,952 11,448,600 14,787,951 74,958 1,554,697,142 44,840,350 6,943,851,940 2,704,731,750 459,697,369 19,397,574 7,632,400 14,292,632 1,029,537,051

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13,991,596,134

13,991,596,134

. . . . . . .

109,715,750 37,296,404 87,712,695 35,776,875 41,978,200 1,597,500,000 –

109,715,750 37,296,404 87,712,695 35,776,875 41,978,200 1,597,500,000 1,945,625,000

Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,909,979,924

3,855,604,924

Equity Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21,606,011,408 4,273,550,415 41,417,603

21,606,011,408 4,273,550,415 41,417,603

Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,920,979,426

25,920,979,426

Total capitalisation (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,830,959,350

29,776,584,350

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

. . . . . . .

. . . . . . . . . . . . . .

HK$

494,723,465 691,882,952 11,448,600 14,787,951 74,958 1,554,697,142 44,840,350 6,943,851,940 2,704,731,750 459,697,369 19,397,574 7,632,400 14,292,632 1,029,537,051

. . . . . . .

. . . . . . . . . . . . . .

As adjusted

HK$ . . . . . . . . . . . . . .

Non-current liabilities Deferred tax liabilities . . . . . . . . . . . Other non-current financial liabilities . Interest bearing loans and borrowings. Provisions . . . . . . . . . . . . . . . . . . . Deferred revenues . . . . . . . . . . . . . . Bonds payable (1) . . . . . . . . . . . . . . . Bond/Notes offered(2) . . . . . . . . . . . .

. . . . . . . . . . . . . .

Actual

. . . . . . .

Notes: (1)

On 31 March 2015, the Issuer issued S$128,000,000 7.00 per cent. guaranteed notes due 2017.

(2)

The translation of USD amounts into Hong Kong dollar amounts has been made at the rate of HK$7.7825 to U.S.$1.00.

(3)

Total capitalisation equals the sum of total non-current liabilities and total equity.

Unless otherwise disclosed in this Offering Circular, there has not been any material adverse change in the Issuer’s capitalisation or indebtedness since 31 December 2014.

22

CAPITALISATION AND INDEBTEDNESS OF THE GUARANTOR The following table sets forth the Guarantor’s consolidated capitalisation and indebtedness as at 31 December 2014 as adjusted to give effect to the issue of the Notes and the use of proceeds discussed in ‘‘Use of Proceeds’’ before deducting the underwriting commission and estimated offering expenses payable by the Issuer. For additional information, see the audited consolidated Guarantor’s financial statements and notes thereto included in the Offering Circular and this Supplement. The information set out below should be read in conjunction with ‘‘Use of Proceeds’’, and is qualified in its entirety by reference to, the audited consolidated financial statement of the Guarantor for the year ended 31 December 2014 included elsewhere in the Offering Circular and this Supplement. As at 31 December 2014

Current liabilities: Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Actual

As Adjusted

CNY

CNY

52,920,913,909.09 44,184,769,380.03 97,105,683,289.12

52,920,913,909.09 44,184,769,380.03 97,105,683,289.12

. . . . . .

116,612,225,517.45 21,671,586,792.25 4,518,869,337.58 984,812,845.95 – 143,787,494,493.23

116,612,225,517.45 21,671,586,792.25 4,518,869,337.58 984,812,845.95 1,552,500,000.00 145,339,994,493.23

Owner’s equity: Equity attributable to the owners of the company . . . . . . . . . . . . . . . . . . . . . . . Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total owner’s equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19,203,378,125.85 53,950,955,466.53 73,154,333,592.38

19,203,378,125.85 53,950,955,466.53 73,154,333,592.38

Total capitalisation (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

216,941,828,085.61

218,494,328,085.61

Non-current liabilities: Long-term borrowings . . . . . . Bonds payable (1) . . . . . . . . . . Deferred tax liabilities . . . . . . Other non-current liabilities . . Bonds/Notes offered hereby (2) . Total non-current liabilities . . .

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Notes: (1)

On 31 March 2015, the Issuer issued S$128,000,000 of 7.00 per cent. guaranteed bonds due 2017.

(2)

The translation of USD amounts into Renminbi amounts has been made at the rate of RMB6.21 to U.S.$1.00.

(3)

Total capitalisation equals the sum of total non-current liabilities and total equity.

Unless otherwise disclosed in this Offering Circular, there has not been any material adverse change in the Guarantor’s capitalisation or indebtedness since 31 December 2014.

23

DIRECTORS AND SENIOR MANAGEMENT OF THE ISSUER DIRECTORS The members of the board of directors of the Issuer as of the date of this Supplement are as follows: Name Chen Feng . . . . . . . . Wang Jian . . . . . . . . Tan Xiangdong . . . . . Donal Joseph Boylan . Li Yifan . . . . . . . . . . Wang Hao . . . . . . . . Li Xiaoming . . . . . . .

Positions . . . . . . .

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Director Director Director Director Director Director Director

and Chairman and Vice Chairman and Vice Chairman and CEO

Chen Feng Mr. Chen, aged 61, is a senior economist, and has been a member of the board of directors of the Issuer since October 2013. He is also the chairman of the board of directors( 董事局主席)of the Guarantor. He obtained a master degree in management science from Lufthansa Aviation Transportation Management College in the Federal Republic of Germany in 1984, a master degree in business administration from Holland Maastricht School of Management in 1995, and a graduate certificate in senior management from Harvard Business School in the United States in 2004. Mr. Chen was granted special government allowance by the State Council in October 1994. Mr. Chen has many years of management working experience at the CAAC and the National Air Traffic Control Bureau(國家空中交 通管制局), and was an aviation affair assistant to the governor of the Hainan Province(海南省省長航 空事務助理)who presided over the formation of Hainan Airlines Company Limited. In addition, Mr. Chen was a member of the standing committee of the 2nd session of the Hainan Province People’s Congress( 第二屆海南省人民代表大會常務委員會), the 16th, 17th and 18th National Congress of the Communist Party of China(中國共產黨第十六次、十七次及十八次全國代表大會), and the 10th and 11th National Committee of the Chinese People’s Political Consultative Conference(中 國人民政治協商會議第十屆及第十一屆全國委員會). Mr. Chen has been granted a number of awards by various government authorities and other organisations, including without limitation, the Best Asian Business Leader Award(亞洲最佳商業領袖獎)sponsored by CNBC in 2005 and the Leader of Chinese Entrepreneurs For The Year Award(華商領袖年度人物大獎)in 2010. Wang Jian Mr. Wang, aged 53, has been the chairman of the board of directors of the Issuer since August 2013. He is also chairman(董事長)of the Guarantor. He obtained an undergraduate degree in Aviation Management from Civil Aviation University of China (formerly China Civil Aviation College(中國民 航大學,前稱中國民航學院)in 1983, and a master degree in business administration from Holland Maastricht School of Management in 1995. In 1990, he was involved in the establishment of Hainan Provincial Airlines Company and played an outstanding role in the formation of HNA Group. Mr. Wang worked for the CAAC for many years and is now one of the key responsible persons and decision makers of both the Issuer and the Guarantor. Tan Xiangdong Mr. Tan, aged 47, has been the vice chairman of the board of directors of the Issuer since October 2013. He is also vice chairman of the board of directors of the Guarantor, the president of HNA Group Co., Ltd. and the chairman of the board of directors of HNA Capital Holdings Limited(海航資本控股有限公 司). He obtained a degree in finance and a master degree in economics in 1989 from Beijing College of Finance and Commerce(北京財貿學院), and a master degree in business administration from the Insurance Institute of America in 1999. Mr. Tan successively worked for China’s Rural Trust and

24

Investment Corporation(中國農村信託投資公司)in its worldwide bank loans office, the World Bank loans office in Hainan province(世界銀行海南省貸款辦公室), China Xingnan Group Company(中國 興南集團公司)and Hainan Meizhou Company Limited(海南美洲有限公司). Donal Joseph Boylan Mr. Donal Joseph Boylan has been a member of the board of directors of the Issuer since August 2013. Mr. Boylan has been Chief Executive Officer of Hong Kong Aviation Capital Limited since 2011. Mr. Boylan’s served as Head of Aerospace & Defence, Structured Asset Finance at the Royal Bank of Scotland. Mr. Boylan prior experience includes twenty years of significant industry experience in technical and commercial roles at GPA Group plc, GE Capital Aviation Services (GECAS), and RBS Aviation Capital. He was Co-founder of RBS Aviation Capital and served as its director in 2001. He has worked extensively in the Middle East where Niche Group PLC (The) is actively seeking investment opportunities in the oil and gas sectors. He serves as Executive Chairman of The Niche Group PLC and has been its Executive Director since October 2010. He served as Non Executive Director of The Niche Group PLC from May 2010 to October 2010. Li Yifan Mr. Li Yifan has been the vice chairman of the board of directors of the Issuer since May 2014. He has over 20 years of management experience. Wang Hao Mr. Wang, aged 38, has been the chief executive officer of the Issuer since May 2015. He obtained a master degree in business administration from City University of Seattle in the United States. He is also the manager of aircraft procurement of Hainan Airlines Group Co., Ltd.( 海南航空股份有限公司)(a Shanghai A-share listed company, stock code: 600221), the general manager of Finance Department of HNA Group Co., Ltd.( 海航集團有限公司), the chief financial officer of Hainan Airlines Group Co., Ltd.( 海南航空股份有限公司)and the chief financial officer of HNA Capital Group Co., Ltd.( 海航資 本集團有限公司). He was also the chairman of Bohai Leasing Co., Ltd.( 渤海租賃股份有限公司)(a Shenzhen A-share listed company, stock code: 000415). Mr. Wang has over 15 years of working experience in the financial and corporate management, and has extensive knowledge and experience in corporate management. Li Xiaoming Mr. Li, aged 52, has been a member of the board of directors of the Issuer since July 2015. Mr. Li Xiaoming is also the executive president of the Guarantor. Mr Li graduated from China University of Political Science and Law majoring in Economic Law. He joined the Group in 1993, and was engaged with senior management positions of the Group and its operating companies, namely including mainly the executive president of the Guarantor, the chairman of Hainan Airlines Group Co., Ltd.( 海南航空股 份有限公司)(a Shanghai A-share listed company, stock code: 600221), the chairman of Hainan Airlines Logistics Co., Ltd.( 海航物流有限公司), the chairman of HNA Property Holdings Co., Ltd.( 海航置業 控股集團有限公司), the chairman of HNA Hotel (Group) Co., Ltd.( 海航酒店 (集團)有限公司)and the chairman of Yangtze River Real Estate Group Co., Ltd.( 揚子江地產集團有限公司). Mr. Li has over 30 years of working and management experiences in the areas of airlines, logistics, real estate, hotel etc., and has extensive knowledge and experience in corporate management.

25

DESCRIPTION OF THE ISSUER GROUP OVERVIEW In order to expand globally and drive further growth and development, the Issuer was established in Hong Kong on 12 July 2010, with company registration number 1479207, to act as the Group’s offshore investment and foreign capital management platform. As at the date of this Supplement, the telephone number of the Issuer is +852 3196 0960. The Issuer plays a key role in the Group’s strategy in becoming a global brand by being its platform for globalisation. Since its incorporation, the Issuer has, through capital investment and acquisitions, quickly formed and developed the Issuer Group that engages in various businesses in Hong Kong and overseas. The operating assets and revenues of the Issuer Group are diversified across currencies such as US dollars and Hong Kong dollars reflecting the international nature of its investments and business. The Issuer Group earns fee income through managing offshore investments and foreign capital for the Group, as well as earns dividends and one-off gains from its investments. As at the date of this Offering Circular, the Issuer had 20,264,155,617 shares in issue, of which 18,458,158,537 shares are held by the Guarantor, constituting approximately 91.09% of the shares of the Issuer, and 1,805,997,080 shares are held by Hong Kong Airlines Limited, constituting approximately 8.91% of the shares of the Issuer. Pursuant to a special resolution of the sole member of the Issuer passed on 22 September 2013, the name of the Issuer was changed from ‘‘HNA Group International Headquarter (Hong Kong) Co., Limited 海航集團國際總部 (香港)有限公司’’ to ‘‘HNA Group (International) Company Limited 海航集 團 (國際)有限公司’’. A key strategy of the Issuer is to expand globally through strategic acquisitions. Crucial to the success of this strategy is the ability to identify suitable investments and to manage its investments wisely. The Issuer has established an investment department formed by experienced investment professionals from international financial institutions. The investment department is constantly on a lookout for investment opportunities. It is responsible for analysing the markets in which the Issuer’s businesses operate, tracking relevant government policies and working in conjunction with other external parties to seek appropriate investment opportunities for the Group. The Issuer has also developed good relationships with major financial institutions, further strengthening the Group’s ability to source investment targets worldwide. The Issuer will conduct extensive due diligence to evaluate investment opportunities. These include conducting site visits and meetings with the management, employees, suppliers and customers of the investment target, as well as carrying out in-depth analysis of the relevant industry and in respect of human resources, branding and products. Strategic investments will be decided at the Group’s or Issuer’s board level. Employing such analytical capabilities and resources, the Issuer has made various successful acquisitions overseas, including Seaco SRL (‘‘Seaco’’) in Barbados, TIP Trailer Services (‘‘TIP’’) in the Netherlands, NH Hoteles S.A. (‘‘NH Hoteles’’) in Spain, each of which has furthered the Group’s strategy to globalise, to grow in the relevant businesses, and to enrich the Issuer’s overall business portfolio. For instance, when the Issuer sold Seaco to Bohai Leasing in 2013, the Issuer achieved a return of over HK$2.78 billion. RECENT FINANCIAL INFORMATION As at 31 December 2013 and 2014, the Issuer Group had total assets of approximately HK$41.383 billion and HK$41.823 billion respectively. For each of the years ended 31 December 2013 and 2014, the Issuer Group recorded total revenue of approximately HK$8,062.8 million and HK$4,540.8 million, respectively and a net profit of approximately HK$3,679.6 million and HK$692.8 million, respectively. The decrease in net profit for the year ended 31 December 2014 is due to a one off sale of Seaco to Bohai Leasing in 2013. Details of the financial information of the Issuer Group are set out in sections entitled ‘‘Index to the Audited Financial Statements’’ and ‘‘Capitalisation and Indebtedness of the Issuer Group’’ in this Offering Circular.

26

The Issuer Group believes that its key strengths are as follows: Proven success of capitalising on investment opportunities The Issuer Group has secured consistent investment returns through the rigorous section of strategically viable assets, targeting both short term and long term investments to achieve diversification. As part of its long term investments, in 2011 the Issuer acquired Seaco (formerly named GE Seaco), the world’s fifth largest container leasing company at the time, from GE Capital and its joint venture partner. Providing clear leadership and strategic direction, the Issuer nurtured and developed Seaco. When the Issuer subsequently sold Seaco to Bohai Leasing in 2013, it achieved a return of over HK$2.78 billion. Seaco now operates as a core business within the Group’s existing logistics and finance operations in the form of Bohai Leasing. According to a survey by Drewry Maritime Research regarding the global container leasing market in 2013, Bonal Leasing is the largest container leasing company in the world by number of cost equivalent unit. After the acquisition of Cronos Limited in January 2015, Bohai Leasing remains the largest container leasing company in the world by number of cost equivalent unit. The Issuer has similarly enjoyed a good track record in capitalising on its short term investments: •

Silverlake Axis Ltd (‘‘Silverlake’’) – in 2014, the Issuer achieved a gain of SGD12.8 million when it sold 20 million shares of its shareholding in Silverlake, a market leading developer in core banking technologies.



Tsogo Sun Holdings Limited (‘‘Tsogo Sun’’) – the Issuer has invested in 48.3 million shares of Tsogo Sun Holdings Limited, one of South Africa’s largest hotel chains, as its second largest shareholder with 5% ownership. As at 31 December 2014, the Issuer’s holdings were valued at HK$401.1 million, with an unrealised gain of HK$ 67.7 million.



KVB Kunlun Financial Group Limited (‘‘KVB Kunlun’’) – in May 2012, the Issuer invested in KVB Kunlun prior to its IPO on the Growth Enterprise Market of the Hong Kong Stock Exchange, and is currently its third largest shareholder with 5.3% ownership. As at 31 December 2014, the unrealised gain of the Issuer’s holdings stood at HK$56 million, holding 106.6 million shares.



Shengjing Bank Co., Ltd (‘‘Shengjing Bank’’) – The Issuer invested in the IPO of Shengjing Bank, the largest city commercial bank in Northeast China), and was allotted 81.24 million shares, making the Issuer its ninth largest shareholder with 5.9% ownership of H shares. As at 31 December 2014, the Issuer’s holdings were valued at HK$623.1 million, with an unrealised gain of HK$8.9 million.

Value enhancement and strategic synergies for the Group The Issuer Group seeks to maintain a diversified portfolio of high quality businesses and stable income source. Seeking to expand internationally with the support from Chinese policy banks, the Issuer Group has acquired interests in high quality businesses overseas with the goal of enhancing value and providing strategic synergies for the Group. The Issuer Group enjoys strategic, financial and operational synergies with the HNA Group through its interests in the Europe-based TIP and NH Hoteles, and seeks to achieve vertical and horizontal integration in the aviation, logistics, finance and retail and logistics value chain businesses of the Group through other acquisitions. After acquisition of TIP by the Issuer Group from GE Capital in October 2013, the Group provided support in management of TIP, enabling TIP to move out of its contractionary phase. The Issuer also received capital support from the Group in funding TIP’s acquisition plans in Europe. After acquisition by the Issuer Group, TIP benefits substantially from the Group’s existing portfolio of leasing businesses such as Cronos and Seaco to deliver holistic leasing and transportation solutions for users across various industries.

27

The Issuer also benefits from the strategic cooperation between NH Hoteles and Group. In September 2014, NH Hoteles and the Group signed a memorandum of understanding pursuant to which the parties will set up a jointly owned company, which will take over the management of six of the Group’s hotels located in Beijing, Haikou, Sanya and Tianjin, encompassing 1,312 rooms. Such joint venture converts HNA hotels to NH flagships to develop the local market through management by NH Hoteles of Chinese 3 to 4-star hotels. This move is in line with the Group’s approach to new acquisitions, allowing the Group to acquire, and to enjoy the synergies derived from adapting from the best of Western management and corporate governance principles. The Group also intends to promote NH Hoteles by making them the preferred hotel choice in Europe of the Group’s travel agencies, with the goal of bringing more Chinese tourists to the NH Hoteles. Since its acquisition by the Issuer, NH Hoteles’ market capitalisation has increased 179% from EUR631 million as at 30 April 2013 to EUR1,758 million as at 17 June 2015, illustrating the realisation of synergies. The Issuer Group intends to leverage on the significant network and diversified business portfolio of the Group to further develop its business. Close cooperation with the Group enables the Issuer to capture business opportunities and deliver products and services to serve its customers on a global basis. Prudent financial management supported by sustainable funding sources As the Group’s offshore investment and foreign capital management platform, the Issuer has adopted prudent financial policies and has maintained a conservative debt profile. The average cost of debt to the Issuer is 4.634% as at 31 December 2014. As at 31 December 2014, debt for the Issuer is financed through cross-border standby letters of credit (‘‘SBLC’’), with the amount of SBLC-backed debt standing at U.S.$880 million. As at 31 December 2014, the Issuer had U.S.$1.28 billion in offshore debt. As U.S.$880 million of such debt is fully financed by cross-border SBLC, the actual debt level for the Issuer stood at only U.S.$401 million. As at 31 December 2014, debt of the Issuer that is not backed by SBLC comprised only 15% of its total current assets, and 84% of its debt comprises of short-term debt. The amount and tenor of such SBLCbacked debt obtained by the Issuer offshore match those of the SBLCs, presenting a very low risk. SLBCs of the Issuer are issued by credible Chinese banks including Bank of China, Industrial and Commercial Bank of China and China Construction Bank. The SBLCs are 100% backed by cash deposits of the Guarantor onshore and are renewed annually. The Issuer does not currently have any priority debt. Acting as the Group’s foreign capital management platform, the Issuer is responsible for overseas money lending for the Issuer Group companies. Since 2008, the Group has been utilising SBLCs to finance various offshore debts through the Issuer. The Issuer charges a 0.5% fee for deploying the SBLC-backed funds offshore, with such fees totally U.S.$4.4 million in 2014. As the SBLCs are renewed on an annual basis, this income source is expected to remain stable. Since the operation of this business line in 2008 to year end 2014, the Issuer Group has cumulatively raised U.S.$2,580 million of SBLC-backed debt, with a balance of U.S.$880 million as at 31 December 2014. Apart from service charges for arranging offshore financing, the Issuer also derives its revenue from its investment companies, majority-owned subsidiaries and associated investment companies, as well as gains from opportunistic acquisitions and divestments of investment projects, providing a diversified and sustainable source of income. Through establishing good relationships with domestic and international financial institutions, the Issuer has access to substantial sources of funding through credit facilities. Key relationship banks and financial institutions providing facilities to the Issuer include Guotai Junan Securities, Bank of China, Industrial and Commercial Bank of China, China Construction Bank, China Merchants Securities, Stand Bank, Bank of Communications, The Export-Import Bank of China, Bank of Taiwan, Korea Exchange Bank, and Shanghai Pudong Development Bank. As at 31 December 2014, the Issuer had U.S.$1.58 billion credit facilities with its relationship banks, with the total drawdown amount standing at U.S.$951 million and unused facilities at U.S.$633 million as at 31 December 2014. Apart from facilities from banks and financial institutions, the Issuer has also maintained substantial cash reserves and available-

28

for-sale financial assets which are available for it funding purposes. As at 31 December 2014, the Issuer had HK$2,365 million cash reserves and HK$5,809 million available-for-sale financial assets (including interests in listed entities), compared to cash reserves of HK$1,091 million and available-for-sale assets (including interests in listed entities) of HK$3,523 million held by the Issuer as at 31 December 2013. Experienced management team The Issuer’s management team has extensive experience in the aviation industry as well as in strategic investments. Recent strategic investments identified by our management team demonstrate our commitment to focusing on strategic fit with the Group’s business with strong and consistent profit margins. The management’s experience at the CAAC and the close relationship with the Hainan government authorities and other organisations provides the Issuer a solid platform for growth and establishes significant barriers to entry for potential competitors. PRINCIPAL BUSINESSES The Issuer holds interests in the following entities through which the Issuer’s principal business of financial services and travel services are conducted. Business

Entity

Interests held by the Issuer

Financial services . . . . . . . .

TIP Trailer Services Hong Kong International Aviation Leasing Company Limited Hong Kong International Financial Services Limited NH Hoteles S.A.

100% 34% 81% 29.5%

Travel services . . . . . . . . . .

For each of the years ended 31 December 2013 and 2014, the Issuer Group recorded EBITDA of approximately HK$6,431.0 million and HK$2,431.1 million, respectively. The table below shows the percentage contribution to (i) the revenue and (ii) the EBITDA of the Issuer Group as at 31 December 2014 by the Issuer and other key subsidiaries. As at 30 December 2014 Entity

(i) Revenue

Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hong Kong International Financial Services Limited TIP Trailer Services . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . .

24% 1% 70% 5%

39% 1% 59% 1%

Total: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100%

100%

i)

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(ii) EBITDA

Financial Services

The Issuer Group engages in trailer leasing, aircraft leasing and general financial services. Trailer Leasing Business The Issuer Group acquired 100% shareholdings in TIP in October 2013 from GE Capital. TIP is Europe’s largest trailer leasing company with over 40 years of experience. Headquartered in Amsterdam, TIP has more than 70 branches located throughout 16 countries across Europe and has over 6,000 customers. TIP provides transportation and logistics customers with leasing, rental, maintenance and other value-added solutions. As at 31 December 2014, TIP had total assets of EUR932.7 million and its total revenue was EUR314.9 million for the year ended 31 December 2014. TIP recorded a net profit of EUR18.5 million for the year ended 31 December 2014.

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Owning a fleet of over 44,000 trailers, TIP is one of the leading independent operating lease providers in Europe. With a managed fleet of 64,000 units trailers, TIP is also a leading provider of fleet management solutions, including fleet maintenance, to its own fleet and on a stand-alone basis to third parties. TIP provides stand-alone fleet management services through its own origination network, its relationships with European asset finance providers as part of the TIP Equipment Funding program and its strategic partnerships with leading trailer and tire manufacturers. TIP operates primarily in the trailer segment with a focus on sub-types commonly use by major transportation and logistics companies which cover a diverse range of end users. Other types of widerange equipment includes trailers, drawbars, chassis and swap body units as well as the full range of large commercial trucks to light commercial vehicles. TIP’s business model has historically been focused on providing high class operating leases and associated services to a diversified base of high quality customers. Among the large number of local and regional players in the trailer leasing market, TIP is the largest European provider of operating leases with 16% market share in terms of short and long-term operating leases, and is the market leader in 12 of the 16 countries in which it operates. Among all the operating lease providers, TIP has the most comprehensive offering of complementary services. TIP has an average fleet utilisation rate of 85% over the past 5 years and a current utilisation rate of 84%, which drives a historically high EBITDA margin(1) of 44% on average over the past 5 years, which is higher than other key pan- European or local/regional players in the trailer operating lease business. Note: (1)

EBITDA margin is calculated as EBITDA divided by total revenue, expressed as a percentage. EBITDA consists of total revenue less total variable costs, employee benefit expenses, other operating expenses and bad debt expense.

Fleet As the market leader in trailer leasing with a fleet of over 44,000 trailers, TIP owns more than twice as many trailers compared with the nearest competitor. TIP focuses on following trailer types: •

Curtainsider: One of the most commonly used trailer types is the curtainsider, which is used for transportation of general goods requiring less security.



Van: Vans are used for general transport of goods requiring high security such as parcels.



Reefer: Goods that require environmental control, such as food, electronics and flowers are transported in a reefer, which allows for temperature-controlled transportation of goods.



Tanker: A number of different tanker trailer types exist for transportation of liquids, powders and waste depending on whether the freight is food or industrial related.



Chassis: A chassis allows for transportation of swap body units and containers.



Swapbody: A swap body is a freight container, which can be set on ‘‘legs’’ and does not require a crane to be loaded. It exists in different versions such as curtain sider, van, reefer and tanker.



Tractor: A vehicle that can be driven on the roads with or without a trailer.

According to the Issuer’s data, TIP’s fleet is younger than the industry average in every country in which it operates (other than Poland).

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Main businesses TIP provides flexibility for customers to create a bespoke service package to address all of their trailer needs. The key services provided by TIP are leasing, rental and maintenance. Leasing and Rental Customers can choose either to purchase trailers outright or lease them through two primary lease options: •

Finance Lease: Leased vehicles become the property of the lessee for the duration of the lease for periodic payments over the term. The duration of financing and the expected service levels and costs differ between new and used trailers. While new trailers require a larger upfront capital commitment, they tend to have minimal near-term maintenance requirements. On the other hand, used trailers represent a more economic option for certain customers but will potentially require more ongoing maintenance.



Operating Lease: Vehicles are leased for periodic rental payments that can include service components. The leased asset remains the property of the lessor. The advantages of having an operating lease include the ability of the lessees to secure valued-added services. Some of the value added services are maintenance and fleet management, flexibility to scale the fleet to match customer demand and elimination of residual value risk. TIP leases both new and used trailers – leases on new trailers are typically long-term, ranging from four to ten years, while leases on used trailers tend to be for shorter term, ranging from one to three years.

FleetOptions Branded as ‘‘FleetOptions’’, TIP provides a wide range of equipment with flexible financing options, including short-term rentals, long-term leases, sale and leasebacks equipment sourcing through TEF and vehicle sales. •

Long-term leases: Contracts with duration of 12 months or more are classified as long-term leases. TIP will originate a long-term lease on either a new trailer or equipment from its existing trailer fleet.



Short-term rentals: Contracts with an initial duration of less than 12 months are classified as short‑term rentals. In practice, short-term trailers may remain on rent for longer periods due to renewals. Trailers utilised for short-term rental contracts are from TIP’s existing trailer fleet. As rental periods can be as short as several hours, rapid identification and deployment of available trailers from the rental fleet is critical to maximise returns. TIP’s integrated IT systems allow regional teams to identify available trailers by both type and location. This system enables TIP to efficiently redeploy its used trailer fleet in higher demand locations.

Maintenance services In additional to leasing and rentals, TIP provides the following maintenance and other ancillary services. •

FleetCare: Branded as ‘‘FleetCare’’, the TIP maintenance services are included in the majority of infleet trailer leases and are required for all short-term rentals, which enable TIP to control the quality of the maintenance and asset yet ensuring maximum uptime for customers. TIP leverages on its in-depth understanding of maintenance needs throughout the trailer life cycle and its extensive service network that supports its own trailer fleet to an attractive flat rate contract management and maintenance option to fleet operators on a third-party basis.



FleetProtect: Branded as ‘‘FleetProtect’’, TIP’s damage waiver offering provides for damage protection and tire care and is frequently used with short-term rentals.

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FleetIntelligence: Branded as ‘‘FleetIntelligence’’, TIP offers IT solutions for fleet management, including real-time online fleet management tools and telematic services, which are made available to the majority of fleet operators.

Customer Base TIP has over 6,000 customers. Customers are generally global or regional logistics operators that operate a sizable trailer fleet for their intra-European road transportation activities. TIP maintains a high quality credit customer base and practices rigorous risk management system. Most of TIP’s top 20 customers have maintained business relationship with TIP for 10-15 years, and engage TIP for both operating lease and FleetCare services. In addition, the TIP sales team has been implementing a cross selling strategy across its business segments. In order to strengthen customer relationships and further understand the changing customers demands from, TIP plays an active role on the Customer Advisory Board (CAB) and European Transport Board (ETB), where TIP has at least two comprehensive dialogues with many trailer operators annually. Management Team The senior management of TIP has an average of 15 years of experience at TIP and/or 20 years of experience at GE and the Group. The senior management has a track record of delivering satisfactory results through cycles, and is considered to be one of the top quality management team in the industry. Turnover at key client interaction and management positions is low with 75% of the sales force having been with TIP for five or more years. Financial Results As at 31 December 2013 and 31 December 2014, Global TIP Holdings Two B.V., the holding company of TIP, had total assets of EUR822.1 million and EUR932.7 million, respectively. For the years ended 31 December 2013 and 31 December 2014, its annual revenue amounted to EUR62.3 million (revenue contribution from TIP Trailer Services did not begin until after its acquisition in October 2013) and EUR314.9 million, respectively. For the year ended 31 December 2013 and 31 December 2014, Global TIP Holdings Two B.V. earned net profit of EUR0.2 million and EUR18.5 million, respectively. TIP Trailer Services was acquired by the Issuer Group in October 2013, after which its results were consolidated with those of the Issuer’s. Aircraft Leasing Business Hong Kong International Aviation Leasing Co., Ltd (‘‘HKIAL’’), founded in February 2007, specialises in aircraft and aviation equipment leasing and also engages in ship and yacht leasing. HKIAL became a subsidiary of the Issuer since June 2011. HKIAL is one of the leading leasing companies in Hong Kong. The fleet includes about 30 aircraft, one luxury yacht and one aircraft engine. HKIAL provides customers with financial leasing, operating leasing and sale-and-leaseback services. As at 31 December 2013 and 31 December 2014, HKIAL had total assets of U.S.$2,631.3 million and U.S.$2,983.4 million, respectively. For the year ended 31 December 2013, HKIAL’s total revenue was U.S.$156.8 million and its net profit for the same period was U.S.$8.3 million. For the year ended 31 December 2014, HKIAL’s total revenue was U.S.$190.9 million and its net profit for the same period was U.S.$11.2 million. General Financial Services Business The Issuer Group conducts its general financial services business principally through Hong Kong International Securities Limited (formerly known as Mayfair Securities Limited) (‘‘Hong Kong International Securities’’) and Hong Kong International Futures Limited (formerly known as Mayfair Commodities Limited) (‘‘Hong Kong International Futures’’), which are wholly-owned subsidiaries of Hong Kong International Financial Services Limited (formerly known as Mayfair Finance Limited)

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(‘‘Hong Kong International Financial Services’’), a Hong Kong company acquired by the Issuer in December 2010. Through Hong Kong International Securities and Hong Kong International Futures, the Issuer Group is capable of providing a comprehensive range of financial services in Hong Kong, including stockbroking, securities and futures dealing, investment consulting and asset management, where asset management is carried out wholly incidental to the securities and/or futures dealing business. Hong Kong International Securities was incorporated in Hong Kong in January 1988 with a current issued share capital of HK$42 million. Hong Kong International Securities is licensed and regulated by the Securities and Futures Commission of Hong Kong (the ‘‘SFC’’) (CE Reference: AAB856), with Hong Kong Stock Exchange Broker code ‘‘3960/3961/3962/3967/3968/3969’’, and Hong Kong Clearing House Code B01231. It is a licensed corporation under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the ‘‘SFO’’) to carry on Type 1 (dealing in securities) regulated activities. Hong Kong International Securities engages in securities dealing and securities investment consulting and advises on corporate finance and asset management which are carried out wholly incidental to securities dealing business. The securities trading services include opening cash and margin accounts for its customers. Hong Kong International Futures was incorporated in Hong Kong in January 1988 with a current issued share capital of HK$22 million. Hong Kong International Futures is licensed and regulated by the SFC (CE Reference: ACT373), with Hong Kong Futures Exchange Broker code ‘‘MCL’’ and Hong Kong Clearing House code ‘‘CMCL’’. It is a licensed corporation under the SFO to carry on Type 2 (dealing in future contracts) regulated activities. Hong Kong International Futures engages in futures dealing, futures investment consulting and asset management which are carried out wholly incidental to futures dealing business. It also engages in the local and international futures derivatives trading business, covering Europe, U.S., Singapore, Japan and other international exchanges of commodities futures and financial futures. Both Hong Kong International Securities and Hong Kong International Futures provide customers with international mainstream e-trading systems, such as 2GOTrade and QianLong for securities and Sharppoint for futures trading, which allow customers to conveniently browse market information and place orders. In April 2013, Hong Kong International Financial Services acquired Hong Kong International Securities Limited (formerly known as Cathay Asia Advisors Limited) (‘‘Hong Kong International Securities’’) which was incorporated in Hong Kong in March 1993 with a current issued share capital of HK$26 million. Hong Kong International Securities is licensed and regulated by the SFC (CE Reference: ABT748). It is a licensed corporation under the SFO to carry on Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities. Hong Kong International Securities engages in the business of financial consultancy and asset management services. Financial Results As at 31 December 2013 and 2014, Hong Kong International Financial Services had total assets of approximately HK$252.5 million and HK$224.1 million respectively. For the years ended 31 December 2013 and 2014, the consolidated revenue of Hong Kong International Financial Services were HK$40.29 million and HK$35.10 million respectively. The consolidated net profits/(loss) of Hong Kong International Financial Services for the same periods were HK$19.97 million and HK$2.4 million respectively.

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ii)

Travel Services

In 2013, the Issuer Group acquired a 20% stake in NH Hoteles, which was increased to 24% in February 2014 and further increased to 29.5% in November 2014. The Issuer Group is currently the largest shareholder of NH Hoteles. NH Hoteles is a hotel chain based in Spain and listed on the Stock Exchange of Madrid. Operating almost 400 hotels with around 60,000 rooms in 29 countries across Europe, America and Africa, NH Hoteles is one of the top 25 hotel chains in the world. According to rankings published by Hosteltur, NH Hoteles is the second largest chain hotel group in Spain, and the third largest business hotel chains in Europe. Its focus is on four-star business hotels, which constitute approximately 60% of the hotels operated by NH Hoteles. As at 31 December 2014, NH Hoteles self-owned 21% of its hotels, leased 56% of its hotels and managed 23% of its hotels. The occupancy rate of hotels operated by NH Hoteles amounted to 66.1% and 67.7% for the years ended 31 December 2013 and 2014, respectively. The average daily rate of hotels operated by NH Hoteles was EUR77.5 and EUR78.9 for the years ended 31 December 2013 and 2014, respectively. According to the status report published by NH Hoteles in February 2015 in respect of its five-year plan, NH Hoteles seeks to invest approximately EUR220 million with focus in 63 key hotels between 2014 and 2016 with an estimated return of EBITDA of around 20% as part of its asset repositioning plan. NH Hoteles received support for its recent developments by international institutional investors such as BlackRock, UBS, THS and Fidelity, each of which has in recent months increased its stakes in NH Hoteles. In 2014, the average occupancy rate of hotels operated by NH Hoteles was 67.7% and average room rate was EUR78.9 per night. Locations NH Hoteles has a wide presence in Europe and South America, with hotels located in 28 countries, including prime destinations such as Amsterdam, Barcelona, Berlin, Bogota, Brussels, Buenos Aires, Frankfurt, London, Madrid, Mexico City, Milan, New York, Paris, Rome and Vienna. Approximately 170 of its hotels are located in Spain, approximately 180 in Europe, with the remainder located in South America and other locations. Brands NH Hoteles operates its hotels and resorts under four distinctive brands: •

NH Hotels: Three and four-star urban hotels for business travellers or tourists seeking excellent location with the best value for money. NH Hotels offer comfortable and functional rooms with services and facilities adapted to the needs of city travellers. NH Hotels also offer solutions business meetings and business events (MICE).



NH Collection: premium hotels located in the main capital across Europe and Latin America. Typically housed in unique and heritage buildings with local character preserved, the NH Collection hotels are carefully designed for guests who want to make the most of their stay. Excellent standards of comfort, a wide range of services on offer and customised service with all types of facilities to ensure guest satisfaction.



nhow: a select range of unique hotels featuring contemporary architecture and designed by prestigious architects and interior designers (Matteo Thun, Rem Koolhaas, Karim Rashid). NH Hoteles currently operates three hotels under the nhow brand in the cosmopolitan cities of Milan, Berlin and Rome. Each hotel has its own personality, inspired by the city it is located.



Hesperia Resorts: contemporary holiday resorts situated in stunning locations, targeted towards couples and families who seek an ideal combination of rest and enjoyment. The Hesperia Resorts offer a wide range of services and leisure activities, as well as facilities for hosting events and business meetings.

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Awards and Recognition In 2015, 190 of the hotels of NH Hoteles have been awarded the Certificate of Excellence by TripAdvisor, an award that acknowledges hospitality based on travellers’ reviews on the world’s largest travel site. The hotels which have received the Certificate of Excellence include, among others, NH Collection Eurobuilding in Madrid, the NH Collection Constanza in Barcelona, the NH Collection Porta Rossa in Florence, the NH Collection Palazzo Barocci in Venice, the NH Berlin Mitte and nhow Berlin in the German capital, the NH Kensington in London, the NH Amsterdam Centre in Amsterdam, the NH Collection Guadalajara in México and the NH 9 de Julio in Buenos Aires. Other awards and recognition received by NH Hoteles and individual hotels under its brands in 2013 include: •

Agenttravel Prize awarded to the best hotel chain in terms of quality/price ratio, best city hotels and best business hotels in Spain;



Second place in the Ranking of America’s Top Companies;



Best Company to Work For in the tourism sector, according to the MERCO Ranking;



Green Star Diamond Prize and Best Resort Prize awarded to the NH Almenara hotel;



Most Popular Hotel in the Dominican Republic Prize and Dominican Ecoservices Prize awarded to the Secrets Royal Beach Punta Cana Hotel; and



Prize awarded the NH Jan Tabak, NH Atlantic and NH Schiphol Airport hotels for being among the 25 best hotels in the Netherlands awarded by Zoover Award.

In addition to providing excellent hotel services, NH Hoteles places great value on corporate responsibility and sustainability in its growth. In 2013, the Group was included in the prestigious FTSE4Good sustainability index. This index includes listed companies from around the world and is designed to help investors to integrate factors such as the environment, stakeholder relations, human rights and labour in their investments. Business Initiatives NH Hoteles has launched numerous business initiatives over the years with the aim to improve the quality of its services, to meet the needs of its clients and to distinguish itself from other hotel brands. Such initiatives include: •

NH Group Rewards: NH Group Rewards is a loyalty programme that allows customers to accumulate points when they stay at NH hotels. Points allows customers to redeem rewards such as free stays at hotels and restaurant services. Other benefits enjoyed by customers that sign up to the rewards programme include exclusive room rates, better room choice, free wi-fi, early check-in, late check-out and express check-in. Currently, the NH Group Rewards loyalty programme has almost one million members.



NH Stock Art: An ongoing commitment to young artists has provided NH Hoteles with a sizeable collection of over 4,000 pieces contemporary art. Such works are displayed in hotels allowing guests the opportunity to enjoy them in their rooms and in the communal areas.



Ecomeeting: NH Hoteles has launched Ecomeeting, which is a new concept for the organisation of events, conferences and conventions that is defined according to standards of sustainability and represents a respectful use of energy resources, as well as the use of fair trade products with low environmental impact.



Sustainability Club NH: A creative laboratory for environmental innovation in the field of product and service development.

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Other businesses In addition to the hotel business, NH Hoteles operates other travel services businesses such as a casino in Madrid, gym clubs, beauty salons and fast food restaurants. Financial Results As of 31 December 2013 and 31 December 2014, NH Hoteles had total assets of EUR2,687 million and EUR2,661 million, respectively. For the years ended 31 December 2013 and 2014, the total revenue of NH Hoteles was EUR1,260 million and EUR1,295 million, respectively. As at 17 June 2015, market capitalisation of NH Hoteles was EUR1,758 million, recording a 179% increase compared to EUR 631 million as at April 2013 when the Issuer Group acquired its shares. Recent Development In September 2014, NH Hoteles and the Group signed a memorandum of understanding pursuant to which the parties will set up a jointly owned company to be named HNA/NH Hotel Management Joint Venture Company. The joint venture company, to be owned 49% by NH Hoteles and 51% by the Group, would have an initial share capital of U.S.$20 million. The joint venture company will take over the management of six of the Group’s hotels located in Beijing, Haikou, Sanya and Tianjin, encompassing 1,312 rooms. The joint venture company’s incorporation would be subject to receipt of the required authorisations and permits from the relevant PRC authorities. iii)

Others

In addition to its principal businesses, the Issuer Group also makes other investments. The key investments of the Issuer Group include: Long term investments •

HNA International Investment Holdings Limited (formerly known as Shougang Concord Technology Holdings Limited) (00521.hk) (‘‘HNA International Investment’’). The Issuer invested in HNA International Investment in July 2013 and currently holds a 28.16% stake in HNA International Investment and is its largest shareholder. HNA International Investment has been listed on the Hong Kong Stock Exchange since 1988. The Issuer Group has successfully injected a quality golf hotel property business into HNA International Investment, which specialises in golf club management and provides hotel and leisure services. The addition of HNA International Investment into the Issuer Group has expanded the income source of the Issuer Group and greater efficiency has resulted from the increased synergy.



Hawker Pacific Airservices Limited (‘‘Hawker Pacific’’). In September 2014, the Issuer acquired 65.8% of shareholding of Hawker Pacific and is its largest shareholder. Hawker Pacific, a Hong Kong company, is one of the leading integrated aviation solutions providers including sales, support, supplies, aircraft management and associated services, with presence across the Asia Pacific and the Middle East. Hawker Pacific complements the Group’s existing aviation business, with its expertise in fixed base operations (FBOs), aircraft management, Continuing Airworthiness Management Organisation (CAMO) services, maintenance, repair and overhaul (MRO) and aircraft leasing. As at 31 March 2014, Hawker Pacific had total assets of U.S.$175.0 million. For the financial year ended 31 March 2014, its total revenue was U.S.$278.0 million.



Comair Limited (‘‘Comair’’). In May 2015, the Issuer acquired 6.2% of shareholding of Comair. Comair is an airline company based in South Africa and is the only domestic airline listed on the Johannesburg Stock Exchange (JSE:COM). Comair complements the Group’s existing aviation business, expanding the Groups’ presence in South Africa.

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Short term investments •

KVB Kunlun Financial Group Limited (08077.hk) (‘‘KVB’’). The Issuer invested in KVB in May 2012 prior to its listing on the Growth Enterprise Market of the Hong Kong Stock Exchange in July 2013. As at 31 December 2014, KVB had a market capitalisation of HK$95.87 million.



Silverlake Axis Ltd (SGX:5CP) (‘‘Silverlake’’). As at 31 December 2014, the Issuer Group held 59.6 million shares in Silverlake, which had a market capitalisation of SGD74.8 million. In the year 2014, the Issuer Group sold 20 million shares of Silverlake with a total gain of SGD12.8 million.



Tsogo Sun Holdings Limited (‘‘Tsogo Sun’’). On 25 July 2014, the Issuer entered into a one-year equity forward contract with The Standard Bank of South Africa Limited (‘‘Standard Bank’’) with respect to the sale of 48,299,592 shares in Tsogo Sun Holdings Limited (‘‘Tsogo Sun’’) by Standard Bank to the Issuer. Tsogo Sun is an operator of one of South Africa’s largest hotel chains and its shares are listed on the Johannesburg Stock Exchange.

Standby letter of credits Due to foreign exchange controls imposed by SAFE, Chinese multinationals would primarily disburse funds to offshore subsidiaries via cross-border trade finance. Therefore Chinese multinationals often adopt the payment method of SBLCs for the daily operating requirements, working capital financing of their offshore subsidiaries. The SBLC is a form of credit line. Since 2008, the Issuer Group has been utilising SBLCs to finance various offshore debts. These SBLCs are backed by 100% cash deposits of the Issuer Group onshore and are issued by reputable Chinese banks. The Issuer will then use such SBLCs to obtain a loan from a bank offshore, with the loan amount and tenor matching that of the SBLC. The debts are shown on the Issuer’s balance sheet. However, this is low-risk borrowing for offshore banks as the offshore debts are fully secured by the SBLCs, which in turn are fully backed by 100% cash deposits from the Issuer Group. In the event of non-payment of the relevant loans, the relevant offshore banks can claim repayment against the SBLCs provided by the onshore banks. In these transactions, the Issuer acts as the offshore investment and capital management platform and foreign capital pool management platform for the Issuer Group. It is responsible for overseas money lending for the Issuer Group companies. Its revenue is derived from service charges and dividends from its investment companies, majority-owned subsidiaries and associated investment companies, as well as gains from opportunistic acquisitions and divestments of investment projects. These SBLCs are renewed on an annual basis and therefore income is expected to remain stable. Since the operation of this business line in 2008 to year end 2014, the Issuer Group has cumulatively raised U.S.$2.58 billion of SBLC-backed debt, with a balance of U.S.$880 million in 2014. As at the date of this Offering Circular, there has not been any default to such debt. As of 31 December 2014, the Issuer had U.S.$1.28 billion in offshore debt, of which U.S.$880 million were fully financed by the cross-border SBLC and therefore actual debt level for the Issuer stands at U.S.$401 million. The Issuer charges a 0.5% fee for deploying the SBLC backed funds offshore, with such fees totalling U.S.$4.4 million in 2014. DISCONTINUED BUSINESS Seaco SRL From December 2011 to December 2013, the Issuer also conducted a container leasing business through Seaco, which was indirectly wholly-owned by the Issuer. In December 2013, the Issuer disposed of its entire interest in Seaco to Bohai Leasing, a subsidiary of the Guarantor. For a description of the business conducted by Seaco, see the section titled ‘‘Business of the Group – Principal Businesses – viii) Financial Services – Container Leasing’’.

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GC Tankers Pte. Ltd. From December 2011 to July 2014, the Issuer conducted a logistic transportation business through GC Tankers Pte. Ltd. (‘‘GC Tankers’’), in which the Issuer held a 80% indirect interest. In July 2014, the Issuer disposed of its entire indirect interest in GC Tankers to an independent third party for a consideration of U.S.$40 million. Based in Singapore, GC Tankers principally engaged in investment, commercial operations and management of oil tankers and the provision of related consultation services. MATERIAL FUND RAISING ACTIVITY As at the date of this Offering Circular, the Issuer has issued CNY800 million 7.5% guaranteed bonds due 2015 in March 2012, the full principal amount of which has been repaid. The Issuer has also issued CNY1,250 million 8.00% guaranteed bonds due 2017 in November 2014, the full principal amount of which remains outstanding. In March 2015, the Issuer established a U.S.$1,000,000,000 medium term note programme and has issued S$128 million 7.0% guaranteed bonds due 2017 under such programme, the full principal amount of which remains outstanding. RECENT DEVELOPMENTS On 13 November 2014, the Issuer issued CNY1,250 million 8.00% bonds due 2017 guaranteed by the Guarantor. The bonds were listed on SGX-ST. On 6 March 2015, the Issuer issued CNY200 million 7.00% bonds due 2018 in Korea. The Issuer was the world’s first non-financial institution to issue RMB bonds in Korea. DIRECTORS As at the date of this Offering Circular, the directors of the Issuer are Mr. Chen Feng, Mr. Wang Jian, Mr. Tan Xiang Dong, Mr. Boylan Donal Joseph, Mr. Li Yifan, Mr. Wang Hao and Mr. Li Xiaoming. See the section headed ‘‘Directors of the Issuer’’ in this Offering Circular for more detailed information. EMPLOYEES As at 31 December 2014, the Issuer Group had a total of approximately 1,200 employees, including Issuer and its holding subsidiaries. The Issuer Group has employment contracts with all of its full-time employees. The Issuer Group has not experienced any significant problems with its employees or disruption to its operations due to labour disputes. The Issuer Group recognises the importance of a good relationship with its employees and believes that it maintains a good working relationship with its employees. LEGAL PROCEEDINGS As at the date of this Offering Circular, the Issuer and its subsidiaries have not been involved in any legal or administrative proceedings or arbitration that could have a material adverse effect on their financial condition or results of operations, nor is the Issuer aware of any potential legal or administrative respective proceedings or arbitration involving the Issuer or any of its subsidiaries that would have a material adverse effect on the Issuer Group’s financial condition or results of operations. The Issuer and its subsidiaries however have from time to time been involved in certain pending or threatened legal or regulatory proceedings arising out of their ordinary course of business. Insofar as the Issuer and its subsidiaries are aware of, none of these proceedings, individually or in aggregate, has had any material adverse effect on the Issuer Group’s financial position or results of operations.

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DESCRIPTION OF THE GUARANTOR GROUP OVERVIEW The Group is a leading conglomerate and an integrated operator in modern service industry with diversified businesses covering airport services, air transportation, real estate, hotel and catering, travel services, commercial retail, logistics and transportation, financial services and other businesses such as culture industry and network information technology. With its beginnings as an airline company, the Group has gradually transformed into a multi-business conglomerate focusing on air travel, modern financial services, modern logistics and other business along the relevant industry value chain. Through rapid‑development and benefiting from China’s economic growth and globalisation, the Group has built a quality portfolio of businesses and assets and established brand recognition within each of its core businesses. With respect to the Group’s air travel business, Hainan Airlines Co., Ltd. (‘‘Hainan Airlines’’) has been named a ‘‘5-star airline’’ by Skytrax for three consecutive years since 2011, being the only Chinese airline to have received such recognition and also one of the seven airlines in the world to have done so. With respect to the Group’s leasing business, Bohai Leasing is an industry leader in financial leasing and operating leasing and is the only leasing company publicly listed in China. With respect to the travel services and hotel businesses, the Group provides one-stop services and products to meet travellers’ needs. According to the ‘‘Fortune Global 500 Companies’’ list published by Fortune Magazine, the Group ranked 464th in 2015. According to the ‘‘Top 500 Companies in China in 2014’’ list published by the China Enterprise Confederation(中國企業聯合會)and the China Enterprise Directors Association(中國 企業家協會), the Guarantor ranked 120th by company revenue in 2014. The Guarantor has maintained its position within the list of Top 500 Companies in China. The Guarantor’s ranking was 112th, 108th and 120th respectively in the years 2012 to 2014. As at 31 March 2015, the Group employed over 83,000 employees. As at 31 December 2013 and 2014, the Group had total assets of approximately CNY266.2 billion and CNY322.6 billion respectively. The Group’s consolidated total revenue totaled approximately CNY56.0 billion and CNY67.5 billion respectively for the years ended 31 December 2013 and 2014. The Guarantor’s predecessor, Hainan Provincial Airlines Limited was established in September 1989 and began operations in 1993. It was established to foster development of Hainan, which was then a newly established and the largest special economic zone in China. The Guarantor was established on 16 April 1998, with company registration number 460000000091806 under the laws of the PRC. Hainan Provincial Airlines Limited was consolidated into the Group in 2000 and was the key business of the Guarantor. Over the years, the Group has evolved from one single airline company to a leading conglomerate. In the first ten years of its history, with air passenger and cargo service as its principal business, the focus was on enhancing the quality of the service, expansion of business and operations and establishing the HNA brand name. The year 2000 marked the milestone in the history of the Group. In January 2000, the State Administration of Industry and Commerce approved the establishment of the Guarantor in the Hainan province of the PRC as a platform for consolidation, integration and expansion of commercial operations in the province. Building on the established air passenger and cargo business of Hainan Provincial Airlines Limited, the following 10 years saw the development and growth of the key business segments of the Group, the enhancement of synergistic effects and the optimisation of the overall revenue structure. As at the date of this Offering Circular, the Guarantor was 70% owned by Hainan Traffic Control Holding Co., Ltd. and 30% owned by Yangpu Construction Investment Co., Ltd.. As at the date of this Offering Circular, each of Hainan Traffic Control Holding Co., Ltd. and Yangpu Construction Investment Co., Ltd. has pledged certain of the shares it holds in the Guarantor to financial institutions to secure its financing. The ultimate major beneficial shareholder of the Guarantor is the Hainan Liberation Commonwealth Foundation. The telephone number of the Guarantor is 0898-66739906.

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Over the years, driven in part by the economic growth in the PRC and through reorganisation, capital investment and acquisitions, the assets and revenue of the Group have significantly increased. The table below shows the consolidated total assets, revenue and net profit of the Group for the period specified below. Income Statement (CNY million)

Total Operating Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance Sheet Statement (CNY million)

Current Assets . . . . . . Non-current Assets . . . Total Assets . . . . . . . . Current Liabilities . . . . Non-current Liabilities . Total Liabilities. . . . . . Total Equity . . . . . . . .

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2014

2013

(Audited)

(Audited)

67,502 2,914 2,426

56,008 1,532 1,552

2014

2013

(Audited)

(Audited)

127,492 195,130 322,622 97,106 152,362 249,467 73,154

95,171 171,013 266,184 83,287 125,867 209,154 57,030

KEY STRENGTHS Having accumulated years of valuable experience in international markets and having an in-depth understanding of the industries in which it operates, the Group believes that its key strengths and core capabilities will allow it to continue to capture investment opportunities and to benefit from the steady growth of the Chinese economy and the recovery of the world economy. The Group believes its key strengths are as follows: Leading conglomerate with established market positions, strong industry reputation and brand recognition The Group is a leading conglomerate in modern service industry with diversified businesses spanning across air transportation, airport services, real estate, hotel and catering, travel services, commercial retail, logistics and transportation, financial services and other businesses such as culture industry and network information technology. According to the ‘‘Fortune Global 500 Companies’’ list published by Fortune Magazine, the Group ranked 464th in 2015. According to the ‘‘Top 500 Companies in China in 2013’’ list published by the China Enterprise Confederation(中國企業聯合會)and the China Enterprise Directors Association(中國企業家協會), the Guarantor ranked 108th by total revenue in China in 2013. The Guarantor has maintained its position within the list of Top 500 Companies in China, ranking 120th, respectively, in 2014. The Group enjoys leading market positions in many businesses it engages in. Over the years, the Group has received numerous accolades, awards and recognition in different businesses, particularly in its air passenger and cargo, airports and travel services businesses. See the section titled ‘‘Description of the Group – Awards’’. Such accolades, awards and recognition have built a strong reputation for the Group in the relevant industries and enhanced customer loyalty, trust and confidence in the Group generally. They also helped in attracting new business opportunities and customers. The Group believes that its leading market position in the relevant industries have laid a solid foundation for further growth, integration and expansion of its businesses.

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Business diversification through integrated business segments providing stable earnings Responding to the challenges posed by the SARS epidemic, the Group began to diversify its business after 2003 and successfully transformed itself from an airline company operating under a single-business model to a conglomerate engaging in businesses along the industry value chain such as of air transportation, airport services, real estate, hotel and catering, travel services, commercial retail, logistics and transportation and financial services. Its diversified business allows the Group to derive synergistic benefits. Diversification enables the Group to be less vulnerable to business cycles, mitigates the business concentration risks and reduce volatility in the Group’s overall earnings and financial position. For example, operating efficiencies are achieved through the Group’s airports and airline businesses. Working with airports operated and owned by the Group and by utilising the Group’s airline related businesses such as aircraft maintenance services, aircraft equipment and spare parts procurement and crew training programmes, the airlines under the Group’s air passenger and cargo business have been able to improve its operating efficiency to achieve better financial performance. The Group is also able to cross-market its various services, thereby widening its customer base and increasing business opportunities. For example, the HNA Easycard allows customers to purchase from a wide range of the Group’s travel business partners including hotels, car rental services, and restaurants, which helps to encourage cross-selling and promote business across the Group’s various segments and businesses. The diversification of the Group’s business also ensures stability, consistency and reliability in the Group’s business performance and maintains a balanced revenue and earnings mix. Successful track record in asset integration and value enhancement Striving towards the goal of becoming a Chinese conglomerate with global presence, the Group has a successful track record in identifying suitable investments to further the Group’s strategy and has demonstrated its ability to manage investments prudently and wisely to enhance value. In 2010, the Group acquired the business and assets of Allco Aviation (subsequently rebranded Hong Kong Aviation Capital Limited (‘‘HKAC’’), an Australian based aircraft leasing company which went into receivership. Through further investment and prudent management, HKAC enjoyed steady growth and provided a profitable return to the Issuer Group when the Issuer Group subsequently sold it to Bohai Leasing in 2011. HKAC is currently ranked 23rd in the world by fleet value. Similarly, in 2011 the Issuer acquired Seaco (formerly named GE Seaco), the world’s fifth largest container leasing company at the time, from GE Capital and its joint venture partner. Providing clear leadership and strategic direction, the Group aims to lead Seaco to become the world’s largest container leasing company by number of cost equivalent unit according to a survey by Drewry Maritime Research regarding the global container leasing market in 2013. In January 2015, Bohai Leasing acquired 80% stake in Cronos Limited (‘‘Cronos’’) from Cronos Holding Company Ltd.. Cronos is one of the world’s leading cargo container lessors and an industry leader in specialised container leasing. After acquisition of Cronos, Bohai Leasing remains the largest container leasing company in the world by number of cost equivalent unit. The Group has accumulated substantial experience in making use of the equity markets to provide profitable return on its investments and to increase the value of its assets. Since the listing of Hainan Airlines on the Shanghai Stock Exchange in 1997 and the listing of HNA Infrastructure on The Stock Exchange of Hong Kong Limited, the Group has successfully listed many Group companies and acquired stakes in listed companies, bringing its current investment portfolio to 12 listed companies. IPOs and acquisitions of stakes in listed companies provide the Group with means to monetise its investments in addition to increasing value of its assets by providing greater sources of funding, improving corporate governance and increasing market and brand recognition. Prudent financial policies policy with sustainable funding resources The Group has implemented prudent financial policies to ensure a healthy financial profile and stable cash flow. It has established diversified funding sources including equity financing and issuances of domestic corporate bonds and commercial paper. As at 31 December 2014, the Group had listed stocks with a total market value of HK$29.35 billion, comprising Hong Kong-listed stocks with a total market value of HK$1.42 billion, PRC-listed stocks with a total market value of HK$23.17 billion, Europelisted stocks with a total market value of HK$3.9 billion, Singapore-listed stocks with a total market value of HK$0.45 billion and South Africa-listed stocks with a total market value of HK$0.41 billion.

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Through the Group’s holdings in listed companies, it enjoys diversified funding channels including share placements. For instance, in 2012, Hainan Airlines made a placement of A-shares, raising CNY8 billion and in 2013 Bohai Leasing also made an A-share placement and successfully raised CNY3.5 billion. Through effective management of liquidity and funding sources, the Group seeks to maximise returns and value for its businesses to ensure long term sustainable profitability and stability. The Group has established good relationships with over 300 domestic and international financial institutions, including China Development Bank, The Export-Import Bank of China, Bank of China, Agriculture Bank of China, Industrial and Commercial Bank of China, Bank of Communications, China Everbright Bank and China Construction Bank. Currently, the Group’s largest lenders are China Development Bank, the Export-Import Bank of China and China Construction Bank. As at 31 December 2014, the total credit line for the Group stood at RMB420 billion, compared to RMB70 billion as at 31 December 2013. The Group’s relationship banks have extended more credit lines to the Group year-onyear, reflecting their positive views on the outlook of the Group. Relationships with financial institutions worldwide have also strengthened the Group’s investment capability. The Guarantor was rated AA+ by Shanghai Brilliance Credit Rating & Investors Services Co., Ltd. in June 2014. As at 31 December 2014, the unused credit limit of the Group was approximately CNY200 billion. Strategic cooperation with provincial and municipal governments The Group believes that its success has been and will continue to be closely linked to the economic conditions and growth of the various provinces and cities in China. To this end, the Group has, over the years, entered into strategic cooperation framework agreements with various provincial and municipal governments and established or held interests in joint ventures together with entities controlled by various provincial and municipal governments. Due to the strategic nature of airlines and airports, the provincial and municipal governments are, in some cases, strategic shareholders and partners of the airlines and airports which are managed or operated by the Group. As at 31 July 2014, the Group had entered into 116 strategic cooperation agreements with various provincial, municipal and local governments across 28 provinces. Of these, 12 agreements were entered into with provincial governments, including Beijing, Tianjin, Gansu, Yan’an, Haikou, Shizuishan, Guangxi and Hefei. Under the strategic cooperation agreements, the Group benefits from arrangements such as preferential tax treatment, favourable policies for land and project development, subsidies, assistance and/or support from the relevant governments, in return for which the Group agrees to contribute to the development of air transportation, logistics, tourism and other industries in the relevant provinces, municipalities and cities across China. Experienced and savvy management team to capture growth opportunities The Group’s management team has extensive operating experience and in depth market understanding and knowledge of their businesses. They are commercially-oriented with proven capability to capitalise on available opportunities to maximise profitability, improve cost efficiency and synergy within the Group. With a proven track record of sound decision-making, the Group’s current senior management team led the Group throughout the economic cycles since the commencement of the Group’s business operations in 1993 and helped transform the Group from a regional airline to a multi-business conglomerate. The success is attributable to the management style that advocates for an open-minded, creative, strong and effective management. Embracing cultural diversity, the Group has retained the original management team of the acquired entities in each overseas acquisition it completed. Such approach allows continued management by personnel with the best knowledge of the local economy, culture and practices in which the businesses operate, providing a harmonious transition while at the same time allowing the Group to acquire, and be continually updated with, the latest modern Western management and corporate governance principles, facilitating the growth of the Group into a modern, global enterprise.

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STRATEGIES The Group’s goals are to build a world-class Chinese brand, to achieve continual growth and to become a competitive global conglomerate. The Group seeks to achieve its goals through the following strategies: Focus on and continue to develop the Group’s core businesses The Group enjoys leading market positions in many of its businesses such as air transportation, airports and travel services. The Group will continue to strengthen its management and operation efficiency and to focus on strengthening and further developing each of the Group’s key businesses to improve profitability and to seize a greater market share in an ever competitive market in each business. The Group seeks to adopt a focused, strategic development approach by streamlining its management structure. The Group aims to become more agile, more efficient and more effective by simplifying its internal approval processes and by decentralising business decisions to the level of each core business. The Group will also integrate new technology such as mobile internet, cloud and big data to achieve management and operational efficiency. The Group aims to further build and promote the HNA brand and to achieve increased brand recognition both in the PRC and globally. Continue to build upon the Group’s diversified business The Group seeks to expand and grow strongly while being specialised and focused. Accordingly, the Group continues to diversify whilst at the same time maintaining a high quality investment portfolio, providing the Group with a stable income. Leveraging on the success of its core air transportation, airports and travel services business, the Group closely follows the new trends and developments to explore and develop new businesses that complement the Group’s existing businesses to create further synergy. The latest additions to the Group’s diversified business mix are the e-commerce, culture and health businesses. The Group seeks to integrate a range of digital services such as prepaid cards, thirdparty payment, social networking, internet logistics, cultural communications, online and consumer financing and internet entertainment with its other existing businesses such air transportation, hotels, travel services and retail. Continue to expand globally to strengthen global presence The Group aims to establish itself as a world class brand with global presence. The Group will seek to identify suitable acquisition targets which are complementary to its businesses and instrumental to the achievements of its goal to become a global brand. Utilising Hong Kong as a platform, the Group aims to drive further growth and development by expanding its foothold to Asia, Africa, Europe and North America. By making suitable acquisitions, the Group also seeks to expand the number of international routes of its air transportation business to reach more destinations. The Group has established an investment department formed by experienced investment professionals to identify suitable acquisition targets. The investment department is responsible for analysing the markets in which the Group’s businesses operate, tracking relevant government policies and working in conjunction with other external parties to seek appropriate investment opportunities for the Group. Placing great emphasis on risk minimisation, the Group carries out extensive due diligence on any identified potential targets, such as by conducting site visits and meetings with the management, employees, suppliers and customers, and will conduct in-depth analysis in the relevant industry and in respect of human resources, branding and products. Continue to increase capital raising and equity investments The Group will continue to explore means to increase its access to capital. In 2013, Bohai Leasing and Xi’an Minsheng successfully issued corporate notes raising an aggregate of CNY4.1 billion, HNA Infrastructure successfully raised U.S.$250 million offshore, and the issue of CNY300 million corporate notes by Hainan Island Construction Co., Ltd. HNA International Tourism Island had received

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regulatory approval. As part of its development strategy, the Group will also make equity investments in companies whose businesses will help further the Group’s strategic goals. In 2013, the Group acquired stakes in Yicheng Co., Ltd. and HNA International Investment (formerly known as Shougang Concord Technology Holdings Limited), increasing the number of listed companies invested in by the Group to 12. The Group will continually assess the availability of suitable investment or acquisition targets. AWARDS The Group has received numerous awards and recognition in each of its core industry sector as set forth below. Airport Service •

In 2015, Haikou Meilian International Airport was ranked 2nd for ‘‘Best Airport by Size: 5-15 Million Passengers’’ by Airport Council International.



In 2015, Haikou Meilian International Airport ranked 9th place for ‘‘Best Domestic Airport 2015’’ globally and 4th place for ‘‘Best Regional Airport in Asia 2015’’ by Skytrax.



In 2014, Haikou Meilian International Airport ranked 4th for the ‘‘2014 ASQ Award for Best Airport in Asia-Pacific’’.



In 2014, the Haikou Meilan International Airport, partially owned and operated by the Group, won the Skytrax ‘‘(China) Regional Best Airport Award’’ and was named by Skytrax as the 2nd ‘‘5-Star Terminal’’ in China and 6th in the world in 2014.



In 2014, Sanya Phoenix International Airport was ranked 2nd for ‘‘Best Airport by Size: 5-15 Million Passengers’’ by Airport Council International.



In 2014, Sanya Phoenix International Airport was ranked 5th place for ‘‘the Best Airport in AsiaPacific’’ and 8th place for ‘‘Best regional Airport in Asia 2015’’ by Skytrax.



In 2012, the Sanya Phoenix International Airport won the ASQ Award for ‘‘Best Improvement in the Asia-Pacific’’ in the Airports Council International (ACI) Airport Service Quality (ASQ) awards, and was the 5th international airport in Asia to receive such award.

Air Transportation •

In 2015, Hainan Airlines ranked 8th globally for the World’s Safest Airline in JACDEC AIRLINE SAFETY RANKING 2015 awarded by Aero International.



In 2015, Hainan Airlines was named a ‘‘5-star airline’’ by Skytrax for four consecutive years. It was also awarded ‘‘(China) Regional Best Airline’’ and ‘‘(China) Regional Best Staff Service’’ by Skytrax for four consecutive years, being the only mainland Chinese airline companies to receive such awards.



In 2015, Tianjin Airlines was recognised as the ‘‘top 100 Airlines globally’’ by Skytrax and ranked 2nd and 6th ‘‘Best Regional Airline’’ in China and Asia respectively by Skytrax.



In January 2013, Hainan Airlines ranked 8th in the World’s Safest Airlines published by the German aviation magazine, Aero International, ranking the highest among PRC airlines.



In December 2013, Hainan Airlines was awarded the ‘‘Best Economy Class’’ honours by the 20th World Travel Awards.

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In 2011, Tianjin Airlines Co., Ltd. (‘‘Tianjin Airlines’’), a subsidiary of the Guarantor, was named ‘‘4-Star Airline’’ and won the ‘‘Best China Regional Airline’’ title awarded by Skytrax;



In 2011, Deer Jet Co., Ltd. (now renamed as Beijing Capital Airlines Co., Ltd., ‘‘Capital Airlines’’), a subsidiary of the Guarantor, became the first Chinese business jet operator to attain ARGUS Platinum Rating and IS-BAO rating;

Real Estate •

In 2013, the Group joined the ranks of the top 50 Chinese real estate enterprises, ranking 48th in terms of sales and 41st in terms of area sold.



In November 2013, the Group was awarded ‘‘Brand Enterprise of the Year’’ organised by the ‘‘Real Estate’’ magazine.



In June 2013, HNA Real Estate received the ‘‘PRC Blue Chip Real Estate’’ award in the 10th PRC Blue Chip Annual Conference organised by the Economic Observer.



In 2011, the Group was awarded ‘‘China Construction Luban Award for 2010-2011 (National High Quality Construction) by China Building Industry Association.

Hotel and Catering •

In 2013, the Group ranked 69th (in terms of number of hotel rooms) in the list of ‘‘Hotels 325’’ published by Hotels Magazine.



In 2012, Tangla Hotel Tianjin was awarded ‘‘International Six Star Diamond Award’’ by American Academy of Hospitality Sciences.

Travel Services •

In 2014, HNA Tourism Holding (Group) Co., Ltd. (‘‘HNA Tourism’’) was awarded with ‘‘Asia’s Leading Travel Management Company’’ and ‘‘China’s Leading Travel Management Company’’ by the World Travel Award.



In 2013, HNA Tourism won the title of ‘‘Top Brands Contributors – 2013 China’s Influential Brands’’ at the Business Leaders & Media Leaders Annual Conference & Top Brands Contributors Awarding Ceremony.



HNA Tourism was ranked 6th in the ‘‘Top 20 PRC Tourism Groups’’ by China Tourism Academy in both 2011, 2013 and 2014.



In 2013, HNA Tourism won the ‘‘Gold Spectrum Award (Tourism Industry)’’ in the 7th Annual Chinese Brand Awards, and the ‘‘2013 Influential Chinese Brands Award’’ in the 2013 China Business Leaders & Media Leaders Annual Conference.

Business Retail •

In 2014 and 2013, HNA Commercial Holdings Co, Ltd. was ranked top 10 and 22nd respectively in the ‘‘Top 100 PRC Chain Store Enterprises’’.

Logistics •

In 2014, Gopay Information Technology Co., Ltd. was awarded ‘‘Top 100 brand of China internet finance enterprise’’ organised by CIFC, Huaxia newspaper and He Xun Wang.



In 2014, HNA Sinosun Logistics Co., Ltd, was awarded the top ten comprehensive logistics service providers ‘‘Golden Chain Award’’ of China cold chain by the China Federation of Logistics and Purchasing Cold Chain Logistics Committee.

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Financial Services •

In 2014, Bohai Leasing has been awarded the ‘‘2014 Most Influential Leasing Company’’ under the CBN Financial Value Ranking.



In 2013, Bohai Leasing won the ‘‘Best Management Trust Company in China’’ award at the China Wealth Management Summit and Best Wealth Management Institutions Awards Ceremony organised by Securities Times.



In 2012, Bohai Leasing won the ‘‘PRC leasing Innovative Award’’ in the 2012 PRC leasing Annual Conference.



In 2012, Bohai Leasing won the ‘‘Best Finance Leasing Company’’ award at the Ninth Chinese Enterprise Operation and Financial Strategic Management Summit organised by the China Association of Chief Financial Officers and the China CFO Magazine.

PRINCIPAL BUSINESSES The principal businesses of the Group are airport services, air transportation, real estate, hotel and catering, travel services, business retail, logistics transportation, financial services and other businesses such as culture industry and network information technology. The tables below show the respective contribution to (1) the operating revenue and (2) the gross profit of the Group by various business segments for the years ended 31 December 2013 and 2014. (1)

Operating Revenue Business Segment

Operating Revenue (CNY) Year Ended 31 December 2014 . . . . . . . . .

(million) 18,848 5,040 7,892 1,667 16,237 3,945 1,796 9,170 1,207

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

65,802

Air transportation . . . Financial services . . . Travel services . . . . . Airport services. . . . . Business retail . . . . . Real estate . . . . . . . . Hotel and catering . . . Logistic transportation Others . . . . . . . . . . .

(2)

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

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. . . . . . . . .

. . . . . . . . .

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. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

% of Total

Year Ended 31 December 2013

% of Total

28.6 7.7 12.0 2.5 24.7 6.0 2.7 13.9 1.9

(million) 16,106 3,854 8,159 1,269 12,121 3,247 1,982 6,352 1,327

29.6 7.1 15.0 2.3 22.3 6.0 3.6 11.7 2.4

100

54,417

100

Gross profit Business Segment

Gross Profit (CNY) Year Ended 31 December 2014 . . . . . . . . .

(million) 3,299 2,116 1,108 859 2,837 1,084 1,123 2,998 354

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15,778

Air transportation . . . Financial services . . . Travel services . . . . . Airport services. . . . . Business retail . . . . . Real estate . . . . . . . . Hotel and catering . . . Logistic transportation Others . . . . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

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% of Total

Year Ended 31 December 2013

% of Total

20.9 13.4 7.0 5.4 18.0 6.9 7.1 19.0 2.3

(million) 2,661 1,550 1,347 602 2,772 1,045 1,107 1,606 387

20.3 11.9 10.3 4.6 21.2 8.0 8.5 12.3 2.9

100

13,077

100

i)

Air Transportation

According to statistics published by CAAC the Group was ranked the 4th largest domestic airline group in China in 2014 in terms of total air traffic. The Group is engaged in trunk line and regional airlines, business jet, air cargo, helicopter and low-cost carrier businesses. As at 31 December 2014, the Group held 139 aircrafts and operated 413 flight routes. For the year ended 31 December 2014, it achieved passenger traffic (in RPKs) of approximately 24.43 billion and the total cargo throughout of China was 128.3 million tonne kilometres. As at the date of this Offering Circular, HNA operates the following 18 airline companies: No.

Airlines Company

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Hainan Airlines Tianjin Airlines Capital Airlines Hong Kong Airlines Grand China Air Co., Ltd. Hong Kong Express Airways Limited West Air Co., Ltd. Lucky Air Co., Ltd Changan Airlines Co., Ltd. Shanxi Airlines Co., Ltd. Yangtze River Express Airlines Co., Ltd. China Xinhua Airlines Limited Liability Company Shanghai Deer Jet Co., Ltd. Africa World Airlines Limited Aigle Azur Urumqi Air Fuzhou Airlines Guangxi Beibu Gulf Airlines

Among the airlines operated by the Group, the principal airlines are Hainan Airlines, Tianjin Airlines, Capital Airlines and Hong Kong Airlines. Hainan Airlines Hainan Airlines, an associated company of the Guarantor, is a leading provider of air passenger, air cargo and airline-related services in China. It is the fourth-largest airline in China in terms of fleet size, revenue and number of passengers carried in 2013. The shares of Hainan Airlines are listed on the Shanghai Stock Exchange (600221.SS). As at 31 December 2014, Hainan Airlines provided scheduled domestic, regional and international services using a hub and spoke strategy on 622 routes to 89 cities in 10 countries. Hainan Airlines is one of seven airlines in the world ranked as a 5-Star airline by the independent airline benchmarking firm Skytrax in 2013. The first and only PRC airline to receive this rating, Hainan Airlines received the rating for a third consecutive year. Hainan Airlines was ranked 14th in 2014 in the airline safety ranking published by Germany’s JACDEC, ranking highest among Chinese airlines. In addition to passenger services, Hainan Airlines provides cargo and mail services through bellyhold space of its passenger aircraft. It also leases out a total of 54 aircrafts to other affiliated airline companies of the Guarantor, and provides other airline-related services, including property leasing, lodging, catering, ticketing and ground services in Beijing, Haikou, Xi’an and other locations through its subsidiaries.

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Hainan Airlines has a fleet primarily comprising Boeing 737-800 aircraft, along with Boeing 787-8, Boeing 767-300, Boeing 737-700, Boeing 737-400, Airbus A340-600, Airbus A330-300, Airbus A330-200 and Airbus A330-200VIP aircraft for passenger and cargo transportation. As at 31 December 2014, Hainan Airlines operated a fleet of 169 aircrafts, serving 75 domestic and regional and 14 international destinations. In 2013 and 2014, Hainan Airlines carried approximately 26.26 million and 32.72 million passengers and had revenue passenger kilometres of 45,489.19 million and 55,634.91 million, respectively. In 2014, Hainan Airlines achieved an average load factor of 87.16%. Tianjin Airlines Established in November 2006, Tianjin Airlines, a subsidiary of the Guarantor, is a regional airline operating domestic scheduled passenger and cargo flights out of Tianjin Binhai International Airport. Tianjin Airlines operates approximately 150 routes to over 100 domestic destinations, including Beijing, Chongqing, Dalian, Nanjing, Hailar, Shanghai, Xi’an, Wuhan, with an annual passenger throughput of over 10 million passengers. As of April 2015, the Tianjin Airlines fleet consisted of 84 aircrafts including 22 Embraer EMB 145, 45 Embraer ERJ 190 and 17 Airbus 320. In addition to scheduled air passenger service, Tianjin Airlines also provides charter flight services. Since the commencement of operation, Tianjin Airlines has received recognition for its good quality performance. In 2009, Tianjin Airlines was named ‘‘Best China Regional Airline’’ at Centre for Asia Pacific Aviation’s annual Awards for Excellence in 2009. In 2011 and 2014, it was named a ‘‘4-Star Airline’’, and won the ‘‘Best China Regional Airline’’ title awarded, by the independent consultancy firm Skytrax. Capital Airlines Capital Airlines, a subsidiary of the Guarantor, operates scheduled air passenger service with a fleet of 51 Airbus A319 and A320. It is the largest tourist charter flights operator in China. Since the commencement of operation, it has established over 250 passenger routes to approximately 200 destinations in China including regional hubs such as Beijing, Guangzhou, Nanjing, Chongqing, and Kunming. Deer Jet, another line of business of Capital Airlines, is a leading provider of corporate and private charter services in China. It operates 83 corporate jets, including Boeing Business Jet, Gulfstream G450/G550/GV/GIV/GIV-SP/G200, Hawker 900xp/850xp/800xp and Airbus 319. Deer Jet’s corporate and private jet charter offers efficient travel solutions with premium comfort and style. The fleet represents approximately 40% of the total of China corporate jets and market share is approximately 65% as at April 2014. Its clientele includes government officials, top business executives and celebrities. Hong Kong Airlines Hong Kong Airlines, an associated company of the Guarantor, is the second largest airline group in Hong Kong in terms of market share and route network. Besides its international network, Hong Kong Airlines has established passenger route network in the PRC comprising the cities of Beijing, Shanghai, Nanchang, Chengdu, Chongqing, Guiyang, Nanning, Haikou, Sanya, Tianjin, Hangzhou, Nanjing, Yancheng, Changchun, Fuzhou, Xuzhou, Taiyuan and Hohhot. It has entered into passenger codeshare agreements with Hainan Airlines, China Eastern Airlines, Shanghai Airlines, EVA Airways, Air India, Air Seychelles, Etihad Airways, Garuda Indonesia and Hong Kong Express to strengthen the frequency of its flight schedule and offer increased access to certain destinations for its passengers. So far, it has approximately 340 scheduled codeshare flights every week operated by its codeshare partners and it operates approximately 448 scheduled codeshare flights every week. Hong Kong Airlines currently operates 25 aircrafts, comprising of 20 passenger aircrafts and 5 pure cargo aircrafts. Since 2010, Hong Kong Airlines was awarded ‘‘4-Star Airline’’ title by Skytrax for consecutive 4 years, and was awarded ‘‘The World’s Best Improved Airline’’ in 2014. The above airlines are participating airlines in the frequent flyer programme known as Fortune Wings Club.

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ii)

Financial Services

The Group provides a range of financial services, including leasing, trust and other financial services such as insurance, securities, futures, investment banking, funds, factoring, equity investments and guarantee provision. Leasing The Group conducts its leasing business primarily through Bohai Leasing. Listed on the Shenzhen Stock Exchange, Bohai Leasing (SHSE: 415) mainly engages in the finance lease, operating lease and financing guarantee businesses, specialising in aircrafts, ships, containers, infrastructure, high-end machineries. Its financing products and services include finance lease, operating lease, sale-leaseback, leveraged leasing, vendor leasing, aircraft prepayment financing, aircraft mortgage financing, financial advisory services and risk management services. It is the only listed leasing company in China and has a full leasing license. Bohai Leasing is the largest and most diversified container leasing company in the world by cost equivalent unit. The Guarantor directly held 44.3% interests in Bohai Leasing as at 31 December 2014, and is its largest controlling shareholder. In August 2013, Bohai Leasing successfully issued CNY3.5 billion domestic bonds, becoming the first leasing company to issue bonds in the PRC. On December 27, 2013, Bohai Leasing, through its offshore subsidiary, Global Sea Containers Ltd, completed its acquisition of the entire stake in Seaco from Global Sea Containers Two SRL, a subsidiary of the Issuer. At the time of acquisition, Seaco owned and managed over 870,000 20-foot equivalent units. On January 20, 2015, Bohai Leasing, through its offshore subsidiary, Global Sea Containers Ltd, completed its acquisition of 80% stake in Cronos from Cronos Holding Company Ltd.. As at 31 December 2014, assets under lease and lease receivables of Bohai Leasing amounted to CNY26.45 billion and CNY32.40 billion, respectively. For the year ended 31 December 2014, the operating revenue and operating profit of Bohai Leasing were CNY6,852 million and CNY1,234 million, respectively. Aircraft Leasing As at 31 December 2014, the Group had contracted to lease 170 aircraft, of which 151 aircraft had been delivered. The assets under lease as at 31 December 2014 totalled CNY24.25 billion. The size of the fleet held by the Group is one of the largest in the world. The aircraft leasing business of the Group is predominantly conducted through Bohai Leasing’s subsidiary, HKAC. Acquired by the Group in January 2010, HKAC is an international aircraft leasing company headquartered in Hong Kong, with offices in Dublin and New York. It is mainly engaged in aircraft leasing and asset management. Customers of HKAC include Qantas, British Airways, Emirates Airlines, Ryanair and Wizz Air. According to Ascend Flightglobal Consultancy in 2014, HKAC is one of the global top 23 aircraft leasing companies in terms of fleet value. Container Leasing The container leasing business of the Group is primarily conducted through Seaco, a subsidiary of Bohai Leasing, and Cronos.

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Seaco was a joint venture established by General Electric Capital Corporation and Sea Containers Ltd. (since reformed as Seaco Limited) in Barbados in 1998 and was originally named as GE Seaco SRL. Acquired by the Issuer in 2011 and sold to Bohai Leasing in 2013, Seaco now operates as a core business within the Group’s existing logistics and finance operations in the form of Bohai Leasing. It has an issued capital of U.S.$113.23 million. Seaco is headquartered in Singapore and has 14 sales and support offices worldwide. By working closely with container manufacturers and offering advanced container leasing services, Seaco is recognised worldwide as an industry leader. The majority of Seaco’s fleet is on long-term leases to a diverse group of world’s leading liners, logistics companies and shippers, allowing Seaco to maintain strong and stable cash flow. Seaco manages one of the most diversified container fleets amongst its industry peers, providing consistent cashflows throughout economic cycles. A diversified fleet also enables Seaco to have a broader customer base than other lessors, with its top 10 customers representing less than 48% of its total revenue in 2014. Seaco also has an established track record in selling end-of-life assets worldwide, maximising asset value to shareholders. Cronos is headquartered in San Francisco, United States and has 18 leasing and sales offices worldwide. Cronos is one of the world’s leading cargo container lessors and an industry leader in specialised container leasing. Cronos leases dry, refrigerated, tank and specialized intermodal container equipment to users worldwide across a number of industries. The company also offers design and procurement services for companies needing specialized built-to-order container equipment. In addition, it manages equipment leasing investment programs on behalf of third-party equipment owners. Trust The Group conducts its trust business primarily through Bohai International Trust Co., Ltd. (‘‘Bohai Trust’’). •

Bohai Trust was incorporated in October 1982. Pursuant to a restructuring in December 2006, Bohai Trust became a subsidiary of the Guarantor. Further to several rounds of capital increase, it currently has registered capital of CNY2 billion. Based in Hebei, Bohai Trust has established branch offices in Beijing, Shanghai and Chengdu, etc.. Its products range from infrastructure trust, securities trust to real estate trust. As at 31 December 2014, Bohai Trust had assets under its management totaling CNY216.62 billion. For the year 2014, it recorded total revenue of approximately CNY1,151 million and net profit of approximately CNY591 million. In the same year, Bohai Trust was named ‘‘China Most Potential Trust Company’’ by Shenzhen Secutimes at the ‘‘3rd China Trust Companies Awards of Excellence’’.

Other Financial Services •

Approved by the China Insurance Regulatory Commission, Min’an Property and Casualty Insurance Co., Ltd. (‘‘Min’an Insurance’’), a company in which the Guarantor has an interest, is an insurance company based in Shenzhen. Its businesses include home insurance, liability insurance, credit insurance, health insurance, casualty insurance and re-insurance of the above insurances. It has a well established sales and distribution network covering the whole of China with over 150 branch offices, including in Shenzhen, Hainan, Guangdong, Beijing, Shanghai, Sichuan, Hunan, Henan, Tianjin and Hong Kong. Min’an Insurance received a second tier ‘‘Shenzhen Financial Innovation Award’’ issued by the Shenzhen Municipal Government in 2009. Lianxun Securities Co., Ltd. (‘‘Lianxun Securities’’), a company in which the Guarantor has an interest, was established in 1988. Its business includes security brokerage, fund retail, security investment consultation, financial advisory and security asset management. It has over 30 branches in China. Lianxun Securities is listed on the over-the-counter bulletin board in Shenzhen.



Yingkou Coastal Bank Co., Ltd. (‘‘Yingkou Coastal Bank’’), a company in which the Guarantor has an interest, was established in December 2010 with a registered capital of CNY1.5 billion. Headquartered in Yingkou city of Liaoning province, Yingkou Coastal Bank is a newly formed

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commercial bank jointly established by four urban credit cooperatives in Yingkou city; it is situated at a strategic location in the coastal economic zone of Liaoning province, and aims to take advantage of the economic development in the region and to become a bank with expertise in logistics network. iii)

Travel Services

Operating under the core development strategy of ‘‘one card, one network, and one center’’, the Group seeks to provide a one-stop solution for all the travel needs of its customers from travel planning and booking, financing, air travel, hotel accommodations, tour guides to shopping and entertainment, with integrated internet and e-commerce platforms. The Group is one of the largest travel services groups in China and in 2013 it ranked sixth in the list of ‘‘Top 20 Chinese Tourism Groups’’ published by the China Tourism Academy. The Group’s travel services span from travel agencies, stored value smart card, to currency exchange, with companies (including Grand China MICE, Hainan HNA Yisheng Co., Ltd., Tianjin Bohai Huitong Currency Exchange, Yisheng Capital Fund Co., Ltd. etc) approximately 73 travel agencies, over 500 travel agency outlets, over 10,000 merchants established and almost 40 currency exchange outlets. With ‘‘one card, one network, and one center’’ as core development strategy and creative business model, the Group aspires to become the largest domestic and one of the leading international provider of modern comprehensive and seamless travel services and to create, promote and lead a new lifestyle of travel and consumption as part of its key strategies. On 14 January 2015, Shanghai Nine Dragon Tourism Co., Ltd. (‘‘Nine Dragon’’), an indirectly owned subsidiary of the Guarantor, has entered into an equity transfer agreement, pursuant to which Shanghai Nine Dragon will transfer its 60% equity interest in Shanghai Dragon woo Travel Co., Ltd to Shanghai Chase Tour Travel Co., Ltd for CNY 3 million. Pursuant to completion of transaction, Nine Dragon will hold remaining 40% stake in Dragon woo. The key subsidiaries of the Group engaged in travel services are Hong Thai Travel Services Co., Ltd. (‘‘Hong Thai’’) and Bohai E-Business Service (‘‘Bohai E-Business’’). Grand China MICE A subsidiary of the Guarantor, Grand China MICE provides marketing, incentives, conferences, and exhibitions (‘‘MICE’’) solutions to numerous reputable Top 500 multinational corporations from pharmaceutical, telecommunication, insurance, financial, car and information technology industries. Its headquarter is located at Beijing with subsidiaries in Shanghai, Guangzhou and Chengdu targeting eastern region, southern region and western region respectively. The company has approximately 200 employees and their average year of experience in MICE is over 5 years. Some highlighted events of Grand China MICE include hosting FIVB Beach Volleyball World Tour Beijing Station(國際排聯沙灘 排球世界大滿貫北京賽)that served about 300 FIVB staff and athletics in April 2011, 5th and Congress of Critical Care Medicine(第5次全國重症醫學大會)at Guangzhou that served more than 5,000 attendees in May 2011. Hong Thai Acquired in 2011, Hong Thai, a subsidiary of the Guarantor, is one of the largest travel agencies in Hong Kong. Founded in 1966, it has 19 sales outlets located in Hong Kong, Macau, Shenzhen, Guangzhou and Singapore. Over the years, it has received numerous awards and accolades for its achievements and market leader position. According to Nielson Media Index Hong Kong Report, Hong Thai is the leading travel and tour operator in terms of customers served for 13 consecutive years from 2001 to 2013. Hong Thai won Yahoo! Hong Kong’s ‘‘Emotive Brand Awards (Travel Agent Category)’’ for 12 consecutive years from 2003 to 2014 and Asiaweek magazine’s ‘‘Asian Premier Brands Award’’ for three consecutive years from 2011 to 2013.

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Bohai E-Business Incorporated in Tianjin in December 2008, Bohai E-Business is a subsidiary of the Guarantor and its principal businesses and core business development directions are to develop and market HNA Easycard as an electronic payment platform on the internet. Aspiring to become the Chinese version of American Express card, HNA Easycard is a rechargeable stored value card which the holders can use for payment at affiliated shops and sales and services outlets. HNA Easycard allows customers to purchase from a wide range of the Group’s travel business partners including hotels, car rental services and restaurants and encouraging cross-selling and promoting business across the Group’s various segments and businesses. The economic growth of Tianjin and its vicinity area and the increase in personal wealth helps the business of HNA Easycard grow significantly. In 2013, the revenue of the sales transactions completed through HNA Easycard exceeded CNY69 million. Meanwhile, the sales volume of HNA Easycard has reached 202,912 and the stored value on the cards has exceeded CNY71 million. HNA Easycard business mainly focuses on individual clients which are relatively scattered. It has partnered with outstanding enterprises like Tianjin Business Federation, China UnionPay, China Telecom, China Unicom, Hainan Airlines, Tianjin Airlines Co., Ltd. etc. Bohai E-Business is also amongst the 269 enterprises and the first batch of enterprises which have been issued with the third party payment authorisation certificate by the People’s Bank of China. iv)

Airport Services

The Group is engaged in the businesses of airport investment, airport restructuring, airport operation and management and related ground and consultancy services, and owns and manages a portfolio of 10 airports across China. The Guarantor has a stake in and manages the following airports in China: No.

Airport

1 2 3 4 5 6 7 8 9 10

Sanya Phoenix International Airport Yichang Sanxia Airport Weifang Nanyuan Airport Dongying Yong’an Airport Manzhouli West Skirts Airport Yingkou Airport An’qing Tianzhushan Airport Tangshan Sannuhe Airport Haikou Meilan International Airport Jinzhou Airport

As at 31 December 2014, the total assets of the Group’s airports business amounted to approximately CNY41.2 billion. According to the information published by CAAC, in 2014, the Group’s airports group achieved the total passenger throughput of approximately 38.15 million passengers and total cargo throughout of approximately 487,200 tonnes. Sanya Phoenix International Airport is a modern airport located in Sanya, Hainan constructed to 4E standards with capacity to handle large aeroplanes like the Boeing 747-400. The airport was officially opened to air traffic in July 1994, it has a network of over 214 domestic and international routes connecting to major international and domestic cities, including Singapore, Moscow, Bangkok, Tokyo, Osaka, Seoul, Hong Kong and Taiwan. In 2014, it handled over 14.94 million passengers, making it the 19th busiest airport in terms of passenger traffic. Total cargo traffic handled for the same period reached approximately 7.56 tonnes. Haikou Meilan International Airport, located southeast of Haikou, the capital city of Hainan province, was officially opened on 25 May 1999. It is the largest airport in Hainan, covering an area of 583 hectares. With modern facilities meeting the 4E standards as required by the International Civil Aviation

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Organisation, it serves both domestic and international passengers. After expansion, its passenger terminal building has an area of 102,000 square metres, raising its capacity to handle passenger throughput of up to 9.3 million passengers annually. In 2014, it handled approximately 13.85 million passengers, 105,900 flight movements and 12.11 tonnes of cargo and was the 19th busiest airport in China in terms of passenger traffic. Haikou Meilan International Airport is operated by HNA Infrastructure, the shares of which are listed on The Stock Exchange of Hong Kong Limited (Stock Code:357). Both located in Hainan, Sanya Phoenix International Airport and Haikou Meilan International Airport are well positioned to play an important role in the development of Hainan as an international tourist destination, which is part of the 12th Five-Year Plan promulgated by the PRC National People’s Congress. A number of these member airports of the Group are exemplification of strategic cooperation between the Group and various provincial and municipal governments in the PRC, including Haikou Meilan International Airport, Sanya Phoenix International Airport, Yichang Sanxia Airport, Tangshan Sannuhe Airport and Manzhouli West Skirts Airport. v)

Retail Business

The Group has retail business in Western China and is exploring the rest of the Chinese domestic market. The Group seeks to bring the concepts of ‘‘health, wealth, happiness and harmony’’ to its retail business and to adopt a business strategy that integrates real and virtual businesses, electronic commerce and financial services. The Group carries out its retail business through 16 companies with an established nationwide retail network of 316 retail stores in locations including Shaanxi, Gansu, Tianjin, Shanghai and Beijing, comprising 15 department stores, 300 supermarkets and a shopping mall covering an operating floor area of 1.26 million square metres. In 2014, HNA Commercial Holding Co., Ltd., a subsidiary of the Guarantor, ranked 20th in the list of Top 100 Chain Stores in China in terms of sales volume, which was awarded by the China Chain Store & Franchise Association. The Group’s key retail operations include the following: •

Xi’an Minsheng Group Co., Ltd. (‘‘Minsheng Group’’), a subsidiary of the Guarantor, is a longestablished brand name in Xi’an, Shaanxi province with leading position in retail markets. Its shares have been listed on the Shenzhen Stock Exchange since 1994. Minsheng Group has 13 department stores across central cities in Shaanxi, such as Xi’an, Baoji, Hanzhong, Yan’an, and Ankang, as well as eastern areas of Gansu province, and more than 100 supermarkets covering Shaanxi and eastern Gansu. It employs over 5,000 employees.



Hunan Joindoor Supermarket is a large Hunan-based chain retail enterprise, operating over 60 stores, including hypermarkets, supermarkets and convenience stores. Its stores are located in Changsha, Yueyang, Yiyang, Changde, Hengyang, Zhuzhou, Loudi, Xiangxiang. With its total operating area of 300,000 square meters, Hunan Joindoor Supermarket has over 4,800 employees.



Haikou Seaview International Plaza, a mid to high-end shopping centre located in the business centre of Haikou, is the first and only commercial enterprise selected by the Ministry of Commerce as ‘‘Jinding Department Store’’, the highest grading accorded to stores. In 2011, it was among the first batch of designated tax rebate shops for foreign tourists in Hainan. In 2012, it won the title of Hainan’s Top Ten Consumer Goods Enterprise with its total score ranking the first place in Hainan.



Qingdao HNA Wanbang Center is a complex of office buildings, apartments and commercial buildings located in the central business district of Qingdao. It comprises a 51-storey, 5A class intelligent office building, the highest in Qingdao, a 30-storey luxury apartment and a four-storey high-end commercial shopping mall.

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vi)

Real Estate

The Group has developed various types of luxury hotels, office buildings, urban complexes, high-end residences and large-scale eco-tourism scenic spots. As of December 2014, the Group has 47 projects in construction with an approximate area of over six million square meters. As at 31 December 2014, the Group had real estate operations over 40 cities in China, including Hainan, Beijing, Shanghai, Shenzhen, Tianjin, Chongqing, Qingdao and Dalian. It employed a total of over 7,500 employees. In 2014, the Group completed five real estate development projects with a gross saleable area of 734,900 square metres, with pre-payments amounting to CNY6.567 billion. As at the end of 2014, the Group held over 100 real estate projects, with construction area of over 4 million square metre and land reserves of approximately 700,000 mu. Of these, 47 projects were under development or which were about to commence development, and of which 13 were located in Haikou, 8 were located in other areas of Hainan Province and 10 were located in other areas of China. vii) Hotel and Catering The Group owns 28 hotels that are consolidated into the results of the Group, of which seven are fivestar hotels and four are four-star hotels. As at the end of 2014, such hotels had a total of 6,783 guest rooms and received over 1.8 million guests during 2014. In 2014, the Group ranked fifth among hotels in China in terms of number of rooms operated. Through its subsidiary, HNA Hotel, the Group also operates and holds interests over 60 hotels, including high end business hotels, resorts hotels, condominiums, budget hotels, clubhouses and golf courses etc. The locations of the Group’s hotel operations are located in major cities and tourist destinations in the PRC as well as overseas, including Brussels, Hainan, Beijing, Guangzhou, Hangzhou, Xi’an, Qingdao, Nanchang, Kunming, Harbin, Changchun, Ningbo, Dalian and Baoji. The Group also cooperates with international hotel groups such as Westin, Raffles and Marriott for the management of over 20 hotels owned by the Group, including Marriott Beijing Northeast, Tianjin HNA Raffles and Guangzhou HNA Westin. In 2013, the Group ranked 69th (in terms of number of hotel rooms) globally in the list of ‘‘Hotels 325’’ published by the Hotels Magazine. The Group has developed two distinctive series of brands for different types of hotels, aiming to create unique following and loyalty for each of such brands. The Tangla series of hotel brands is used for the Groups premium luxury hotels, including the Tangla Grand Place, Tangla Hotels & Resorts, the Tang Hotel and Gardenlane Select. HNA series of hotel brands include HNA Grand Hotel, HNA Business Hotel and HNA Express Inn. The Group uses the advanced management concepts and systems and firstrate quality standards and methods to consolidate brands through standardised operation, expand brands through scale mergers and acquisitions, and seeks to become a world-class Chinese hotel brand enterprise. In conjunction with its hotel business, the Group also operates restaurants at various hotels operated by the Group, offering a range of cuisines and dining options for its hotel guests. viii) Logistics and Transportation The Group conducts the following principal areas of logistics business: shipping and marine engineering construction, marine transportation, bulk commodity trading and cold chain system logistics. •

Shipping and marine engineering construction. Jinhai Heavy Industry Co., Ltd., an affiliated enterprise of HNA Logistics Group Co., Ltd and among the top ten shipbuilding enterprises in China, is engaged in the businesses of shipbuilding, marine shipping equipment, marine engineering equipment and non-shipbuilding equipment manufacturing, and aims to become a world-class equipment manufacturer. It has equipped itself with the capacity and conditions to build various types of vessels for the domestic and international customers, including large and

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medium container vessels, liquefied natural gas (LNG) carriers, liquefied petroleum gas (LPG) carriers, ro-ro vessels, floating storage tankers, refined oil tankers, crude oil tankers, bulk carriers, passenger ships and special working vessels. •

Marine transportation operation. The maritime operations under HNA Logistics Group Co., Ltd cover container transport, bulk cargo transport, tanker transport, ship and crew management and many other businesses. It has operated almost 40 vessels. It has also signed many long and midterm cargo transport contracts with regular customers and operates the foreign trade routes including the Oceania route, America route, Japan route, Korea route and Southeast Asia routes and a number of domestic routes.



Bulk commodity trading. Gopay Information Technology Co., Ltd. under HNA Logistics Group Co., Ltd is a third-party payment company with the full licenses including licence for Internet payment, mobile phone payment, prepaid card and acquiring service. It operates in market segments such as bulk commodity trading, business-to-consumer (B2C) business, prepaid card, acquiring service and financial service. Relaying on its payment business, data processing technology and trade settlement platform, Gopay has well integrated HNA’s industrial resources and by virtue of three major tools including Internet of things, big data and cloud computing, has created a new Internet based financial mode and is striving to develop to a leading comprehensive third-party payment platform.



Cold chain system logistics. HNA Sinosun Logistics Co., Ltd. under HNA Logistics Group Co., Ltd specialises in cold chain transport operations, and is among the top 50 enterprise in China’s food cold chain logistics. Presently, it has established good business relationship with Nestle, Starbucks, KFC, IKEA, DHL and other brands, and is devoted to become the first integrated air and sea intermodal service provider throughout the cold chain.

ix)

Other Businesses

The Group is also engaged in the businesses of culture, media and new energy. RECENT DEVELOPMENTS Non-public issuance of A Shares On 16 April 2015, HNA Investment Group Co., Ltd. has approved the non-public issuance of its A shares of no more than 3,037,974,683 shares. The total amount of proceeds is expected to be no more than CNY12 billion. The proceeds from the non-public issue of shares, after deduction of all issuance costs, were intended to be used for the capital increase of Bohai International Trust Co., Ltd, acquisition of equity interests in Sinosafe Insurance, acquisition in Beijing Xinsheng Medical Investment Management Co., Ltd. and replenishment of working capital. The issuance is conditional on, among other things, the requisite approvals obtained from the China Securities Regulatory Commission (‘‘CSRC’’), the China Banking Regulatory Commission and all other relevant regulatory authorities in China and applicable jurisdictions. On 13 April 2015 and 19 June 2015, the board of Hainan Airlines has approved the non-public issuance of its A shares of no more than 6,703,910,614 shares. The total amount of proceeds is expected to be no more than CNY24,000,000,000. The proceeds from the non-public issue of shares, after deduction of all issuance costs, were intended to be used for the purchase of 37 aircraft by Hainan Airlines, the acquisition of 48.21% of the shareholdings of Tianjin Airlines and for repayment of banking facilities. The issuance is conditional on, among other things, the requisite approvals obtained from the CSRC and all other relevant regulatory authorities in China and applicable jurisdictions.

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On 16 April 2015 and 27 April 2015, the board of Bohai Leasing has approved the non-public issuance of its A shares of no more than 1,308,258,381shares. The total amount of proceeds is expected to be no more than CNY16,000,000,000. The proceeds from the non-public issue of shares, after deduction of all issuance costs, were intended to be used for expansion of Aircraft leasing business by HKAC, expansion of leasing business by Tianjin Bohai Hainan Airlines and repayment of liabilities. The proposed issuance is subject to the approval of the CSRC. Reorganisation of E-Food Group In April 2015, as part of its reorganisation plan, the board of E-food Group Co., Ltd (‘‘E-Food Group’’) (SZSE: 00796), an indirect subsidiary of the Guarantor, entered into a share purchase agreement with HNA Tourism and Caissa Shijia Tourism Management Consulting Limited(凱撒世嘉旅遊管理顧問股份 有限公司)(‘‘Caissa Shijia’’) pursuant to which E-Food Group will purchase the HNA Tourism’s and Caissa Shijia’s respective shareholdings in Caissa Tongsheng (Beijing) Investment Co., Ltd.( 凱撒同盛 (北京)投資有限公司)(‘‘Caissa Tongsheng’’). E-Food Group agreed to issue a total of 432,432,421 of its A shares to HNA Tourism and Caissa Shijia as consideration for the purchase. The total amount of proceeds from the issuance was CNY2,400,000,000. The board of E-food Group also approved the issuance of its A shares of no more than 124,025,812 shares in return for capital to be used for investing in Caissa Tongsheng’s key businesses, including sales and marketing projects in the PRC, upgrade of IT and e-commerce platform, various tourism projects. The total amount of proceeds from the issuance was CNY799,966,487.40. The above share issuances have been approved by the CSRC on 21 September 2015 and completed on 9 November 2015. E-Food Group has also changed its name into HNA-Caissa Travel Group Co., Ltd.. Pursuant to the share issuance, HNA Tourism Group became the largest shareholder of HNA-Caissa Travel Group Co., Ltd, with shareholding increased from 1.00% to 31.79%. Acquisition of Xi’an Xingzhengyuan Shopping Centre Co Ltd. On 1 July 2015, Xi’An Minsheng Group Co Ltd (‘‘Xi’An Minsheng’’) received the CSRC’s approval in connection with its proposed acquisition of 67.59% of shareholding in Xi’an Xingzhengyuan Shopping Centre Co Ltd. owned by HNA Retailing Holdings Limited (‘‘HNA Retailing’’), the purchase of certain property in Luomashi, Xi’An, owned by Xingzhengyuan Property Development Co., Ltd. (‘‘Xingzhengyuan Property’’) and associated capital raising activities. Pursuant to such CSRC approval, Xi’An Minsheng may non-publicly issue (i) no more than 112,311,015 of its A shares to HNA Retailing in consideration of its proposed share acquisition and (ii) no more than 82,073,434 of its A shares to Xinzhengyuan Property in consideration of its proposed property purchase. In addition, Xi’An Minsheng may issue no more than 106,714,628 new shares to the public for raising supporting capital in connection with the share and property acquisition. Subscription of convertible bonds issued by AID Partners On 20 July 2015, AID Partners Capital Holdings Limited (‘‘AID Partners’’), an indirect subsidiary of the Guarantor, completed the issuance of convertible bonds in aggregate principal amount of HK$140,000,000 bearing compound interest of 8 per cent. per annum to its substantial shareholder, Hong Kong HNA Holding Group Co. Limited, also an indirect subsidiary of the Guarantor. Based on the initial conversion price of HK$0.325 per share and assuming full conversion of the said convertible bond at the initial conversion price, the said convertible bond will be convertible into 430,769,230 shares of AID Partners. The net proceeds will be used as investment capital for the strategic investment business of AID Partners for the expansion of its asset management business and related financial platform as well as for general working capital of the AID Partners group. On 22 July 2015, the Group was ranked 464th in the ‘‘Fortune Global 500 Companies’’ list published by Fortune Magazine. Potential Acquisition of Swissport International Ltd. On 30 July 2015, the Guarantor entered into an agreement with PAI Partners, a leading European private equity firm, in respect of the acquisition of Swissport International Ltd. (‘‘Swissport’’) by the Guarantor for a total transaction value of CHF 2.7 billion (approximately U.S.$2.8 billion). Completion of the acquisition is expected to occur during the first quarter of 2016. The proposed acquisition is subject to customary anti-trust approvals and the approval of regulatory authorities in the PRC and, accordingly, may or may not complete.

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Based in Switzerland, Swissport is one of the world’s leading operator in ground handling and cargo services. It serves around 224 million passengers and handles 4.1 million tonnes of cargo a year on behalf of some 700 client-companies. With a workforce of around 60,000 personnel, Swissport is active at more than 270 stations in 48 countries across five continents. The Group believes that the proposed acquisition, if completed, will create opportunities for synergy with the Group’s existing airport services business, and further strengthen and complement the Group’s existing activities including aviation, airport management, logistics and tourism businesses globally. Acquisition of 30 South Colonnade in London On 28 August 2015, HNA Investment Holding Co, Ltd, a subsidiary of the Guarantor entered into an agreement with KanAm Grund Group, a German real estate investment fund for the acquisition of 30 South Colonnade, Canary Wharf, London, the United Kingdom. 30 South Colonnade is a landmark office building at the centre of Canary Wharf, one of London’s major financial districts. The building extends over 10 storeys, with a total area of 305,600 square feet and is the European headquarters for Thomson Reuters. Located near other notable tenants in Canary Wharf including Citigroup, HSBC, Northern Trust, and Morgan Stanley, it is prominently situated near the centre of the Canary Wharf estate and is regularly featured in the media with the Reuters digital ticker tape providing the backdrop. The acquisition marked the first real estate acquisition by the Group in Europe and represented a significant step in building the Group’s European portfolio. Acquisition of Avolon Holdings Ltd On 3 September 2015, Bohai Leasing entered into a definitive merger agreement to acquire 100% of Avolon Holdings Ltd (‘‘Avolon’’) for approximately U.S.$2.555 billion, representing a price of U.S.$31 cash per common share. The offer price of U.S.$31 per common share represents a 31% premium to Avolon’s closing price on 13 July 2015 of U.S.$23.73 per common share, the closing price prior to the announcement of Bohai Leasing’s initial intention to acquire a 20% stake in Avolon. The purchase price for the acquisition is guaranteed by the Guarantor. The proposed acquisition is expected to close by the first quarter of 2016 and is subject to certain regulatory approvals as well as the approval by the shareholders of each of Avolon and Bohai Leasing, and accordingly may or may not complete. A total deposit of U.S.$350 million is payable by Bohai Leasing to Avolon in certain circumstances if the transaction is not consummated. Avolon is an international aircraft leasing company listed on the New York Stock Exchange. It is headquartered in Ireland, with regional offices in China, Dubai, Singapore and the United States. According to the statistic from the aircraft magazine Airline Business, Avolon is the 11th largest aircraft leasing company in the world, based on the value of the fleet. Avolon provides aircraft leasing and lease management services. As at 30 June 2015, Avolon had an owned, managed and committed fleet of 260 aircraft serving 56 customers in 33 countries. The book value of the aircraft assets has reached U.S.$6.36 billion. The acquisition of Avolon represents a strong complement to the Group’s existing investment in the aircraft leasing sector, and according to the statistics of Finance & Leasing, Bohai Leasing would be among the global top 10 aircraft leasing company after completion of the acquisition. Civil Aircraft Engine and Maintenance Service Agreement with Rolls-Royce On 21 October 2015, the Group entered into a civil aircraft engine and maintenance service agreement with Rolls-Royce Holdings Plc (‘‘Rolls-Royce’’), under which the Group’s new wide-body aircraft are to be powered by Rolls-Royce’s engines and maintenance services worth U.S.$2.4 billion. HNA Group’s wide-body aircraft, regional aircraft and business jets have Rolls-Royce engines installed. The engines included in the agreement will power a total of 44 aircraft that have already been ordered with Airbus by the Group’s airline subsidiaries, including Airbus A330s, A350-900s and A330 Freighters. After the delivery of HNA Group’s new wide-body aircraft order has been completed, the proportion is expected to further increase. Pursuant to the agreement, the Group may become one of the world’s largest companies operating an A330 aircraft fleet maintained and powered by Rolls-Royce’s engines.

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The British-based Rolls-Royce Group is a world-renowned manufacturer of power systems and energy equipment. Its technology is widely used in the field of aviation, waterborne vessels and energy generation. In the field of civil aviation, Rolls-Royce has a wide range of engines and manufactures engines to power different models of wide-body aircraft, regional aircraft and business jets. In 2014, Rolls-Royce Group recorded a total operating income of £14.588 billion. Launch of Beijing-Manchester Route On 23 October 2015, Hainan Airlines announced that it will launch a Beijing-Manchester route in June 2016. The new route will be the first nonstop service between the two cities. Manchester Airport is the international gateway to the North of England and the new route is expected to inject over £250 million into the economy of the United Kingdom. The launch of the Beijing-Manchester route is part of Hainan Airlines’s ‘One Belt, One Road’ initiative, where nonstop flights connecting China with Europe have been introduced over the last few years. The Beijing-Manchester route will be Hainan Airlines’ sixth international route following the launch of the Chongqing-Rome, Beijing-San Jose, Shanghai-Boston, Shanghai-Seattle and Beijing-Prague routes in early 2015. The launch of the Beijing-Manchester route will further broaden Hainan Airlines’ global network. Change of ultimate control of the Guarantor On 13 November 2015, the Board of Hainan Liberation Commonwealth Foundation(海南省慈航公益基 金會)(the ‘‘Fund’’), the Guarantor’s controlling shareholder, approved the amendments to the Foundation’s articles of association, pursuant to which Trade Union Committee of Hainan Airlines Co., Ltd.( 海南航空股份有限公司工會委員會)(the ‘‘Union’’) ceased to have control of the board of the Fund, which in turn ceased its ultimate control of the Guarantor. The Fund acquired ultimate control of the Guarantor and remains as the controlling shareholder of the Guarantor. Issuance of domestic corporate bonds On 19 November 2015, the Guarantor has announced the issuance of CNY3,000,000,000 fixed rate domestic corporate bonds due 2022 in the PRC. The bonds will be guaranteed by Grand China Air Co., Ltd.. The domestic corporate bonds have been rated AA+ by Shanghai Brilliance Credit Rating & Investor Service Co., Ltd. Potential Acquisition of Azul Linhas Aereas Brasileiras SA On 24 November 2015, the Group announced the entering into of a strategic partnership agreement with Azul Linhas Aereas Brasileiras SA (‘‘Azul’’), whereby the Group has agreed to acquire 23.7% stake in Azul, at a consideration of 1.7 billion reals (approximately U.S.$455 million). Upon completion of the acquisition, the Group will become the biggest individual shareholder of Azul and will have one seat on the board of Azul. The companies will cooperate in the development of code sharing, new route development, and the expansion of loyalty participation programmes. The proposed acquisition is subject to customary anti-trust approvals and the approval of regulatory authorities in the PRC and, accordingly, may or may not complete. Azul is the largest airline in Brazil by number of cities served, and the third largest airline in Brazil by market share, offering more than 900 daily flights to 101 destinations. With a fleet of 140 aircraft and more than 10,000 crewmembers, Azul currently has a 32% share of departures of the Brazilian aviation market. The acquisition of Azul will be a first foray into Latin America for the Group and the Group believes that the partnership will bring more choice and convenience to its customers traveling to and from Brazil.

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EMPLOYEES As at 31 March 2015, the Group had over 83,000 employees. Amongst the employees, over 35% had bachelor degrees and over 2% had postgraduate or doctorate degrees. The Group believes that its employees are critical to its performance and success. Its human resources policy promotes motivation and innovation, which it believes help boost the efficiency of the Group and its competitive edge. Remuneration of its employees comprises fixed basic salary, bonus (determined with reference to the relevant company’s results and the relevant employee’s performance) and allowances. The Group also provides its employees with welfare benefits in accordance with the applicable laws and regulations, including but not limited to provident fund contributions, medical insurance schemes and insurance. The Group has further established a platform to facilitate dialogue and interaction between employees’ representatives and the senior management of the Group. As social responsibility is one of the important values of the Group, community service events are organised from time to time to promote such value and to maintain harmonious working environment for the employees of the Group. The Group adheres to, and complies with, the relevant labour laws of the PRC in all material respects. It has not experienced any major strike or work stoppage, and there is currently no unresolved major labour dispute that could cause material adverse effect to the operation and performance of the Group. CORPORATE GOVERNANCE The Guarantor has established a Management Consultancy Committee which oversees operations of the Group and its subsidiaries (including the Issuer) and the implementation of its strategies, and liaises with various levels of governments. The Safety Management Committee monitors the potential safety hazards relating to each of the Group’s business segments, and issues relevant handbooks and guidelines. The Budget Management Committee controls investment decision making and risk management processes to ensure effective supervision during each stage of investment. INSURANCE The operations of the Group involve a number of inherent risks, such as mechanical failure, fatality, personal injury, property loss and damage, business interruption, hostilities and labour strikes. The Group is covered by insurance policies by reputable insurance companies in the relevant jurisdictions and with commercially reasonable deductibles and limits on coverage. It believes that the insurance coverage in place are in line with industry and market standards and is adequate and sufficient for the conduct of its businesses. LEGAL PROCEEDINGS As at the date of this Offering Circular, the Guarantor and its subsidiaries have not been involved in any legal or administrative proceedings or arbitration that could have a material adverse effect on their respective financial condition or results of operations, nor is the Guarantor aware of any potential legal or administrative proceedings or arbitration involving the Guarantor or any of its subsidiaries that would have a material adverse effect on the Group’s financial condition or results of operations. The Guarantor and its subsidiaries however may from time to time be involved in certain legal proceedings arising out of their ordinary course of businesses. The Group is currently involved in legal proceedings with Shagang Shipping involving disputed claims of U.S.$66.4 million and the Group believes that it has a legitimate defence in the lawsuit. The Group believes that none of these legal proceedings, individually or in the aggregate, will have any material adverse effect on the Group’s financial position or results of operations.

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PRC REGULATIONS The heading of the existing section ‘‘Remittance of Reminibi into and outside the PRC and PRC Regulations on the Guarantee of the Notes’’ appearing on pages 160 to 163 of the Offering Circular is changed to ‘‘PRC Regulations’’. New sub-section headings ‘‘Remittance of Renminbi into and outside the PRC’’ and ‘‘Regulations on the Guarantee of the Notes’’ are inserted before the paragraph ‘‘Current Account Items Under the applicable PRC foreign exchange control regulation, current account items refer to…’’ on page 160 and the paragraph ‘‘Cross-Border Security Laws On 19 May 2014, the SAFE promulgated the Notice Concerning the Foreign Exchange Administration Rules on Cross-Border Security and the relating implementation guidelines…’’ on page 162, respectively. The existing subsection headings ‘‘Current Account Items’’ and ‘‘Capital Account Items’’ on page 160 are changed into secondary sub-section heading and the existing sub-section heading ‘‘Cross-Border Security Laws’’ on page 162 is cancelled. Further, the following new sub-section is inserted after the paragraph ‘‘The Terms and Conditions of the Notes provide that the Guarantor will register, or cause to be registered, the Deed of Guarantee with SAFE…’’ on page 163. PRE-ISSUE REGISTRATION AND POST-ISSUE FILING REQUIREMENTS On 14 September 2015, NDRC promulgated the Circular on Promoting the Reform of the Filing and Registration System for Issuance of Foreign Debt by Enterprises( 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), the ‘‘NDRC Circular’’), which came into effect on the same day. According to the NDRC Circular, enterprises domiciled within the territory of the PRC and their overseas subsidiaries and branches which issue debt securities or incur medium-tolong term loans outside the PRC shall procure the registration of the debt securities or loans with the NDRC prior to the issuance of the securities or drawings under the loans. Within five working days from the receipt of an application for registration, NDRC shall inform the applicant whether the application would be accepted for processing. In addition, NDRC shall issue an ‘‘Enterprise Overseas Debt Issuance Registration Certificate(企業發行外債備案登記證明)’’ within seven working days upon acceptance of the application for registration. The prospective issuer or obligor may proceed with the debt issuance or drawing with the registration certificate. Within 10 working days following the closing of the debt issuance or drawdown, a post-issue filing shall be made to NDRC. The information required to be filed with NDRC includes the name of the issuer or obligor, the major economic indicators of the issuer or obligor, the basic information of the debt securities or loans, etc. Since the NDRC Circular is a newly promulgated regulation and is worded in generic terms, its interpretation and implementation in practice will depend on the detailed implementation rules and official interpretations issued by NDRC from time to time. The NDRC Circular does not specify the legal consequences of non-compliance with the pre-issue registration and post-issue filing requirements.

60

GENERAL INFORMATION 1.

Listing Approval-in-principle has been received from the SGX-ST to list the Notes issued pursuant to the Programme on the SGX-ST. Application has been made to the Irish Stock Exchange for the approval of these Listing Particulars. Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List of the Irish Stock Exchange and trading on the Global Exchange Market. Arthur Cox Listing Services Limited is acting solely in its capacity as listing agent for the Issuer in relation to the Notes and is not itself seeking admission of the Notes to the Official List of the Irish Stock Exchange or to trading on the Global Exchange Market of the Irish Stock Exchange.

2.

Authorisation The Issuer has obtained all necessary consents, approvals and authorisations in connection with the issue of the Notes thereunder and performance of its obligations under the Notes, the Trust Deed, the Deed of Guarantee, the Escrow Deed, and the Agency Agreement. The issue of the Notes was authorised by a resolution of the board of directors of the Issuer passed on 16 March 2015. The Guarantor has obtained all consents, approvals and authorisations in connection with the giving of the Guarantee of the Notes and the performance of its obligations under the Trust Deed, the Deed of Guarantee, the Escrow Deed and the Agency Agreement. The giving of the Guarantee of the Notes was authorised by resolutions of the Guarantor passed on 27 July 2015.

3.

4.

The Guarantor obtained from NDRC an Enterprise Overseas Debt Issuance Registration Certificate (企業發行外債備案登記證明)for the Notes on 20 November 2015. Furthermore, the Guarantor undertakes under Special Condition 2 of the Terms and Conditions of the Notes to file or cause to be filed with NDRC the requisite information and documents within 10 China Business Days after the Issue Date in accordance with the NDRC Circular. Significant/Material Change Save as disclosed in this Offering Circular, there has been no material adverse change in the prospects of the Issuer, the Guarantor or the Group since 31 December 2014 and there has been no significant change in the financial or trading position of the Issuer, the Guarantor or the Group since 31 December 2014.

5.

Directors, Supervisors and Management The business address of each of the directors, supervisors and senior management of the Issuer named in the section ‘‘Directors and Senior Management of the Issuer’’ in this Supplement is 26/F, Three Pacific Place, 1 Queen’s Road East, Hong Kong. The business address of each of the directors, supervisors and senior management of the Guarantor named in the section ‘‘Directors of the Guarantor’’ in this Supplement is Haihang Building, 7 Guo Xing Road, Haikou City, Hainan Province, the PRC.

6.

Disclosure of Interest As at the date of this Supplement, there are no potential conflicts of interest between any duties of the Issuer’s directors to the Issuer or the Guarantor’s directors to the Guarantor, and their private interests and/or other duties.

61

6.

Legal and Arbitration Proceedings None of the Issuer, the Guarantor or any member of the Group is involved in any governmental, litigation or arbitration proceedings, which the Issuer, the Guarantor or the Group, as the case may be, believes may have, or have had during the 12 months period prior to the date of these Listing Particulars a significant adverse effect on the financial position or profitability of the Issuer, the Guarantor or the Group and, so far as the Issuer or the Guarantor is aware, no such litigation or arbitration proceedings are pending or threatened.

7.

Auditor The Issuer’s audited consolidated financial statements for the years ended 31 December 2012, 2013 and 2014, which are included elsewhere in the Offering Circular and this Supplement, have been audited by Li, Tang, Cheng & Co., independent auditor in accordance with Hong Kong Standards on auditing issued by Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). Li, Tang, Cheng & Co. is a member of the Hong Kong Institute of Certified Public Accountants. The Guarantor’s audited consolidated financial statements as of and for the year ended 31 December 2012, which are included elsewhere in the Offering Circular, have been audited by Peking Certified Public Accountants, independent auditor, in accordance with PRC Accounting Standards. Peking Certified Public Accountants have not been reappointed subsequent to 31 December 2012 due to PRC local regulations relating to maintaining auditor’s independence. The Guarantor’s audited consolidated financial statements as of and for the year ended 31 December 2013 and 2014, which are included elsewhere in the Offering Circular and this Supplement, have been audited by ZhongXingCaiGuangHua Certified Public Accountants LLP, independent auditor, in accordance with PRC Accounting Standards. ZhongXingCaiGuangHua Certified Public Accountants LLP is a member of the Chinese Institute of Certified Public Accountants.

8.

Documents on Display Copies of the following documents will be available for inspection (in physical form) from the Issue Date at the specified office of the Issuer at 26/F, Three Pacific Place, 1 Queen’s Road East, Hong Kong during normal business hours, for so long as any Note is outstanding: (i)

the Articles of Association of each of the Issuer and the Guarantor;

(ii)

the Issuer’s audited consolidated financial statements as of and for the years ended 31 December 2013 and 2014;

(iii) the Guarantor’s audited consolidated financial statements as of and for the years ended 31 December 2013 and 2014; (iv) the Pricing Supplement; (v)

a copy of these Listing Particulars, together with any supplement to these Listing Particulars and any other documents incorporated herein or therein referenced;

(vi) the Trust Deed; and (vii) the Deed of Guarantee.

62

9.

Third Party Information Market data and certain industry forecasts and statistics in this Supplement have been obtained from both public and private sources, including market research, publicly available information and industry publications. Each of the Issuer and the Guarantor confirms that third party information included in this Supplement has been accurately reproduced and, so far as the Issuer and the Guarantor are aware and have been able to ascertain from that published information, no facts have been omitted which would render the reproduced information inaccurate or misleading.

10.

Expense related to trading The expenses in relation to the admission of the Notes to trading on the Global Exchange Market of the Irish Stock Exchange will be €6,500.

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ANNEXURE 1 – OFFERING CIRCULAR DATED 17 MARCH 2015

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IMPORTANT NOTICE NOT FOR DISTRIBUTION IN THE UNITED STATES NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE UNITED STATES. THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE ADDRESSEES OUTSIDE OF THE UNITED STATES. IMPORTANT: You must read the following before continuing. The following applies to the offering circular following this page (the ‘‘Offering Circular’’), and you are therefore advised to read this carefully before reading, accessing or making any other use of the Offering Circular. In accessing the Offering Circular, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from us as a result of such access. NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION, AND THE SECURITIES IN BEARER FORM ARE SUBJECT TO U.S. TAX LAW REQUIREMENTS. THE SECURITIES MAY NOT BE OFFERED, SOLD OR (IN THE CASE OF SECURITIES IN BEARER FORM) DELIVERED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (‘‘REGULATION S’’), EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THIS OFFERING IS MADE SOLELY IN OFFSHORE TRANSACTIONS PURSUANT TO REGULATION S UNDER THE SECURITIES ACT. THIS OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND IN PARTICULAR, MAY NOT BE FORWARDED TO ANY ADDRESS IN THE UNITED STATES. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. Confirmation of your Representation: This Offering Circular is being sent at your request and by accepting the electronic mail and accessing this Offering Circular, you shall be deemed to have represented to us that the electronic mail address that you gave us and to which this electronic mail has been delivered is not located in the United States and that you consent to delivery of such Offering Circular by electronic transmission. You are reminded that this Offering Circular has been delivered to you on the basis that you are a person into whose possession this Offering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver this Offering Circular to any other person. The materials relating to the offering of securities to which this Offering Circular relates do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licenced broker or dealer and the underwriters or any affiliate of the underwriters is a licenced broker or dealer in that jurisdiction, the offering shall be deemed to be made by the underwriters or such affiliate on behalf of the Issuer or the Guarantor (each as defined in this Offering Circular) in such jurisdiction. This Offering Circular has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of the Issuer, the Guarantor, the Sole Arranger, the Dealers (each as defined in this Offering Circular) nor any person who controls the Sole Arranger or any Dealer, nor any director, officer, employee or agent of any of the Issuer, the Guarantor, the Sole Arranger or any Dealer or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between this Offering Circular distributed to you in electronic format and the hard copy version available to you on request from the Sole Arranger or Dealers. You are responsible for protecting against viruses and other destructive items. Your use of this electronic mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature.

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HNA Group (International) Company Limited (incorporated with limited liability in Hong Kong)

U.S.$1,000,000,000 Medium Term Note Programme unconditionally and irrevocably guaranteed by

HNA Group Co., Limited (incorporated with limited liability in the People’s Republic of China) Under the U.S.$1,000,000,000 Medium Term Note Programme described in this Offering Circular (the ‘‘Programme’’), HNA Group (International) Company Limited (the ‘‘Issuer’’), subject to compliance with all relevant laws, regulations and directives, may from time to time issue medium term notes (the ‘‘Notes’’). The Notes will be unconditionally and irrevocably guaranteed (‘‘Guarantee of the Notes’’) by HNA Group Co., Limited (the ‘‘Guarantor’’). The Notes will be constituted by a trust deed to be dated 17 March 2015 (the ‘‘Trust Deed’’) made between the Issuer, the Guarantor and The Bank of New York Mellon, London Branch (the ‘‘Trustee’’). The Notes will constitute direct, general, unconditional, unsubordinated and unsecured obligations of the Issuer, and will rank at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer. The Guarantee of the Notes will constitute direct, general, unconditional, unsubordinated and unsecured obligations of the Guarantor and will rank at least pari passu with all other present and future unsecured and unsubordinated obligations of the Guarantor. The Issuer is a subsidiary of the Guarantor. The Guarantor will enter into a deed of guarantee (each, a ‘‘Deed of Guarantee’’ and collectively, the ‘‘Deeds of Guarantee’’) on the issue date (‘‘Issue Date’’) of each Tranche of the Notes issued under the Programme. The Guarantor will be required to register or cause to be registered with the State Administration of Foreign Exchange (‘‘SAFE’’) each Deed of Guarantee following the issue of each Tranche of the Notes in accordance with the Provision on Foreign Exchange Administration of Cross-Border Guarantees promulgated by SAFE. The Guarantor shall submit for registration the relevant Deed of Guarantee within 15 China Business Days after the Issue Date of each Tranche of the Notes under the Programme and complete the registration of the Deed of Guarantee with SAFE as soon as practicable and, in any event, before the Registration Deadline (being 90 China Business Days after the relevant issue date). If such registration of the Deed of Guarantee with SAFE is completed on or before the Issue Date, the Net Proceeds (as defined in the Terms and Conditions of the Notes) of the relevant Tranche of Notes to be issued shall be deposited into the designated account of the Issuer. If, however, the registration is not completed on or before the Issue Date and the Pricing Supplement for the relevant Tranche of Notes specifies that an escrow account (the ‘‘Escrow Account’’) to be applicable to such Tranche, each of the Issuer and the Guarantor shall procure that the Net Proceeds from the offering of that Tranche of Notes are deposited into the Escrow Account on the relevant Issue Date, following which they may only be released to the Issuer after the completion of such registration on or before the Registration Deadline subject to the Terms and Conditions of the Notes and the relevant Escrow Deed (as defined in the Terms and Conditions of the Notes). Following the occurrence of a Non-Registration Event (as defined in the Terms and Conditions of the Notes), the Issuer shall redeem on the Non-Registration Event Redemption Date (as defined in the Terms and Conditions of the Notes) all, and not some only, of the relevant Tranche of Notes subject to the Non-Registration Event at the relevant Early Redemption Amount (No Registration Event), together with accrued interest up to, but excluding the Non-Registration Event Redemption Date. The obligations of the Guarantor under the Guarantee of the Notes shall, save for such exceptions as may be provided by applicable legislation and subject to Conditions 5(a) of the Terms and Conditions of the Notes at all times rank at least pari passu with all its other present and future unsecured and unsubordinated obligations. The Notes may be issued in bearer or registered form. The aggregate nominal amount of the Notes outstanding will not at any time exceed U.S.$1,000,000,000 (or its equivalent in other currencies, subject to any duly authorised increase). The Notes may be issued on a continuing basis to one or more of the Dealers specified under ‘‘Summary of the Programme’’ or any additional Dealer appointed under the Programme from time to time by the Issuer (each a ‘‘Dealer’’ and together the ‘‘Dealers’’), which appointment may be for a specific issue or on an ongoing basis. References in this Offering Circular to the ‘‘relevant Dealer’’ shall, in the case of an issue of the Notes being (or intended to be) subscribed for by more than one Dealer, be to all Dealers agreeing to subscribe for such Notes. Approval-in-principle has been received from the Singapore Exchange Securities Trading Limited (the ‘‘SGX-ST’’) for the listing and quotation of any Notes which may be issued pursuant to the Programme and which are agreed at or prior to the time of issue thereof to be listed on the SGX-ST. The SGX-ST takes no responsibility for the correctness of any statements made or opinions expressed herein. An approval-in-principle and the admission of any Notes to the Official List of the SGX-ST and listing of any Notes on the SGX-ST are not to be taken as indications of the merits of the Issuer, the Guarantor, the Programme or such Notes. Unlisted Notes may be issued under the Programme. The applicable Pricing Supplement in respect of any Series will specify whether or not such Notes will be listed and, if so, on which exchange(s) the Notes are to be listed. There is no assurance that the application to the Official List of the SGX-ST for the listing of the Notes of any Series will be approved. The Notes of each Series to be issued in bearer form (‘‘Bearer Notes’’) will be represented on issue by a temporary global note (each a ‘‘Temporary Global Note’’) or a permanent global note (each a ‘‘Permanent Global Note’’), and will be sold in an ‘‘offshore transaction’’ within the meaning of Regulation S (‘‘Regulation S’’) under the United States Securities Act of 1933, as amended (the ‘‘Securities Act’’). Interests in Temporary Global Notes generally will be exchangeable for interests in Permanent Global Notes and, together with the Temporary Global Notes, the ‘‘Global Notes’’), or if so stated in the relevant Pricing Supplement, definitive Notes (‘‘Definitive Notes’’), after the date falling 40 days after the later of the commencement of the offering and the relevant issue date of such Series, upon certification as to non-U.S. beneficial ownership. The Notes in each Series to be issued in registered form (‘‘Registered Notes’’) will be represented by registered certificates (each a ‘‘Certificate’’), one Certificate being issued in respect of each Noteholder’s entire holding of Notes in registered form of one Series. Certificates representing Registered Notes that are registered in the name of, or in the name of a nominee for, one or more clearing systems are referred to as global certificates (‘‘Global Note Certificates’’). Global Notes and Global Note Certificates may be deposited on the relevant Issue Date with a common depositary on behalf of Euroclear Bank S.A./N.V. (‘‘Euroclear’’) and/ or Clearstream Banking, société anonyme (‘‘Clearstream, Luxembourg’’) or with The Central Depositary (Pte) Limited (‘‘CDP’’) or with a sub-custodian for the Central Moneymarkets Unit Service (the ‘‘CMU Service’’) operated by the Hong Kong Monetary Authority (the ‘‘HKMA’’). The provisions governing the exchange of interests in a Global Note for other Global Notes or Definitive Notes or a Global Note Certificate for Certificates are described in ‘‘Forms of Notes’’. The Notes and the Guarantee of the Notes have not been and will not be registered under the United States Securities Act of 1933, as amended, or with any securities regulatory authority of any state or other jurisdiction of the United States, and the Notes may include Bearer Notes that are subject to U.S. federal income tax law requirements. The Notes may not be offered, sold, or, in the case of Bearer Notes, delivered within the United States except in accordance with Regulation S under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Any Series of Notes may be subject to additional selling restrictions. The relevant Pricing Supplement in respect of such Series of Notes will specify any such restrictions. See ‘‘Subscription and Sale’’ and the relevant Pricing Supplement. Registered Notes are subject to certain restrictions on transfer as described in ‘‘Subscription and Sale.’’ Investing in Notes issued under the Programme involves certain risks and may not be suitable for all investors. Investors should have sufficient knowledge and experience in financial and business matters to evaluate the information contained in this Offering Circular and in the relevant Pricing Supplement and the merits and risks of investing in a particular issue of Notes in the context of their financial position and particular circumstances. Investors also should have the financial capacity to bear the risks associated with an investment in Notes. Investors should not purchase Notes unless they understand and are able to bear risks associated with Notes. See ‘‘Risk Factors’’ beginning on page 26 for a discussion of factors that investors should consider carefully before investing in the Notes.

Sole Arranger

DBS Bank Ltd. Dealers

DBS Bank Ltd.

Hong Kong International Capital Management Ltd. Offering Circular dated 17 March 2015

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Oversea-Chinese Banking Corporation Limited

CONTENTS Page IMPORTANT NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

CERTAIN TERMS AND CONVENTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

INFORMATION INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

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

12

SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE ISSUER . . . . . . . . . .

18

SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE GUARANTOR . . . .

22

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26

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

56

FORM OF PRICING SUPPLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

97

FORMS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

111

CLEARANCE AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

117

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

119

CAPITALISATION AND INDEBTEDNESS OF THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . .

120

CAPITALISATION AND INDEBTEDNESS OF THE GUARANTOR . . . . . . . . . . . . . . . . . . . . .

121

DESCRIPTION OF THE ISSUER GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

122

DESCRIPTION OF THE GUARANTOR GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

136

DIRECTORS AND SENIOR MANAGEMENT OF THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . .

154

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

157

REMITTANCE OF RENMINBI INTO AND OUTSIDE THE PRC AND PRC REGULATIONS ON THE GUARANTEE OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . .

160

DIFFERENCES BETWEEN PRC ACCOUNTING STANDARDS AND INTERNATIONAL FINANCIAL REPORTING STANDARDS . . . . . . . . . . . . . . . . . . . . . . . . . . .

164

TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

165

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

173

GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

178

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IMPORTANT NOTICE Each of the Issuer and the Guarantor, having made all reasonable enquiries, accepts full responsibility for the accuracy of the information contained in this Offering Circular and confirms that to the best of its knowledge and belief (i) this Offering Circular contains all information with respect to the Guarantor and its subsidiaries (collectively, the ‘‘Group’’), the Notes and the Guarantee of the Notes, which is material in the context of the issue, offering, sale or distribution of the Notes (including all information which, according to the particular nature of the Issuer, the Guarantor, the Group, the Notes and the Guarantee of the Notes 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, the Guarantor, the Group and of the rights attaching to the Notes and the Guarantee of the Notes), (ii) the statements contained in this Offering Circular relating to the Issuer, the Guarantor, the Group, the Notes and the Guarantee of the Notes are in all material respects true and accurate and not misleading, (iii) the statements of intention, opinions, belief or expectation relating to the Issuer, the Guarantor and the Group expressed in this Offering Circular are honestly held, have been reached after considering all relevant circumstances and are based on reasonable assumptions, (iv) there are no other material facts relating to the Issuer, the Guarantor, the Group, the Notes and the Guarantee of the Notes, the omission of which would, in the context of the issue and offering of the Notes and the giving of the Guarantee of the Notes, make any statement in this Offering Circular, in light of the circumstances under which they were made, misleading, 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. Each Tranche of the Notes will be issued on the terms set out herein under ‘‘Terms and Conditions of the Notes’’ as amended and/or supplemented by the Pricing Supplement specific to such Tranche. This Offering Circular must be read and construed together with any amendments or supplements hereto and, in relation to any Tranche of the Notes, must be read and construed together with the relevant Pricing Supplement. The distribution of this Offering Circular and any Pricing Supplement and the offering, sale and delivery of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular comes are required by the Issuer, the Guarantor, the Sole Arranger and the Dealers (as defined in‘‘Summary of the Programme’’) to inform themselves about and to observe any such restrictions. None of the Issuer, the Guarantor, the Sole Arranger, the Dealers, the Trustee or the Agents represents that this Offering Circular or any Pricing Supplement may be lawfully distributed, or that any Notes 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. In particular, no action has been taken by the Issuer, the Guarantor, the Sole Arranger, the Dealers, the Trustee or the Agents, which would permit a public offering of any Notes or distribution of this Offering Circular or any Pricing Supplement in any jurisdiction where action for such purposes is required. Accordingly, no Notes 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. There are restrictions on the offer and sale of the Notes and the circulation of documents relating thereto, in certain jurisdictions including, but not limited to, the United States of America, the European Economic Area, the United Kingdom, the PRC, Hong Kong, Japan, Singapore and to persons connected therewith the Notes and the Guarantee of the Notes have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the ‘‘Securities Act’’) or with any securities regulatory authority of any state or other jurisdiction of the United States. Notes may not be offered or sold within the United States (as defined in Regulation S under the Securities Act (‘‘Regulation S’’)), or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except in accordance with Regulation S under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Any Series of Notes may be subject to additional selling restrictions. The relevant Pricing Supplement in respect of such Series of Notes will specify any 1

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such restrictions. Notes issuable in bearer form are subject to applicable limitations based on U.S. federal income tax law requirements. For a description of certain restrictions on offers, sales and resales of the Notes and the distribution of this Offering Circular, see ‘‘Subscription and Sale’’. This Offering Circular does not constitute an offer of, or an invitation to purchase, any of the Notes in any jurisdiction in which such offer or invitation would be unlawful. By purchasing any Notes, investors represent and agree to all of those provisions contained in that section of this Offering Circular. No person has been or is authorised in connection with the issue, offer, sale or distribution of the Notes to give any information or to make any representation not contained in or not consistent with this Offering Circular or any other document entered into in relation to the Programme and the sale of the Notes and, if given or made, such information or representation should not be relied upon as having been authorised by the Issuer, the Guarantor, the Group, any Arranger, any Dealer, the Trustee or any Agent or any of their respective affiliates (each, as defined in the Terms and Conditions). Neither the delivery of this Offering Circular or any Pricing Supplement nor the offering, sale or delivery of any Note shall, in any circumstances, create any implication that the information contained in this Offering Circular is true subsequent to the date hereof or the date upon which this Offering Circular has been most recently amended or supplemented or that there has been no change, or any event reasonably likely to involve any change, in the prospects or financial or trading position of the Issuer, the Guarantor or the Group since the date thereof or, if later, 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 at any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same. Neither this Offering Circular nor any Pricing Supplement constitutes an offer or an invitation to subscribe for or purchase any Notes and should not be considered as a recommendation by the Issuer, the Guarantor, the Sole Arranger, the Dealers, the Trustee, the Agents or any director, officer, employee, agent or affiliate of any such person or any of them that any recipient of this Offering Circular or any Pricing Supplement should subscribe for or purchase any Notes. 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/or the Group. The maximum aggregate principal amount of the Notes outstanding at any one time under the Programme will not exceed U.S.$1,000,000,000 (and for this purpose, any Notes denominated in another currency shall be translated into United States dollars at the date of the agreement to issue such Notes calculated in accordance with the provisions of the Dealer Agreement), provided that, the maximum aggregate principal amount of the Notes, which may be outstanding at any one time under the Programme, may be increased from time to time, subject to compliance with the relevant provisions of the Dealer Agreement as defined under ‘‘Subscription and Sale’’. Each Tranche of Notes will be issued on the terms set out herein under ‘‘Terms and Conditions of the Notes’’ (the ‘‘Conditions’’) as amended and/or supplemented by the Pricing Supplement specific to such Tranche. This Offering Circular must be read and construed together with any amendments or supplements hereto and with any information incorporated by reference herein and, in relation to any Tranche of Notes, must be read and construed together with the relevant Pricing Supplement and Deed of Guarantee. No representation or warranty, express or implied, is made or given by the Sole Arranger, the Dealers, the Trustee or the Agents or any of their respective affiliates, directors or advisers as to the accuracy, completeness or sufficiency of the information contained in this Offering Circular, any Pricing Supplement or any other information supplied in connection with the Notes or the Guarantee of the Notes, and nothing contained in this Offering Circular is, or shall be relied upon as, a promise, representation or warranty by the Dealers, the Trustee or the Agents or any of their respective affiliates, directors or advisers. The Sole Arranger, the Dealers, the Trustee and the Agents and their respective

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affiliates, directors or advisers have not independently verified any of the information contained in this Offering Circular and can give no assurance that this information is accurate, truthful or complete. To the fullest extent permitted by law, none of the Sole Arranger, the Dealers, the Trustee or any Agent or any director, officer, employee, agent or affiliate of any such person makes any representation, warranty or undertaking, express or implied, or accepts any responsibility, with respect to the accuracy or completeness of any of the information in this Offering Circular or the contents of this Offering Circular or for any other statement made or purported to be made by the Sole Arranger, the Dealers, the Trustee, the Agents, or any director, officer, employee, agent or affiliate of any such person or on its behalf in connection with the Issuer, the Guarantor, the Group, the Guarantee of the Notes, the Notes or the issue and offering of the Notes. The Sole Arranger, the Dealers, the Trustee, each Agent and each of their respective affiliates, directors or advisers accordingly disclaim all and any liability whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in respect of this Offering Circular or any such statement. In connection with the issue of any Tranche of the Notes, the Dealer(s) (if any) named as the stabilising manager(s) (the ‘‘Stabilising Manager(s)’’) (or persons acting on behalf of any Stabilising Manager(s)) in the applicable Pricing Supplement may, to the extent permitted by applicable laws and rules, over allot the 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. However, there is no assurance that the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. 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 the Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of the Notes and 60 days after the date of the allotment of the relevant Tranche of the Notes. Listing of the Notes on the SGX-ST is not to be taken as an indication of the merits of the Issuer, the Guarantor, the Group or the Notes. 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. See ‘‘Risk Factors’’ for a discussion of certain factors to be considered in connection with an investment in the Notes. Any of the Sole Arranger, the Dealers and their respective affiliates may purchase the Notes for its or their own account and enter into transactions, including credit derivatives, such as asset swaps, repackaging and credit default swaps relating to the Notes and/or other securities of the Issuer, the Guarantor or the Company or their respective subsidiaries or associates at the same time as the offer and sale of the Notes or in secondary market transactions. Such transactions may be carried out as bilateral trades with selected counterparties and separately from any existing sale or resale of the Notes to which this Offering Circular relates (notwithstanding that such selected counterparties may also be purchasers of the Notes). Furthermore, investors in the Notes may include entities affiliated with the Group. Investors are advised to read and understand the contents of this Offering Circular and the relevant Pricing Supplement before investing. If in doubt, investors should consult his or her adviser. The Issuer, the Guarantor, the Group, the Sole Arranger, the Dealers, the Trustee and the Agents and their respective affiliates are not making any representation to any purchaser of the Notes regarding the legality of any investment in the Notes by such purchaser under any legal investment or similar laws or regulations. The contents of this Offering Circular should not be construed as providing legal, business, accounting or investment advice. Each person receiving this Offering Circular or any Pricing Supplement acknowledges that such person has not relied on the Sole Arranger, the Dealers, the Trustee, the Agents or any of their respective affiliates in connection with its investigation of the accuracy of such information or its investment decision. 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 Notes of a particular issue. Each potential purchaser of the Notes should refer to and consider carefully the relevant Pricing Supplement

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for each particular issue of the Notes, which may describe additional risks and investment considerations associated with such Notes. The risks and investment considerations identified in this Offering Circular and the applicable Pricing Supplement are provided as general information only. Investors should consult their own financial and legal advisors as to the risks and investment considerations arising from an investment in an issue of the Notes and should possess the appropriate resources to analyse such investment and the suitability of such investment in their particular circumstances. Neither this Offering Circular nor any other information provided in connection with the Programme are intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Issuer, the Guarantor, the Sole Arranger, the Dealers, the Trustee or the Agents or any director, officer, employee, agent or affiliate of any such person that any recipient, of this Offering Circular or of any such information, should purchase the Notes. Each potential purchaser of the Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer, the Guarantor and the Group. Each potential purchaser of the Notes should determine for itself the relevance of the information contained in this Offering Circular and its purchase of the Notes should be based upon such investigation, as it deems necessary. None of the Sole Arranger, the Dealers, the Trustee, the Agents or any of their respective affiliates, directors or advisers undertakes to review the financial condition or affairs of the Issuer, the Guarantor or the Group for so long as the Notes remain outstanding nor to advise any investor or potential investor of the Notes of any information coming to the attention of any of the Sole Arranger, the Dealers, the Trustee, the Agents or their respective affiliates, directors or advisers. Market data and certain industry forecasts and statistics in this Offering Circular have been obtained from both public and private sources, including market research, publicly available information and industry publications. Although the Issuer and the Guarantor believe this information to be reliable, it has not been independently verified by the Issuer, the Guarantor, the Sole Arranger, the Dealers, Trustee or the Agents or their respective directors, advisers and affiliates, and none of the Issuer, the Guarantor, the Sole Arranger, the Dealers, the Trustee or the Agents or their respective directors and affiliates, advisers or employees makes any representation as to the accuracy or completeness of that information. In addition, third party information providers may have obtained information from market participants and such information may not have been independently verified. This Offering Circular summarises certain documents and other information, and investors should refer to them for a more complete understanding of what is discussed in those documents. The contents of this Offering Circular have not been reviewed by any regulatory authority in any jurisdiction. Investors are advised to exercise caution in relation to the offer. If investors are in any doubt about any of the contents of this Offering Circular, investors should obtain independent professional advice. The selected unaudited consolidated financial information of the Guarantor as at and for the nine months ended 30 September 2014 have been prepared and presented in accordance with the PRC Accounting Standards and have been reviewed by 中興財光華會計師事務所 (ZhongXingCaiGuangHua CPA Office) (the ‘‘Guarantor’s Auditors’’). The Guarantor’s selected unaudited consolidated financial information were prepared and presented without notes thereto and without comparison information relating to the previous corresponding financial period and therefore should not be relied upon by potential investors to provide the same quantity of information associated with those included in audited or reviewed consolidated financial statements of the Guarantor with full notes thereto. None of the Sole Arranger, the Dealers, the Trustee or the Agents or any of their respective affiliates, directors or advisors makes any representation or warranty, express or implied, regarding the sufficiency of such consolidated financial results for an assessment of, and potential investors must exercise caution when using such data to evaluate the Guarantor’s financial condition, results of operations and results.

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CERTAIN TERMS AND CONVENTIONS In this Offering Circular, unless otherwise specified or the context otherwise requires, all references to the ‘‘Issuer’’ are to HNA Group (International) Company Limited and all references to the ‘‘Guarantor’’ are to HNA Group Co., Limited. References to the ‘‘Issuer Group’’ are to the Issuer and its subsidiaries and references to the ‘‘Group’’ are to the Guarantor and its subsidiaries (including the Issuer and its subsidiaries), or to the Guarantor, its subsidiaries, associated companies and companies in which the Guarantor has an interest, as applicable. In this Offering Circular, unless otherwise specified or the context otherwise requires, all references to the ‘‘PRC’’ and ‘‘China’’ are to the People’s Republic of China (excluding for the purposes of this Offering Circular only Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan), all references to ‘‘United States’’ and ‘‘U.S.’’ are to the United States of America and all references to ‘‘Hong Kong’’ are to the Hong Kong Special Administrative Region of the People’s Republic of China; all references to ‘‘Hong Kong dollars’’ and ‘‘HK$’’ are to the lawful currency of Hong Kong, all references to ‘‘Renminbi‘‘, ‘‘RMB’’ and ‘‘CNY’’ are to the lawful currency of the PRC, all references to ‘‘SGD’’ and ‘‘S$’’ are to the lawful currency of Singapore and all references to ‘‘USD’’, ‘‘U.S. dollars’’ and ‘‘U.S.$’’ are to the lawful currency of the United States of America; all references to ‘‘PRC Accounting Standards’’ are to the Accounting Standards for Business Enterprises issued by the Ministry of Finance of the PRC on 15 February 2006, and the Application Guidance for Accounting Standards for Business Enterprises, Interpretations of Accounting Standards for Business Enterprises and other relevant regulations issued thereafter, all references to ‘‘IFRS’’ are to International Financial Reporting Standards, and all references to ‘‘HKFRS’’ are to Hong Kong Financial Reporting Standards.

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GLOSSARY ‘‘CAAC’’ . . . . . . . . . . . .

The Civil Aviation Administration of China, the aviation authority under the Ministry of Transport of the People’s Republic of China, which oversees civil aviation and investigates aviation accidents and incidents.

‘‘GDP’’ . . . . . . . . . . . . .

Gross Domestic Product, which refers to the market value of all final goods and services produced within a country in a given period.

‘‘MOFCOM’’ . . . . . . . . .

Ministry of Commerce of the PRC.

‘‘MU’’ . . . . . . . . . . . . . .

a Chinese unit of measurement of area,1 Mu is equivalent to approximately 666.67 square metres.

‘‘PBOC’’ . . . . . . . . . . . .

People’s Bank of China.

‘‘revenue passenger kilometers’’ or ‘‘RPKs’’ . . . . . . . . .

the number of passengers carried multiplied by the kilometres flown.

‘‘SAFE’’ . . . . . . . . . . . .

State Administration of Foreign Exchange of the PRC or its competent local counterpart.

‘‘4D standards’’ . . . . . . .

Standards of civil airports provided in the Technical Standards for Airfield Area of Civil Airports issued by the CAAC; airports which fall within the 4D category have standard runway lengths of at least 1,800 metres and can accommodate aircrafts with wingspans between 36 and 52 metres and main landing gears that span 9 to 14 meters between the bogies.

‘‘4E standards’’ . . . . . . .

Standards of civil airports provided in the Technical Standards for Airfield Area of Civil Airports issued by the CAAC; airports which fall within the 4E category have standard runway lengths of at least 1,800 metres and can accommodate aircrafts with wingspans between 52 and 65 metres and main landing gears that span 9 to 14 meters between the bogies.

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SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS The Issuer and the Guarantor have made forward-looking statements in this Offering Circular regarding, among other things, the Issuer Group’s and the Group’s financial conditions, future expansion plans and business strategy. These forward-looking statements are based on the Issuer Group’s and the Group’s current expectations about future events. Although the Issuer and the Guarantor believe that these expectations and projections are reasonable, such forward-looking statements are inherently subject to risks, uncertainties and assumptions, including, among other things: •

risks associated with general political, social and economic conditions globally and in the PRC;



risks associated with international global business activities and the industries in which the Issuer Group or the Group is involved;



the Issuer Group’s and/or the Group’s ability to manage working capital and operations-related expenditure requirements;



the Issuer Group’s and/or the Group’s ability to achieve their respective business strategies and plans of operation;



the Issuer Group’s and/or the Group’s ability to expand their respective customer base;



foreign exchange controls and fluctuations in exchange rates and interest rates;



certain government regulations, policies and other factors beyond the Issuer Group’s and/or the Group’s control; and



those other risks identified in the ‘‘Risk Factors’’ section of this Offering Circular.

The words ‘‘anticipate’’, ‘‘believe’’, ‘‘can’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘schedule’’, ‘‘will’’, ‘‘would’’, and similar words or expressions are intended to identify a number of these forward-looking statements. However, these words are not the exclusive means of identifying forward-looking statements. The Issuer and the Guarantor undertake no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Offering Circular might not occur and the Issuer Group’s and the Group’s actual results could differ materially from those anticipated in these forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements. This Offering Circular discloses, under ‘‘Risk Factors’’ and elsewhere, important factors that could cause actual results, performances and achievements of the Issuer Group and/or the Group to be materially different. These forward-looking statements speak only as at the date of this Offering Circular. The Issuer and the Guarantor expressly disclaim any obligation or undertaking to release any updates or revisions to any of the opinions or forward-looking statements expressed in this Offering Circular as a result of any new information, future events or otherwise.

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INFORMATION INCORPORATED BY REFERENCE This Offering Circular should be read and construed in conjunction with: (i)

each relevant Pricing Supplement; and

(ii)

all amendments and supplements from time to time to 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 to the extent that a statement contained in any such document is inconsistent with such contents.

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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. The Issuer Group In order to expand globally and drive further growth and development, the Issuer was established in Hong Kong on 12 July 2010 to act as the Group’s offshore investment and foreign capital management platform. The Issuer plays a key role in the Group’s strategy in becoming a global brand by being its platform for globalisation. Since its incorporation, the Issuer has, through capital investment and acquisitions, quickly formed and developed the Issuer Group that engages in various businesses in Hong Kong and overseas. As at the date of this Offering Circular, the Issuer had 20,264,155,617 shares in issue, of which 18,458,158,537 shares are held by the Guarantor, constituting approximately 91.09% of the shares of the Issuer, and 1,805,997,080 shares are held by Hong Kong Airlines Limited, constituting approximately 8.91% of the shares of the Issuer. Serving as the offshore investment and foreign capital management platform of the Group, the Issuer seeks to acquire and maintain a diversified portfolio of high quality businesses and stable income source. At the same time as expanding internationally with the support from Chinese policy banks, the Issuer makes strategic acquisitions to achieve vertical and horizontal integration in the aviation, finance, retail and logistics value chains of the Group. The operating assets and revenues of the Issuer Group are diversified across currencies such as US dollars and Hong Kong dollars, reflecting the international nature of its investments and business. The Issuer Group earns fee income through managing offshore investments and foreign capital for the Group, as well as earns dividends and one-off gains from its investments. As at 31 December 2011, 2012 and 2013 and 30 September 2014, the Issuer Group had total assets of approximately HK$37.553 billion, HK$38.455 billion, HK$41.383 billion and HK$40.004 billion respectively. For each of the years ended 31 December 2011, 2012 and 2013 and the nine months ended 30 September 2013 and 2014, the Issuer Group recorded total revenue of approximately HK$347.2 million, HK$4,628.7 million, HK$8,062.8 million, HK$3,276.4 million and HK$3,347.9 million, respectively and a net profit/(loss) of approximately HK$74.0 million, HK$627.8 million, HK$3,679.6 million, HK$615.9 million and HK$547.8 million, respectively. Strengths The Issuer Group believes that its key strengths are as follows: •

Proven track record of capitalising on investment opportunities



Value enhancement and strategic synergies for the Group



Prudent financial management supported by sustainable funding sources



Experienced management team

See ‘‘Description of the Issuer Group’’.

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The Group The Group is a leading conglomerate and an integrated operator in modern service industry with diversified businesses covering air transportation, financial services, travel services, airport services, business retail, real estate hotel and catering, logistics and transportation and other businesses such as culture industry and network information technology. Started as an airline company, the Group has transformed into a multi-business conglomerate focusing on air travel, modern financial services, modern logistics and other business along the relevant industry value chain. Through rapid‑development and benefiting from China’s economic growth and globalisation, the Group has built a quality portfolio of businesses and assets and established brand recognition within each of its core businesses. With respect to the Group’s air travel business, Hainan Airlines Co., Ltd. (‘‘Hainan Airlines’’) has been named a ‘‘5-star airline’’ by Skytrax for three consecutive years since 2011, being the only Chinese airline to have received such recognition and also one of the seven airlines in the world to have done so. With respect to the Group’s leasing business, Bohai Leasing Co., Ltd. (‘‘Bohai Leasing’’) is an industry leader in each of the areas in which it practices. It is the largest container leasing company in the world by cost equivalent unit. It is also the only leasing company to be publicly listed in China. With respect to the travel services and hotel businesses, the Group provides one-stop services and products to meet travellers’ needs. According to the ‘‘Top 500 Companies in China in 2013’’ list published by the China Enterprise Confederation(中國企業聯合會)and the China Enterprise Directors Association(中國企業家協會), the Guarantor ranked 108th by company’ revenue in 2012. The Guarantor has maintained its position within the list of Top 500 Companies in China. The Guarantor’s ranking was 129th, 112th and 108th respectively in the years 2011 to 2013. As at 31 July 2014, the Group employed over 81,000 employees. As at 31 December 2011, 2012 and 2013 and 30 September 2014, the Group had total assets of approximately CNY173.1 billion, CNY212.4 billion, CNY266.2 billion and CNY301.8 billion respectively. The Group’s consolidated total revenue totaled approximately CNY33.0 billion, CNY46.9 billion, CNY56.0 billion and CNY46.2 billion respectively for the years ended 31 December 2011, 2012 and 2013 and the nine months ended 30 September 2014. Strengths Having accumulated years of valuable experience in international markets and having an in-depth understanding of the industries in which it operates, the Group believes that its key strengths and core capabilities will allow it to continue to capture investment opportunities and to benefit from the steady growth of the Chinese economy. The Group believes its key strengths are as follows: •

Leading conglomerate in China with established market positions, strong industry reputation and brand recognition



Business diversification through integrated business segments providing stable earnings



Successful track record in asset integration and value enhancement



Prudent financial policy with sustainable funding resources



Strategic cooperation with provincial and municipal governments



Experienced and savvy management team to capture growth opportunities

Strategies The Group’s goals are to build a world-class Chinese brand, to achieve continual growth and to become a competitive global conglomerate. The Group seeks to achieve its goals through the following strategies:

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Continue to expand globally to strengthen global presence



Focus on and continue to develop the Group’s core businesses



Continue to build upon the Group’s diversified businesses



Continue to increase capital raising and equity investments

See ‘‘Description of the Group’’.

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SUMMARY OF THE PROGRAMME This summary must be read as an introduction to this Offering Circular and any decision to invest in the Notes should be based on a consideration of the Offering Circular as a whole. Words and expressions defined in the ‘‘Terms and Conditions of the Notes’’ below or elsewhere in this Offering Circular have the same meanings in this summary. Issuer . . . . . . . . . . . . . .

HNA Group (International) Company Limited, a limited liability company incorporated in Hong Kong.

Guarantor . . . . . . . . . . .

HNA Group Co., Limited, a limited liability company incorporated in the PRC.

Guarantee of the Notes . .

On the Issue Date of each Tranche of Notes, the Notes being issued on that date will have the benefit of a Deed of Guarantee executed by the Guarantor. Pursuant to the Deed of Guarantee, the Guarantor will unconditionally and irrevocably guarantee the due and punctual payment of all sums expressed to be payable by the Issuer under the Trust Deed or in respect of the Notes, as further described in Conditions 1(d) and 4(b) of the Terms and Conditions of the Notes. For the benefit of each Tranche of Notes, the Guarantor undertakes to (i) execute a Deed of Guarantee in connection with such Tranche in the form attached to the Trust Deed on the relevant Issue Date, (ii) register or cause to be registered with SAFE the relevant Deed of Guarantee within 15 China Business Days after its execution in accordance with the Foreign Exchange Administration Rules on Cross-border Security(跨境 擔保外匯管理規定)of the PRC, (iii) use its best endeavours to complete the registration on or before the relevant Registration Deadline (being the day falling 90 China Business Days after the Issue Date) and obtain a registration evidence(業務登記憑證)from SAFE and the completed SAFE registration status form and (iv) comply with all applicable PRC laws and regulations in relation to the Guarantee of the Notes.

Programme Size. . . . . . .

Up to U.S.$1,000,000,000 (or the equivalent in other currencies calculated as described in the Dealer Agreement (as defined in ‘‘Subscription and Sale’’)) outstanding at any time. The Issuer and the Guarantor may increase the amount of the Programme in accordance with the terms of the Dealer Agreement.

Risk Factors . . . . . . . . .

Investing in Notes issuable under the Programme involves certain risks. The principal risk factors that may affect the abilities of the Issuer and the Guarantor to fulfil their respective obligations in respect of the Notes, the Trust Deed and the Deeds of Guarantee are discussed under the section ‘‘Risk Factors’’ below.

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Escrow Fund . . . . . . . . .

For each Tranche of Notes, the Guarantor intends to complete the registration of the Guarantee with SAFE as soon as practicable and in any event before the Registration Deadline (being 90 China Business Days after the Issue Date). If such SAFE registration is completed on or before the Issue Date, the Net Proceeds shall be deposited into the designated account of the Issuer. If, however, the registration is not completed on or before the Issue Date and the Pricing Supplement for the relevant Tranche of Notes specifies that an Escrow Account to be applicable to such Tranche, each of the Issuer and the Guarantor shall procure that the Net Proceeds from the offering of the that Tranche of Notes are deposited into the Escrow Account on the relevant Issue Date, following which they may only be released to the Issuer after the completion of such registration on or before the Registration Deadline subject to the Terms and Conditions of the Notes and the Escrow Deed (as defined in the Terms and Conditions of the Notes). Following the occurrence of a Non-Registration Event (as defined in the Conditions), each Noteholder will have the right, at such Noteholder’s option, to require the Issuer to redeem all of that Holder’s Notes on the Non-Registration Event Redemption Date (as defined in the Conditions) at the relevant Early Redemption Amount (No Registration Event), together with accrued interest up to, but excluding the Non-Registration Event Redemption Date. The obligations of the Guarantor under the Guarantee of the Notes shall, save for such exceptions as may be provided by applicable legislation and subject to Conditions 5(a) of the Terms and Conditions of the Notes at all times rank at least pari passu with all its other present and future unsecured and unsubordinated obligations.

Issue Price. . . . . . . . . . .

Notes may be issued at their nominal amount or at a discount or premium to their nominal amount. Party paid Notes may be issued, the issue price of which will be payable in two or more instalments.

Arranger . . . . . . . . . . . .

DBS Bank Ltd.

Dealers . . . . . . . . . . . . .

DBS Bank Ltd., Hong Kong International Capital Management Ltd. and Oversea-Chinese Banking Corporation Limited. The Issuer may from time to time terminate the appointment of any dealer under the Programme or appoint additional dealers either in respect of one or more Tranches or in respect of the whole Programme. References in this Offering Circular to ‘‘Permanent Dealers’’ are to the persons listed above as Dealers and to such additional persons that are appointed as dealers in respect of the whole Programme (and whose appointment has not been terminated) and references to ‘‘Dealers’’ are to all Permanent Dealers and all persons appointed as a dealer in respect of one or more Tranches.

Issuing and Paying Agent . . . . . . . . . . . . .

The Bank of New York Mellon, London Branch.

Principal Registrar and Principal Transfer Agent . . . . . . . . . . . . .

The Bank of New York Mellon (Luxembourg) S.A.

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A-17

CDP Paying Agent, CDP Registrar and CDP Transfer Agent . . . . . .

The Bank of New York Mellon, Singapore Branch.

CMU Lodging and Paying Agent, CMU Registrar and CMU Transfer Agent .

The Bank of New York Mellon, Hong Kong Branch.

Calculation Agent . . . . .

The Bank of New York Mellon, London Branch as appointed by the Issuer in respect of a Series of Notes pursuant to the terms of the Agency Agreement or such other Person specified in the relevant Pricing Supplement as the party responsible for calculating the Rate(s) of Interest and Interest Amount(s) and/or such other amount(s) as may be specified in the relevant Pricing Supplement.

Escrow Agent . . . . . . . .

The Bank of New York Mellon, London Branch.

Trustee . . . . . . . . . . . . .

The Bank of New York Mellon, London Branch.

Method of Issue . . . . . . .

The Notes will be issued on a syndicated or non-syndicated basis. The Notes will be issued in series (each a ‘‘Series’’) having one or more issue dates and on terms otherwise identical (or identical other than in respect of the first payment of interest and their issue price), and intended to be interchangeable with all other Notes of that Series. Each Series may be issued in tranches (each a ‘‘Tranche’’) 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 date of interest and nominal amount of the Tranche, will be identical to the terms of other Tranches of the same Series) will be completed in the Pricing Supplement.

Clearing Systems . . . . . .

Euroclear Bank S.A./N.V. (‘‘Euroclear’’), Clearstream Banking, société anonyme, Luxembourg (‘‘Clearstream, Luxembourg’’), the Central Moneymarkets Unit Service, operated by the HKMA (the ‘‘CMU Service’’), The Central Depository (Pte) Limited (‘‘CDP’’) and, in relation to any Tranche, such other clearing system as may be agreed between the Issuer, the Guarantor, the Issuing and Paying Agent and the relevant Dealer(s).

Form of the Notes . . . . .

Notes may be issued in bearer form or in registered form. Registered Notes will not be exchangeable for Bearer Notes and vice versa. No single Series or Tranche may comprise both Bearer Notes and Registered Notes. Each Tranche of Bearer Notes will initially be represented by a Temporary Global Note or a Permanent Global Note, as specified in the applicable Pricing Supplement.

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Each Global Note will be deposited on or around the relevant issue date with a common depositary for Clearstream, Luxembourg and/or Euroclear and/or, in respect of CMU Notes, a sub-custodian for the CMU Service and/or, in respect of CDP Notes, with CDP and/or, as the case may be, any other relevant clearing system. Each Temporary Global Note will be exchangeable for a Permanent Global Note or, if so specified in the relevant Pricing Supplement, for Definitive Notes. 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 Global Note or receipt of any payment of interest in respect of a Temporary Global Note. Each Permanent Global Note will be exchangeable for Definitive Notes in accordance with its terms. Definitive Notes will, if interest-bearing, have Coupons attached and, if appropriate, a Talon for further Coupons. Registered Notes will initially be represented by Registered Global Notes. Registered Global Notes representing Registered Notes will be registered in the name of a nominee for one or more of Euroclear and Clearstream, Luxembourg and/or, in respect of CMU Notes, the Hong Kong Monetary Authority as the operator of the CMU and/or, in respect of CDP Notes, The CDP. Currencies . . . . . . . . . . .

Notes may be denominated in any currency or currencies, agreed between the Issuer, the Guarantor and the relevant Dealer(s) subject to compliance with all applicable legal and/or regulatory and/or central bank requirements. Payments in respect of the Notes may, subject to such compliance, be made in and/or linked to, any currency or currencies other than the currency in which such Notes are denominated.

Denominations . . . . . . . .

Notes will be issued in such denominations as may be specified in the relevant Pricing Supplement, subject to compliance with all applicable legal and/or regulatory and/or central bank requirements.

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

The Notes will contain certain covenants including Condition 5(a) (Covenants — Negative Pledge), Condition 5(b) (Covenants — Financial Covenants), Condition 5(c) (Covenants — Undertakings in relation to the Gurantee) and Condition 5(d) (Covenants — Escrow Account).

Events of Default . . . . . .

Events of Default for the Notes are set out in Condition 14 (Events of Default).

Cross Default. . . . . . . . .

The Notes will contain a cross default provision as further described in Condition 14(c).

Withholding Tax . . . . . .

All payments of principal and interest by or on behalf of the Issuer or the Guarantor in respect of the Notes and the Coupons or under the Guarantee of the Notes (as the case may be) shall be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Hong Kong, the PRC or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law.

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A-19

Status of the Notes . . . . .

The Notes constitute direct, general, unconditional, unsubordinated and unsecured obligations of the Issuer which will at all times rank pari passu without any preference or priority among themselves and at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, save as provided under Condition 5(a) and save for such obligations as may be preferred by provisions of law that are both mandatory and of general application, as described in ‘‘Terms and Conditions of the Notes – Status of the Notes’’.

Status of the Guarantee .

The Guarantor will in respect of each Tranche of Notes pursuant to the relevant Deed of Guarantee and the Trust Deed unconditionally and irrevocably guarantee the due and punctual payment of all sums from time to time payable by the Issuer in respect of the Notes. The Guarantee of the Notes constitutes direct, general, unconditional, unsubordinated and unsecured obligations of the Guarantor which will at all times rank at least pari passu with all other present and future unsecured and unsubordinated obligations of the Guarantor, save as provided under Condition 5(a) and save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.

Redemption . . . . . . . . . .

Notes may be redeemable at par or at such other Redemption Amount (detailed in a formula, index or otherwise) as may be specified in the relevant Pricing Supplement. Notes may also be redeemable in two or more instalments on such dates and in such manner as may be specified in the relevant Pricing Supplement.

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 as described in Condition 10(c) (Redemption at the option of the Issuer) and/or the Noteholders to the extent (if at all) specified in the condition 10(f) (Redemption at the option of the Noteholders).

Tax Redemption, NonRegistration Event Redemption and Change of Control Redemption . . . . . . . .

Except as described in ‘‘Optional Redemption’’ above, early redemption will only be permitted (i) for tax reasons as described in Condition 10(b) (Redemption and Purchase — Redemption for tax reasons); (ii) following a No Registration Event as described in Condition 10(g) (Redemption and Purchase — Mandatory Redemption for Non-Registration) and (iii) following a Change of Control as described in Condition 10(e) (Redemption and Purchase — Redemption for Change of Control).

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Listing and Trading . . . .

Approval in-principle has been received from the SGX-ST for the listing and quotation of the Notes that may be issued pursuant to the Programme and which are agreed at or prior to the time of issue thereof to be so listed on the SGX-ST. There is no assurance that the application to the Official List of the SGX-ST for the listing of a particular Series will be approved. For so long as any Notes are listed on the SGX-ST and the rules of the SGX-ST so require, such Notes will be traded on the SGX-ST in a minimum board lot size of not less than S$200,000 (or its equivalent in other currencies). The Notes may also be listed on such other or further stock exchange(s) as may be agreed between the Issuer and the relevant Dealer in relation to each Series. Unlisted Notes may also be issued under the Programme. The relevant Pricing Supplement will state whether or not the Notes of a Series will be listed on any exchange(s) and, if so, on which exchange(s) the Notes are to be listed.

Governing Law . . . . . . .

The Notes, each Guarantee of the Notes, the Agency Agreement, the Trust Deed, and any non-contractual obligations arising out of or in connection with the Notes will be governed by, and shall be construed in accordance with, English law.

Initial Delivery of the Notes . . . . . . . . . . . . .

On or before the issue date for each Series, the Global Note representing Bearer Notes or the Global Note Certificate representing Registered Notes may be deposited with a common depositary for Euroclear and/or Clearstream, Luxembourg and/or, in respect of CMU Notes, a subcustodian for the CMU Service or 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 Issuing and Paying Agent and the relevant Dealers. Registered Notes 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 for or the operator of, such clearing systems.

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SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE ISSUER The following tables set forth the summary consolidated financial information of the Issuer as at and for the periods indicated. The summary financial information presented below as at and for the years ended 31 December 2011, 2012 and 2013, has been extracted from the Issuer’s audited consolidated financial statements for the years ended 31 December 2011, 2012 and 2013. The summary financial information presented below as at and for the nine months ended 30 September 2013 and 2014 has been extracted from the Issuer’s reviewed consolidated financial statements for the nine months ended 30 September 2014. The information set out below should be read in conjunction with, and is qualified in its entirety by reference to, the consolidated financial information of the Issuer, as set out in the section headed Financial Statements of the Issuer’’ in this Offering Circular. The Issuer’s audited consolidated financial statements and reviewed consolidated financial statements are presented in accordance with HKFRS and have been prepared in accordance with Hong Kong Companies Ordinance (Cap. 622 of the Laws of Hong Kong). Consolidated Statement of Comprehensive Income of the Issuer Nine months ended 30 September 2014

30 September 2013

Year ended 31 December 2013

HK$ (Reviewed and unaudited)

2012

2011

HK$ (Audited)

TURNOVER . . . . . . . . . . . . . . . Other revenue and net income . . . . Administrative and operating expenses . . . . . . . . . . . . . . . .

2,543,987,366 803,920,379

2,572,847,606 703,507,522

4,015,396,868 4,047,356,379

3,581,528,712 1,047,199,573

153,384,167 193,863,777

(2,300,578,867)

(2,011,102,754)

(3,344,835,692)

(2,970,393,675)

(132,465,804)

PROFIT FROM OPERATIONS . Finance costs . . . . . . . . . . . . . . . Share of results of associates. . . . .

1,047,328,878 (322,911,465) (123,540,152)

1,265,252,374 (641,385,134) 6,199

4,717,917,555 (948,055,935) (11,622,322)

1,658,334,610 (1,019,554,769) (6,457,542)

214,782,140 (132,412,342) (10,930,680)

PROFIT BEFORE TAXATION. . Income tax expense . . . . . . . . . . .

600,877,261 (53,123,242)

623,873,439 (7,965,730)

3,758,239,298 (78,625,472)

632,322,299 (4,566,813)

71,439,118 2,547,208

PROFIT FOR THE PERIOD/ YEAR . . . . . . . . . . . . . . . . . .

547,754,019

615,907,709

3,679,613,826

627,755,486

73,986,326

546,831,459 922,560

610,537,240 5,370,469

3,667,858,304 11,755,522

620,818,813 6,936,673

73,755,804 230,522

Profit for the period/year attributable to: Equity shareholders of the company Non-controlling interests . . . . . . .

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A-22

Nine months ended 30 September 2014

Year ended 31 December

30 September 2013

2013

HK$ (Reviewed and unaudited)

2012

2011

HK$ (Audited)

PROFIT FOR THE PERIOD/ YEAR . . . . . . . . . . . . . . . . . .

547,754,019

615,907,709

3,679,613,826

627,755,486

73,986,326

OTHER COMPREHENSIVE INCOME/(LOSS) Items that will not be reclassified to profit or loss: Re-measurement of the defined benefits plans . . . . . . . . . . . . .





3,142,950





(687,171,552)

350,940,701

74,028,842

22,217

(236,044)

8,251,840



Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of financial statements of overseas subsidiaries and associates . . . . . . . . . . . . . . . . Available-for-sale financial assets: net movement in the investment revaluation reserve. . . . . . . . . . Cash flow hedge: net movement in the hedging reserve . . . . . . . . .

(532,625)

(8,251,840)

(6,500,056)

– (687,704,177)

178,695,864 521,384,725

237,424,001 304,952,787

(102,751,295) (94,477,238)

(124,573,360) (124,809,404)

OTHER COMPREHENSIVE (LOSS)/INCOME FOR THE PERIOD/YEAR (NET OF TAX) . . . . . . . . . . . . . . . . . .

(687,704,177)

521,384,725

308,095,737

(94,477,238)

(124,809,404)

TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE PERIOD/YEAR . . . . . . . . . . .

(139,950,158)

1,137,292,434

3,987,709,563

533,278,248

(50,823,078)

Total comprehensive (loss)/income for the period/year attributable to: Equity shareholders of the company Non-controlling interests . . . . . . .

(140,868,804) 918,646

1,131,921,965 5,370,469

3,975,968,416 11,741,147

526,341,575 6,936,673

(51,053,810) 230,732

TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE PERIOD/YEAR . . . . . . . . . . .

(139,950,158)

1,137,292,434

3,987,709,563

533,278,248

(50,823,078)

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A-23

Consolidated Balance Sheet of the Issuer As at

As at 31 December

30 September 2014

2013

2012

HK$ (Reviewed and unaudited)

2011

HK$ (Audited)

NON-CURRENT ASSETS Property, plant and equipment . . . Equipment leased to others . . . . . Interests in associates . . . . . . . . . Goodwill . . . . . . . . . . . . . . . . . Other intangible assets . . . . . . . . Available-for-sale financial assets Deferred tax assets . . . . . . . . . . Financial lease receivables . . . . . Other non-current financial assets Other non-current assets . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

. . . . . . . . . .

596,577,663 3,262,404,600 4,584,832,775 28,116,322 354,522,600 54,693,375 155,352,600 – 189,211,500 16,474,064,067

1,814,234,692 3,065,561,500 4,441,071,545 28,116,322 371,810,500 42,746,000 167,154,000 – – 14,606,265,654

18,865,735,317 – 33,812,648 1,369,950,185 1,945,500 735,992,547 21,065,874 259,661,994 1,556,400 5,550,625

17,851,606,563 – 369,753,531 1,364,229,998 31,398,519 136,000 16,498,452 245,457,357 4,116,816 5,550,625

25,699,775,502

24,536,960,213

21,295,271,090

19,888,747,861

. . . . . . . . . . . .

26,887,950 1,287,265,352 540,349,372 726,795,544 2,481,085 6,085,839,088 17,853,626 4,243,011,052 – 19,407,250 28,879,650 1,232,529,998

85,691,865 2,177,161,028 345,791,155 313,326,306 2,471,282 6,475,588,977 966,346,704 5,261,329,555 – 48,976,650 69,647,500 1,091,485,530

41,671,552 704,161,174 167,332,013 127,423,332 6,115,143 7,675,355,158 497,432,151 2,764,331,202 74,224,716 29,604,000 399,512,316 3,318,315,462

– 642,739,304 52,460,389 104,154,336 – 8,229,369,599 909,666,645 2,527,228,726 81,174,567 14,390,865 354,911,643 2,612,480,648

Non-current assets classified as assets held for sale . .

14,211,299,967 92,510,350

16,837,816,552 8,572,000

15,805,478,219 1,354,616,784

15,528,576,722 2,135,235,303

14,303,810,317

16,846,388,552

17,160,095,003

17,663,812,025

496,222,893 685,146,188 40,829,850 7,901,677 74,958 1,558,267,447 43,817,400 7,100,538,482 6,480 – 49,641,454 9,958,500 34,854,750 –

341,977,226 549,357,241 26,787,500 8,226,842 11,543,059 1,552,467,744 42,860,000 7,132,701,220 61,030,724 934,653,160 27,591,691 13,929,500 48,658,138 2,236,683

1,328,363,788 213,037,919 – 2,320,392,638 270,409,540 – – 4,347,297,082 58,150,892 2,254,299,232 3,694,703 – 11,094,922 –

664,411,262 49,659,760 – 2,981,309,402 294,377,476 – – 4,766,571,253 55,488,303 1,925,975,955 47,992,993 – 10,289,826 –

10,027,260,079

10,754,020,728

10,806,740,716

10,796,076,230







511,017,457

10,027,260,079

10,754,020,728

10,806,740,716

11,307,093,687

CURRENT ASSETS Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade receivables. . . . . . . . . . . . . . . . . . . . . . . . Deposits, prepayments and other receivables . . . . . Financial assets at fair value through profit or loss . Tax recoverable. . . . . . . . . . . . . . . . . . . . . . . . . Amount due from immediate holding company . . . Amounts due from fellow subsidiary companies. . . Amounts due from related companies . . . . . . . . . . Finance lease receivables . . . . . . . . . . . . . . . . . . Pledged bank deposits . . . . . . . . . . . . . . . . . . . . Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . Cash and bank balances . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .

CURRENT LIABILITIES Trade payables . . . . . . . . . . . . . . . . . . . . . Accruals and other payables . . . . . . . . . . . . Other current financial liabilities . . . . . . . . . Amounts due to fellow subsidiary companies. Amounts due to related companies . . . . . . . . Amount due to an associate . . . . . . . . . . . . Security deposits . . . . . . . . . . . . . . . . . . . . Bank loans . . . . . . . . . . . . . . . . . . . . . . . . Obligations under finance leases . . . . . . . . . Interest bearing loans and borrowings. . . . . . Tax payable . . . . . . . . . . . . . . . . . . . . . . . Provisions . . . . . . . . . . . . . . . . . . . . . . . . Deferred revenues . . . . . . . . . . . . . . . . . . . Bank overdraft (unsecured) . . . . . . . . . . . . .

. . . . . . . . . . . . . .

. . . . . . . . . . . . . .

. . . . . . . . . . . . . .

. . . . . . . . . . . . . .

. . . . . . . . . . . . . .

. . . . . . . . . . . . . .

Liabilities directly associated with assets classified as held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . .

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A-24

As at 30 September 2014

As at 31 December 2013

HK$ (Reviewed and unaudited)

2012

2011

HK$ (Audited)

NET CURRENT ASSETS . . . . . . . . . . . . . . . . . . .

4,276,550,238

6,092,367,824

6,353,354,287

6,356,718,338

TOTAL ASSETS LESS CURRENT LIABILITIES .

29,976,325,740

30,629,328,037

27,648,625,377

26,245,466,199

97,593,300 64,730,250 – 89,626,500 2,558,396,805 43,319,475 87,634,800 993,568,280

99,649,500 33,216,500 285,892,900 91,077,500 2,776,340,279 540,594 67,289,097 1,012,852,405

62,263,782 303,630,294 347,591,414 – 11,022,860,592 – 44,161,846 825,277,472

58,056,462 254,618,832 406,523,622 – 10,966,542,876 – 50,162,678 –

3,934,869,410

4,366,858,775

12,605,785,400

11,735,904,470

26,041,456,330

26,262,469,262

15,042,839,977

14,509,561,729

Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21,606,011,408 4,392,227,509

20,264,155,617 5,879,125,472

14,430,000,000 520,809,071

14,430,000,000 (5,532,504)

Total equity attributable to equity shareholders of the company . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-controlling interests . . . . . . . . . . . . . . . . . . . .

25,998,238,917 43,217,413

26,143,281,089 119,188,173

14,950,809,071 92,030,906

14,424,467,496 85,094,233

TOTAL EQUITY . . . . . . . . . . . . . . . . . . . . . . . . .

26,041,456,330

26,262,469,262

15,042,839,977

14,509,561,729

NON-CURRENT LIABILITIES Deferred tax liabilities . . . . . . . . . . . . Other non-current financial liabilities . . Obligations under finance leases . . . . . Net employee defined benefit liabilities Interest bearing loans and borrowings. . Provisions . . . . . . . . . . . . . . . . . . . . Deferred revenues . . . . . . . . . . . . . . . Bonds payable . . . . . . . . . . . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . CAPITAL AND RESERVES

21

A-25

SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE GUARANTOR The following tables set forth the summary consolidated financial information and other data of the Guarantor as at and for the periods indicated. The summary financial information presented below as at and for the years ended 31 December 2011, 2012 and 2013, has been extracted from the Guarantor’s audited consolidated financial statements for the years ended 31 December 2012 and 2013. The selected financial information presented below as of and for the nine months ended 30 September 2014 has been extracted from the review report of 中興財光華會計師事務所 (ZhongXingCaiGuangHua CPA Office) as set out in the section headed Financial Statements of the Guarantor’’ in this Offering Circular. The information set out below should be read in conjunction with, and is qualified in its entirety by reference to, the consolidated financial information of the Guarantor, as set out in the section headed Financial Statements of the Guarantor’’ in this Offering Circular. The selected unaudited consolidated financial information of the Guarantor as at and for the nine months ended 30 September 2014 have been prepared and presented in accordance with the PRC Accounting Standards and have been reviewed by 中興財光華會計師事務所 (ZhongXingCaiGuangHua CPA Office) (the ‘‘Guarantor’s Auditors’’). The Guarantor’s selected unaudited consolidated financial information were prepared and presented without notes thereto and without comparison information relating to the previous corresponding financial period and therefore should not be relied upon by potential investors to provide the same quantity of information associated with those included in audited or reviewed consolidated financial statements of the Guarantor with full notes thereto. None of the Sole Arranger, the Dealers, the Trustee or the Agents or any of their respective affiliates, directors or advisors makes any representation or warranty, express or implied, regarding the sufficiency of such consolidated financial results for an assessment of, and potential investors must exercise caution when using such data to evaluate the Guarantor’s financial condition, results of operations and results. The Guarantor’s audited consolidated financial statements are presented in accordance with PRC Accounting Standards. The differences between PRC Accounting Standards and IFRS are summarised in Differences between PRC Accounting Standards and IFRS’’. Consolidated Income Statement of the Guarantor As at 31 December Items

2013

2012

2011

CNY (Audited) I.

II.

III.

IV. V.

VI. VII.

Total operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Including: Operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Handling charges and commission income . . . . . . . . . . . . Total operating cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Including: Operating cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . Handling charges and commission expenses. . . . . . . . . . . Business tax and surcharges. . . . . . . . . . . . . . . . . . . . . . . . . . . . Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Asset impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Add: Gains from changes in fair value . . . . . . . . . . . . . . . . . . . . . Investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exchange gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Add: Non-operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Non-operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . Total profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Income tax expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net profit attributable to shareholders of the parent company. . . . . . . Net (loss) profit attributable to minority interests . . . . . . . . . . . . . . Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . Total comprehensive income attributable to shareholders of the parent company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total comprehensive income attributable to minority interests . . . . . .

22

A-26

56,007,786,270.96 54,417,004,796.49 579,872,763.97 1,010,908,710.50 57,338,478,653.01 41,339,495,678.79 257,924,739.29 75,388,981.65 1,060,225,541.82 3,303,891,939.87 5,566,775,281.07 5,406,125,060.29 328,651,430.23 675,840,126.72 2,075,100,141.30 111,844,669.22 1,532,092,555.19 1,413,979,379.33 209,932,701 25 2,736,139,233.27 1,184,048,732.72 1,552,090,500.55 475,727,844.78 1,076,362,655.77 221,214,701.63 1,773,305,202.18

46,856,939,282.04 45,677,119,814.12 528,615,719.58 651,203,748.34 46,794,464,598.11 32,406,595,312.89 468,911,604.17 94,463,708.04 1,242,079,001.37 2,957,806,504.09 4,603,202,720.69 4,777,155,846.30 244,249,900.56 (38,473,594.51) 1,489,850,963.89 (3,031,650.58) 1,510,820,402.73 673,762,055.55 149,487,751.08 2,035,094,707.20 924,475,364.53 1,110,619,342.67 301,960,789.04 808,658,553.63 5,888,196,993.41 6,998,816,336.08

33,041,332,334.71 32,100,781,735.42 418,339,407.43 522,211,191.86 34,720,835,441.95 22,726,961,426.56 435,801,476.24 77,851,404.85 897,722,976.34 2,503,452,580.24 4,407,586,991.46 3,520,527,956.38 150,930,629.88 811,683,060.57 2,204,728,559.30 (1,802,645.28) 1,335,105,867.35 406,751,856.44 133,272,415.65 1,608,585,308.14 670,684,394.44 937,900,913.70 294,692,426.31 643,208,487.39 81,866,864.20 1,019,767,777.90

696,942,546.41 1,076,362,655.77

3,447,627,147.66 3,551,189,188.42

212,983,468.60 806,784,309.30

Consolidated Balance Sheet Year ended 31 December 2013

2012

2011

CNY (Audited) Assets Current assets: Cash at bank and in hand . . . . . . . . . . . . . . . . . Lending to bank sand other financial institutions . . Trading financial assets . . . . . . . . . . . . . . . . . . Notes receivable . . . . . . . . . . . . . . . . . . . . . . . Accounts receivable . . . . . . . . . . . . . . . . . . . . . Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . Interests receivable . . . . . . . . . . . . . . . . . . . . . Other receivables. . . . . . . . . . . . . . . . . . . . . . . Financial assets purchased under agreement to resell Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current assets due within one year . . . . . . . . Other current assets . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .

35,680,627,927.70 100,000,000.00 2,725,707,903.37 115,775,581.32 4,445,654,667.04 5,233,571,887.03 26,805,034.62 5,014,291,961.50 26,100,261.00 36,181,722,914.96 5,161,238,124.26 460,112,702.30

29,222,905,977.59 18,051,116.54 3,792,304,500.90 62,125,040.00 4,151,431,592.04 5,857,941,222.35 10,311,798.56 5,384,693,422.91 6,000,060.00 23,080,096,929.76

28,861,118,113.54 115,800,836.27 3,970,791,262.06 12,049,650.00 2,983,475,151.15 3,995,155,383.53 110,950,792.10 6,609,604,125.56 175,108,535.00 14,473,466,206.54

181,767,321.30

72,429,664.78

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

95,171,608,965.10

71,767,628,981.95

61,379,949,720.53

. . . . . . . . . . . . . . . .

389,323,156.89 1,363,050,472.00 863,921,250.98 19,120,177,689.63 19,724,311,492.23 24,690,221,201.32 78,987,388,469.33 10,739,439,708.36 109,676.00 578,167.18 6,087,702,373.36 16,322,791.44 5,250,700,743.31 2,541,075,939.29 279,962,829.85 958,397,779.89

95,000,000.00 2,815,510,501.19 261,356,600.00 17,399,255,961.55 19,453,406,881.46 21,516,638,624.48 59,269,277,342.73 7,599,870,490.19 – 7,626,706.98 5,169,150,205.14 4,053,907.13 3,672,072,447.38 2,404,345,883.82 74,175,907.91 932,376,310.90

949,000,000.00 389,466,205.60 1,984,077,346.67 13,774,521,658.80 16,891,946,497.21 8,771,393,842.62 48,557,618,536.64 7,370,204,412.04 – 4,829,238.80 6,955,187,422.05 2,356,289.28 3,971,063,248.09 1,712,181,188.03 74,929,478.85 316,341,351.97

Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

171,012,683,741.06

140,674,117,770.86

111,725,116,716.65

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

266,184,292,706.16

212,441,746,752.81

173,105,066,437.18

Non-current assets: Entrusted loans and advances granted. Available-for-sale financial assets . . . Held-to-maturity investments . . . . . . Long-term accounts receivable . . . . . Long-term equity investments. . . . . . Investment properties . . . . . . . . . . . Fixed assets . . . . . . . . . . . . . . . . . Construction in progress . . . . . . . . . Construction materials . . . . . . . . . . Disposal of fixed assets . . . . . . . . . Intangible assets . . . . . . . . . . . . . . Development expenditure . . . . . . . . Goodwill . . . . . . . . . . . . . . . . . . . Long-term prepaid expenses . . . . . . . Deferred income tax assets . . . . . . . Other non-current assets . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

. . . . . . . . . . . .

. . . . . . . . . . . . . . . .

23

A-27

Year ended 31 December 2013

2012

2011

CNY (Audited) Liabilities and owner’s equity Current liabilities: Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits takings and deposits from banks and other financial institutions . Lending from banks and other financial institutions . . . . . . . . . . . . . . . Trading financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advances from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial assets sold under agreement to repurchase . . . . . . . . . . . . . . Handling charges and commission payable . . . . . . . . . . . . . . . . . . . . Employee benefits payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interests payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current liabilities due within one year . . . . . . . . . . . . . . . . . . . . Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . .

42,790,611,658.92 458,560,000.00 100,000,000.00 81,645,081.05 5,510,898,386.15 6,085,388,775.02 6,567,361,189.34 144,400,000.00 1,318,728.82 645,187,403.98 982,056,154.70 692,234,338.06 96,637,200.52 7,610,471,358.78 11,003,209,439.52 516,951,324.52

35,560,975,048.28 1,300,212,883.51 – – 5,102,563,096.56 5,557,020,345.96 4,458,928,540.67 480,758,575.34 – 457,538,217.92 1,080,291,726.45 306,170,093.17 76,832,934.27 7,849,979,312.79 6,175,980,283.49 1,892,622,485.57

24,705,972,538.63 123,829,041.55 – – 4,619,654,526.41 5,069,790,294.96 5,610,102,583.35 400,000,000.00 – 463,936,347.45 717,032,285.73 372,314,185.04 66,676,992.35 7,478,808,282.07 3,212,629,178.66 1,731,516,715.13

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

83,286,931,039.38

70,299,873,543.98

54,572,262,971.33

. . . . . . . .

99,184,652,719.42 16,053,227,421.44 5,223,990,226.85 12,030,916.00 363,672,188.59 3,940,649,408.80 1,088,750,075.71 125,866,972,956.81

80,416,433,657.53 8,878,109,764.11 2,957,267,465.72 12,030,916.00 51,555,875.84 4,055,295,616.94 715,200,781.60 97,085,894,077.74

75,262,191,274.49 2,800,000,000.00 3,095,022,841.50 41,589,622.96 55,257,933.20 1,583,389,855.35 405,691,316.23 83,243,142,843.73

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

209,153,903,996.19

167,385,767,621.72

137,815,405,815.06

. . . . . . .

11,151,800,000.00 6,019,679,085.88 194,283,996.94 2,235,383,124.54 (375,154,440.42) 19,225,991,766.94 37,804,396,943.03

6,271,800,000.00 5,875,282,677.36 157,550,961.03 1,439,818,655.35 (128,364,565.85) 13,616,087,727.89 31,439,891,403.20

6,271,800,000.00 2,472,582,405.27 136,143,169.22 1,209,265,658.12 (128,765,966.74) 9,961,025,265.87 25,328,635,356.25

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

57,030,388,709.97

45,055,979,131.09

35,289,660,622.12

Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . .

266,184,292,706.16

212,441,746,752.81

173,105,066,437.18

Non-current liabilities: Long-term borrowings . . . . . Bonds payable . . . . . . . . . . Long-term payables . . . . . . . Special payables . . . . . . . . . Estimated liabilities . . . . . . . Deferred income tax liabilities Other non-current liabilities . . Total non-current liabilities . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

Shareholders’ equity: Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Surplus reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Undistributed profits . . . . . . . . . . . . . . . . . . . . . . . . . . . Exchange differences on translation of foreign operations . . . . Total equity attributable to shareholders of the parent company Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . .

. . . . . . .

. . . . . . . .

. . . . . . .

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. . . . . . .

. . . . . . . .

. . . . . . .

24

A-28

Selected Consolidated Financial Information of the Guarantor as of and for the nine months ended 30 September 2014 Nine months ended 30 September 2014

Income Statement

CNY (million) (Reviewed) Total Operating Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

46,205 1,160 980 As at 30 September 2014

Balance Sheet Statement

CNY (million) (Reviewed) Current Assets . . . . . . Non-current Assets . . . Total Assets . . . . . . . . Current Liabilities . . . . Non-current Liabilities . Total Liabilities. . . . . . Total Equity . . . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

. . . . . . .

117,575 184,180 301,755 90,978 146,055 237,033 64,722

Non-GAAP Financial Measures As at 30 September 2014

As at 31 December 2013

2012

2011

(in CNY million, except for ratios and percentages) (Reviewed) (Audited) EBITDA (1) . . . . . . . . . . . EBITDA margin(2) . . . . . . EBITDA/Interest expense . Total debt (3)/EBITDA . . . Total debt/Total capital (4) .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

10,411.96 22.53% 2.09x 13.44x 74.25%

12,790.91 22.84% 1.91x 12.39x 73.54%

10,695.01 22.82% 2.15x 11.80x 73.63%

7,631.14 23.10% 1.84x 13.48x 74.46%

Notes: (1)

EBITDA for any period consists of total profit, fixed asset depreciation, intangible asset amortisation, long-term deferred expenses and interest expense. EBITDA is not a standard measure under PRC GAAP. EBITDA is a widely used financial indicator of a company’s ability to service and incur debt. EBITDA should not be considered in isolation or construed as an alternative to cash flows, net income or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. EBITDA does not account for taxes, interest expense or other non-operating cash expenses. In evaluating EBITDA, investors should consider, among other things, the components of EBITDA such as sales and operating expenses and the amount by which EBITDA exceeds capital expenditures and other charges. EBITDA has been included because the Group believe it is a useful supplement to cash flow data as a measure of its performance and its ability to generate cash flow from operations to cover debt service and taxes. EBITDA presented herein may not be comparable to similarly titled measures presented by other companies. Investors should not compare the Group’s EBITDA to EBITDA presented by other companies because not all companies use the same definition.

(2)

EBITDA margin is calculated as EBITDA divided by total operating revenue.

(3)

Total debt consists of short-term borrowing, absorbing deposits and borrowing form other financial institutions, long-term borrowing and bonds payable.

(4)

Total capital consists of total debt and total owner’s equity.

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RISK FACTORS Prior to making any investment decision, prospective investors should consider carefully all of the information contained in this Offering Circular, including the risks and uncertainties described below. The business, results of operations or financial condition of the Issuer Group and/or the Group could be materially adversely affected by any of these risks. The Issuer and the Guarantor believe that the following factors may affect their respective ability to fulfil their respective obligations under the Notes and the Guarantee of the Notes. Additional considerations and uncertainties not presently known to the Issuer or the Guarantor or which they currently deem immaterial may also have an adverse effect on an investment in the Notes. All of these factors are contingencies which may or may not occur and neither the Issuer nor the Guarantor is in a position to express a view on the likelihood of any such contingency occurring. Factors which the Issuer and the Guarantor believe may be material for the purpose of assessing the market risks associated with the Notes are also described below. The Issuer and the Guarantor believe that the factors described below represent the principal risks inherent in investing in the Notes, but the inability of the Guarantor to pay all sums due under the Guarantee of the Notes and the inability of the Issuer to repay principal, interest or other amounts or fulfil other obligations on or in connection with the Notes may occur for other reasons and neither the Issuer nor the Guarantor represents that the statements below regarding the risks of investment in the Notes are exhaustive. RISKS RELATING TO THE GROUP AND THE ISSUER GROUP The Group may not be able to implement its growth strategy The Group’s success in implementing its growth strategies is determined by, amongst other factors: •

the general condition of the global, regional and local economies in which the Group operates and continued growth in demand for seaborne and air transportation;



the availability, terms and costs of any financing required to make an acquisition or complete expansion plans;



the Group’s ability in identifying, investing in and integrating suitable expansion targets;



the Group’s ability in optimising its asset portfolio;



the Group’s ability in improving its operating, financial and internal control systems; and



the Group’s ability in recruiting, training and retaining experienced and skilled management staff and crew.

The growth strategies of the Group may not be implemented successfully, and such failure or inadequacy could give rise to adverse impact on the growth and development of its asset portfolio and business performance. There is no assurance that the Group could successfully enter into and compete in the industries that it desires to consolidate in or extend into. In the event that the Group is unable to successfully implement its growth strategies, there may be a material adverse effect on the Group’s financial condition and results of operations.

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Pirate attacks and hijacks, terrorist attacks, other acts of violence or war and adverse political developments may affect the Group’s performance Due to the close connection between the Group’s container leasing and tanker business and the seaborne transportation sector in general, pirate attacks and hijacks could lead to adverse consequences in respect of the Group’s operations and financial conditions. The Group’s insurers may increase the amount of premiums payable by the Group, and the Group may also have to pay additional security costs in order to ensure that its vessels are protected from pirate attacks. In addition, certain routes and locations may be affected by pirate attacks, causing it to be difficult or impossible to transport cargoes through such routes and/or to such locations. Thus, the Group’s financial performance could be negatively affected. Furthermore, wars and other armed conflicts in certain areas could cause property damage and business disruption to the Group. Such conflicts could also negatively affect the ports of which the Group’s containers come in and out. Military breakouts may bring about uncertainties as to the global or regional political stability and economic conditions, thus causing a decrease in the volume of international trade in which containers are involved. The unforeseeability of such hostilities makes it difficult for the Group to predict and assess the potential damage that may be caused to its business. There are also possibilities that the Group’s aircrafts, leased containers or oil tankers become involved in terrorist attacks. On 29 June 2012, on the flight from Hetian to Urumqi, the flight crew successfully prevented a terrorist attack and handed six terrorists to the police. However, there can be no assurance that such events will not happen again. If such events take place, not only the Group’s property could be damaged or destroyed – the Group’s reputations in the relevant industry could also be severely harmed. The occurrence of natural or other catastrophes, severe weather conditions or other acts of God may materially disrupt the Group’s operations Droughts, storms, or other natural disasters, epidemics and other acts of God could, whether alone or together, lead to unfavourable consequences including personal casualty and damage of cargoes and maritime property, as well as business disruptions, thus resulting in loss of revenues, increased costs and decreased cash flow of the Group. In recent years, a number of large-scale epidemics and natural disasters occurred globally including the outbreak of the Ebola virus disease in west Africa and the hurricane Sandy in the U.S.. These could adversely affect the general economic condition by reducing volume of international trade, and affect the business of the Group by reducing the demands for materials and products. Any period of sustained disruption may have an adverse effect on the Group’s business, financial condition and results of operations. The Group’s ability to raise further funds and the prospect of future growth may also be adversely affected. If an outbreak of epidemics such as the avian flu occurs, the market may see a decrease in the demand for specific commodities such as chicken feed, thereby causing a drop in the needs for shipping services. The Group’s business is highly dependent on general economic conditions and the volume of world trade The success and profitability of the Group’s activities depend, in part, on global economic growth and demand for its services. The demand for the various products and services offered by the Group is subject to different market cycles specific to such products and service, which in turn are affected by changes or developments in global economic and financial conditions (including currency rate movements) that are beyond the Group’s control. Other external factors, such as the imposition of trade tariffs, sanctions, boycotts, trade and labour disputes and work stoppages, particularly in the marine transportation and financial services industries, which are events beyond the Group’s control, could adversely affect the businesses, financial condition and results of operations of the Group. During the global economic downturn and the consequent decrease in consumer demand, even rigorously expanding economies such as China experienced a slowdown in its economic growth in the second half of 2008 and in 2009. Although the world’s economy has recently seen signs of recovery, it is uncertain whether such recovery can be sustained in the future. Any recurrence of a global financial crisis, which could potentially be sparked by the recent market volatility attributed to concerns over several European countries and the United States, may cause a renewed slowdown in the world economy. The recurrence of adverse macroeconomic conditions is expected to have an adverse impact on the Group’s businesses, financial condition and results of operations.

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For example, the global economic conditions have significant impact on the demand for and supply of leased containers and oil tanker capacity. The shipping industry is also highly cyclical and subject to seasonal fluctuations. During economic recessions and downturns in the international trade volume, demand for shipping products and services tend to decline, and the rates for container leasing and vessel chartering may also drop. The Group’s ability to arrange for external financing and cost of such financing may be adversely affected by factors beyond its control Most of the businesses that the Group engages in, such as air passenger and cargo, airport, and property development and investment, are capital-intensive and require a substantial amount of capital for operations and expansion. The Group’s ability to arrange for external financing and the cost of such financing are dependent on numerous factors, including general economic and capital market conditions, interest rates, credit availability from banks or other lenders, investors’ confidence in the Group, success of the Group’s businesses, provisions of tax and securities laws that may be applicable to the Group’s efforts to raise capital, and political and economic conditions in the PRC and elsewhere. For example, in respect of the Group’s property development and investment business, there is no assurance that the PRC government will not continue to limit its access to capital, flexibility and ability to use bank loans or other forms of financing to finance its property development and investment and that the Group may not be able to secure adequate financing to fund its land acquisitions (including any unpaid land premium for past acquisitions), to finance its project construction or to renew its existing credit facilities prior to their expiration. The failure to do so may adversely affect the business, financial condition and results of operations of the Group. The growth of the Group’s business through acquisitions and joint ventures may not succeed and it may have difficulty in managing its international operations The Group has been actively seeking new profitable business opportunities in order to enhance its market share and competitiveness in its core business areas. The Group’s ability to grow through acquisitions and joint ventures will depend on, among other things: •

general market conditions;



potential ongoing financial obligations and unforeseen or hidden liabilities of the Group’s acquisition targets or joint ventures;



the availability of suitable acquisition targets and at acceptable prices;



its ability to attract and reach agreement with acquisition targets or joint venture partners on commercially reasonable terms;



whether the required governmental approvals will be granted; and



the availability of financing, if needed, to complete acquisitions or joint ventures.

The benefits of an acquisition or joint venture transaction may take considerable time to develop. Such post-acquisition integration could place a significant strain on its managerial, operational and financial resources and there is no assurance that any particular acquisition or joint venture will achieve the intended benefits. Further, the success of such joint ventures is also dependent on current global economic conditions. For example, in a global economic downturn, the Group’s joint ventures may need to raise more funds in order to continue to meet their obligations and there is no assurance that such funds will be successfully raised. In addition, as the Group is expanding internationally, it may encounter additional challenges due to lower level of familiarity with local regulatory and business environment in overseas markets. Foreign countries may also impose government controls, trade restrictions, trade tariffs and other laws and policies which may restrict the Group’s investment. Failure to implement its expansion strategy and effectively manage its multinational operations may adversely

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affect the Group’s business, financial condition and results of operations. Moreover, the PRC government may issue policies which could have a significant influence over many aspects of the economy from time to time. There is no assurance that the Group’s outbound investments and international operations will not be restricted or adversely affected by such policies in the future. In addition, the Group will review and optimise its business portfolio from time to time, including implementing exit plans for its investments in business segments, in accordance with its development strategies. There is no assurance that the Group will successfully implement its investment exit strategies and/or restructure its business portfolio in the future. The Group will take into account various factors such as the followings when reviewing its investment exit strategies: •

general market conditions;



the availability of different methods of exit and the risks associated thereto;



the projected investment gain, as updated during the entire lifecycle of the investment; and



the impact on the Group’s financial results and cashflows.

In the event that the Group is unable to make and implement investment exit decisions that adequately address its needs of business restructuring and optimisation, the Group’s business, financial condition, results of operation and prospects might be adversely affected. The Group may not have, or may be unable to maintain, adequate insurance coverage The operation of the businesses of the Group has an inherent risk of fire, collisions, explosions and other disasters, environmental pollution, cargo and property loss or damage, and business interruption caused by mechanical failure, human error, political action, labour strikes, adverse weather conditions and other circumstances or events. Any such incident may result in loss of revenue or increased costs. Some of these incidents may even result in personal casualty. The Group has arranged for insurance coverage against certain of these risks in line with industry standards. However, there can be no assurance that all potential risks including those on the Group’s members are adequately insured against, that any particular claim will be paid or that it will be able to procure adequate insurance coverage at commercially reasonable rates in the future. For example, the Group’s travel services business is exposed to risks of third parties’ claims for harm or injury suffered or allegedly suffered in relation to the premises in which its offices and shops are located or the travel arrangement and products it sells to its customers. There is no assurance that its insurance policies are sufficient to cover all risks associated with its operations. Generally, in relation to the logistics business of the Group, it is also insured or has obtained indemnities in respect of certain damage and losses. However, such insurance and indemnities might not offer adequate coverage for protection against all related risks the Group is exposed to. Due to the extensiveness and contingent nature of the potential costs and expenses relating to environmental issues, the Group is not able to predict the ultimate cost of compliance or the impact on the resale value or useful lives of its container fleet. The costs and availability of insurance may also fluctuate. The level of premium payable for the insurance purchased by the Group could fluctuate and may rise significantly, causing it too expensive for the Group to continue to be insured. Furthermore, there are certain risks to which the Group’s businesses are exposed that could not be insured due to lack of availability of insurance in the market. Such risks include, for example, those arising from the damage caused by wear and tear. The Group has also not obtained insurance coverage for certain trading risks such as loss of revenue due to, for example, non-payment of receivables by containers lessees. In addition, stricter environmental regulations may result in increased costs for, or the unavailability of, insurance against the risks of

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environmental damage or pollution. The Group’s insurance policies contain certain standard deductibles, limitations and exclusions, including limitations and exclusions in respect to certain losses arising from acts of war, terrorism, malicious acts, nuclear force and wilful misconduct or fraud. The Group depends on its key senior management members and key senior officers and may have difficulty in attracting and retaining skilled employees The Group’s success depends, to a significant extent, upon the abilities, expertise and efforts of its key senior management members and key senior officers and skilled employees in each of its business areas. If it loses the services of its key senior management members or key senior officers or skilled employees, the Group may face difficulties in employing and integrating suitable replacement personnel in the short-term. The loss of the services of its key personnel or its inability to attract and retain qualified personnel in the future may have a material adverse effect on its business, financial condition and results of operations. In addition, if any of these key senior management members or key senior officers joins a competitor or forms a competing company, the Group may lose customers and suppliers and incur additional expense to recruit and train personnel. Some of the Group’s businesses are in highly competitive industries Some of the Group’s businesses are in highly competitive industries and the Group’s operations face competition from both international and local operators based on numerous factors specific to each of its core businesses. The Group also competes with both local and international companies in capturing new business opportunities. Some of the Group’s competitors may have significant financial resources, marketing and other capabilities, more extensive local knowledge and business relationships and longer operational track records in the relevant local markets than the Group. International competitors may also be able to capitalise on their overseas experience to compete in the PRC. For example, the Group’s travel services business competes with other hotels, travel agents and alternative travel booking media. The Group’s retail business also faces competition from domestic and international operators of department stores, supermarkets or other internet retail operators. While the Group’s air passenger business maintains a frequent flyer programme under the name, ‘‘Fortune Wings Club’’, the Group is currently not a member of any major international airline alliance and there is no assurance that the Group will be able to join any other alliance or strategic partnership in the near future. In addition, the Group’s air passenger, cargo and its airport businesses compete with other alternative modes of transportation such as rail, highways and sea routes for passenger and cargo transportation. China’s plan to build an extensive intercity high-speed rail network by 2020 may further intensify the competition for passenger and freight traffic for short-haul travel. As a result, there can be no assurance that the Group will be able to compete successfully in the future against its existing or potential competitors. Any failure of the Group to compete successfully will have a material and adverse effect on the Group’s business, financial position, operating results and future prospects. The Group operates in highly regulated industries Certain core businesses of the Group, particularly the air passenger and cargo, logistics, airport, financial services and property development and investment businesses, are highly regulated. The international conventions, treaties, international and local laws, rules, regulations or policies applicable to the Group’s businesses may be subject to future change or amendments, or uncertainties regarding their interpretation and application. In order to comply with the existing and future conventions, treaties, laws and regulations, the Group incurs, and expects to continue to incur, substantial costs in obtaining necessary authorisation, implementing operational changes to fulfil regulatory requirements, developing and maintaining international policies, procedures and training programmes and purchasing necessary insurance. Failure to comply with any of these conventions, treaties, laws, rules, regulations or policies may result in fines, restrictions on the Group’s business activities or, in extreme cases, suspension or revocation of the Group’s business licences, which could materially and adversely affect the Group’s business, financial position, operating results and prospects. In addition, any change or development in conventions, treaties, laws, rules, regulations or policies, or the interpretation of existing or future

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conventions, treaties, laws, rules, regulations or policies, including accounting policies and standards, could have a material and adverse effect on the Group’s business, financial position, operating results and prospects. The Group is subject to environmental protection laws The Group is subject to a variety of PRC environmental laws and regulations. For example, environmental protection standards set out in certain laws and regulations including but not limited to Environmental Protection Law, Noise Pollution Prevention Law, Water Pollution Prevention Law, Air Pollution Prevention Law and Solid Waste Pollution Prevention Law are applicable to its airport business. The aircraft engine noise created by approaching and departing aircrafts using the Sanya Phoenix International Airport and other airports operated by the Group may exceed the prescribed level applicable to areas around airports. There is no assurance that the Group may not face claims for noise pollution in the future. In respect of its property development and investment business, each project the Group develops is required to undergo environmental assessments and it is required to submit an environmental impact assessment report to the relevant governmental authorities for approval before commencement of its construction. There is no assurance that the Group will not violate any environmental laws and regulations and subject to any liabilities, fines, compensation or suspension of business for violations of such laws and regulations, which could have a material adverse effect on the Group’s business, financial conditions and results of operations. The Group may be involved in legal and other proceedings arising from its operations from time to time The Group is subject to legal proceedings and claims in the course of operations, arising from personal injury, property damage, contractual disputes, environmental issues and non-compliance with laws or regulations. If the Group is unsuccessful in defending any legal proceeding, or is unsuccessful in settling any legal proceeding on commercially reasonable terms, the Group may be liable to pay amounts of damages or face penalties or sanctions that may have a material adverse effect on the Group’s business and operations. In addition, whilst the Group has purchased and/or required its customers (such as container lessors) to purchase liability insurance, there is no assurance by the Group that such insurance coverage is sufficient to eliminate potential loss and damage caused by such proceedings. Nevertheless, the Group believes that no current or potential claims of which it is aware will have a material adverse effect on its consolidated financial position, results of operations or cash flows. For details, please refer to the paragraph headed ‘‘Legal Proceedings’’ in the section titled ‘‘Description of the Issuer Group’’ and ‘‘Description of the Group’’. If the Group is unsuccessful in defending ourselves in legal proceedings and receive an adverse judgment, such an judgement may have a material adverse effect on the Group’s operating results If the Group is sued in a court and is unsuccessful in defending itself, it may be forced to make a payment of a large amount money for the claim, which may have a material adverse effect on its operating results. The Group is currently involved in legal proceedings with Shagang Shipping Company Limited (‘‘Shagang Shipping’’) involving disputed claims of U.S.$66.4 million. See the paragraph headed ‘‘Legal Proceedings’’ in the section titled ‘‘Description of the Group’’. While the Group believes that the it has legitimate defence, there is no assurance that it will be able to successfully defend itself in the lawsuit. If the Group is unsuccessful in defending itself, it may be forced to pay a significant amount of money to the opposite party. Failure to obtain and renew all relevant approvals, licences and permits may adversely affect the Group’s business, financial condition and results of operations The Group requires various approvals, licences and permits for its businesses. However, there is no assurance that the Group could obtain or renew all relevant approvals, licences and permits required for its operation in the PRC during the entire course of its operation. For example, civil airports in the PRC are subject to extensive regulations by CAAC, which also incorporates relevant international treaties in

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relation to many aspects of their operations, including without limitation, technical standards of airfield facilities, air traffic and equipment and ground safety. The Group’s hotel management business is also required to comply with certain national and local government regulations in the PRC relating to the operation of the hotels, such as health and safety standards, and the preparation and sale of food and beverages. As a precondition to engaging in real estate property development in the PRC, a property developer must obtain a qualification certificate and renew it on an annual basis unless the rules and regulations allow a longer renewal period. In addition, to develop and complete a property project, it must apply for various licences, permits, certificates and approvals, including land use rights certificates, construction land planning permits, construction works planning permits, construction permits, pre-sale permits and certificates of completion, at the relevant government departments. Before the government issues any certificate or permit, the Group must first meet specific conditions. Any failure to obtain or renew relevant approvals, licences and permits in a timely manner may have an adverse effect on the Group’s future operations, expansion and financial performance. The Group may be adversely affected by third-party related factors The success of the Group depends upon the services provided by other third parties. For example, the range of travel products its travel services business can offer to the market is also dependent on its ability to source and be granted access to the services of travel suppliers. However, in the event of inadequate support by its suppliers, the Group would have to source from alternative travel suppliers for travel products. There is no assurance that such travel products may be sourced on equally commercially acceptable terms. Besides, the Group’s property development and investment business engages thirdparty contractors to provide various services, including construction, landscaping, gardening, equipment installation, interior decoration, mechanical and electrical installation and utilities installation. There is no assurance that any such third-party contractor will always provide satisfactory services of the quality required by the Group. If the performance of any third-party contractor is not satisfactory, it may need to replace such contractor or take other remedial actions, which could adversely affect the cost and development schedule of its projects. All of these third-party related factors may have an adverse impact on the reputation, credibility, financial position and business operations of the Group. The Group’s profit is partly contributed by dividends paid by its portfolio companies and the Guarantor may not have complete control over dividend policies of some of these companies The Guarantor is a holding company and relies principally on its subsidiaries, both wholly-owned and non-wholly owned, associates and jointly controlled entities to pay dividends, distributions or interest to it for its performance of payment obligations under the Guarantee. The Guarantor may not exercise complete control over dividend or other policies of some of its portfolio companies which it has a minority interest. The shareholders or the board of directors of some of the portfolio companies may determine not to pay dividends but retain the earnings for their own operations or expansion. There is no assurance that the Guarantor will be able to receive sufficient cash flow from its portfolio companies in order to satisfy its obligations under the Guarantee. The Guarantor’s accounts were audited in accordance with PRC Accounting Standards which may be different from International Financial Reporting Standards (‘‘IFRS’’). The Guarantor’s auditors has no affiliation with any international accounting authority and they have limited international capital markets experience The Guarantor’s audited reports for the years ended 31 December 2012 and 2013 were prepared in accordance with the Accounting Standards for Business Enterprises (‘‘ABSE’’) issued by the Ministry of Finance of the PRC on 15 February 2006, and the Application Guidance for Accounting Standards for Business Enterprises, Interpretations of ABSE and other relevant regulations issued thereafter. Although PRC Accounting Standards are substantively in line with IFRS, PRC Accounting Standards are, to a certain extent, different from IFRS. See ‘‘Differences between PRC Accounting Standards and International Financial Reporting Standards’’. There is no guarantee that the PRC Accounting Standards will fully converge with IFRS or there will be no additional differences between the two

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accounting standards in the future. Potential investors should consult their own professional advisers for an understanding of any differences that may exist between PRC Accounting Standards and IFRS, and how those differences might affect the financial information included in this Offering Circular. E a c h o f t h e G u a r a n t o r ’s c u r r e n t i n d e p e n d e n t a u d i t o r s , 中 興 財 光 華 會 計 師 事 務 所 (ZhongXingCaiGuangHua Certified Public Accountants LLP), and previous auditors, Peking Certified Public Accountants is a registered member of The Chinese Institute of Certified Public Accountants; and has no affiliation with any international accounting authority or firm. Although each of Peking Certified Public Accountants and 中興財光華會計師事務所 (ZhongXingCaiGuangHua Certified Public Accountants LLP) has significant audit experience in the PRC, it has limited international capital markets experience. Prospective investors should consider these factors prior to making any investment decision. Any adverse public health developments, including SARS, avian flu or influenza A (H1N1), or the occurrence of natural disasters may, among other things, lead to reduced levels of economic activity in the affected areas, which may in turn significantly reduce demand for the Group’s services and have an adverse effect on its financial condition and results of operations Adverse public health epidemics or pandemics could disrupt businesses and the national economy of China and other countries where the Group does business. For example, the outbreak of Severe Acute Respiratory Syndrome, or SARS, in early 2003 led to a significant decline in travel volume and business activities and substantially affected businesses in Asia. Moreover, some Asian countries, including China, have recently encountered incidents of the H5N1 strain of avian flu, many of which have resulted in fatalities. In addition, the outbreak of influenza A (H1N1), a highly contagious acute respiratory disease, in March 2009 has had an adverse influence on the air passenger and cargo, airport and travel services industries globally (including the Group). If there were another outbreak of a disease that affects travel behaviour and consumption pattern in the future, it could adversely affect the Group’s business operations. Natural disasters, such as earthquakes, snowstorms, floods, volcanic eruptions or tsunamis may disrupt or seriously affect various activities of the Group. Hainan Island, one of the locations for the operations of the core businesses of the Group, experiences typhoons, particularly during the third quarter of each year. Besides, in 2010, a number of large-scale natural disasters occurred globally, such as earthquakes in Haiti, Mexico and Qinghai province of China, and the volcanic eruption in Iceland in April 2010. In March 2011, Japan experienced a powerful earthquake, triggering a violent tsunami and seriously damaging the Fukushima nuclear power plant. All of these natural disasters adversely affected the air passenger and cargo, airport and travel services industries by reducing revenues and affecting travel behaviour and affected the retail business of the Group by reducing the supply of materials and products. Any period of sustained disruption may have an adverse effect on the Group’s business, financial condition and results of operations. Risks associated with foreign exchange may adversely affect the Group’s profitability The Group’s business operations span internationally; entities within the Group are exposed to foreign exchange risks from future commercial transactions and monetary asset and liabilities that are denominated in a currency that is not the entity’s functional currency. Fluctuations in exchange rates could negatively impact the Group’s costs in investments in foreign operations and capital commitments, and in other business transactions such as shipbuilding contracts. The Group does not currently maintain any regular hedging policy. It manages its foreign currency risks by closely monitoring the movement of the foreign currency rates and will consider entering into forward foreign exchange contracts to reduce the risks should the need arise in the future.

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RISKS RELATING TO GROUP’S AIR PASSENGER AND CARGO BUSINESS Any aviation fuel shortages or any increase in domestic or international aviation fuel prices may adversely affect the Group’s air passenger and cargo business The availability of aviation fuel has a significant influence on the Group’s financial condition and results of operations. In the past, aviation fuel shortages have occurred in the PRC and, on some rare occasions prior to 1993, required the Group to delay or cancel flights. Although aviation fuel shortages have not occurred since the end of 1993, there can be no assurance that aviation fuel shortages will not occur in the future. If such a shortage occurs in the future and the Group is forced to delay or cancel flights due to a fuel shortage, its operational reputation among passengers as well as the results of its operations may suffer. In addition, aviation fuel costs constitute a significant portion of the Group’s operating costs. As such, the Group is sensitive to aviation fuel prices. Aviation fuel prices are susceptible to, among other factors, political unrest in various parts of the world, the policies of the Organisation of Petroleum Exporting Countries, the rapid growth of the economies of certain countries, including the PRC and India, the levels of fuel inventory carried by industries, the amounts of reserves built by governments, disruptions to production and refining facilities and weather conditions. These and other factors that affect the global supply and demand for aviation fuel are out of the Group’s control. In particular, the recent political uncertainty in the Middle East continues to cause fluctuations in aviation fuel prices and may result in increases in aviation fuel prices. Due to the highly competitive nature of the air passenger and cargo industry and government regulation on airfare pricing and the level of aviation fuel surcharges, the Group may be unable to fully or effectively pass on to its customers any increased aviation fuel costs that it may encounter in the future, which could negatively affect its financial condition and results of operations. The Group’s failure to maintain a high utilisation rate for each aircraft may adversely affect its profitability and reputation One of the key elements of the Group’s profitability is to maintain a high utilisation rate for each aircraft. The Group’s average utilisation rate for each aircraft was approximately 10.24 hours per day for the year ended 31 December 2013. This is achieved in part by reducing turnaround time at airports. However, the Group may in its operations suffer from inferior quality infrastructure and facilities of less developed airports which would affect operational efficiency and delay turnaround time of the aircraft. This would affect the Group’s ability to maximise aircraft utilisation and could adversely affect its financial results. Pursuing new routes and increasing flights on current routes could also increase the risk of delays in the Group’s flight schedule. High aircraft utilisation also increases the risk that, in the event that an aircraft falls behind schedule during the day, it will remain behind schedule for the rest of the day, which can disrupt timely operations and lead to passenger dissatisfaction. Therefore, such delays may reduce the Group’s operational efficiency and utilisation rate, adversely affecting its profitability and reputation. There is no assurance that the Group will maintain a high utilisation rate for each of its aircraft. If the Group fails to maintain a high utilisation rate for each aircraft, its profitability and reputation may be adversely affected. The air passenger and cargo industry is capital-intensive and characterised by a high degree of operating leverage The air passenger and cargo industry is capital-intensive. The costs of maintaining its aircraft fleet, including payments made in connection with aircraft leases, and keeping them in good repair may be unpredictable and capital requirement for expanding such fleet may be significant. The size of the aircraft fleet of the Group may decrease as each aircraft is for a specific period of time and it may not be able to replace with suitable aircraft on commercially acceptable terms. Besides, the air passenger

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and cargo industry is also generally characterised by a high degree of operating leverage. The expenses relating to the operation of any given flight do not vary proportionately with the number of passengers carried, while revenues generated from a particular flight are directly related to the number of passengers carried and the fare structure of such flight. Due to the competitive nature of the air passenger and cargo industry, the Group may not be able to transfer all of its costs to its customers through higher ticket prices. Accordingly, a decrease in revenues could result in a disproportionately greater decrease in net income. Airport, transit and landing fees and security charges, along with other costs airlines must pay to ensure air traffic security, may increase further Airport, transit and landing fees, along with security charges and costs, represent a significant portion of the operating costs of the Group and directly affect the fares that it must charge its passengers in order to operate cost effectively. There can be no assurance that such costs will not rise in the future or that the Group will not incur additional costs. New costs could arise if, for example, airports levied noise or landing charges or fees based on environmental criteria such as aircraft noise or emission levels, or if airlines were required to assume additional security responsibilities. Future events or developments, such as terrorist acts or other conflicts, could also result in heightened security regulations for air traffic. Any of these developments could cause operating costs to increase. If the Group is unable to pass on increases in fees, charges or other costs to its customers, these increases could have a material adverse effect on its business, financial condition and results of operations. The Group’s reputation and business could be adversely affected in the event of an emergency, accident or incident involving the Group’s aircraft The Group is exposed to potential significant losses in the event that any of its aircraft is subject to an emergency, accident, terrorist incident or other disaster, and significant costs related to passenger claims, repairs or replacement of a damaged aircraft and its temporary or permanent loss from service. There can be no assurance that the Group will not be affected by such events or that the amount of its insurance coverage will be adequate if such circumstances arise and any such event could cause a substantial increase in the Group’s insurance premiums. In addition, any future aircraft accidents or incidents, even if fully insured, may create a public perception that the Group is less reliable or safe than other airlines, which could have an adverse impact on the Group’s reputation and business, financial condition and results of operations. RISKS RELATING TO THE GROUP’S AIRPORT BUSINESS The Group’s airport business is dependent on the development of its air traffic destinations as tourist destinations Substantially all of the air traffic using the airports of the Group is destination traffic, rather than transit traffic. For example, Hainan, as a renowned tourist island, attracts a lot of international and domestic tourists every year. Hainan competes with other Southeastern Asian destinations such as Hong Kong, Macau, Thailand and Singapore for tourist arrivals and departures. Any factors that could enhance the attractiveness, convenience or affordability of these destinations relative to Hainan or the air traffic destinations served by the Group, or a change in arrival patterns of tourists in the PRC, could have an adverse effect on the Group’s business, financial condition and results of operations. The Group’s airport business is dependent on domestic and regional economic growth Similar to other countries, the Chinese civil aviation industry is dependent on the level of domestic, regional and global economic growth, international trade and consumer spending. During periods of robust economic growth, passenger movements may grow at a rate as great as, or even greater than, that of the GDP. On the other hand, during periods of slow GDP growth, passenger throughput may exhibit slow or even negative growth. The civil aviation sectors of most Asian countries, including China, were negatively affected by the slowdown in economic growth during the global financial crisis in 2008, leading to reduced load factors among airlines and decreases in passenger throughput and aircraft

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movements at airports. There can be no assurance that future fluctuations of the economic or business cycle or other events that could influence GDP growth will not have an adverse effect on the Group’s business, financial condition and operating results. Construction risks which are beyond the Group’s control may adversely affect business A number of airport expansion and renovation projects which may be undertaken at the Sanya Phoenix International Airport and other airports operated by the Group in the future may require substantial capital expenditure during their construction and it may take many months, or possibly years, until the projects completed. The time taken and the costs incurred in completing an expansion or renovation project can be adversely affected by many factors including without limitation, shortages of materials, equipment, technical skills and labour, adverse weather conditions, natural disasters, labour disputes, disputes with contractors and sub-contractors, accidents, changes in government priorities and policies, delays in receiving the requisite licences, permits and approvals from relevant authorities and unforeseen problems and circumstances. Any of these factors could give rise to delays in the completion of a project and result in costs exceeding those initially budgeted. The failure to complete the construction of a project to its planned specifications or schedule may result in the liabilities being assumed, reduced efficiency or loss of revenue or less attractive returns to the Group. RISKS RELATING TO THE GROUP’S TRAVEL SERVICES AND HOTEL MANAGEMENT BUSINESSES The Group’s travel services and hotel management businesses are subject to seasonality factors The travel services and hospitality industries are inherently seasonal. Sales and price of packages and services, hotel room and restaurant revenues, occupancy levels and room rates will normally be higher for holiday seasons and lower for off-peak seasons. Higher revenues are normally generated during festive holidays including without limitation, New Year, Chinese New Year, Easter, Christmas and the Spring Festival Golden Week and National Day Golden Week in China, when more travellers tend to go on holidays. The Group’s operating results may therefore be subject to fluctuations due to seasonality factors from time to time. Refurbishments or further development of the Group’s existing properties may result in cost overruns or disruptions of its hotel operations In order to improve and maintain the conditions of its hotels, the Group may conduct refurbishments of its hotels from time to time. These refurbishments may be more costly than expected and are subject to risk of delays and cost overruns. In addition, even though the operations of hotels under refurbishment or development may not need to be closed down entirely, there may be instances where refurbishment or development would seriously disrupt hotel operations and adversely affect the revenues of the relevant hotels. The disruptions and other risks associated with refurbishments and further development or the Group’s failure to improve and maintain the conditions of the hotels could have an adverse effect on its business, financial condition and results of operations. The Group’s hotel management business relies on the reputation of its brand names and protection of its intellectual property rights Over the years, the Group has developed distinctive brands for different types of hotels including without limitation, ‘‘TANGLA’’. The success of the Group’s hotel management business depends on the reputation of these brand names. The Group has registered some of its brand names as trademarks. However, the brand names of the Group are susceptible to imitation and infringement and there is no assurance that no third party will copy or otherwise obtain and use such trademarks without its authorisation. In the event of imitation and infringement, there may be an adverse impact on the Group’s business reputation and performance. Customers may believe that other hotels using the same brand names are related to the Group’s hotels, and customers recognition of and confidence in its brands may be negatively impacted if any services or amenities offered in such other hotels are below the standards offered by the hotels of the Group.

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RISKS RELATING TO THE GROUP’S RETAIL BUSINESS Shortages or unavailability of products demanded by customers due to disruptions to its supply chain may adversely affect the Group’s retail business The Group needs to maintain sufficient inventory of its products to meet the demands of its customers, and any failure to do so could materially and adversely affect its business and profitability and damage its reputation. Should the supply of products be disrupted, the Group may not be able to procure products of equal quality on equally competitive terms, if at all. Such disruption to supply may materially and adversely affect its business, profitability and reputation. It cannot be assured that the Group will not incur losses nor there will not be material write-offs due to shortages or unavailability of particular products demanded by its customers due to disruptions to its supply chain, which may result in increased costs or reduced sales and may materially and adversely affect its competitiveness, financial condition and results of operations. The Group’s retail business is dependent on the renewal of existing leases for its retail shops on commercially reasonable terms When the Group expands its retail network by adding new retail shops or supermarkets or department stores, availability of retail space at desirable locations and on acceptable terms is one of the key factors that the Group would consider. In addition, significant investments are made in the external and internal decorations and improvement of the retail shops. The Group is cautious in the selection of its retail shops, and the Group takes into account factors such as the convenience and accessibility of the sites to its target customer groups, the expected pedestrian traffic flow and the degree of surrounding competition. In the event that the Group is not able to renew any of its existing leases, or that any of its leases are terminated for any reason prior to their expiration, the Group will need to relocate to alternative premises or shut down its operations at those premises. Upon expiration of the lease agreement for each of its leased premises, the Group will need to negotiate the terms and conditions on which the lease agreement may be renewed. It cannot be assured that the Group will be able to renew its lease agreements on terms and conditions which are favourable or otherwise acceptable to it, or at all. In such case, the Group may need to seek an alternative site to relocate the existing supermarkets, department stores or other retail shops. It cannot be assured that such alternative site will be at a comparable location or can be leased on comparable terms. In addition, relocation of any part of its operations may cause disruptions to its business and requires significant expenditure. The Group may have to pay significantly higher rent which may materially and adversely affect its business, financial condition and results of operations. Failure to anticipate and provide the appropriate mix of merchandise to satisfy customer tastes and demands may adversely affect the business, financial condition and results of operations of the Group The Group’s retail business maintains a comprehensive selection of merchandise targeting a broad range of customers. The success of its business depends on its ability to maintain a comprehensive selection of products and retail outlets and, at the same time, anticipate and respond in a timely manner to changing customer demands and preferences. Customer demands and consumption patterns in the PRC are changing at a rapid pace and customer acceptance of new products is affected by a number of factors, including prevailing economic conditions, disposable income, global lifestyle trends, price, functionality, technology, appearance and many other factors. If the Group fails to accurately foresee or quickly adjust to general trends in consumer demands and preferences, its business, financial condition and results of operations may be materially and adversely affected.

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The Group is subject to third party intellectual property rights In the event that the Group or its rental tenants sell merchandise which infringes third party intellectual property rights at its supermarkets, department stores or other retail shops, the Group, as a retailer, may be found liable for the infringement and be compelled to discontinue the sale of the offending merchandise and/or pay damages or other fines. During the years ended 31 December 2011 and 2012 and 2013 and nine months ended 30 September 2014, the Group has not been subject to any claims in relation to the infringement of third party intellectual property rights which would materially and adversely affect its business, financial condition and results of operations in any material aspects. The Group’s inspection team, which inspects the merchandise it sourced from its suppliers upon delivery, may not be able to detect merchandise or acts that infringe the intellectual property rights of third parties. In the event that the Group purchases and subsequently re-sells merchandise that infringes the intellectual property rights of third parties, it may be subject to investigation and its reputation may suffer. The Group may bring claims against its suppliers or rental tenants responsible for the infringing merchandise to recover any losses that it has suffered. However, it cannot be assured that the Group will be able to recover, partially or fully, all losses caused by these suppliers and in particular, it may not be able to fully recover the losses to compensate the damage such infringement may have on its reputation, which may have a material adverse effect on its business, financial condition and results of operations. RISKS RELATING TO THE GROUP’S PROPERTY DEVELOPMENT AND INVESTMENT BUSINESS The Group may not always be able to obtain land reserves that are suitable for development To have a steady stream of developed properties available for sale and a continuous growth in the long term, the Group has to replenish and increase its land reserves that are suitable for development. Its ability to identify and acquire suitable development sites is subject to a number of factors, some of which are beyond its control. The availability of substantially all of the land in China is controlled by the PRC government. Thus the PRC government’s land policies have a direct impact on its ability to acquire land use rights for development and its costs of acquisition. In recent years, the PRC central and local governments have also implemented various measures to regulate the means by which property developers obtain land for property development. The PRC government also controls land supply through zoning, land usage regulations and other means. All these measures further intensify the competition for land in the PRC among property developers. For example, subsequent re-zoning by the PRC government may adversely affect the ability of the Group to obtain land use rights. If the Group fails to acquire sufficient land reserves suitable for development in a timely manner and at acceptable prices, its prospects and competitive position may be adversely affected and its business strategies, growth potential and performance may be materially adversely affected. The policies, regulations and measures of the PRC government to discourage speculation and prevent overheating of the property market may adversely affect the Group’s property development and investment business The Group’s property development and investment business is susceptible to changes in the regulatory measures and policy initiatives implemented by the PRC government. Over the past few years, the PRC government has introduced tightening measures to curtail the overheating of the PRC property market, including without limitation: •

requiring any first-time home owner to pay a minimum down-payment of 30% of the purchase price of the premises if the premises has a unit floor area of less than 90 square meters and the purchase is buying the premise as a primary residence;

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requiring any second-time home owner to pay a minimum down-payment of 60% of the purchase price of the premises and an increased minimum mortgage loan interest rate at 110% of the relevant PBOC benchmark bank lending interest rate;



for a commercial property buyer, (i) requiring banks not to finance any purchase of properties of which the construction completion has not been approved; (ii) increasing the minimum downpayment to 50% of the purchase price of the premises; (iii) increasing the minimum mortgage loan interest rate at 110% of the relevant PBOC benchmark bank lending interest rate; and (iv) limiting the terms of such bank borrowings to a maximum of 10 years;



for a buyer of commercial/residential dual-purpose properties, increase the minimum amount downpayment to 45% of the purchase price of the property; and



imposing more restrictions on the types of property developments that foreign investments may engage in.

If a property developer fails to commence development of a property project within the stipulated period as required under the current PRC laws, the relevant PRC land bureau may serve a warning notice on it and impose an idle land fee of up to 20% of the land premium unless such failure is caused by a government action or a force majeure event. The Notice on Promoting Economization of Land Use issued by the State Council in January 2008 further confirmed the idle land fee at 20% of the land premium. If a property developer fails to commence such development for more than two years, the land is subject to forfeiture to the PRC government unless the delay in development is caused by government actions or force majeure. Even if the commencement of the land development complies with the land grant contract, if the developed gross floor area on the land is less than one-third of the total gross floor area of the project or if the total capital expenditure is less than 25% of the total investment of the project and the suspension of the development of the land is more than one year without government approval, the land will still be treated as idle land. Certain municipal governments also introduced various tightening measures to further curtail the overheating of the local property market, including without limitation, restricting non-local residents to purchase local premises and, introducing trial rules on personal property tax. The PRC government’s restrictive measures may limit the Group’s access to capital, reduce market demand and increase the Group’s operating cost in adapting to these measures. There is no assurance that the PRC government will not adopt additional and more stringent measures, which may further curtail the development of the industry in general and adversely affect the Group’s property development and investment business, financial condition and results of operations. The Group may not be able to complete its development projects on time or at all Property development projects require substantial capital expenditures prior to and during the construction period and construction of a property project may take many months or several years before it generates positive cash flow through pre-sales or sales. Meanwhile, the progress and cost for a development project can be adversely affected by many factors, including: •

delays in obtaining necessary licenses, permits or approvals from governmental agencies or authorities;



relocation of existing residents and/or demolishment of existing structures;



shortages of materials, equipment, contractors and skilled labour;



labour disputes;



construction accidents;

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natural catastrophes; and



adverse weather conditions.

Construction delays or failure to complete the construction of a project according to its planned specifications, schedules or budgets as a result of the above factors may adversely affect its results of operations and financial position and may also cause damage to reputation. The Group’s failure to meet all requirements for the issue of property ownership certificates may lead to compensatory liability to its customers According to PRC law, property developers must meet various requirements within 90 days after delivery of property for the customers to apply for property ownership certificates, including passing various governmental clearances, formalities and procedures. A property developer usually stipulates the delivery dates in its sales contracts to leave sufficient time for it to complete the formalities and obtain the relevant approvals. However, there is no assurance that there will not be delays in the Group’s property development projects. There may also be factors beyond its control that may delay the delivery of property ownership certificates, including shortage in human resources at various governmental offices and time-consuming inspections and approval processes at various government agencies. Under current PRC laws and regulations, a property developer is required to compensate its customers for delays in its deliveries. Any serious delays on one or more property projects will adversely affect the business and reputation of the Group. RISKS RELATING TO THE GROUP’S FINANCIAL SERVICES BUSINESS The Group’s asset management revenue and earnings from its financial services business could decline if the investments it manages perform poorly, its clients withdraw assets it manages on short notice, or if the Group loses clients Investment performance affects the assets under the Group’s management, which is one of the most important factors in retaining clients and competing for new asset management business. Market volatility and limitations in investment options and hedging strategies in the PRC could limit the Group’s ability to provide stable returns for its clients and cause it to lose clients. Poor investment performance could adversely affect its revenue and growth because: •

existing clients might withdraw funds from its asset management business in favour of better performing products provided by its competitors, which would result in lower management fees for us;



clients may request that it lowers its fees for asset management services, particularly in an intensely competitive industry;



its incentive fees, which are based on a percentage of investment returns, would decline; and



firms with which it has strategic alliances may terminate such relationships with it, and future strategic alliances may be unavailable.

In addition, the Group may not be able to keep or increase its assets under management due to increased competition from insurance companies, banks and other competitors, which would adversely affect its results of operations and financial condition. The success of the financial services business is dependent on the proper functioning and improvement of information technology systems The operation of the Group’s financial services business is highly dependent on the proper functioning and continued improvement of its information technology systems.

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The Group’s information technology systems may be vulnerable to disruptions caused by, among others, software or hardware failure, data corruption, computer viruses, hackers, insufficient processing power or network failure. Such disruptions may result in loss of data and interruption, delay or cessation in the financial services provided by the Group and/or loss of confidential information. The Group may be required to bear the loss resulting from such disruption and may be subject to warnings, fines and punishments from the relevant regulatory authorities, which in turn could have a material and adverse effect on the Group’s business, financial position, operating results and future prospects. As a result of the expansion of the Group’s financial services business and rapid advances in information technology, the Group will be required to upgrade its computer systems on a timely and cost-effective basis to maintain its competitiveness. However, there can be no assurance that the Group would be able to continuously upgrade its computer systems effectively or on a timely manner to cope with increasing demand and advances in technology or that no disruption will occur in the course of upgrading the Group’s computer systems. As a result, the failure to maintain and upgrade the relevant computer systems may have a material effect on the Group’s business, financial position, operating results and future prospects. The Group’s financial services business is susceptible to the operational failure of third parties The Group faces the risk of operational failure or termination of any of the exchanges, depositaries, clearing agents or other financial intermediaries it uses to facilitate its securities transactions. Any operational failure or termination of the particular financial intermediaries that it uses could adversely affect its ability to effect transactions, serve its clients and manage its risk exposure. In addition, as its interconnectivity with its clients grows, it will increasingly face the risk of operational failure with respect to its clients’ systems. The financial services business may be materially adversely affected if the Group fails to maintain effective or adequate risk management and internal control systems The Group has established risk management and internal control systems and procedures. Certain areas within its risk management and internal control systems may require constant monitoring, maintenance and continued improvements by its senior management and staff. Its businesses and prospects may be materially and adversely affected if its efforts to maintain these systems are proved to be ineffective or inadequate. Deficiencies in its risk management and internal control systems and procedures may adversely affect its ability to record, process, summarise and report financial and other data in an accurate and timely manner and adversely impact its ability to identify any reporting errors and noncompliance with rules and regulations. The Group’s internal control system may contain inherent limitations caused by misjudgment or fault. As a result, there is no assurance that its risk management and internal control systems are adequate or effective notwithstanding its efforts, and any failure to address any internal control matters and other deficiencies could result in investigation and disciplinary actions or even prosecution being taken against it or its employees, disruption to its risk management system, and material and adverse effects on its financial condition and results of operations. RISKS RELATING TO THE ISSUER AND THE GUARANTOR No representation or warranty on public information of some listed companies within the Group Shares of certain companies within the Group, namely Hainan Airlines (SHSE:600221); Bohai Leasing Co., Ltd. (‘‘Bohai Leasing’’) (SZSE:000415); HNA Infrastructure Company Limited (formerly Hainan Meilan International Airport) (‘‘Hainan Infrastructure’’) (SEHK:0357); Xi’an Mingsheng Group (SZSE:000564); E-Food Group (SZSE:000796); Hainan International Tourism Island (SHSE:600515); Shougang Tech (HKSE:00521); Shanghai Nine Dragon Tourism (SHSE:600555); Tianjin Marine Shipping (SHSE:600751); NH Hoteles (NHH:SM); Yeland Group (SZSE:000616) and Lianxun Securities (OTCBB:830899), are listed on stock exchanges. These listed companies are therefore subject

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to the continuous disclosure requirements imposed by the respective stock exchanges on which their shares are listed. As such, information relating to them can be obtained from a variety of sources. The Issuer and the Guarantor assume no responsibility and accept no liability for, and make no representation or warranty (whether express or implied) as to the accuracy and completeness of any information obtained by any investor about these listed companies. Investors should make their own enquiries, and where appropriate, obtain advice in relation to any investment decision. Public information on the Issuer and the Guarantor may be limited Even though some of the Group’s companies are listed in the PRC, Hong Kong and Spain, the Issuer and the Guarantor are incorporated in Hong Kong under the Companies Ordinance (Cap. 622 of Laws of Hong Kong) and established in the PRC respectively, and both are not listed on any stock exchange. Publicly available information of the Issuer and the Guarantor may be more limited than that for listed companies. RISKS RELATING TO THE PRC Changes in PRC economic, political and social conditions, as well as government policies, could have a material adverse effect on the Group’s business, prospects, financial condition and results of operations A substantial portion of the Group’s business and operations are conducted in China. Accordingly, the Group’s business, prospects, financial condition and results of operations are, to a significant degree, subject to economic, political and social developments in China. The Chinese economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures since the late 1970s emphasizing the utilisation of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the PRC government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over China’s economic growth through allocation of resources, controlling payment of foreign currency denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Certain measures taken by the PRC government to guide the allocation of resources may benefit the overall economy of China but may, however, also have a negative effect on the Group. For example, the Group’s business, prospects, financial condition and results of operations may be adversely affected by government control over capital investments, changes in tax regulations that are applicable to the Group, change in interest rates and statutory reserve rates for banks or government control in bank lending activities. Future fluctuations in the value of the Renminbi could have an adverse effect on the Group’s financial condition and results of operations While the Group conducts a substantial portion of its business operations in the PRC, the Group also derive foreign currencies denominated revenue. The Group convert Renminbi into foreign currencies to meet the relevant subsidiary’s own foreign currency obligation. A portion of the Group’s revenue, expenses and bank borrowings are denominated in US dollars and other foreign currencies, although the Group’s functional currency is the Renminbi. As a result, fluctuations in exchange rates, particularly between the Renminbi, the Hong Kong dollar or the US dollar, could affect the Group’s profitability and may result in foreign currency exchange losses of our foreign currency-denominated assets and liabilities. The exchange rate of the Renminbi against the US dollar and other currencies fluctuates and is affected by, among other things, changes in the PRC’s, as well as, international, political and economic conditions and the PRC government’s fiscal and currency policies. Since 1994, the conversion of the

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Renminbi into foreign currencies, including the Hong Kong dollar and the US dollar, has been based on rates set daily by the PBOC, based on the previous business day’s inter-bank foreign exchange market rates and exchange rates in global financial markets. From 1994 to 20 July 2005, the official exchange rate for the conversion of the Renminbi to US dollars was generally stable. On 21 July 2005, the PRC government adopted a more flexible managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band that is based on market supply and demand with reference to a basket of currencies. On 19 June 2010, the PBOC announced that the PRC government would reform the Renminbi exchange rate regime and increase the flexibility of the exchange rate. On 18 March 2014, the PBOC enlarged the previous floating band of the trading prices of the Renminbi against the US dollar in the inter-bank spot foreign exchange market from 1% to 2% in order to further improve the managed floating RMB exchange rate regime based on market supply and demand with reference to a basket of currencies. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in further and more significant appreciation of the Renminbi against the US dollar. There can be no assurance that the Renminbi will not experience significant appreciation against the US dollar in the future. Any significant increase in the value of the Renminbi against foreign currencies could reduce the value of the Group’s foreign currency-denominated revenue and assets. The legal system of the PRC is still developing and there are inherent uncertainties that may affect the protection afforded to the Group’s business The Group’s business and operations in China are governed by the PRC legal system that is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since the late 1970s, the PRC government has promulgated laws and regulations dealing with economic matters such as foreign investment, corporate organisation and governance, commerce, taxation and trade. However, as these laws and regulations are relatively new and continue to evolve, interpretation and enforcement of these laws and regulations involve significant uncertainties and different degrees of inconsistency. Some of the laws and regulations are still in the developmental stage and are therefore subject to policy changes. Many laws, regulations, policies and legal requirements have only been recently adopted by PRC central or local government agencies, and their implementation, interpretation and enforcement may involve uncertainty due to the lack of established practice available for reference. The Group cannot predict the effect of future legal developments in China, including the promulgation of new laws, changes in existing laws or their interpretation or enforcement, or the pre-emption of local regulations by national laws. As a result, there is substantial uncertainty as to the legal protection available to the Group. Furthermore, due to the limited volume of published cases and the non-binding nature of prior court decisions, the outcome of dispute resolution may not be as consistent or predictable as in other more developed jurisdictions, which may limit the legal protection available to the Group. In addition, any litigation in China may be protracted and result in substantial costs and the diversion of resources and management attention. The Group’s operations in China are subject to PRC regulations governing PRC companies. These regulations contain provisions that are required to be included in the articles of association of PRC companies and are intended to regulate the internal affairs of these companies. It may be difficult to effect service of process upon, or to enforce against, the Group’s Directors or members of the Group’s senior management who reside in the PRC in connection with judgments obtained in non-PRC courts Most of the Group’s assets and the Group’s subsidiaries are located in China. In addition, most of the Group’s Directors and senior management reside within China, and the assets of the Group’s Directors and senior management may also be located within China. As a result, it may not be possible to effect service of process outside China upon most of the Group’s Directors and senior management, including for matters arising under applicable securities law. A judgment of a court of another jurisdiction may be reciprocally recognised or enforced if the jurisdiction has a treaty with China or if judgments of the PRC courts have been recognised before in that jurisdiction, subject to the satisfaction of other requirements. However, China does not have treaties providing for the reciprocal enforcement of judgments of courts

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with Japan, the United Kingdom, the United States and many other countries. In addition, Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. As a result, recognition and enforcement in the PRC or Hong Kong of judgments from various jurisdictions is uncertain. The Group faces risks related to force majeure events, natural disasters, health epidemics and other outbreaks, which could significantly affect the Group’s operations The Group’s business could be materially and adversely affected by natural disasters or the outbreak of avian influenza, severe acute respiratory syndrome (‘‘SARS’’), or other epidemics. On 12 May 2008, 14 April 2010 and 20 April 2013, severe earthquakes hit part of Sichuan province in southwest China and part of Qinghai province in west China, resulting in significant casualties and property damage. If a similar disaster were to occur in the future, particularly in regions where the Group operates, the Group’s operations could be materially and adversely affected due to loss of personnel, damage to property or decreased demand for the Group’s products. In April 2009, a new strain of influenza A virus subtype H1N1 was discovered and quickly spread across the world, including to China. In July 2009, the World Health Organisation declared the outbreak to be a pandemic, while noting that most of the illnesses were of moderate severity. More recently, human infections of the latest avian influenza strain, H7N9 flu, have begun to appear in different regions in China. Any outbreak of avian influenza, SARS, influenza A (H1N1), H7N9 or other adverse public health developments, could adversely affect the overall business sentiment and environment in China and the world, which in turn may lead to slower overall economic growth in China and the world. Any contraction or slowdown in the economic growth of China and the world could adversely affect the Group’s businesses, financial condition, results of operations and growth prospects. In addition, if any of the Group’s employees is infected or affected by any severe communicable disease, it could adversely affect or disrupt the Group’s operations, as we may be required to close some or all of the Group’s business to prevent the spread of the disease. The spread of any severe communicable disease in China may also affect the Group’s customers and suppliers, which could in turn adversely affect the Group’s businesses, financial condition, results of operations and growth prospects. RISKS RELATING TO NOTES ISSUED UNDER THE PROGRAMME AND THE GUARANTEE OF THE NOTES The Notes and the Guarantee of the Notes are unsecured obligations As the Notes and the Guarantee of the Notes are unsecured obligations, their repayment may be compromised 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 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, as the case may be, the Guarantor’s assets and any amounts received from the sale of such assets may not be sufficient to pay amounts due on the Notes. Notes may not be a suitable investment for all investors The Notes are complex financial instruments and may be purchased as a way to reduce risk or enhance yield with an understood, measured and appropriate addition of risk to their overall portfolios. A potential investor should not invest in the Notes unless it has the expertise (either alone or with the help

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of a financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of such Notes and the impact this investment will have on the potential investor’s overall investment portfolio. Each potential investor in any Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: (i)

have sufficient knowledge and experience to make a meaningful evaluation of the relevant Notes, the merits and risks of investing in the Notes and the information contained in this Offering Circular or any applicable supplement;

(ii)

have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Notes and the impact such investment will have on its overall investment portfolio;

(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes, including where principal or interest is payable in one or more currencies, or where the currency for principal or interest payments is different from the potential investor’s currency; (iv) understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevant financial markets; and (v)

able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

Notes 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 Notes 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 the Notes which is already issued). If the Notes 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 or the Group. If the Notes are trading at a discount, investors may not be able to receive a favourable price for their Notes, and in some circumstances investors may not be able to sell their Notes at all or at their fair market value. Although an application may be made for some Notes issued under the Programme to be listed and quoted on the Official List of the SGX-ST, there is no assurance that such application will be accepted, that any particular Tranche of the Notes will be so listed and quoted 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 Notes issued under the Programme. Accordingly, there is no assurance as to the development or liquidity of any trading market, or that disruptions will not occur, for any particular Tranche of the Notes. If the Guarantor fails to complete the SAFE registration in connection with the Guarantee of each Tranche of the Notes within the time period prescribed by SAFE, there may be logistical hurdles for cross-border payment under the Guarantee of the particular Tranche of the Notes For the benefit of each Tranche of Notes, the Guarantor will enter into a Deed of Guarantee. Pursuant to the Deed of Guarantee, the Guarantor will unconditionally and irrevocably guarantee the due payment of all sums expressed to be payable by the Issuer under the Tranche of Notes and the Trust Deed. The Guarantor is required to submit the relevant Deed of Guarantee and other documents to the Tainan Branch of SAFE for registration in accordance with the Foreign Exchange Administration Rules on Cross-border Security(跨境擔保外滙管理規定)within 15 China Business Days after Issue Date of the relevant Notes. Although the non-registration does not render the Guarantee of the Notes ineffective or

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invalid under PRC law, SAFE may impose penalties on the Guarantor. The Guarantor intends to use it best endeavours to complete the registration of the Deed of Guarantee as soon as practicable and in any event within 90 China Business Days after the Issue Date for each Tranche of Notes. Where he Pricing Supplement for a specific Tranche of Notes so specifies the Issuer and the Guarantor will enter into an Escrow Deed. Pursuant to the Escrow Deed, If, the registration is not completed on or before the relevant Issue Date of the Tranche of the Notes, each of the Issuer and the Guarantor shall procure that the net proceeds from the offering of the relevant Tranche of Notes are deposited into the Escrow Account on the relevant Issue Date, following which they may only be released to the Issuer after the completion of such registration on or before the Registration Deadline subject to the Terms and Conditions of the Notes and the Escrow Deed. Following the occurrence of a Non-Registration Event (as defined in the Conditions), the Issuer shall redeem on the Non-Registration Event Redemption Date (as defined in the Conditions) all, and not some only, of the relevant Tranche of Notes subject to the NonRegistration Event at the relevant Early Redemption Amount (No Registration Event), together with accrued interest up to, but excluding the Non-Registration Event Redemption Date. The obligations of the Guarantor under the Guarantee of the Notes shall, save for such exceptions as may be provided by applicable legislation and subject to Conditions 5(a) of the Terms and Conditions of the Notes at all times rank at least pari passu with all its other present and future unsecured and unsubordinated obligations. Changes in interest rates may have an adverse effect on the price of the Notes The Noteholders may suffer unforeseen losses due to fluctuations in interest rates. Generally, a rise in interest rates may cause a fall in the prices of the Notes, resulting in a capital loss for the Noteholders. However, the Noteholders may reinvest the interest payments at higher prevailing interest rates. Conversely, when interest rates fall, the prices of the Notes may rise. The Noteholders may enjoy a capital gain but interest payments received may be reinvested at lower prevailing interest rates. Exchange rate risks and exchange controls may result in investors receiving less interest or principal than expected The Issuer and the Guarantor will pay principal and interest on the Notes in the currency specified in the relevant Pricing Supplement (the ‘‘Specified Currency’’). This presents certain risks relating to currency conversions if an investor’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 Inventor’s Currency relative to the Specified Currency would decrease (1) the Investor’s Currency equivalent yield on the Notes, (2) the Investor’s Currency equivalent value of the principal payable on the Notes and (3) the Investor’s Currency equivalent market value of the Notes. Government 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, investors may receive less interest or principal than expected, or no interest or principal. Notes subject to optional redemption by the Issuer may have a lower market value than Notes that cannot be redeemed Optional redemption features as contained in the Terms and Conditions of the Notes are likely to limit the market value of Notes. During any period when the Issuer may elect to redeem Notes, the market value of those Notes generally will not rise substantially above the price at which they can be redeemed. This may also be true prior to any redemption period. The Notes are redeemable in the event of certain withholding taxes being applicable.

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The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes 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. The Notes are redeemable in the event of certain withholding taxes being applicable No assurances are made by the Issuer or the Guarantor as to whether or not payments on the Notes may be made without withholding taxes or deductions applying from the date on which agreement is reached to issue the first Tranche of Notes for or on account of any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Hong Kong or the PRC or any political subdivision, territory, possession thereof or authority therein having power to tax (the ‘‘Relevant Jurisdiction’’). Although, pursuant to the Terms and Conditions of the Notes, the Issuer or the Guarantor, as the case may be, is required to gross up payments on account of any such withholding taxes or deductions, the Issuer also has the right to redeem the Notes at any time in the event that it or, as the case may be, the Guarantor has or will become obliged to pay additional tax 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 Hong Kong or (only where such tax or withholding is in excess of 10 per cent.) the PRC or any political subdivision, territory, possession thereof or any authority therein having power to tax as a result of any change in, or amendment to, the laws of a Relevant Jurisdiction or any regulations or rulings promulgated thereunder, or any change in the application or official interpretation of such laws, rulings or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after the date on which agreement is reached to issue the first Tranche of Notes. EU Savings Directive Under EC Council Directive 2003/48/EC on the taxation of savings income (the ‘‘Directive’’), Member States are required to provide to the tax authorities of another Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to (or for the benefit of) an individual resident in that other Member State or to certain limited types of entities established in that other Member State. However, for a transitional period, Austria is instead required (unless during that period it elects otherwise) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). A number of non-EU countries and territories, including Switzerland, have adopted similar measures (a withholding system in the case of Switzerland). On 24 March 2014, the European Council adopted an EU Council Directive amending and broadening the scope of the requirements described above. In particular, the changes expand the range of payments covered by the Directive to include certain additional types of income, and widen the range of recipients payments to whom are covered by the Directive, to include certain other types of entity and legal arrangement. Member States are required to implement national legislation giving effect to these changes by 1 January 2016 (which national legislation must apply from 1 January 2017). If a payment were to be made or collected through a Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that payment, neither the Issuer nor any Paying Agent (as defined in the Terms and Conditions of the Notes) nor any other person would be obliged to pay additional amounts with respect to any Note as a result of the imposition of such withholding tax. The Issuer is required to maintain a Paying Agent in a Member State that is not obliged to withhold or deduct tax pursuant to the Directive.

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U.S. Foreign Account Tax Compliance Withholding may affect payments on the Notes Sections 1471 to 1474 of the U.S. Internal Revenue Code of 1986 (‘‘FATCA’’) impose a new reporting regime and, potentially, a 30 per cent. withholding tax with respect to (i) certain payments from sources within the United States, (ii) ‘‘foreign passthru payments’’ made to certain non-U.S. financial institutions that do not comply with this new reporting regime, and (iii) payments to certain investors that do not provide identification information with respect to interests issued by a participating non-U.S. financial institution. While the Notes are in global form and held within the Clearing Systems, in all but the most remote circumstances, it is not expected that FATCA will affect the amount of any payment received by the Clearing Systems (see ‘‘Taxation – FATCA’’). 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, 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 that each is compliant with FATCA or other laws or agreements related to FATCA) and should 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 advisers to obtain a more detailed explanation of FATCA and how FATCA may affect them. The Issuer’s obligations under the Notes are discharged once it has paid the common depositary or sub-custodian for the Clearing Systems (as bearer or registered holder of the Notes) and the Issuer has therefore no responsibility for any amount thereafter transmitted through the Clearing Systems and custodians or intermediaries. The Notes and the Guarantee of the Notes will be structurally subordinated to the existing and future indebtedness and other liabilities of the Issuer’s and the Guarantor’s existing and future subsidiaries, other than the Issuer, and effectively subordinated to the Issuer’s and the Guarantor’s secured debt to the extent of the value of the collateral securing such indebtedness. The Notes and the Guarantee of the Notes will be structurally subordinated to any debt and other liabilities and commitments, including trade payables and lease obligations, of the Issuer’s and the Guarantor’s existing and future subsidiaries, other than the Issuer, whether or not secured. The Notes will not be guaranteed by any of the Issuer’s and the Guarantor’s subsidiaries, and the Issuer and the Guarantor may not have direct access to the assets of such subsidiaries unless these assets are transferred by dividend or otherwise to the Issuer or the Guarantor. The ability of such subsidiaries to pay dividends or otherwise transfer assets to the Issuer and the Guarantor is subject to various restrictions under applicable law. Each of the Issuer’s and the Guarantor’s subsidiaries are separate legal entities that have no obligation to pay any amounts due under the Notes or Guarantee of the Notes or make any funds available therefor whether by dividends, loans or other payments. The Issuer’s and the Guarantor’s right to receive assets of any of the Issuer’s and the Guarantor’s subsidiaries, respectively, upon that subsidiary’s liquidation or reorganisation will be effectively subordinated to the claim of that subsidiary’s creditors (except to the extent that the Issuer or the Guarantor are creditors of that subsidiary). Consequently, the Notes and the Guarantee of the Notes will be effectively subordinated to all liabilities, including trade payables and lease obligations, of any of the Issuer’s and the Guarantor’s subsidiaries, other than the Issuer, and any subsidiaries that the Guarantor may in the future acquire or establish. The Notes and the Guarantee of the Notes are the Issuer’s and the Guarantor’s unsecured obligations, respectively, and will (i) rank equally in right of payment with all the Issuer’s and the Guarantor’s other present and future unsecured indebtedness; (ii) be effectively subordinated to all of the Issuer’s and the Guarantor’s present and future secured indebtedness to the extent of the value of the collateral securing such obligations; and (iii) be senior to all of the Issuer’s and the Guarantor’s present and future subordinated obligations. As a result, claims of secured lenders, whether senior or junior, with respect to

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assets securing their loans will be prior with respect to those assets. In the event of the Issuer’s or the Guarantor’s bankruptcy, insolvency, liquidation, reorganisation, dissolution or other winding up, or upon any acceleration of the Notes, these assets will be available to pay obligations on the Notes only after all other debt secured by these assets has been repaid in full. Any remaining assets will be available to the Noteholders ratably with all of the Issuer’s or the Guarantor’s other unsecured creditors, including trade creditors. If there are not sufficient assets remaining to pay all these creditors, then all or a portion of the Notes then outstanding would remain unpaid. The insolvency laws of Hong Kong and the PRC and other local insolvency laws may differ from those of another jurisdiction with which the Noteholders are familiar. As the Issuer and the Guarantor are incorporated under the laws of Hong Kong and the PRC, respectively, any insolvency proceeding relating to the Issuer and the Guarantor, even if brought in other jurisdictions, would likely involve Hong Kong and the PRC insolvency laws, the procedural and substantive provisions of which may differ from comparable provisions of the local insolvency laws of jurisdictions with which the Noteholders are familiar. If the Issuer and the Guarantor are unable to comply with the restrictions and covenants in their respective debt agreements, there could be a default under the terms of these agreements, which could cause repayment of their respective debt to be accelerated If the Issuer and the Guarantor are unable to comply with their respective current or future debt obligations and other agreements, there could be a default under the terms of these agreements. In the event of a default under these agreements, the holders of the debt could terminate their commitments to lend to the Issuer and the Guarantor, accelerate repayment of the debt and declare all outstanding amounts due and payable or terminate the agreements, as the case may be. Furthermore, some of the Issuer’s or the Guarantor’s debt agreements contain cross-acceleration or cross-default provisions. As a result, the Issuer’s or the Guarantor’s default under one debt agreement may cause the acceleration of repayment of not only such debt but also other debt, including the Notes, or result in a default under the Issuer’s or the Guarantor’s other debt agreements. If any of these events occur, the Issuer and the Guarantor cannot assure Noteholders that their respective assets and cash flows would be sufficient to repay in full all of their respective indebtedness, or that the Issuer and the Guarantor would be able to find alternative financing. Even if they could obtain alternative financing, they cannot assure holders that it would be on terms that are favourable or acceptable to them. The Notes may be represented by Global Notes and holders of a beneficial interest in a Global Note must rely on the procedures of the relevant Clearing System(s) Notes issued under the Programme may be represented by one or more Global Notes or Global Certificates. Such Global Notes and Global Certificates will be deposited with CDP, a sub-custodian for the CMU or a common depositary for Euroclear and Clearstream, Luxembourg (each of CDP, CMU, Euroclear and Clearstream, Luxembourg being a ‘‘Clearing System’’). Except in the circumstances described in the relevant Global Note or Global Certificate, investors will not be entitled to receive Definitive Notes or Individual Note Certificates. The relevant Clearing System(s) will maintain records of their direct account holders in relation to the Global Notes and Global Certificates. While the Notes are represented by one or more Global Notes or Global Certificates, investors will be able to trade their beneficial interests only through the relevant Clearing System(s) and their participants. While the Notes are represented by one or more Global Notes or Global Certificates, the Issuer or, as the case may be, the Guarantor, will discharge its payment obligations under the Notes by making payments through the relevant Clearing System(s) for distribution to their account holders, or, in the case of the CMU, to the persons for whose account(s) interests in such Global Notes or Global Certificates are credited as being held in the CMU in accordance with the CMU rules and procedures as notified by the CMU to the CMU Lodging and Paying Agent in a relevant CMU Instrument Position Report or any other notification by the CMU.

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A holder of a beneficial interest in a Global Note or Global Note Certificate must rely on the procedures of the relevant Clearing System(s) to receive payments under the relevant Notes. The Issuer, the Guarantor and/or the Agents do not have any responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Notes or Global Note Certificates. Bearer Notes where denominations involve integral multiples: definitive Bearer Notes In relation to any issue of Bearer Notes which have denominations consisting of a minimum Specified Denomination plus one or more higher integral multiples of another smaller amount, it is possible that such Notes may be traded in amounts that are not integral multiples of such minimum Specified Denomination. In such a case a holder who, as a result of trading such amounts, holds an amount which is less than the minimum Specified Denomination in his account with the relevant clearing system would not be able to sell the remainder of such holding without first purchasing a principal amount of Bearer Notes at or in excess of the minimum Specified Denomination such that its holding amounts to a Specified Denomination. Further, a holder who, as a result of trading such amounts, holds an amount which is less than the minimum Specified Denomination in his account with the relevant clearing system at the relevant time may not receive a definitive Bearer Note in respect of such holding (should such Notes be printed) and would need to purchase a principal amount of the Notes at or in excess of the minimum Specified Denomination such that its holding amounts to a Specified Denomination. If definitive Bearer Notes are issued, holders should be aware that definitive Notes which have a denomination that is not an integral multiple of the minimum Specified Denomination may be illiquid and difficult to trade. The Trustee may request Noteholders to provide an indemnity, security and/or pre-funding to its satisfaction In certain circumstances, including, without limitation, giving notice to the Issuer pursuant to Condition 14 of the Terms and Conditions and taking enforcement steps pursuant to Condition 19 of the Terms and Conditions of the Notes, the Trustee may, at its sole discretion, request Noteholders to provide an indemnity, security and/or pre-funding to its satisfaction before it takes actions on behalf of Noteholders. The Trustee shall not be obliged to take any such actions if not indemnified, secured and/ or pre-funded to its satisfaction. Negotiating and agreeing to an indemnity, security and/or pre-funding can be a lengthy process and may impact on when such actions can be taken. The Trustee may not be able to take actions, notwithstanding the provision of an indemnity, security and/or pre-funding to it, in breach of the terms of the Trust Deed or the Terms and Conditions of the Notes and in circumstances where there is uncertainty or dispute as to the applicable laws or regulations and, to the extent permitted by the agreements and the applicable law, it will be for the Noteholders to take such actions directly. Decisions that may be made on behalf of all Noteholders may be adverse to the interests of individual Noteholders The Terms and Conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including holders who did not attend and vote at the relevant meeting and holders who voted in a manner contrary to the majority. Furthermore, there is a risk that the decision of the majority of Noteholders may be adverse to the interests of the individuals. Modification and waivers The Terms and Conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority.

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The Terms and Conditions of the Notes also provide that the Trustee may, without the consent of the Noteholders, agree to any modification of the Terms and Conditions of the Notes, any Deed of Guarantee or the Trust Deed (other than in respect of a Reserved Matter (as defined therein)) which is, in the opinion of the Trustee, proper to make if, in the opinion of the Trustee, such modification will not be materially prejudicial to the interests of Noteholders and to any modification of the Notes, any Deed of Guarantee or the Trust Deed which is of a formal, minor or technical nature or is to correct a manifest error. In addition, the Trustee may without the consent of the Noteholders or Couponholders authorise or waive any proposed breach or breach of the Notes, any Deed of Guarantee or the Trust Deed (other than a proposed breach or breach relating to the subject of a Reserved Matter) if, in the opinion of the Trustee, the interests of the Noteholders will not be materially prejudiced thereby. Considerations related to a particular issue of the Notes A wide range of the Notes may be issued under the Programme. A number of these Notes may have features which contain particular risks for potential investors. Set out below is a description of certain such features: Index Linked Notes and Dual Currency Notes The Issuer may issue Notes with principal or interest determined by reference to an index or formula, to changes in the prices of securities or commodities, to movements in currency exchange rates or other factors (each, a ‘‘Relevant Factor’’). In addition, the Issuer may issue Notes with principal or interest payable in one or more currencies which may be different from the currency in which the Notes are denominated. Potential investors should be aware that: (i)

the market price of such Notes may be volatile;

(ii)

they may receive no interest;

(iii) the payment of principal or interest may occur at a different time or in a different currency than expected; (iv) the amount of principal payable at redemption may be less than the nominal amount of such Notes or even zero; (v)

a Relevant Factor may be subject to significant fluctuations that may not correlate with changes in interest rates, currencies or other indices;

(vi) if a Relevant Factor is applied to Notes in conjunction with a multiplier greater than one or contains some other leverage factor, the effect of changes in the Relevant Factor on principal or interest payable will likely be magnified; and (vii) the timing of changes in a Relevant Factor may affect the actual yield to investors, even if the average level is consistent with their expectations. In general, the earlier the change in the Relevant Factor, the greater the effect on yield. Partly-paid Notes The Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay any subsequent instalment could result in an investor losing all of its investment.

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Variable rate Notes with a multiplier or other leverage factor Notes with variable interest rates can be volatile investments. 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 those features. Inverse Floating Rate Notes Inverse Floating Rate Notes 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 Notes are typically 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 Notes are more volatile because an increase in the reference rate not only decreases the interest rate of the Notes, but may also reflect an increase in prevailing interest rates, which further adversely affects the market value of these Notes. Fixed/Floating Rate Notes Fixed/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. The Issuer’s ability to convert the interest rate will affect the secondary market and the market value of such Notes 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/Floating Rate Notes may be less favourable than then prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating rate at any time may be lower than the rates on other Notes. If the Issuer converts from a floating rate to a fixed rate, the fixed rate may be lower than then prevailing rates on its Notes. RISKS RELATING TO RENMINBI DENOMINATED NOTES A description of risks which may be relevant to an investor in Notes denominated in Renminbi (‘‘Renminbi Notes’’) is set out below. Renminbi is not freely convertible and there are significant restrictions on the remittance of Renminbi into and out of the PRC which may adversely affect the liquidity of Renminbi Notes Renminbi is not freely convertible at present. The government of the PRC (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 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 the 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 developing gradually. On 7 April 2011, SAFE promulgated the ‘‘Circular on Issues Concerning the Capital Account Items in connection with Cross-Border Renminbi’’ (the ‘‘SAFE Circular’’), which became effective on 1 May 2011. According to the SAFE Circular, in the event that foreign investors intend to use Renminbi (including offshore Renminbi and onshore Renminbi held in the capital accounts of non-PRC residents) to make contribution to an onshore enterprise or make payment for the transfer of equity interest of an onshore enterprise by a PRC resident, such onshore enterprise shall be required to submit the prior written consent of the relevant Ministry of Commerce (‘‘MOFCOM’’) to the relevant local branch of SAFE of such onshore enterprise and register for a foreign invested enterprise status. Further, the SAFE

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Circular clarifies that the foreign debts borrowed, and the foreign guarantee provided, by an onshore entity (including a financial institution) in Renminbi shall, in principle, be regulated under the current PRC foreign debt and foreign guarantee regime. In respect of Renminbi foreign direct investments (‘‘FDI’’), PBOC promulgated the Administrative Measures on Renminbi Settlement of Foreign Direct Investment (the ‘‘PBOC FDI Measures’’) on 13 October 2011 as part of PBOC’s detailed Renminbi FDI accounts administration system. The system covers almost all aspects in relation to FDI, including capital injections, payments for the acquisition of PRC domestic enterprises, repatriation of dividends and other distributions, as well as Renminbi denominated cross-border loans. On 14 June 2012, PBOC issued a circular setting out the operational guidelines for FDI. PBOC further issued the Circular on the Relevant Issues on Renminbi Settlement of Investment in Onshore Financial Institutions by Foreign Investors on 10 October 2013, which provides further details for using Renminbi to invest in a financial institution domiciled in the PRC. Under the PBOC FDI Measures, special approval for FDI and shareholder loans from PBOC, which was previously required, is no longer necessary. In some cases, however, post-event filing with PBOC is still necessary. On 3 December 2013, MOFCOM promulgated the Circular on Issues in relation to Cross-border Renminbi Foreign Direct Investment (the ‘‘MOFCOM Circular’’), which became effective on 1 January 2014, to further facilitate FDI by simplifying and streamlining the applicable regulatory framework. Pursuant to the MOFCOM Circular, the appropriate office of MOFCOM and/or its local counterparts will grant written approval for each FDI and specify ‘‘Renminbi Foreign Direct Investment’’ and the amount of capital contribution in the approval. Unlike previous MOFCOM regulations on FDI, the MOFCOM Circular removes the approval requirement for foreign investors who intend to change the currency of its existing capital contribution from a foreign currency to Renminbi. In addition, the MOFCOM Circular also clearly prohibits the FDI funds from being used for any investment in securities and financial derivatives (except for investment in the PRC listed companies as strategic investors) or for entrustment loans in the PRC. As the SAFE Circular, the PBOC FDI Measures and the MOFCOM Circular are relatively new circulars, they will be subject to interpretation and application by the relevant authorities in the PRC. There is no assurance that the PRC government will continue gradually to liberalise control over cross-border remittance of Renminbi in the future, that the 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 out of the PRC. In the event that funds cannot be repatriated out of the PRC in Renminbi, this may affect the overall availability of Renminbi outside the PRC and the ability of the Issuer to source Renminbi to finance its obligations under Notes denominated in Renminbi. There is only limited availability of Renminbi outside the PRC, which may affect the liquidity of the Renminbi Notes and the Issuer’s ability to source Renminbi outside the PRC to service Renminbi Notes 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 is limited. There are restrictions imposed by PBOC on Renminbi business participating banks in respect of crossborder 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 for the purpose of squaring open positions of participating banks for limited types of transactions and are not

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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 outside the PRC 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 is 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 Notes. To the extent that the Issuer or the Guarantor is required to source Renminbi in the offshore market to service its Renminbi Notes, there is no assurance that the Issuer and the Guarantor will be able to source such Renminbi on satisfactory terms, if at all. Investment in the Renminbi Notes is subject to exchange rate risks The value of Renminbi against other foreign currencies fluctuates from time to time and is affected by changes in the PRC and international political and economic conditions as well as many other factors. The Issuer will make all payments of interest and principal with respect to the Renminbi Notes in Renminbi unless otherwise specified. As a result, the value of these Renminbi payments may vary with the changes in the prevailing exchange rates in the marketplace. If the value of Renminbi depreciates against another foreign currency, the value of the investment made by a holder of the Renminbi Notes in that foreign currency will decline. Payments with respect to the Renminbi Notes may be made only in the manner designated in the terms and conditions of the Renminbi Notes All Renminbi payments to investors in respect of the RMB Notes will be made solely (i) for so long as the RMB Notes are represented by Global Notes held with a common depositary for Euroclear and Clearstream, Luxembourg, the CDP or a sub-custodian of the or CMU service or any alternative clearing system, by transfer to a Renminbi bank account maintained in the Renminbi Financial Centre specified in the applicable Pricing Supplement in accordance with prevailing Euroclear and Clearstream, Luxembourg, CDP and CMU rules and procedures, or (ii) when the RMB Notes are in definitive form, by transfer to a Renminbi bank account maintained in the Renminbi Financial Centre specified in the applicable Pricing Supplement in accordance with prevailing rules and regulations. The Issuer cannot 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 in Renminbi into or out of the PRC 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 is 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, that they will not be revoked or amended in the future. There is no assurance that the PRC government will continue gradually to 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 out of the PRC in Renminbi, it will need to source Renminbi outside the PRC to finance its obligations under the Renminbi Notes, and its ability to do so will be subject to the overall availability of Renminbi outside the PRC.

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The Issuer may be deemed to be a PRC tax resident enterprise by the PRC tax authorities and certain withholding taxes may be applicable The Issuer is incorporated under the laws of Hong Kong. Pursuant to the New Enterprise Income Tax Law and its implementation regulations, enterprises that are established under laws of foreign countries and regions (including Hong Kong, Macau and Taiwan) but whose ‘‘de facto management bodies’’ are within the territory of China will be deemed as PRC tax resident enterprises for the purpose of the New Enterprise Income Tax Law and must pay enterprise income tax at the rate of 25% in respect of their income sourced from both within and outside China. The ‘‘de facto management body’’ is defined as the organisational body that effectively exercises overall management and control over production and business operations, personnel, finance and accounting, and properties of the enterprise. It remains unclear how the PRC tax authorities will interpret such a broad definition. If relevant PRC tax authorities decide, in accordance with applicable tax rules and regulations, that the ‘‘de facto management body’’ of the Issuer is within the territory of PRC, the Issuer may be deemed as a PRC tax resident enterprise for the purpose of the New Enterprise Income Tax Law and be subject to PRC enterprise income tax at the rate of 25% in respect of its income sourced from both within and outside PRC.

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TERMS AND CONDITIONS OF THE NOTES The following is the text of the terms and conditions which, as completed by the relevant Pricing Supplement, will be endorsed on each Note in definitive form issued under the Programme. The Pricing Supplement in respect of any Tranche of Notes may supplement, amend and/or replace any information in this Offering Circular. The terms and conditions applicable to any Note in global form will differ from those terms and conditions which would apply to the Note were it in definitive form to the extent described under ‘‘Form of the Notes – Summary of Provisions Relating to the Notes while in Global Form’’ below. 1.

Introduction (a)

Programme: HNA Group (International) Company Limited(海航集團 (國際)有限公司)(the ‘‘Issuer’’) has established a Medium Term Note Programme (the ‘‘Programme’’) for the issuance of up to U.S.$1,000,000,000 in aggregate principal amount of notes (the ‘‘Notes’’) unconditionally and irrevocably guaranteed by HNA Group Co., Limited(海航集團有限公 司)(the ‘‘Guarantor’’).

(b)

Pricing Supplement: Notes issued under the Programme are issued in series (each a ‘‘Series’’) and each Series may comprise one or more tranches (each a ‘‘Tranche’’) of Notes. Each Tranche is the subject of a pricing supplement (the ‘‘Pricing Supplement’’) which supplements these terms and conditions (the ‘‘Conditions’’). The terms and conditions applicable to any particular Tranche of Notes are these Conditions as supplemented, amended and/or replaced by the relevant Pricing Supplement. In the event of any inconsistency between these Conditions and the relevant Pricing Supplement, the relevant Pricing Supplement shall prevail.

(c)

Trust Deed: The Notes are constituted by, are subject to, and have the benefit of, a trust deed dated 17 March 2015 (as amended, restated and/or supplemented from time to time, the ‘‘Trust Deed’’) between the Issuer, the Guarantor and The Bank of New York Mellon, London Branch as trustee (the ‘‘Trustee’’, which expression includes all persons for the time being trustee or trustees appointed under the Trust Deed).

(d)

Deed of Guarantee: Each Tranche of Notes will have the benefit of a deed of guarantee dated on or about the relevant Issue Date (as amended, restated and/or supplemented from time to time, the ‘‘Deed of Guarantee’’) entered into between the Issuer, the Guarantor and the Trustee.

(e)

CDP Deed of Covenant: In the case of Notes cleared through the CDP (as defined below), the Noteholders are entitled to the benefit of a deed of covenant dated 17 March 2015 (as amended, restated and/or supplemented from time to time, the ‘‘CDP Deed of Covenant’’) executed by the Issuer for the benefit of the Relevant Account Holders (as defined therein) from time to time and for the time being. The Issuer has submitted and the CDP has accepted an application form signed by the Issuer on 17 March 2015 together with the terms and conditions for the provision of depositary services by the CDP referred to therein.

(f)

Agency Agreement: The Notes are the subject of an issue and paying agency agreement dated 17 March 2015 (as amended, restated and/or supplemented from time to time, the ‘‘Agency Agreement’’) between the Issuer, the Guarantor, The Bank of New York Mellon, London Branch as issuing and paying agent (the ‘‘Issuing and Paying Agent’’, which expression includes any successor issuing and paying agent appointed from time to time in connection with the Notes), The Bank of New York Mellon, Hong Kong Branch as CMU lodging and paying agent (the ‘‘CMU Lodging and Paying Agent’’, which expression includes any successor CMU lodging and paying agent appointed from time to time in connection with the

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Notes), The Bank of New York Mellon, Singapore Branch as CDP paying agent (the ‘‘CDP Paying Agent’’, which expression includes any successor CDP paying agent appointed from time to time in connection with the Notes), the paying agents named therein (collectively, the ‘‘Paying Agents’’, which expression includes any successor or additional paying agents appointed from time to time in connection with the Notes), The Bank of New York Mellon (Luxembourg) S.A. as registrar for Notes to be held in Euroclear and/or Clearstream, Luxembourg (each as defined below) (the ‘‘Principal Registrar’’, which expression includes any successor registrar appointed from time to time in connection with such Notes), The Bank of New York Mellon, Hong Kong Branch as registrar for Notes to be held in the CMU Service (as defined below) (the ‘‘CMU Registrar’’, which expression includes any successor registrar appointed from time to time in connection with such Notes), The Bank of New York Mellon, Singapore Branch as registrar for Notes to be held in the CDP (the ‘‘CDP Registrar’’, which expression includes any successor registrar appointed from time to time in connection with such Notes) (collectively, the ‘‘Registrars’’ and each, a ‘‘Registrar’’), the transfer agents named therein (together with the Registrars, the ‘‘Transfer Agents’’, which expression includes any successor or additional transfer agents appointed from time to time in connection with the Notes) and the Trustee. In these Conditions references to the ‘‘Agents’’ are to the Paying Agents and the Transfer Agents and any reference to an ‘‘Agent’’ is to any one of them. For the purposes of these Conditions, all references (other than in relation to the determination of interest and other amounts payable in respect of the Notes) to the Issuing and Paying Agent shall, with respect to a Series of Notes to be held in the CMU Service, be deemed to be a reference to the CMU Lodging and Paying Agent, and all such references shall be construed accordingly, and, with respect to a Series of Notes to be held in the CDP, be deemed to be a reference to the CDP Paying Agent, and all such references shall be construed accordingly. (g)

Escrow Deed: The Issuer, the Guarantor, the Trustee and The Bank of New York Mellon, London Branch as escrow agent (the ‘‘Escrow Agent’’) will, as applicable, enter into an escrow deed prior to the relevant Issue Date (as amended, restated and/or supplemented from time to time, the ‘‘Escrow Deed’’) for the deposit of the Net Proceeds (as defined below) of each Tranche of Notes in an Escrow Account (as defined below) (each, an ‘‘Escrow Arrangement’’).

(h)

The Notes: The Notes may be issued in bearer form (‘‘Bearer Notes’’), or in registered form (‘‘Registered Notes’’). All subsequent references in these Conditions to ‘‘Notes’’ are to the Notes which are the subject of the relevant Pricing Supplement. Copies of the relevant Pricing Supplement are available for inspection by Noteholders during normal business hours at the Specified Offices of each of the Agents, the initial Specified Offices of which are set out below.

(i)

Summaries: Certain provisions of these Conditions are summaries of the Trust Deed, the relevant Escrow Deed, the relevant Deed of Guarantee to be entered into for a Tranche of Notes, the CDP Deed of Covenant and the Agency Agreement and are subject to their detailed provisions. Noteholders (as defined below) and the holders of the related interest coupons, if any, (the ‘‘Couponholders’’ and the ‘‘Coupons’’, respectively) are bound by, and are deemed to have notice of, all the provisions of the Trust Deed, the relevant Deed of Guarantee, the CDP Deed of Covenant and the Agency Agreement applicable to them. Copies of the Trust Deed, the relevant Deed of Guarantee, the CDP Deed of Covenant, the relevant Escrow Deed and the Agency Agreement are available for inspection by Noteholders during normal business hours with reasonable prior notification at the Specified Offices of each of the Agents, the initial Specified Offices of which are set out below.

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2.

Interpretation (a)

Definitions: In these Conditions the following expressions have the following meanings:

‘‘Accrual Yield’’ has the meaning given in the relevant Pricing Supplement; ‘‘Additional Business Centre(s)’’ means the city or cities specified as such in the relevant Pricing Supplement; ‘‘Additional Financial Centre(s)’’ means the city or cities specified as such in the relevant Pricing Supplement; ‘‘Additional Tax Amounts’’ has the meaning given in Condition 13(c) (Taxation – Additional Tax Amounts); ‘‘Business Day’’ means: (a)

in relation to any sum payable in euro, a TARGET Settlement Day and a day on which commercial banks and foreign exchange markets settle payments generally in each (if any) Additional Business Centre;

(b)

in relation to any sum payable in Singapore dollars, a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments generally in Singapore;

(c)

in relation to any sum payable in Renminbi, any day (other than a Sunday or a Saturday) on which commercial banks and foreign exchange markets are open for business and settle Renminbi payments in Hong Kong and are not authorised or obligated by law or executive order to be closed; or

(d)

in relation to any sum payable in a currency other than euro, Singapore dollars and Renminbi, a day (other than a Sunday or a Saturday) on which commercial banks and foreign exchange markets settle payments generally in the Principal Financial Centre of the relevant currency and in each (if any) Additional Business Centre;

‘‘Business Day Convention’’, in relation to any particular date, has the meaning given in the relevant Pricing Supplement and, if so specified in the relevant Pricing Supplement, may have different meanings in relation to different dates and, in this context, the following expressions shall have the following meanings: (a)

‘‘Following Business Day Convention’’ means that the relevant date shall be postponed to the first following day that is a Business Day;

(b)

‘‘Modified Following Business Day Convention’’ or ‘‘Modified Business Day Convention’’ means that the relevant date shall be postponed to the first following day that is a Business Day unless that day falls in the next calendar month in which case that date will be the first preceding day that is a Business Day;

(c)

‘‘Preceding Business Day Convention’’ means that the relevant date shall be brought forward to the first preceding day that is a Business Day;

(d)

‘‘FRN Convention’’, ‘‘Floating Rate Convention’’ or ‘‘Eurodollar Convention’’ means that each relevant date shall be the date which numerically corresponds to the preceding such date in the calendar month which is the number of months specified in the relevant Pricing Supplement as the Specified Period after the calendar month in which the preceding such date occurred provided, however, that:

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(i)

if there is no such numerically corresponding day in the calendar month in which any such date should occur, then such date will be the last day which is a Business Day in that calendar month;

(ii)

if any such date would otherwise fall on a day which is not a Business Day, then such date will be the first following day which is a Business Day unless that day falls in the next calendar month, in which case it will be the first preceding day which is a Business Day; and

(iii) if the preceding such date occurred on the last day in a calendar month which was a Business Day, then all subsequent such dates will be the last day which is a Business Day in the calendar month which is the specified number of months after the calendar month in which the preceding such date occurred; and (e)

‘‘No Adjustment’’ means that the relevant date shall not be adjusted in accordance with any Business Day Convention;

‘‘Calculation Agent’’ means the Issuing and Paying Agent as appointed by the Issuer in respect of a Series of Notes pursuant to the terms of the Agency Agreement or such other Person specified in the relevant Pricing Supplement as the party responsible for calculating the Rate(s) of Interest and Interest Amount(s) and/or such other amount(s) as may be specified in the relevant Pricing Supplement; ‘‘Calculation Amount’’ has the meaning given in the relevant Pricing Supplement; ‘‘CDP’’ means The Central Depository (Pte) Limited; a ‘‘Change of Control’’ occurs when any Person or Persons acting together acquires Control of the Guarantor or the Issuer provided that such Person or Persons does not or do not have, and would not be deemed to have, Control of the Guarantor or the Issuer, as the case may be, on 17 March 2015; ‘‘China Business Days’’ means a day (other than a Saturday, Sunday or a public holiday) on which banks in Beijing, the PRC are not authorised or obligated by law or executive order to be closed; ‘‘Clearstream, Luxembourg’’ means Clearstream Banking, société anonyme; ‘‘CMU Service’’ means the Central Moneymarkets Unit Service, operated by the Hong Kong Monetary Authority; ‘‘Control’’, in relation to the definition of ‘‘Change of Control’’, means: (a)

the acquisition or control of more than 50% of the voting rights of the issued share capital of the Guarantor or the Issuer, as the case may be; or

(b)

the right to appoint and/or remove all or the majority of the members of the board of directors or other governing body of the Guarantor or the Issuer, as the case may be, whether obtained directly or indirectly, and whether obtained by ownership of share capital, the possession of voting rights, contract or otherwise,

and the terms ‘‘Controlling’’ and ‘‘Controlled’’ shall have meanings correlative to the foregoing; ‘‘Consolidated Equity’’ means, at any time, the total owner’s equity of the Group measured in accordance with PRC Accounting Standards;

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‘‘Consolidated Total Assets’’ means, at any time, the total consolidated assets of the Group measured in accordance with PRC Accounting Standards; ‘‘Consolidated Total Debt’’ means, at any time, the aggregate amount of all obligations of the Group for or in respect of Financial Indebtedness but excluding any such obligations to any other member of the Group; ‘‘Coupon Sheet’’ means, in respect of a Note, a coupon sheet relating to the Note; ‘‘Day Count Fraction’’ means, in respect of the calculation of an amount for any period of time (the ‘‘Calculation Period’’), such day count fraction as may be specified in these Conditions or the relevant Pricing Supplement and: (a)

if ‘‘Actual/Actual (ICMA)’’ is so specified, means: (i)

where the Calculation Period is equal to or shorter than the Regular Period during which it falls, the actual number of days in the Calculation Period divided by the product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year; and

(ii)

where the Calculation Period is longer than one Regular Period, the sum of: (A) the actual number of days in such Calculation Period falling in the Regular Period in which it begins divided by the product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year; and (B)

the actual number of days in such Calculation Period falling in the next Regular Period divided by the product of (a) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year;

(b)

if ‘‘Actual/Actual (ISDA)’’ is so specified, means the actual number of days in the Calculation Period divided by 365 (or, if any portion of the 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);

(c)

if ‘‘Actual/365 (Fixed)’’ is so specified, means the actual number of days in the Calculation Period divided by 365;

(d)

if ‘‘Actual/360’’ is so specified, means the actual number of days in the Calculation Period divided by 360;

(e)

if ‘‘30/360’’ is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows Day Count Fraction

=

[360x(Y 2 – Y 1)] + [30x(M 2 – M 1)] + (D2 – D 1) 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;

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‘‘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 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 ‘‘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 and D1 is greater than 29, in which case D2 will be 30’’; (f)

if ‘‘30E/360’’ or ‘‘Eurobond Basis’’ is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows: Day Count Fraction

=

[360x(Y 2 – Y 1)] + [30x(M 2 – M 1)] + (D2 – D 1) 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 ‘‘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; and (g)

if ‘‘30E/360 (ISDA)’’ is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows: Day Count Fraction

=

[360x(Y 2 – Y 1)] + [30x(M 2 – M 1)] + (D2 – D 1) 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;

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‘‘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, provided, however, that in each such case the number of days in the Calculation Period is calculated from and including the first day of the Calculation Period to but excluding the last day of the Calculation Period; ‘‘Early Redemption Amount (Change of Control)’’ means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Pricing Supplement; ‘‘Early Redemption Amount (No Registration Event)’’ means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Pricing Supplement; ‘‘Early Redemption Amount (Tax)’’ means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Pricing Supplement; ‘‘Early Termination Amount’’ means, in respect of any Note, its principal amount or such other amount as may be specified in these Conditions or the relevant Pricing Supplement; ‘‘Escrow Account’’ means a non-interest bearing account maintained by the Issuer with the Escrow Agent and subject to the terms of the relevant Escrow Deed; ‘‘Escrow Fund’’ means any amount standing to the credit of the relevant Escrow Account and any income or interest earned thereon from time to time; ‘‘Euroclear’’ means Euroclear Bank S.A./N.V.; ‘‘Extraordinary Resolution’’ has the meaning given in the Trust Deed; ‘‘Final Redemption Amount’’ means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Pricing Supplement; ‘‘Financial Indebtedness’’ means, at any time, the outstanding principal, capital or nominal amount and any fixed or minimum premium payable on repayment or redemption of any indebtedness for or in respect of: (a)

moneys borrowed and debit balances with financial institutions;

(b)

any amount raised by acceptance under any acceptance credit facility;

(c)

any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

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(d)

the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with PRC Accounting Standards, be treated as a finance or capital lease;

(e)

receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

(f)

any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution (excluding any given in respect of trade credit arising in the ordinary course of business);

(g)

any amount of any liability under an advance or deferred purchase agreement if one of the primary reasons behind the entry into this agreement is to raise finance;

(h)

any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing; and

(i)

(without double counting) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (h) above;

provided so that no amount shall be included or excluded more than once; ‘‘First Interest Payment Date’’ means the date specified in the relevant Pricing Supplement; ‘‘Fixed Coupon Amount’’ has the meaning given in the relevant Pricing Supplement; ‘‘Group’’ means the Guarantor and its Subsidiaries, taken as a whole; ‘‘Guarantee’’ means, in relation to any Indebtedness of any Person, any obligation of another Person to pay such Indebtedness including (without limitation): (a)

any obligation to purchase such Indebtedness;

(b)

any obligation to lend money, to purchase or subscribe shares or other securities or to purchase assets or services in order to provide funds for the payment of such Indebtedness;

(c)

any indemnity against the consequences of a default in the payment of such Indebtedness; and

(d)

any other agreement to be responsible for such Indebtedness;

‘‘Guarantee of the Notes’’ means the guarantee of the Notes given by the Guarantor in the relevant Deed of Guarantee; ‘‘Holder’’, in the case of Bearer Notes, has the meaning given in Condition 3(b) (Form, Denomination, Title and Transfer – Title to Bearer Notes) and, in the case of Registered Notes, has the meaning given in Condition 3(d) (Form, Denomination, Title and Transfer – Title to Registered Notes); ‘‘Hong Kong’’ means the Hong Kong Special Administrative Region of the PRC; ‘‘Indebtedness’’ means any indebtedness of any Person for money borrowed or raised including (without limitation) any indebtedness for or in respect of: (a)

amounts raised by acceptance under any acceptance credit facility;

(b)

amounts raised under any note purchase facility;

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(c)

the amount of any liability in respect of leases or hire purchase contracts which would, in accordance with applicable law and generally accepted accounting principles, be treated as finance or capital leases;

(d)

the amount of any liability in respect of any purchase price for assets or services the payment of which is deferred for a period in excess of 60 days; and

(e)

amounts raised under any other transaction (including, without limitation, any forward sale or purchase agreement) having the commercial effect of a borrowing;

‘‘Interest Amount’’ means, in relation to a Note and an Interest Period, the amount of interest payable in respect of that Note for that Interest Period; ‘‘Interest Commencement Date’’ means the Issue Date of the Notes or such other date as may be specified as the Interest Commencement Date in the relevant Pricing Supplement; ‘‘Interest Determination Date’’ has the meaning given in the relevant Pricing Supplement; ‘‘Interest Payment Date’’ means the First Interest Payment Date and any other date or dates specified as such in, or determined in accordance with the provisions of, the relevant Pricing Supplement and, if a Business Day Convention is specified in the relevant Pricing Supplement: (a)

as the same may be adjusted in accordance with the relevant Business Day Convention; or

(b)

if the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention and an interval of a number of calendar months is specified in the relevant Pricing Supplement as being the Specified Period, each of such dates as may occur in accordance with the FRN Convention, Floating Rate Convention or Eurodollar Convention at such Specified Period of calendar months following the Interest Commencement Date (in the case of the first Interest Payment Date) or the previous Interest Payment Date (in any other case);

‘‘Interest Period’’ means each period beginning on (and including) the Interest Commencement Date or any Interest Payment Date and ending on (but excluding) the next Interest Payment Date; ‘‘ISDA Definitions’’ means the 2006 ISDA Definitions (as amended and updated as at the date of issue of the first Tranche of the Notes of the relevant Series (as specified in the relevant Pricing Supplement) as published by the International Swaps and Derivatives Association, Inc.); ‘‘Issue Date’’ has the meaning given in the relevant Pricing Supplement; ‘‘Listed Subsidiary’’ means any Subsidiary, the shares of which are at the relevant time listed on The Stock Exchange of Hong Kong Limited or any other stock exchange; ‘‘Margin’’ has the meaning given in the relevant Pricing Supplement; ‘‘Material Subsidiaries’’ mean, at any time, each Subsidiary of the Guarantor: (a)

whose gross revenues attributable to the Guarantor (consolidated in the case of a Subsidiary which itself has Subsidiaries), as shown by its latest audited income statement are at least five per cent. of the consolidated gross revenues as shown by the latest published audited income statement of the Guarantor and its Subsidiaries include, for the avoidance of doubt, the Guarantor and its Consolidated Subsidiaries’ share of profits of Subsidiaries not consolidated and of associated entities and after adjustments for minority interests;

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(b)

whose profits before taxation and exceptional items attributable to the Guarantor (‘‘pre-tax profit’’) (consolidated in the case of a Subsidiary which itself has Subsidiaries), as shown by its latest audited income statement, are at least five per cent. of the consolidated pre-tax profit as shown by the latest published audited 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 associated entities and after adjustments for minority interests; or

(c)

whose gross assets or (in the case of a Subsidiary of the Guarantor which has subsidiaries and which customarily prepares consolidated accounts) gross consolidated assets attributable to the Guarantor as shown by its latest balance sheet are at least five per cent. or the sum of (x) the gross consolidated assets of the Guarantor and its Subsidiaries as shown by the latest published audited consolidated balance sheet of the Guarantor and its Subsidiaries, and (y) the Guarantor and its consolidated Subsidiaries’ share of the gross assets (consolidated in the case of a Subsidiary of the Guarantor which itself has Subsidiaries and which customarily prepares consolidated accounts) (as shown by its latest balance sheet (consolidated, if available)) of each Subsidiary of the Guarantor whose accounts are not consolidated with the accounts of the Guarantor and after adjustment for minority interests, 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 of the Guarantor after the 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 of the Guarantor are published, be deemed to be a reference to the then latest consolidated audited accounts of the Guarantor adjusted to consolidate the latest accounts (consolidated in the case of a Subsidiary of the Guarantor which itself has Subsidiaries and which customarily prepares consolidated accounts) of such Subsidiary in such accounts;

(ii)

if the accounts of any Subsidiary of the Guarantor (not being a Subsidiary of the Guarantor referred to in proviso (i) above of this definition) are not consolidated with those of the Guarantor, then the determination of whether or not such subsidiary is a Material Subsidiary shall be based on a pro forma consolidation of its accounts (consolidated, if available) with the consolidated accounts (determined on the basis of the foregoing) of the Guarantor; and

(iii) in relation to any Subsidiary of the Guarantor, each reference in (i) or (ii) above to all or any of the accounts (consolidated or otherwise) of such Subsidiary shall be deemed to be a reference to the relevant audited accounts of such Subsidiary if it customarily prepares accounts which are audited and, if not, to the relevant unaudited accounts of such Subsidiary which shall be certified by any two directors of such Subsidiary as having been properly prepared in accordance with generally accepted accounting principles applicable to such Subsidiary; or (d)

to which is transferred the whole or substantially the whole of the assets of another Subsidiary of the Guarantor which, immediately prior to such transfer, was a Material Subsidiary, provided that the Material Subsidiary which so transfers its assets shall forthwith upon such transfer cease to be a Material Subsidiary and the Subsidiary to which the assets are so transferred shall cease to become a Material Subsidiary at the date on which the first published audited consolidated accounts of the Guarantor prepared as of a date later than

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such transfer are issued unless such Subsidiary would continue to be a Material Subsidiary on the basis of such accounts by virtue of the provisions of paragraphs (a), (b) and (c) above of this definition, and a certificate signed by any two directors or duly authorised officers of the Guarantor, in their opinion, a Subsidiary is or is not, or was or was not, a Material Subsidiary shall, in the absence of manifest error, be conclusive and binding on all parties. The certificate shall, if there is a dispute as to whether an entity is or is not a Material Subsidiary and if the Guarantor is able to procure the same by the use of its reasonable endeavours, be accompanied by a report by an internationally recognised firm of accountants addressed to the directors of the Guarantor as to proper extraction of the figures used by the Guarantor in determining the Material Subsidiaries of the Guarantor and mathematical accuracy of the calculation; ‘‘Maturity Date’’ has the meaning given in the relevant Pricing Supplement; ‘‘Maximum Redemption Amount’’ has the meaning given in the relevant Pricing Supplement; ‘‘Minimum Redemption Amount’’ has the meaning given in the relevant Pricing Supplement; ‘‘Net Proceeds’’ means the net sum representing the gross proceeds paid on the relevant Issue Date for each Tranche of Notes less all fees and commission payable by the Issuer and/or the Guarantor in connection with the issue and offering of that Tranche of Notes; a ‘‘Non-Registration Event’’ occurs when the Release Condition has not been satisfied on or prior to the Registration Deadline; and ‘‘Non-Registration Event Redemption Date’’ means seven business days after the Registration Deadline. ‘‘Noteholder’’, in the case of Bearer Notes, has the meaning given in Condition 3(b) (Form, Denomination, Title and Transfer – Title to Bearer Notes) and, in the case of Registered Notes, has the meaning given in Condition 3(d) (Form, Denomination, Title and Transfer – Title to Registered Notes); ‘‘Optional Redemption Amount (Call)’’ means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Pricing Supplement; ‘‘Optional Redemption Amount (Put)’’ means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Pricing Supplement; ‘‘Optional Redemption Date (Call)’’ has the meaning given in the relevant Pricing Supplement; ‘‘Optional Redemption Date (Put)’’ has the meaning given in the relevant Pricing Supplement; ‘‘Participating Member State’’ means a Member State of the European Union which adopts the euro as its lawful currency in accordance with the Treaty; ‘‘Payment Business Day’’ means: (a)

if the currency of payment is euro, any day which is: (i)

a day on which (x) banks in the relevant place of presentation are open for presentation and payment of bearer debt securities and for dealings in foreign currencies; and (y) a day on which commercial banks are open for general business (including dealing in

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foreign currencies) in the city where the Issuing and Paying Agent, the CMU Lodging and Paying Agent or the CDP Paying Agent (as the case may be) has its Specified Office; and (ii)

(b)

in the case of payment by transfer to an account, (a) a TARGET Settlement Day and (b) a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or

if the currency of payment is not euro, any day which is: (i)

a day on which (a) banks in the relevant place of presentation are open for presentation and payment of bearer debt securities and for dealings in foreign currencies and (b) a day on which commercial banks are open for general business (including dealings in foreign currencies) in the city where the Issuing and Paying Agent, the CMU Lodging and Paying Agent or the CDP Paying Agent (as the case may be) has its Specified Office; and

(ii)

in the case of payment by transfer to an account, a day on which dealings in foreign currencies (including, in the case of Notes denominated in Renminbi, settlement of Renminbi payments) may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre;

‘‘Person’’, in relation to: (a)

the definition of ‘‘Change of Control’’ only, includes any individual, company, corporation, firm, partnership, joint venture, undertaking, association, organisation, trust, state or agency of a state (in each case whether or not being a separate legal entity) but in the case of the Guarantor only, does not include (i) the Trade Union Committee of Hainan Airlines Co., Ltd.( 海南航空股份有限公司工會委員會)(the ‘‘Union’’), (ii) the Hainan Liberation Commonwealth Foundation(海南省慈航公益基金會)(the ‘‘Fund’’), (iii) the successors of the Union or the Fund, (iv) Persons controlled by the Union or the Fund, (v) the Guarantor’s Board of Directors or any other governing board and (vi) the Guarantor’s wholly-owned direct or indirect Subsidiaries; or

(b)

the other provisions in these Conditions, means any individual, company, corporation, firm, partnership, joint venture, association, organisation, state or agency of a state or other entity, whether or not having separate legal personality;

‘‘PRC’’ means the People’s Republic of China, for the purposes of this definition, excluding Hong Kong, the Macau Special Administrative Region and Taiwan; ‘‘PRC Accounting Standards’’ means the Accounting Standards for Business Enterprises issued by the Ministry of Finance of the PRC on 15 February 2006, and the Application Guidance for Accounting Standards for Business Enterprises, Interpretations of Accounting Standards for Business Enterprises and other relevant regulations issued thereafter; ‘‘Principal Financial Centre’’ means, in relation to any currency, the principal financial centre for that currency provided, however, that: (a)

in relation to euro, it means the principal financial centre of such Member State of the European Communities as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent;

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(b)

in relation to New Zealand dollars, it means either Wellington or Auckland as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent; and

(c)

in relation to Renminbi, it means Hong Kong and/or any other relevant financial centre, as is specified in the relevant Pricing Supplement;

‘‘Put Option Notice’’ means a notice which must be delivered to a Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder in accordance with Condition 10(e) (Redemption and Purchase – Redemption for Change of Control) or Condition 10(f) (Redemption and Purchase – Redemption at the option of Noteholders); ‘‘Put Option Receipt’’ means a receipt issued by a Paying Agent to a depositing Noteholder upon deposit of a Note with such Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder; ‘‘Rate of Interest’’ means the rate or rates (expressed as a percentage per annum) of interest payable in respect of the Notes specified in the relevant Pricing Supplement or calculated or determined in accordance with the provisions of these Conditions and/or the relevant Pricing Supplement; ‘‘Redemption Amount’’ means, as appropriate, the Final Redemption Amount, the Early Redemption Amount (Tax), the Early Redemption Amount (Change of Control), the Early Redemption Amount (No Registration Event), the Optional Redemption Amount (Call), the Optional Redemption Amount (Put), the Early Termination Amount or such other amount in the nature of a redemption amount as may be specified in the relevant Pricing Supplement; ‘‘Reference Banks’’ has the meaning given in the relevant Pricing Supplement or, if none, four major banks selected by the Issuer in the market that is most closely connected with the Reference Rate and notified in writing to the Calculation Agent; ‘‘Reference Price’’ has the meaning given in the relevant Pricing Supplement; ‘‘Reference Rate’’ means EURIBOR, HIBOR, LIBOR, SIBOR or such other rate as specified in the relevant Pricing Supplement in respect of the currency and period specified in the relevant Pricing Supplement; ‘‘Register’’ has the meaning the meaning given in the Agency Agreement; ‘‘Registration Deadline’’ means the day falling 90 China Business Days after the Issue Date of a Tranche of Notes; ‘‘Regular Period’’ means: (a)

in the case of Notes where interest is scheduled to be paid only by means of regular payments, each period from and including the Interest Commencement Date to but excluding the first Interest Payment Date and each successive period from and including one Interest Payment Date to but excluding the next Interest Payment Date;

(b)

in the case of Notes where, apart from the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where ‘‘Regular Date’’ means the day and month (but not the year) on which any Interest Payment Date falls; and

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(c)

in the case of Notes where, apart from one Interest Period other than the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where ‘‘Regular Date’’ means the day and month (but not the year) on which any Interest Payment Date falls other than the Interest Payment Date falling at the end of the irregular Interest Period;

‘‘Release Condition’’ means the receipt by the Trustee of: (a)

a certificate in substantially the form set out in the Trust Deed of any two directors or duly authorised officers of the Guarantor confirming (i) the completion of the registration with SAFE of the Guarantee of the Notes and the relevant Deed of Guarantee or the relevant supplemental Deed of Guarantee executed in connection therewith as described in Condition 5(c) (Covenants – Undertakings in relation to the Guarantee) and (ii) no Event of Default has occurred; and

(b)

a certified true copy of the relevant SAFE registration evidence and the particulars of registration and an English translation thereof, and a certificate signed by a director or duly authorised officer of the Guarantor certifying that such translation is complete and accurate;

‘‘Relevant Date’’ means, in relation to any payment, whichever is the later of (a) the date on which the payment in question first becomes due and (b) if the full amount payable has not been received in the Principal Financial Centre of the currency of payment by the Issuing and Paying Agent or the Trustee on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Noteholders; ‘‘Relevant Financial Centre’’ has the meaning given in the relevant Pricing Supplement; ‘‘Relevant Indebtedness’’ means any present or future Indebtedness offered or issued outside the PRC which is in the form of or represented by any bond, note, debenture, debenture stock, loan stock, or other securities which is, or is capable of being, listed, quoted or traded on any stock exchange or in any securities market (including, without limitation, any over-the-counter market); ‘‘Relevant Period’’ means each period of 12 months ending on the last day of the Guarantor’s financial year and each period of six months ending on the last day of the first half of the Guarantor’s financial year; ‘‘Relevant Screen Page’’ means the page, section or other part of a particular information service (including, without limitation, Reuters) specified as the Relevant Screen Page in the relevant Pricing Supplement, or such other page, section or other part as may replace it on that information service or such other information service, in each case, as may be nominated by the Person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Reference Rate; ‘‘Relevant Time’’ has the meaning given in the relevant Pricing Supplement; ‘‘Reserved Matter’’ means any proposal to change any date fixed for payment of principal or interest in respect of the Notes, to reduce the amount of principal or interest payable on any date in respect of the Notes, to alter the method of calculating the amount of any payment in respect of the Notes or the date for any such payment, to change the currency of any payment under the Notes, to effect the exchange, conversion or substitution of the Notes for other obligations or securities, to amend Condition 5 (Covenants), to amend the terms of the Guarantee of the Notes or to change the quorum requirements relating to meetings or the majority required to pass an Extraordinary Resolution;

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‘‘SAFE’’ means the Hainan Bureau of the State Administration of Foreign Exchange of the PRC; ‘‘Security Interest’’ means any mortgage, charge, pledge, lien or other security interest including, without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction; ‘‘SGX-ST’’ means the Singapore Exchange Securities Trading Limited; ‘‘Specified Currency’’ has the meaning given in the relevant Pricing Supplement; ‘‘Specified Denomination(s)’’ has the meaning given in the relevant Pricing Supplement; ‘‘Specified Office’’ has the meaning given in the Agency Agreement; ‘‘Specified Period’’ has the meaning given in the relevant Pricing Supplement; ‘‘Subsidiary’’ means, in relation to any Person (the ‘‘first Person’’) at any particular time, any other Person (the ‘‘second Person’’): (a)

whose affairs and policies the first Person controls or has the power to control, whether by ownership of share capital, contract, the power to appoint or remove members of the governing body of the second Person or otherwise; and

(b)

whose financial statements are, in accordance with applicable law and generally accepted accounting principles, consolidated with those of the first Person,

for the purposes of this definition, ‘‘control’’ means the right to appoint and/or remove all or the majority of the members of the board of directors or other governing body of a Person, whether obtained directly or indirectly, and whether obtained by ownership of share capital, the possession of voting rights, contract or otherwise; ‘‘Talon’’ means a talon for further Coupons; ‘‘TARGET2’’ means the Trans-European Automated Real-Time Gross Settlement Express Transfer payment system which utilises a single shared platform and which was launched on 19 November 2007; ‘‘TARGET Settlement Day’’ means any day on which TARGET2 is open for the settlement of payments in euro; ‘‘Treaty’’ means the Treaty on the Functioning of the European Union, as amended; ‘‘United States’’ means the United States of America, the District of Columbia, and its possessions); and ‘‘Zero Coupon Note’’ means a Note specified as such in the relevant Pricing Supplement. (a)

Interpretation: In these Conditions:

(b)

if the Notes are Zero Coupon Notes, references to Coupons and Couponholders are not applicable;

(c)

if Talons are specified in the relevant Pricing Supplement as being attached to the Notes at the time of issue, references to Coupons shall be deemed to include references to Talons;

(d)

if Talons are not specified in the relevant Pricing Supplement as being attached to the Notes at the time of issue, references to Talons are not applicable;

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3.

(e)

any reference to principal shall be deemed to include the Redemption Amount, any Additional Tax Amounts in respect of principal which may be payable under Condition 13 (Taxation), any premium payable in respect of a Note and any other amount in the nature of principal payable pursuant to these Conditions;

(f)

any reference to interest shall be deemed to include any Additional Tax Amounts in respect of interest which may be payable under Condition 13 (Taxation) and any other amount in the nature of interest payable pursuant to these Conditions;

(g)

references to Notes being ‘‘outstanding’’ shall be construed in accordance with the Trust Deed;

(h)

if an expression is stated in Condition 2(a) (Interpretation – Definitions) to have the meaning given in the relevant Pricing Supplement, but the relevant Pricing Supplement gives no such meaning or specifies that such expression is ‘‘not applicable’’ then such expression is not applicable to the Notes; and

(i)

any reference to the Trust Deed, a Deed of Guarantee, the CDP Deed of Covenant, the relevant Escrow Deed or the Agency Agreement shall be construed as a reference to the Trust Deed, the relevant Deed of Guarantee, the CDP Deed of Covenant, the relevant Escrow Deed or the Agency Agreement, as the case may be, as amended and/or supplemented up to and including the Issue Date of the Notes.

Form, Denomination, Title and Transfer (a)

Bearer Notes: Bearer Notes are in the Specified Denomination(s) with Coupons and, if specified in the relevant Pricing Supplement, Talons attached at the time of issue. In the case of a Series of Bearer Notes with more than one Specified Denomination, Bearer Notes of one Specified Denomination will not be exchangeable for Bearer Notes of another Specified Denomination. In any case, Bearer Notes will not be exchangeable for Registered Notes.

(b)

Title to Bearer Notes: Title to Bearer Notes and the Coupons will pass by delivery. In the case of Bearer Notes, ‘‘Holder’’ means the holder of such Bearer Note and ‘‘Noteholder’’ and ‘‘Couponholder’’ shall be construed accordingly.

(c)

Registered Notes: Registered Notes are in the Specified Denomination(s), which may include a minimum denomination specified in the relevant Pricing Supplement and higher integral multiples of a smaller amount specified in the relevant Pricing Supplement. In any case, Registered Notes will not be exchangeable for Bearer Notes.

(d)

Title to Registered Notes: Each Registrar will maintain a register in Hong Kong in accordance with the provisions of the Agency Agreement. A certificate (each, a ‘‘Note Certificate’’) will be issued to each Holder of Registered Notes in respect of its registered holding. Each Note Certificate will be numbered serially with an identifying number which will be recorded in the Register. In the case of Registered Notes, ‘‘Holder’’ means the person in whose name such Registered Note is for the time being registered in the Register (or, in the case of a joint holding, the first named thereof) and ‘‘Noteholder’’ shall be construed accordingly.

(e)

Ownership: The Holder of any Note or Coupon shall (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing thereon or, in the case of Registered Notes, on the Note Certificate relating thereto (other than the endorsed form of transfer) or any notice of any previous loss or theft thereof) and no Person shall be

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liable for so treating such Holder. No person shall have any right to enforce any term or condition of any Note or the Trust Deed under the Contracts (Rights of Third Parties) Act 1999.

4.

(f)

Transfers of Registered Notes: Subject to paragraphs (i) (Closed periods) and (j) (Regulations concerning transfers and registration) below, a Registered Note may be transferred upon surrender of the relevant Note Certificate, with the endorsed form of transfer duly completed, at the Specified Office of the relevant Registrar or any Transfer Agent, together with such evidence as such Registrar or (as the case may be) Transfer Agent may reasonably require to prove the title of the transferor and the authority of the individuals who have executed the form of transfer; provided, however, that a Registered Note may not be transferred unless the principal amount of Registered Notes transferred and (where not all of the Registered Notes held by a Holder are being transferred) the principal amount of the balance of Registered Notes not transferred are Specified Denominations. Where not all the Registered Notes represented by the surrendered Note Certificate are the subject of the transfer, a new Note Certificate in respect of the balance of the Registered Notes will be issued to the transferor.

(g)

Registration and delivery of Note Certificates: Within five business days of the surrender of a Note Certificate in accordance with paragraph (f) (Transfers of Registered Notes) above, the relevant Registrar will register the transfer in question and deliver a new Note Certificate of a like principal amount to the Registered Notes transferred to each relevant Holder at its Specified Office or (as the case may be) the Specified Office of any Transfer Agent or (at the request and risk of any such relevant Holder) by uninsured first class mail (airmail if overseas) to the address specified for the purpose by such relevant Holder. In this paragraph, ‘‘business day’’ means a day on which commercial banks are open for general business (including dealings in foreign currencies) in the city where the relevant Registrar or (as the case may be) Transfer Agent has its Specified Office.

(h)

No charge: The transfer of a Registered Note will be effected without charge by or on behalf of the Issuer or the relevant Registrar or any Transfer Agent but against such indemnity as such Registrar or (as the case may be) Transfer Agent may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such transfer.

(i)

Closed periods: Noteholders may not require transfers to be registered during the period of seven days ending on the due date for any payment of principal or interest in respect of the Registered Notes.

(j)

Regulations concerning transfers and registration: All transfers of Registered Notes and entries on the Register are subject to the detailed regulations concerning the transfer of Registered Notes scheduled to the Agency Agreement. The regulations may be changed by the Issuer with the prior written approval of the Registrars. A copy of the current regulations will be made available for inspection by a Registrar to any Noteholder who requests in writing a copy of such regulations.

Status and Guarantee (a)

Status of the Notes: The Notes constitute direct, general, unconditional, unsubordinated and unsecured obligations of the Issuer which will at all times rank pari passu without any preference or priority among themselves and at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, save as provided under Condition 5(a) (Covenants – Negative Pledge) and save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.

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(b)

5.

Guarantee of the Notes: The Guarantor will in respect of each Tranche of Notes pursuant to the relevant Deed of Guarantee unconditionally and irrevocably guarantee the due payment of all sums expressed to be payable by the Issuer under the Trust Deed and the Notes. This Guarantee of the Notes constitutes direct, general, unconditional, unsubordinated and unsecured obligations of the Guarantor which will at all times rank at least pari passu with all other present and future unsecured and unsubordinated obligations of the Guarantor, save as provided under Condition 5(a) (Covenants – Negative Pledge) and save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.

Covenants (a)

Negative Pledge So long as any Note remains outstanding, neither the Issuer nor the Guarantor shall, and each of the Issuer and the Guarantor shall procure that none of their respective Subsidiaries (other than Listed Subsidiaries and their respective Subsidiaries) will, create or permit to subsist any Security Interest upon the whole or any part of its present or future undertaking, assets or revenues to secure any Relevant Indebtedness or Guarantee of Relevant Indebtedness without (i) at the same time or prior thereto securing the Notes equally and ratably therewith or (ii) providing such other security for the Notes as may be approved by an Extraordinary Resolution of Noteholders.

(b)

Financial Covenants So long as any Note remains outstanding, the Guarantor shall not directly or indirectly, permit: (i)

the ratio of Consolidated Total Debt to Consolidated Total Assets as at the end of any Relevant Period to exceed 0.8:1; and

(ii)

Consolidated Equity as at the end of any Relevant Period to be less than RMB24 billion.

The financial covenants set out in this Condition 5(b) (Covenants – Financial Covenants) shall be (where applicable) calculated in accordance with PRC Accounting Standards and tested by reference to the latest audited (or, as the case may be, unaudited) consolidated balance sheet and income statements of the Guarantor as at the end of the Relevant Period. The Trustee is under no obligation to monitor compliance by the Guarantor with this Condition 5(b) (Covenants – Financial Covenants) and shall not be responsible or liable to any Noteholder or any other person for not doing so. (c)

Undertakings in relation to the Guarantee For the benefit of each initial Tranche(s) of the Notes to be issued in accordance with these Conditions and the Trust Deed, the Guarantor shall: (i)

execute a Deed of Guarantee in connection with such Tranche in the form attached to the Trust Deed on the relevant Issue Date;

(ii)

register or cause to be registered with SAFE the relevant Deed of Guarantee within 15 China Business Days after its execution in accordance with the Foreign Exchange Administration Rules on Cross-border Security(跨境擔保外匯管理規定)of the PRC (the ‘‘Cross-border Security Registration’’);

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(iii) use its best endeavours to complete the Cross-border Security Registration on or before the relevant Registration Deadline and obtain a registration evidence(業務登記憑證) from SAFE and the completed SAFE registration status form; (iv) deliver to the Trustee on or before the relevant Registration Deadline (x) a certificate signed by any two directors or authorised officers of the Guarantor confirming the completion of the Cross-border Security Registration in connection with the Notes, and (y) a certified copy of the relevant registration evidence(業務登記憑證)from SAFE and the completed SAFE registration status form; and (v)

comply with all applicable PRC laws and regulations in relation to the Guarantee of the Notes.

For the benefit of any Tranche of Notes to be issued in accordance with these Conditions and the Trust Deed which shall be consolidated into, and form a single Series with, an original Series of Notes, the Guarantor shall: (i)

execute a supplemental Deed of Guarantee for the Notes reflecting the increase in principal amount of that Series of Notes on the relevant Issue Date;

(ii)

register or cause to be registered with SAFE the relevant supplemental Deed of Guarantee in respect of the applicable Series of Notes within 15 China Business Days after the execution of such supplemental Deed of Guarantee;

(iii) use its best endeavours to complete the Cross-border Security Registration or applicable registration update with SAFE on or before the relevant Registration Deadline and obtain the applicable registration of Cross-border Security Registration and the completed SAFE registration status form; (iv) deliver to the Trustee on or before the relevant Registration Deadline (x) a certificate signed by any two directors or authorised officers of the Guarantor confirming the completion of the Cross-border Security Registration or applicable registration update in connection with the applicable Series of Notes, and (y) a certified copy of the relevant evidence from SAFE on the completion of the applicable registration of Cross-border Security Registration; and (v)

(d)

comply with all applicable PRC laws and regulations in relation to the Guarantee of the Notes.

Escrow Account If an Escrow Arrangement is specified in the relevant Pricing Supplement as being applicable, in relation to the relevant Tranche of Notes: (i)

prior to the relevant Issue Date, each of the Issuer and the Guarantor shall (A) execute an Escrow Deed with the Escrow Agent and the Trustee, and (B) procure that an Escrow Account for the currency in which such Tranche is denominated is opened in the name of the Issuer with the Escrow Agent;

(ii)

on the relevant Issue Date, each of the Issuer and the Guarantor shall procure that the Net Proceeds from such Tranche of Notes are deposited into the Escrow Account if the Release Condition has not been satisfied by the Guarantor on or prior to such Issue Date;

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(iii) subject to the Release Condition having been satisfied by the Guarantor on or prior to the Registration Deadline and so long as no Event of Default has occurred, the Issuer shall notify the Trustee and the Trustee shall forthwith direct the Escrow Agent to release the Escrow Fund to an account nominated by it in writing, in accordance with the provisions of the Escrow Deed; (iv) upon the occurrence of a Non-Registration Event, the Issuer shall forthwith notify the Trustee and the Trustee may instruct the Escrow Agent to transfer the Escrow Fund (or if the Escrow Fund exceeds the amount due, such amount that is required to pay the amount due) to an account designated in such instruction by the Trustee for payment in and towards principal and interest to be made in respect of the redemption of the Notes in accordance with Condition 10(g) (Redemption and Purchase – Mandatory Redemption for Non-Registration), provided that any amount of the Escrow Fund remaining after all such payment obligations have been fully satisfied shall be released to an account nominated by the Issuer in writing, in accordance with the provisions of the Escrow Deed; and (v)

(e)

upon the Notes becoming due and payable following the occurrence of an Event of Default, the Escrow Agent shall transfer the Escrow Fund at the written instruction of the Trustee to an account designated in writing by the Trustee, and the Trustee shall apply such funds in accordance with the provisions of the Trust Deed towards payment of the amounts due and payable under the Notes and the Trust Deed.

Financial Statements So long as any Note remains outstanding: (i)

each of the Issuer and the Guarantor shall send to the Trustee as soon as practicable after their date of publication and in any event not more than 180 days after the end of each financial year, two copies of the audited annual financial statements (on a consolidated basis) of each of the Issuer and the Guarantor and if such statements shall be in the Chinese language, together with an English translation of the same translated by an internationally recognised firm of accountants or a professional translation service provider, and a certificate signed by a director or duly authorised officer of the Issuer (in respect of the Issuer’s audited annual financial statements (on a consolidated basis)) and of the Guarantor (in respect of the Guarantor’s audited annual financial statements (on a consolidated basis)) certifying that such translation is complete and accurate; and

(ii)

the Guarantor shall send to the Trustee as soon as practicable after their date of publication and in any event not more than 90 days after the end of each financial period, two copies of the semi-annual statements prepared on a basis consistent with the audited financial statements of the Guarantor and if such statements shall be in the Chinese language, together with an English translation of the same translated by an internationally recognised firm of accountants or a professional translation service provider, and a certificate signed by a director or duly authorised officer of the Guarantor certifying that such translation is complete and accurate.

For so long as any Note remains outstanding, the Guarantor will provide to the Trustee within 180 days after the end of each financial year and 90 days after the end of each semiannual financial period, a certificate signed by a director or duly authorised officer of the Guarantor confirming compliance with the financial covenant contained in Condition 5(b) (Covenants – Financial Covenants), showing in reasonable detail the calculations demonstrating compliance with such financial covenant.

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6.

7.

Fixed Rate Note Provisions (a)

Application: This Condition 6 (Fixed Rate Note Provisions) is applicable to the Notes only if the Fixed Rate Note Provisions are specified in the relevant Pricing Supplement as being applicable.

(b)

Accrual of interest: The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments – Bearer Notes) and Condition 12 (Payments – Registered Notes). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition 6 (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Issuing and Paying Agent or the Trustee has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c)

Fixed Coupon Amount: Unless specified in the relevant Pricing Supplement, the amount of interest payable in respect of each Note for any Interest Period shall be the relevant Fixed Coupon Amount and, if the Notes are in more than one Specified Denomination, shall be the relevant Fixed Coupon Amount in respect of the relevant Specified Denomination.

(d)

Calculation of interest amount: The amount of interest payable in respect of each Note for any period for which a Fixed Coupon Amount is not specified shall be calculated by applying the Rate of Interest to the Calculation Amount, multiplying the product by the relevant Day Count Fraction, rounding the resulting figure to the nearest sub-unit of the Specified Currency (half a sub-unit being rounded upwards) and multiplying such rounded figure by a fraction equal to the Specified Denomination of such Note divided by the Calculation Amount. For this purpose a ‘‘sub-unit’’ means, in the case of any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of euro, means one cent.

Floating Rate Note and Index-Linked Interest Note Provisions (a)

Application: This Condition 7 (Floating Rate Note and Index-Linked Interest Note Provisions) is applicable to the Notes only if the Floating Rate Note Provisions or the IndexLinked Interest Note Provisions are specified in the relevant Pricing Supplement as being applicable.

(b)

Accrual of interest: The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments – Bearer Notes) and Condition 12 (Payments – Registered Notes). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Issuing and Paying Agent or the Trustee has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c)

Screen Rate Determination: If Screen Rate Determination is specified in the relevant Pricing Supplement as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be determined by the Calculation Agent on the following basis:

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(i)

if the Reference Rate is a composite quotation or customarily supplied by one entity, the Calculation Agent will determine the Reference Rate which appears on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

(ii)

if Linear Interpolation is specified as applicable in respect of an Interest Period in the applicable Pricing Supplement, the Rate of Interest for such Interest Period shall be calculated by the Calculation Agent by straight-line linear interpolation by reference to two rates which appear on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date, where: (A) one rate shall be determined as if the relevant Interest Period were the period of time for which rates are available next shorter than the length of the relevant Interest Period; and (B)

the other rate shall be determined as if the relevant Interest Period were the period of time for which rates are available next longer than the length of the relevant Interest Period;

provided, however, that if no rate is available for a period of time next shorter or, as the case may be, next longer than the length of the relevant Interest Period, then the Calculation Agent shall, upon seeking advice from the Reference Banks (at the cost of the Issuer) or taking instructions from the Issuer, determine such rate at such time and by reference to such sources as it determines appropriate; (iii) in any other case, the Calculation Agent will determine the arithmetic mean of the Reference Rates which appear on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date; (iv) if, in the case of (i) above, such rate does not appear on that page or, in the case of (iii) above, fewer than two such rates appear on that page or if, in either case, the Relevant Screen Page is unavailable, the Calculation Agent will: (A) request the principal Relevant Financial Centre office of each of the Reference Banks to provide a quotation of the Reference Rate at approximately the Relevant Time on the Interest Determination Date to prime banks in the Relevant Financial Centre interbank market in an amount that is representative for a single transaction in that market at that time; and (B) (v)

determine the arithmetic mean of such quotations; and

if fewer than two such quotations are provided as requested, the Calculation Agent will determine the arithmetic mean of the rates (being the nearest to the Reference Rate, as determined by the Calculation Agent) quoted by major banks in the Principal Financial Centre of the Specified Currency, selected by the Calculation Agent, at approximately 11.00 a.m. (local time in the Principal Financial Centre of the Specified Currency) on the first day of the relevant Interest Period for loans in the Specified Currency to leading international banks for a period equal to the relevant Interest Period and in an amount that is representative for a single transaction in that market at that time,

and the Rate of Interest for such Interest Period shall be the sum of the Margin and the rate or (as the case may be) the arithmetic mean so determined; provided, however, that if the Calculation Agent is unable to determine a rate or (as the case may be) an arithmetic mean in accordance with the above provisions in relation to any Interest Period, the Rate of Interest

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applicable to the Notes during such Interest Period will be the sum of the Margin and the rate or (as the case may be) the arithmetic mean last determined in relation to the Notes in respect of a preceding Interest Period. (d)

ISDA Determination: If ISDA Determination is specified in the relevant Pricing Supplement as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be the sum of the Margin and the relevant ISDA Rate where ‘‘ISDA Rate’’ in relation to any Interest Period means a rate equal to the Floating Rate (as defined in the ISDA Definitions) that would be determined by the Calculation Agent under an interest rate swap transaction if the Calculation Agent were acting as Calculation Agent for that interest rate swap transaction under the terms of an agreement incorporating the ISDA Definitions and under which: (i)

the Floating Rate Option (as defined in the ISDA Definitions) is as specified in the relevant Pricing Supplement;

(ii)

the Designated Maturity (as defined in the ISDA Definitions) is a period specified in the relevant Pricing Supplement;

(iii) the relevant Reset Date (as defined in the ISDA Definitions) is either (A) if the relevant Floating Rate Option is based on EURIBOR, HIBOR, LIBOR or SIBOR for a currency, the first day of that Interest Period or (B) in any other case, as specified in the relevant Pricing Supplement; and (iv) if Linear Interpolation is specified as applicable in respect of an Interest Period in the applicable Pricing Supplement, the Rate of Interest for such Interest Period shall be calculated by the Calculation Agent by straight-line linear interpolation by reference to two rates based on the relevant Floating Rate Option, where: (A) one rate shall be determined as if the Designated Maturity were the period of time for which rates are available next shorter than the length of the relevant Interest Period; and (B)

the other rate shall be determined as if the Designated Maturity were the period of time for which rates are available next longer than the length of the relevant Interest Period

provided, however, that if there is no rate available for a period of time next shorter than the length of the relevant Interest Period or, as the case may be, next longer than the length of the relevant Interest Period, then the Calculation Agent shall determine such rate at such time and by reference to such sources as it determines appropriate. (e)

Index-Linked Interest: If the Index-Linked Interest Note Provisions are specified in the relevant Pricing Supplement as being applicable, the Rate(s) of Interest applicable to the Notes for each Interest Period will be determined in the manner specified in the relevant Pricing Supplement.

(f)

Maximum or Minimum Rate of Interest: If any Maximum Rate of Interest or Minimum Rate of Interest is specified in the relevant Pricing Supplement, then the Rate of Interest shall in no event be greater than the maximum or be less than the minimum so specified. If the relevant Pricing Supplement does not specify any Minimum Rate of Interest and the Rate of Interest as determined by the Calculation Agent according to this Condition 7 is a negative value, the Rate of Interest shall be zero per cent. per annum.

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8.

(g)

Calculation of Interest Amount: The Calculation Agent will, as soon as practicable after the time at which the Rate of Interest is to be determined in relation to each Interest Period, calculate the Interest Amount payable in respect of each Note for such Interest Period. The Interest Amount will be calculated by applying the Rate of Interest for such Interest Period to the Calculation Amount, multiplying the product by the relevant Day Count Fraction, rounding the resulting figure to the nearest sub-unit of the Specified Currency (half a subunit being rounded upwards) and multiplying such rounded figure by a fraction equal to the Specified Denomination of the relevant Note divided by the Calculation Amount. For this purpose a ‘‘sub-unit’’ means, in the case of any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of euro, means one cent.

(h)

Calculation of other amounts: If the relevant Pricing Supplement specifies that any other amount is to be calculated by the Calculation Agent, the Calculation Agent will, as soon as practicable after the time or times at which any such amount is to be determined, calculate the relevant amount. The relevant amount will be calculated by the Calculation Agent in the manner specified in the relevant Pricing Supplement.

(i)

Publication: The Calculation Agent will cause each Rate of Interest and Interest Amount determined by it, together with the relevant Interest Payment Date, and any other amount(s) required to be determined by it together with any relevant payment date(s) to be notified to the Issuer, the Paying Agents, and the Trustee as soon as practicable after such determination but (in the case of each Rate of Interest, Interest Amount and Interest Payment Date) in any event not later than the first day of the relevant Interest Period. Notice thereof shall also promptly be given by the Issuer to the Noteholders and each competent authority, stock exchange and/or quotation system (if any) by which the Notes have then been admitted to listing, trading and/or quotation. The Calculation Agent will be entitled to recalculate any Interest Amount (on the basis of the foregoing provisions) without notice in the event of an extension or shortening of the relevant Interest Period. If the Calculation Amount is less than the minimum Specified Denomination the Calculation Agent shall not be obliged to publish each Interest Amount but instead may publish only the Calculation Amount and the Interest Amount in respect of a Note having the minimum Specified Denomination.

(j)

Notifications etc: All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Condition by the Calculation Agent will (in the absence of manifest error) be binding on the Issuer, the Guarantor, the Trustee, the Paying Agents, the Noteholders and the Couponholders and (subject as aforesaid) no liability to any such Person will attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions for such purposes.

Zero Coupon Note Provisions (a)

Application: This Condition 8 (Zero Coupon Note Provisions) is applicable to the Notes only if the Zero Coupon Note Provisions are specified in the relevant Pricing Supplement as being applicable.

(b)

Late payment on Zero Coupon Notes: If the Redemption Amount payable in respect of any Zero Coupon Note is improperly withheld or refused, the Redemption Amount shall thereafter be an amount equal to the sum of: (i)

the Reference Price; and

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(ii)

9.

10.

the product of the Accrual Yield (compounded annually) being applied to the Reference Price on the basis of the relevant Day Count Fraction from (and including) the Issue Date to (but excluding) whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Issuing and Paying Agent or the Issuer has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

Dual Currency Note Provisions (a)

Application: This Condition 9 (Dual Currency Note Provisions) is applicable to the Notes only if the Dual Currency Note Provisions are specified in the relevant Pricing Supplement as being applicable.

(b)

Rate of Interest: If the rate or amount of interest falls to be determined by reference to an exchange rate, the rate or amount of interest payable shall be determined in the manner specified in the relevant Pricing Supplement.

Redemption and Purchase (a)

Scheduled redemption: Unless previously redeemed, or purchased and cancelled, the Notes will be redeemed at their Final Redemption Amount on the Maturity Date, subject as provided in Condition 11 (Payments – Bearer Notes) and Condition 12 (Payments – Registered Notes).

(b)

Redemption for tax reasons: The Notes may be redeemed at the option of the Issuer in whole, but not in part: (i)

at any time (unless the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are specified in the relevant Pricing Supplement as being applicable); or

(ii)

on any Interest Payment Date (if the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are specified in the relevant Pricing Supplement as being applicable),

on giving not less than 30 nor more than 60 days’ notice to the Noteholders, or such other period(s) as may be specified in the relevant Pricing Supplement, (which notice shall be irrevocable), at their Early Redemption Amount (Tax), together with interest accrued (if any) to the date fixed for redemption, if, immediately before giving such notice, the Issuer satisfies the Trustee that: (iii) (1) the Issuer has or will become obliged to pay Additional Tax Amounts as provided or referred to in Condition 13 (Taxation) as a result of any change in, or amendment to, the laws or regulations of Hong Kong 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 of issue of the first Tranche of the Notes; and (2) such obligation cannot be avoided by the Issuer taking reasonable measures available to it; or (iv) (1) the Guarantor has or (if a demand was made under the Guarantee of the Notes) would become obliged to pay Additional Tax Amounts as provided or referred to in Condition 13 (Taxation) 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

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laws or regulations, which change or amendment becomes effective on or after the date of issue of the first Tranche of the Notes and (2) such obligation cannot be avoided by the Guarantor taking reasonable measures available to it, provided, however, that no such notice of redemption shall be given earlier than: (A) where the Notes may be redeemed at any time, 90 days (or such other period as may be specified in the relevant Pricing Supplement) 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 if a payment in respect of the Notes were then due or (as the case may be) a demand under the Guarantee of the Notes were then made; or (B)

where the Notes may be redeemed only on an Interest Payment Date, 60 days (or such other period as may be specified in the relevant Pricing Supplement) prior to the Interest Payment Date occurring immediately before the earliest date on which the Issuer or the Guarantor, as the case may be, would be obliged to pay such Additional Tax Amounts if a payment in respect of the Notes were then due or (as the case may be) a demand under the Guarantee of the Notes were then made.

Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver or procure that there is delivered to the Trustee (1) a certificate signed by two directors or duly authorised officers of the Issuer (or the Guarantor, as the case may be) stating that the obligation referred to in (iii)(1) above cannot be avoided by the Issuer (or, in the case of the Guarantor, the obligation referred to in (iv)(1) cannot be avoided by the Guarantor) taking reasonable measures available to it and (2) an opinion of independent legal or tax advisers of recognised standing to the effect that such change or amendment has occurred (irrespective of whether such amendment or change is then effective), and the Trustee shall be entitled without further enquiry and without liability to any Noteholder or any other person to accept and rely upon such certificate and opinion as sufficient evidence of the satisfaction of the condition precedent set out in (iii)(2) (or, in the case of the Guarantor, (iv)(2)) above, in which event they shall be conclusive and binding on the Noteholders. Upon the expiry of any such notice as is referred to in this Condition 10(b), the Issuer shall be bound to redeem the Notes in accordance with this Condition 10(b). (c)

Redemption at the option of the Issuer: If the Call Option is specified in the relevant Pricing Supplement as being applicable, the Notes may be redeemed at the option of the Issuer in whole or, if so specified in the relevant Pricing Supplement, in part on any Optional Redemption Date (Call) at the relevant Optional Redemption Amount (Call) on the Issuer’s giving not less than 30 nor more than 60 days’ notice to the Noteholders, or such other period(s) as may be specified in the relevant Pricing Supplement (which notice shall be irrevocable and shall oblige the Issuer to redeem the Notes or, as the case may be, the Notes specified in such notice on the relevant Optional Redemption Date (Call) at the Optional Redemption Amount (Call) plus accrued interest (if any) to such date).

(d)

Partial redemption: If the Notes are to be redeemed in part only on any date in accordance with Condition 10(c) (Redemption and Purchase – Redemption at the option of the Issuer), in the case of Bearer Notes, the Notes to be redeemed shall be selected by the drawing of lots in such place as the Issuing and Paying Agent approves and in such manner as the Issuing and Paying Agent considers appropriate, subject to compliance with applicable law, the rules of each competent authority, stock exchange and/or quotation system (if any) by which the Notes have then been admitted to listing, trading and/or quotation and the notice to Noteholders referred to in Condition 10(c) (Redemption and Purchase – Redemption at the 81

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option of the Issuer) shall specify the serial numbers of the Notes so to be redeemed, and, in the case of Registered Notes, each Note shall be redeemed in part in the proportion which the aggregate principal amount of the outstanding Notes to be redeemed on the relevant Optional Redemption Date (Call) bears to the aggregate principal amount of outstanding Notes on such date. If any Maximum Redemption Amount or Minimum Redemption Amount is specified in the relevant Pricing Supplement, then the Optional Redemption Amount (Call) shall in no event be greater than the maximum or be less than the minimum so specified. (e)

Redemption for Change of Control: 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 Put Settlement Date at their Early Redemption Amount (Change of Control), together with accrued interest to, such Put Settlement Date. To exercise such right, the holder of the relevant Note must deposit at the Specified Office of any Paying Agent a duly completed and signed Put Option Notice, together with such Bearer Notes and all unmatured Coupons relating thereto or the Note Certificates evidencing such Registered Notes to be redeemed by not later than 30 days following a Change of Control, or, if later, 30 days following the date upon which notice thereof is given to Noteholders by the Issuer in accordance with Condition 21 (Notices). The ‘‘Put Settlement Date’’ shall be the 14th day after the expiry of such period of 30 days as referred to above. A Put Option Notice, once delivered, shall be irrevocable and the Issuer shall redeem the Notes subject to the Put Option Notices delivered as aforesaid on the Put Settlement Date. The Issuer shall give notice to Noteholders in accordance with Condition 21 (Notices) and the Trustee 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 10(e). The Trustee shall not be obliged to take any steps to ascertain whether a Change of Control has occurred or to monitor the occurrence of any Change of Control, and shall not be liable to the Noteholders or any other person for not doing so.

(f)

Redemption at the option of Noteholders: If the Put Option is specified in the relevant Pricing Supplement as being applicable, the Issuer shall, at the option of the Holder of any Note redeem such Note on the Optional Redemption Date (Put) specified in the relevant Put Option Notice at the relevant Optional Redemption Amount (Put) together with interest (if any) accrued to such date. In order to exercise the option contained in this Condition 10(f), the Holder of a Note must, not less than 30 nor more than 60 days before the relevant Optional Redemption Date (Put) (or such other period(s) as may be specified in the relevant Pricing Supplement), deposit with any Paying Agent such Bearer Note together with all unmatured Coupons relating thereto or the Note Certificates evidencing such Registered Notes to be redeemed and a duly completed Put Option Notice in the form obtainable from any Paying Agent. The Paying Agent with which a Note is so deposited shall deliver a duly completed Put Option Receipt to the depositing Noteholder. No Note, once deposited with a duly completed Put Option Notice in accordance with this Condition 10(f), may be withdrawn; provided, however, that if, prior to the relevant Optional Redemption Date (Put), any such Note becomes immediately due and payable or, upon due presentation of any such Note on the relevant Optional Redemption Date (Put), payment of the redemption moneys is improperly withheld or refused, the relevant Paying Agent shall mail notification thereof to the depositing Noteholder at such address as may have been given by such Noteholder in the relevant Put Option Notice and shall hold such Note at its Specified Office for collection by the depositing Noteholder against surrender of the relevant Put Option Receipt. For so long

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as any outstanding Note is held by a Paying Agent in accordance with this Condition 10(f), the depositor of such Note and not such Paying Agent shall be deemed to be the Holder of such Note for all purposes. (g)

Mandatory Redemption for Non-Registration: Upon the occurrence of a Non-Registration Event, the Issuer shall redeem on the Non-Registration Event Redemption Date all, and not some only, of the relevant Tranche of Notes subject of the Non-Registration Event at their Early Redemption Amount (No Registration Event), together with accrued interest up to, but excluding, the Non-Registration Event Redemption Date.

(h)

No other redemption: The Issuer shall not be entitled to redeem the Notes otherwise than as provided in paragraphs (a) (Scheduled redemption) to (g) (Mandatory Redemption for NonRegistration) above.

(i)

Early redemption of Zero Coupon Notes: Unless otherwise specified in the relevant Pricing Supplement, the Redemption Amount payable on redemption of a Zero Coupon Note at any time before the Maturity Date shall be an amount equal to the sum of: (i)

the Reference Price; and

(ii)

the product of the Accrual Yield (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) the date fixed for redemption or (as the case may be) the date upon which the Note becomes due and payable.

Where such calculation is to be made for a period which is not a whole number of years, the calculation in respect of the period of less than a full year shall be made on the basis of such Day Count Fraction as may be specified in the Pricing Supplement for the purposes of this Condition 10(i) or, if none is so specified, a Day Count Fraction of 30E/360. (j)

Purchase: The Issuer, the Guarantor or any of their respective Subsidiaries may at any time purchase Notes in the open market or otherwise and at any price, provided that all unmatured Coupons are purchased therewith.

(k)

Cancellation: All Notes so redeemed or purchased by the Issuer, the Guarantor or any of their respective Subsidiaries and any unmatured Coupons attached to or surrendered with them may be surrendered for cancellation, in the case of Bearer Notes, by surrendering each such Note together with all unmatured Receipts and Coupons and all unexchanged Talons to the Issuing and Paying Agent and, in the case of Registered Notes, by surrendering the Certificate representing such Notes to the relevant Registrar and, in each case, if so surrendered, shall, together with all Notes redeemed by the Issuer, be cancelled forthwith (together with all unmatured Receipts and Coupons and unexchanged Talons attached thereto or surrendered therewith). Any Notes so surrendered for cancellation may not be reissued or resold and the obligation of the Issuer in respect of any such Notes shall be discharged.

(l)

Calculations: Neither the Trustee nor any of the Agents (other than the Calculation Agent and solely in respect of its functions as an appointed Calculation Agent of the Issuer) shall be responsible for calculating or verifying the calculations of any amount payable under any notice of redemption and shall not be liable to the Noteholders or any other person for not doing so.

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11.

Payments – Bearer Notes This Condition 11 is only applicable to Bearer Notes. (a)

Principal: Payments of principal shall be made only against presentation and (provided that payment is made in full) surrender of Bearer Notes at the Specified Office of any Paying Agent outside the United States (i) in the case of a currency other than Renminbi, by cheque drawn in the currency in which the payment is due on, or by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency, and (ii) in the case of Renminbi, by transfer to an account denominated in that currency and maintained by the payee with a bank in the Principal Financial Centre of that currency.

(b)

Interest: Payments of interest shall, subject to paragraph (h) (Payments on business days) below, be made only against presentation and (provided that payment is made in full) surrender of the appropriate Coupons at the Specified Office of any Paying Agent outside the United States in the manner described in paragraph (a) (Principal) above. Payments of principal and interest in respect of Bearer Notes held in the CMU Service will be made to the person(s) for whose account(s) interests in the relevant Bearer Note are credited as being held with the CMU Service in accordance with the CMU Rules (as defined in the Agency Agreement) at the relevant time as notified to the CMU Lodging and Paying Agent by the CMU Service in a relevant CMU Instrument Position Report (as defined in the Agency Agreement) or any other relevant notification by the CMU Service, which notification shall be conclusive evidence of the records of the CMU Service (save in the case of manifest or proven error) and payment made in accordance thereof shall discharge the obligations of the Issuer, or, as the case may be, the Guarantor, in respect of that payment.

(c)

Payments in New York City: Payments of principal or interest may be made at the Specified Office of a Paying Agent in New York City if (i) the Issuer has appointed Paying Agents outside the United States with the reasonable expectation that such Paying Agents will be able to make payment of the full amount of the interest on the Notes in the currency in which the payment is due when due, (ii) payment of the full amount of such interest at the offices of all such Paying Agents is illegal or effectively precluded by exchange controls or other similar restrictions and (iii) payment is permitted by applicable United States law.

(d)

Payments subject to fiscal laws: All payments in respect of the Bearer Notes are subject in all cases to (i) any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 13 (Taxation) 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 13 (Taxation)) any law implementing an intergovernmental approach thereto.

(e)

No commissions or expenses shall be charged to the Noteholders or Couponholders in respect of such payments.

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(f)

Deductions for unmatured Coupons: If the relevant Pricing Supplement specifies that the Fixed Rate Note Provisions are applicable and a Bearer Note is presented without all unmatured Coupons relating thereto: (i)

if the aggregate amount of the missing Coupons is less than or equal to the amount of principal due for payment, a sum equal to the aggregate amount of the missing Coupons will be deducted from the amount of principal due for payment; provided, however, that if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of such missing Coupons which the gross amount actually available for payment bears to the amount of principal due for payment;

(ii)

if the aggregate amount of the missing Coupons is greater than the amount of principal due for payment: (A) so many of such missing Coupons shall become void (in inverse order of maturity) as will result in the aggregate amount of the remainder of such missing Coupons (the ‘‘Relevant Coupons’’) being equal to the amount of principal due for payment; provided, however, that where this sub-paragraph would otherwise require a fraction of a missing Coupon to become void, such missing Coupon shall become void in its entirety; and (B)

a sum equal to the aggregate amount of the Relevant Coupons (or, if less, the amount of principal due for payment) will be deducted from the amount of principal due for payment; provided, however, that, if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of the Relevant Coupons (or, as the case may be, the amount of principal due for payment) which the gross amount actually available for payment bears to the amount of principal due for payment.

Each sum of principal so deducted shall be paid in the manner provided in paragraph (a) (Principal) above against presentation and (provided that payment is made in full) surrender of the relevant missing Coupons. (g)

Unmatured Coupons void: If the relevant Pricing Supplement specifies that this Condition 11(g) is applicable or that the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions are applicable, on the due date for final redemption of any Note or early redemption in whole of such Note pursuant to Condition 10(b) (Redemption and Purchase – Redemption for tax reasons), Condition 10(c) (Redemption and Purchase – Redemption at the option of the Issuer), Condition 10(e) (Redemption and Purchase – Redemption for Change of Control), Condition 10(f) (Redemption and Purchase – Redemption at the option of Noteholders), Condition 10(g) (Redemption and Purchase – Mandatory Redemption for NonRegistration) or Condition 14 (Events of Default), all unmatured Coupons relating thereto (whether or not still attached) shall become void and no payment will be made in respect thereof.

(h)

Payments on business days: If the due date for payment of any amount in respect of any Bearer Note or Coupon is not a Payment Business Day in the place of presentation, the Holder shall not be entitled to payment in such place of the amount due until the next succeeding Payment Business Day in such place and shall not be entitled to any further interest or other payment in respect of any such delay.

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12.

(i)

Payments other than in respect of matured Coupons: Payments of interest other than in respect of matured Coupons shall be made only against presentation of the relevant Bearer Notes at the Specified Office of any Paying Agent outside the United States (or in New York City if permitted by paragraph (c) (Payments in New York City) above).

(j)

Partial payments: If a Paying Agent makes a partial payment in respect of any Bearer Note or Coupon presented to it for payment, such Paying Agent will endorse thereon a statement indicating the amount and date of such payment.

(k)

Exchange of Talons: On or after the maturity date of the final Coupon which is (or was at the time of issue) part of a Coupon Sheet relating to the Bearer Notes, the Talon forming part of such Coupon Sheet may be exchanged at the Specified Office of the Issuing and Paying Agent for a further Coupon Sheet (including, if appropriate, a further Talon but excluding any Coupons in respect of which claims have already become void pursuant to Condition 15 (Prescription). Upon the due date for redemption of any Bearer Note, any unexchanged Talon relating to such Note shall become void and no Coupon will be delivered in respect of such Talon.

Payments – Registered Notes This Condition 12 is only applicable to Registered Notes. (a)

Principal: Payments of principal shall be made (i) in the case of a currency other than Renminbi, by cheque drawn in the currency in which the payment is due drawn on, or, upon application by a Holder of a Registered Note to the Specified Office of the Issuing and Paying Agent not later than the 15th day before the due date for any such payment, by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency (in the case of a sterling cheque, a town clearing branch of a bank in the City of London), and (ii) in the case of Renminbi, by transfer to an account denominated in that currency and maintained by the payee with a bank in the Principal Financial Centre of that currency, and (in the case of redemption) upon surrender (or, in the case of part payment only, endorsement) of the relevant Note Certificates at the Specified Office of any Paying Agent.

(b)

Interest: Payments of interest shall be made (i) in the case of a currency other than Renminbi, by cheque drawn in the currency in which the payment is due drawn on, or, upon application by a Holder of a Registered Note to the Specified Office of the Issuing and Paying Agent not later than the fifteenth day before the due date for any such payment, by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency (in the case of a sterling cheque, a town clearing branch of a bank in the City of London), and (ii) in the case of Renminbi, by transfer to an account denominated in that currency and maintained by the payee with a bank in the Principal Financial Centre of that currency, and (in the case of interest payable on redemption) upon surrender (or, in the case of part payment only, endorsement) of the relevant Note Certificates at the Specified Office of any Paying Agent. Payments of principal and interest in respect of Registered Notes held in the CMU Service will be made to the person(s) for whose account(s) interests in the relevant Registered Note are credited as being held with the CMU Service in accordance with the CMU Rules (as defined in the Agency Agreement) at the relevant time as notified to the CMU Lodging and Paying Agent by the CMU Service in a relevant CMU Instrument Position Report (as defined in the Agency Agreement) or any other relevant notification by the CMU Service, which

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notification shall be conclusive evidence of the records of the CMU Service (save in the case of manifest or proven error) and payment made in accordance thereof shall discharge the obligations of the Issuer, or, as the case may be, the Guarantor, in respect of that payment. (c)

Payments subject to fiscal laws: All payments in respect of the Registered Notes are subject in all cases to (i) any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 13 (Taxation) 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 13 (Taxation)) any law implementing an intergovernmental approach thereto. No commissions or expenses shall be charged to the Noteholders in respect of such payments.

(d)

Payments on business days: Where payment is to be made by transfer to an account, payment instructions (for value the due date, or, if the due date is not Payment Business Day, for value the next succeeding Payment Business Day) will be initiated and, where payment is to be made by cheque, the cheque will be mailed (i) (in the case of payments of principal and interest payable on redemption) on the later of the due date for payment and the day on which the relevant Note Certificate is surrendered (or, in the case of part payment only, endorsed) at the Specified Office of a Paying Agent and (ii) (in the case of payments of interest payable other than on redemption) on the due date for payment. A Holder of a Registered Note shall not be entitled to any interest or other payment in respect of any delay in payment resulting from (A) the due date for a payment not being a Payment Business Day or (B) a cheque mailed in accordance with this Condition 12 arriving after the due date for payment or being lost in the mail.

(e)

Partial payments: If a Paying Agent makes a partial payment in respect of any Registered Note, the Issuer shall procure that the amount and date of such payment are noted on the Register and, in the case of partial payment upon presentation of a Note Certificate, that a statement indicating the amount and the date of such payment is endorsed on the relevant Note Certificate.

(f)

Record date: Each payment in respect of a Registered Note will be made to the person shown as the Holder in the Register at the opening of business in the place of the relevant Registrar’s Specified Office on the fifth Business Day (in the case of Renminbi) and the fifteenth day (in the case of a currency other than Renminbi, whether or not such fifteenth day is a Business Day) before the due date for such payment (the ‘‘Record Date’’). Where payment in respect of a Registered Note is to be made by cheque, the cheque will be mailed to the address shown as the address of the Holder in the Register at the opening of business on the relevant Record Date. So long as the Global Note Certificate is held on behalf of Euroclear, Clearstream, Luxembourg or any other clearing system, each payment in respect of the Global Note Certificate will be made to the person shown as the holder in the Register at the close of business of the relevant clearing system on the Clearing System Business Day before the due date for such payments, where ‘‘Clearing System Business Day’’ means a weekday (Monday to Friday, inclusive) except 25 December and 1 January.

13.

Taxation (a)

No tax withholding save as required by law: All payments of principal and interest by or on behalf of the Issuer or the Guarantor in respect of the Notes and the Coupons or under the Guarantee of the Notes (as the case may be) shall be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of

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whatever nature imposed, levied, collected, withheld or assessed by or within Hong Kong, the PRC or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law. (b)

Withholding for PRC enterprise income tax: Where such withholding or deduction is in respect of PRC enterprise income tax on interest payments at the rate of up to 10 per cent., the Issuer or, as the case may be, the Guarantor will increase the amount of interest paid to the extent required so that the amount of interest received by Noteholders and the Couponholders (without prejudice to Condition 11(d) (Payments – Bearer Notes – Payments subject to fiscal laws) or Condition 12(c) (Payments – Registered Notes – Payments subject to fiscal laws), as the case may be) amounts to the relevant amount of the interest payable pursuant to Condition 6 (Fixed Rate Note Provisions) or Condition 7 (Floating Rate Note and Index-Linked Interest Note Provisions), as the case may be.

(c)

Additional Tax Amounts: In the event that (i) any such withholding or deduction in respect of principal is required; or (ii) any such withholding or deduction in respect of interest is required by the laws of Hong Kong; or (iii) any such additional withholding or deduction in excess of 10 per cent. in respect of PRC enterprise income tax on interest is required by the laws of the PRC, 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 the Couponholders after such withholding or deduction of such amounts as would have been received by them had no such withholding or deduction been required, except that no such Additional Tax Amounts shall be payable in respect of any Note or Coupon: (i)

held by or on behalf of a Holder which is liable to such taxes, duties, assessments or governmental charges in respect of such Note or Coupon by reason of its having some connection with Hong Kong or, in the case of payments made by the Guarantor, the PRC other than the mere holding of the Note or Coupon; or

(ii)

where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, this Directive; or

(iii) held by or on behalf of a Holder who would have been able to avoid such withholding or deduction by presenting the relevant Note or Coupon to another Paying Agent in a Member State of the EU; or (iv) where the relevant Note or Coupon or Note Certificate is presented or surrendered for payment more than 30 days after the Relevant Date except to the extent that the Holder of such Note or Coupon would have been entitled to such Additional Tax Amounts on presenting or surrendering such Note or Coupon or Note Certificate for payment on the last day of such period of 30 days; or (v)

(d)

to a Noteholder or Couponholder who would not be liable for or subject to such withholding or deduction by making a declaration of identity, non-residence or other similar claim for exemption to the relevant tax authority if, after having been requested to make such a declaration or claim, such holder fails to do so within any applicable period prescribed by such relevant tax authority.

No withholding for estate duty, etc.: For the avoidance of doubt, the Issuer’s or the Guarantor’s (as the case may be) obligation to pay Additional Tax Amounts in respect of taxes, duties, assessments and other governmental charges will not apply to (a) any estate, inheritance, gift, sales, transfer, personal property or any similar tax, duty, assessment or

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other governmental charge or (b) any tax, duty, assessment or other governmental charge which is payable otherwise than by deduction or withholding from payments of principal of, or interest on the Notes or Coupons. (e)

14.

Taxing jurisdiction: If the Issuer or the Guarantor becomes subject at any time to any taxing jurisdiction other than Hong Kong or the PRC, respectively, references in these Conditions to Hong Kong or the PRC shall be construed as references to Hong Kong or (as the case may be) the PRC and/or such other jurisdiction.

Events of Default If any of the following events occurs, then the Trustee at its discretion may and, if so requested in writing by Holders of at least 25 per cent. of the aggregate principal amount of the outstanding Notes or if so directed by an Extraordinary Resolution, shall (subject to the Trustee having been indemnified and/or provided with security and/or pre-funded to its satisfaction) give written notice to the Issuer declaring the Notes to be immediately due and payable, whereupon they shall become immediately due and payable at their Early Termination Amount together with accrued interest (if any) without further action or formality: (a)

Non-payment: there is a failure to pay any amount of principal in respect of the Notes on the due date for payment thereof or a failure to pay any amount of interest in respect of the Notes within 14 days of the due date for payment thereof; or

(b)

Breach of other obligations: the Issuer or the Guarantor defaults in the performance or observance of any of its other obligations under or in respect of the Notes, the relevant Deed of Guarantee or the Trust Deed and such default (i) is incapable of remedy or (ii) being a default which is capable of remedy but remains unremedied for 30 days after the Trustee has given written notice thereof to the Issuer or the Guarantor, as the case may be; or

(c)

Cross-default of Issuer, Guarantor or Material Subsidiaries: (i)

any Indebtedness of the Issuer, the Guarantor or any of their respective Material Subsidiaries is not paid when due or (as the case may be) within any originally applicable grace period;

(ii)

any such Indebtedness becomes due and payable prior to its stated maturity otherwise than at the option of the Issuer, the Guarantor or (as the case may be) the relevant Material Subsidiary or (provided that no event of default, howsoever described, has occurred) any person entitled to such Indebtedness; or

(iii) the Issuer, the Guarantor or any of their respective Material Subsidiaries fails to pay when due any amount payable by it under any Guarantee of any Indebtedness, provided that the amount of Indebtedness referred to in sub-paragraph (i) and/or subparagraph (ii) of this Condition 14(c) and/or the amount payable under any Guarantee referred to in sub-paragraph (iii) of this Condition 14(c) individually or in the aggregate exceeds CNY100,000,000 (or its equivalent in any other currency or currencies); or (d)

Unsatisfied judgment: one or more judgment(s) or order(s) for the payment of an aggregate amount in excess of CNY30,000,000 (or its equivalent in any other currency or currencies) is rendered against the Issuer, the Guarantor or any of their respective Material Subsidiaries and continue(s) unsatisfied and unstayed for a period of 45 days after the date(s) thereof or, if later, the date therein specified for payment; or

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(e)

Security enforced: a secured party takes possession, or a receiver, manager or other similar officer is appointed, of the whole or any material part of the undertaking, assets and revenues of the Issuer, the Guarantor or any of their respective Material Subsidiaries and such action is not discharged within 45 days after the date thereof; or

(f)

Insolvency etc: (i) the Issuer, the Guarantor or any of their respective Material Subsidiaries becomes insolvent or is unable to pay, its debts as they fall due, (ii) an administrator or liquidator of the Issuer, the Guarantor or any of their respective Material Subsidiaries or the whole or any material part of the undertaking, assets and revenues of the Issuer, the Guarantor or any of their respective Material Subsidiaries is appointed (or application for any such appointment is made, (iii) the Issuer, the Guarantor or any of their respective Material Subsidiaries takes any action for a readjustment or deferment of any of its obligations or makes a general assignment or an arrangement or composition with or for the benefit of its creditors or declares a moratorium in respect of any of its Indebtedness or any Guarantee of any Indebtedness given by it or (iv) the Issuer, the Guarantor or any of their respective Material Subsidiaries ceases or threatens to cease to carry on all or any substantial part of its business, except (A) in the case of any Material Subsidiary, where the cessation is for the purpose of and followed by a solvent winding up, dissolution, reconstruction, amalgamation, merger or consolidation whereby the business, undertaking and assets of such Material Subsidiary are transferred to or otherwise vested in the Issuer, the Guarantor, and/or another Material Subsidiary, or (B) any disposal by any of the Issuer, the Guarantor or any of their respective Material Subsidiaries carried out in the ordinary course of business and such disposal would not have a material adverse effect on the Issuer, the Guarantor or the relevant Material Subsidiary or (C) on terms approved by an Extraordinary Resolution of the Noteholders; or

(g)

Winding up etc: an order is made or an effective resolution is passed for the winding up, liquidation or dissolution of the Issuer, the Guarantor or any of their respective Material Subsidiaries, except (i) in the case of any Material Subsidiary, for the purpose of and followed by a solvent winding up, dissolution, reconstruction, merger or consolidation whereby the business, undertaking and assets of such Material Subsidiary are transferred to or otherwise vested in the Issuer, the Guarantor and/or another Material Subsidiary or (ii) on terms approved by an Extraordinary Resolution of the Noteholders; or

(h)

Government intervention: (i) all or any material part of the undertaking, assets and revenues of the Issuer, the Guarantor or any of their respective Material Subsidiaries is condemned, seized or otherwise appropriated by any person acting under the authority of any national, regional or local government or (ii) the Issuer, the Guarantor or any of their respective Material Subsidiaries is prevented by any such person from exercising normal control over all or any material part of its undertaking, assets and revenues; or

(i)

Analogous event: any event occurs which under the laws of Hong Kong or the PRC has an analogous effect to any of the events referred to in Condition 14(d) (Events of Default – Unsatisfied judgment) to Condition 14(h) (Events of Default – Government intervention) (both inclusive); or

(j)

Failure to take action etc: any action, condition or thing 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 and in respect of the Notes, the Trust Deed, the relevant Deed of Guarantee, the Agency Agreement or the relevant Escrow Deed, (ii) to ensure that those obligations are legal, valid, binding and enforceable and (iii) to make the Notes, the Trust Deed, the relevant Deed of Guarantee, the Agency Agreement or the relevant Escrow Deed admissible in evidence in the courts of Hong Kong or the PRC is not taken, fulfilled or done; or

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15.

(k)

Unlawfulness: it is or will become unlawful for the Issuer or the Guarantor to perform or comply with any of its obligations under or in respect of the Notes, the Trust Deed, the relevant Deed of Guarantee, the relevant Escrow Deed or the Agency Agreement; or

(l)

Guarantee not in force: the Guarantee of the Notes or the Cross-border Security Registration shall cease to be in full force or effect or (in the case of the Cross-border Security Registration) revoked, or the Guarantor shall deny or disaffirm its obligations under the Guarantee of the Notes.

Prescription Claims for principal in respect of Bearer Notes shall become void unless the relevant Bearer Notes are presented for payment within ten years of the appropriate Relevant Date. Claims for interest in respect of Bearer Notes shall become void unless the relevant Coupons are presented for payment within five years of the appropriate Relevant Date. Claims for principal and interest on redemption in respect of Registered Notes shall become void unless the relevant Note Certificates are surrendered for payment within ten years of the appropriate Relevant Date.

16.

Replacement of Notes and Coupons If any Note, Note Certificate or Coupon is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the Specified Office of the Issuing and Paying Agent, in the case of Bearer Notes, or the relevant Registrar, in the case of Registered Notes (and, if the Notes are then admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent or Transfer Agent in any particular place, the Paying Agent or Transfer Agent having its Specified Office in the place required by such competent authority, stock exchange and/or quotation system), subject to all applicable laws and competent authority, stock exchange and/or quotation system requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer may reasonably require. Mutilated or defaced Notes, Note Certificates or Coupons must be surrendered before replacements will be issued.

17.

Trustee and Agents Under the Trust Deed, the Trustee is entitled to be indemnified and/or pre-funded and/or provided with security to its satisfaction, as well as relieved from responsibility in certain circumstances and to be paid its fees, costs and expenses in priority to the claims of the Noteholders. In addition, the Trustee is entitled to enter into business transactions with the Issuer, the Guarantor and any entity relating to the Issuer or the Guarantor without accounting for any profit. In the exercise of its powers and discretions under these Conditions, the relevant Deed of Guarantee and the Trust Deed, the Trustee will have regard to the interests of the Noteholders as a class and will not be responsible for any consequence for individual Holders of Notes or Coupons as a result of such Holders being connected in any way with a particular territory or taxing jurisdiction. In acting under the Agency Agreement and in connection with the Notes and the Coupons, the Agents act solely as agents of the Issuer and the Guarantor and (to the extent provided therein) the Trustee and do not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders or Couponholders. The initial Agents and their initial Specified Offices are listed below. The initial Calculation Agent (if any) is specified in the relevant Pricing Supplement. The Issuer and the Guarantor reserve the right (with the prior approval of the Trustee) at any time to vary or terminate the appointment of any Agent and to appoint a successor to any of the Issuing and Paying Agent, the CMU Lodging

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and Paying Agent, the CDP Paying Agent, the Principal Registrar, the CMU Registrar, the CDP Registrar or the Calculation Agent and additional or successor paying agents and transfer agents; provided, however, that: (a)

the Issuer and the Guarantor shall at all times maintain an Issuing and Paying Agent and a Principal Registrar; and

(b)

the Issuer and the Guarantor shall at all times maintain a paying agent in an EU member state that will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC; and

(c)

the Issuer and the Guarantor shall at all times maintain a CMU Lodging and Paying Agent (and a CMU Registrar, in case of Registered Notes) in relation to Notes accepted for clearance through the CMU Service;

(d)

the Issuer and the Guarantor shall at all times maintain a CDP Paying Agent (and a CDP Registrar, in case of Registered Notes) in relation to Notes accepted for clearance through the CDP;

(e)

if a Calculation Agent is specified in the relevant Pricing Supplement, the Issuer and the Guarantor shall at all times maintain a Calculation Agent;

(f)

a Paying Agent in Singapore, where the Notes may be presented or surrendered for payment or redemption, in the event that Global Notes are exchanged for Definitive Notes, for so long as the Notes are listed on the SGX-ST and the rules of the SGX-ST so require; and

(g)

if and for so long as the Notes are admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent and/or a Transfer Agent in any particular place, the Issuer and the Guarantor shall maintain a Paying Agent and/or a Transfer Agent having its Specified Office in the place required by such competent authority, stock exchange and/or quotation system.

Notice of any change in any of the Agents or in their Specified Offices shall promptly be given to the Noteholders. 18.

Meetings of Noteholders, Modification and Waiver (a)

Meetings of Noteholders: The Trust Deed contains provisions for convening meetings of Noteholders to consider matters relating to the Notes, including the modification of any provision of these Conditions, the Trust Deed, each Deed of Guarantee, each Escrow Deed or the Agency Agreement. Any such modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the Issuer and the Guarantor (acting together) or by the Trustee and shall be convened by the Trustee upon the request in writing of Noteholders holding not less than ten per cent. of the aggregate principal amount of the outstanding Notes. The quorum at any meeting convened to vote on an Extraordinary Resolution will be two or more Persons holding or representing more than 50 per cent. of the aggregate principal amount of the outstanding Notes or, at any adjourned meeting, two or more Persons being or representing Noteholders whatever the principal amount of the Notes held or represented; provided, however, that Reserved Matters may only be sanctioned by an Extraordinary Resolution passed at a meeting of Noteholders at which two or more Persons holding or representing not less than 75 per cent. or, at any adjourned meeting, 25 per cent. of the aggregate principal amount of the outstanding Notes form a quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders and Couponholders, whether present or not.

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In addition, a resolution in writing signed by or on behalf of holders holding not less than 90 per cent. of the aggregate principal amount of the Notes outstanding who for the time being are entitled to receive notice of a meeting of Noteholders under the Trust Deed will take effect as if it were an Extraordinary Resolution. 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. (b)

Modification and waiver: The Trustee may, without the consent of the Noteholders, agree to any modification of these Conditions, the Trust Deed, any Deed of Guarantee or any Escrow Deed (other than in respect of a Reserved Matter) which is, in the opinion of the Trustee, proper to make if, in the opinion of the Trustee, such modification will not be materially prejudicial to the interests of Noteholders and to any modification of the Notes, the Trust Deed, any Deed of Guarantee or any Escrow Deed which is of a formal, minor or technical nature or is to correct a manifest error. In addition, the Trustee may, without the consent of the Noteholders or Couponholders, authorise or waive any proposed breach or breach of the Notes, the Trust Deed, any Deed of Guarantee or any Escrow Deed (other than a proposed breach or breach relating to the subject of a Reserved Matter) if, in the opinion of the Trustee (relying on the opinion of any legal adviser selected by the Trustee in accordance with the Trust Deed), the interests of the Noteholders will not be materially prejudiced thereby. Unless the Trustee agrees otherwise, any such authorisation, waiver or modification shall be notified to the Noteholders as soon as practicable thereafter and shall be binding on all Noteholders.

(c)

Directions from Noteholders: None of the Trustee or any of the Agents shall be responsible for the performance by the Issuer or the Guarantor or any other person appointed by the Issuer in relation to the Notes of the duties and obligations on their part expressed in respect of the same and, unless it has actual knowledge 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 principal amount of Notes outstanding or passed at a meeting of Noteholders convened and held in accordance with the Trust Deed and these Conditions. Whenever the Trustee is required or entitled by the terms of the Trust Deed 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 or seek legal advice, 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 advice or in the event that no such directions are received. The Trustee shall not be under any obligation to monitor compliance with the provisions of the Trust Deed or these Conditions.

(d)

Certificates and Report: Any certificate, advice, opinion, confirmation or report of any expert or other person called for by or provided to the Trustee (whether or not addressed to the Trustee) in accordance with or for the purposes of these Conditions or the Trust Deed may be relied upon by the Trustee as sufficient evidence of the facts therein (and shall be conclusive and binding on all parties) notwithstanding that such certificate, advice, opinion, confirmation or report and/or engagement letter or other document entered into by the Trustee and/or the Issuer in connection therewith contains a monetary or other limit on the liability of the

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relevant expert or person in respect thereof. The Trustee may accept and shall be entitled to rely on any such certificate, advice, opinion, confirmation, report or other document without liability and such certificate, advice, opinion, confirmation, report or other document shall be binding on the Issuer, the Guarantor and the Noteholders. 19.

Enforcement The Trustee may at any time, at its absolute discretion and without notice, institute such proceedings, actions or steps as it thinks fit to enforce its rights under the Trust Deed, the relevant Deed of Guarantee or the relevant Escrow Deed in respect of the Notes or the Guarantee of the Notes, but it shall not be bound to do so unless: (a)

it has been so requested in writing by the Holders of at least 25 per cent. of the aggregate principal amount of the outstanding Notes or has been so directed by an Extraordinary Resolution; and

(b)

it has been indemnified, pre-funded or provided with security to its satisfaction.

No Noteholder may proceed directly against the Issuer or the Guarantor unless the Trustee, having become bound to do so, fails to do so within a reasonable time and such failure is continuing. 20.

Further Issues Subject to compliance with the undertaking in Condition 5(c) (Covenants – Undertaking in relation to the Guarantee), the Issuer may from time to time, without the consent of the Noteholders or the Couponholders and in accordance with the Trust Deed, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest) so as to form a single series with the Notes. The Issuer may from time to time create and issue other series of notes having the benefit of the Trust Deed.

21.

Notices (a)

Bearer Notes: Notices to the Holders of Bearer Notes shall be valid if published in a leading English language daily newspaper published in Hong Kong or, if such publication is not practicable, in a leading English language daily newspaper having general circulation in Asia. Any such notice shall be deemed to have been given on the date of first publication (or if required to be published in more than one newspaper, on the first date on which publication shall have been made in all the required newspapers). Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the Holders of Bearer Notes.

(b)

Registered Notes: Notices to the Holders of Registered Notes shall be sent to them by first class mail (or its equivalent) or (if posted to an overseas address) by airmail at their respective addresses on the Register or, if such publication is not practicable, in a leading English language daily newspaper having general circulation in Asia. Any such notice shall be deemed to have been given on the fourth day after the date of mailing.

So long as the Notes are represented by a Global Note or a Global Note Certificate and such Global Note or Global Note Certificate is held on behalf of (i) Euroclear or Clearstream, Luxembourg, or any other clearing system (except as provided in (ii) and (iii) below), notices to the holders of Notes 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 as required by the Conditions, (ii) the CMU Service, notices to the holders of Notes of that Series may be given by delivery of the relevant notice to the Persons shown in a CMU Instrument Position Report issued by the Hong Kong Monetary Authority on the business day preceding the date of despatch of such notice, or (iii) (subject to the agreement of the CDP) the CDP, notices to the holders of Notes of that Series may be given by delivery of the relevant notice to the persons

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shown in the records of the CDP. Any such notice shall be deemed to have been given to the holders of the Notes on the second day after the day on which the said notice was given to Euroclear, Clearstream, Luxembourg, the CMU Service, the CDP and/or the alternative clearing system, as the case may be. 22.

Currency Indemnity If any sum due from the Issuer or the Guarantor in respect of the Notes or the Coupons or any order or judgment given or made in relation thereto has to be converted from the currency (the ‘‘first currency’’) in which the same is payable under these Conditions or such order or judgment into another currency (the ‘‘second currency’’) for the purpose of (a) making or filing a claim or proof against the Issuer or the Guarantor, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to the Notes, the Issuer and the Guarantor shall indemnify the Trustee, each Noteholder and Couponholder, on the written demand of the Trustee, such Noteholder or Couponholder addressed to the Issuer and the Guarantor and delivered to the Issuer and the Guarantor, against any loss suffered as a result of any discrepancy between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which the Trustee, such Noteholder or Couponholder may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. This indemnity constitutes a separate and independent obligation of each of the Issuer and the Guarantor and shall give rise to a separate and independent cause of action.

23.

Rounding For the purposes of any calculations referred to in these Conditions (unless otherwise specified in these Conditions or the relevant Pricing Supplement), (a) all percentages resulting from such calculations will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with 0.000005 per cent. being rounded up to 0.00001 per cent.), (b) all United States dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one half cent being rounded up), (c) all Japanese Yen amounts used in or resulting from such calculations will be rounded downwards to the next lower whole Japanese Yen amount, and (d) all amounts denominated in any other currency used in or resulting from such calculations will be rounded to the nearest two decimal places in such currency, with 0.005 being rounded upwards.

24.

Governing Law and Jurisdiction (a)

Governing law: The Notes, the Trust Deed and each Deed of Guarantee and all noncontractual obligations arising out of or in connection with the Notes, the Trust Deed and each Deed of Guarantee are governed by English law.

(b)

Jurisdiction: Each of the Issuer and the Guarantor has in the Trust Deed and each Deed of Guarantee (i) agreed for the benefit of the Trustee and the Noteholders that the courts of Hong Kong shall have exclusive jurisdiction to settle any dispute (a ‘‘Dispute’’) arising out of or in connection with the Notes, the Trust Deed or the relevant Deed of Guarantee (including any non-contractual obligation arising out of or in connection with the Notes, the Trust Deed or the relevant Deed of Guarantee); and (ii) agreed that those courts are the most appropriate and convenient courts to settle any Dispute and, accordingly, that it will not argue that any other courts are more appropriate or convenient to accept service of any process on its behalf.

(c)

Waiver of immunity: To the extent that the Issuer or the Guarantor may in any jurisdiction claim for itself or its assets or revenues immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent

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that such immunity (whether or not claimed) may be attributed in any such jurisdiction to the Issuer or the Guarantor or their respective assets or revenues, each of the Issuer and the Guarantor agrees not to claim and irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction. (d)

Service of Process: Each of the Issuer and the Guarantor has agreed to receive service of process at the Issuer’s principal place of business at 26/F, 3 Pacific Place, 1 Queen’s Road East, Hong Kong in any Dispute in Hong Kong based on any of the Trust Deed, the Notes or the relevant Deed of Guarantee. If the Issuer ceases to have a place of business in Hong Kong, each of the Issuer and the Guarantor shall promptly appoint a person in Hong Kong to accept service of process on its behalf and deliver to the Trustee a copy of such person’s acceptance of that appointment within 30 days. Nothing herein shall affect the right to serve process in any other manner permitted by law.

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FORM OF PRICING SUPPLEMENT The Pricing Supplement in respect of each Tranche of Notes will be substantially in the following form, duly supplemented (if necessary), amended (if necessary) and completed to reflect the particular terms of the relevant Notes and their issue. Pricing Supplement dated [•] HNA GROUP (INTERNATIONAL) COMPANY LIMITED Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes] Guaranteed by HNA GROUP CO., LIMITED under the U.S.$1,000,000,000 Medium Term Note Programme The 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 Conditions (the ‘‘Conditions’’) set forth in the Offering Circular dated 17 March 2015. This Pricing Supplement contains the final terms of the Notes and must be read in conjunction with such Offering Circular [and the supplemental Offering Circular dated [date]]. The Guarantor is a private company and therefore there is less publicly available information about the Guarantor than a public company. In particular, they are not required to publish periodic financial statements. [Where interest, discount income (not including discount income arising from secondary trading), prepayment fee, redemption premium or break cost is derived from any Notes by any person who is not resident in Singapore and who carries on any operations in Singapore through a permanent establishment in Singapore, the tax exemption available (subject to certain conditions) under the Income Tax Act, Chapter 134 of Singapore (the ‘‘ITA’’), shall not apply if such person acquires such Notes using the funds and profits of such person’s operations through a permanent establishment in Singapore. Any person whose interest, discount income (not including discount income arising from secondary trading), prepayment fees, redemption premium or break cost derived from the Notes is not exempt from tax (including for the reasons described above) shall include such income in a return of income made under the ITA.] [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 (in which case the sub-paragraphs of the paragraphs which are not applicable can be deleted). Italics denote guidance for completing the Pricing Supplement.] 1.

2.

(i)

Issuer:

HNA Group (International) Company Limited

(ii)

Guarantor:

HNA Group Co., Limited

[(i)

Series Number:]

[•]

[(ii) Tranche Number:

[•]

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[(iii) Date on which the Notes become fungible:

[Not Applicable/The Notes shall be consolidated, form a single series and be interchangeable for trading purposes with the [•] on [[•]/the Issue Date/exchange of the Temporary Global Note for interests in the Permanent Global Note, as referred to in paragraph 25 below [which is expected to occur on or about [•]].]

3.

Specified Currency or Currencies:

[•]

4.

Aggregate Nominal Amount:

[•]

[(i)] [Series]:

[•]

[(ii) Tranche:

[•]]

(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)]

(i)

Specified Denominations 1

(ii)

Calculation Amount:

[•]

(i)

Issue Date:

[•]

(ii)

Interest Commencement Date:

[Specify/Issue Date/Not Applicable]

5.

6.

7.

8.

Maturity Date:

2 3

[•]

[Specify date or (for Floating Rate Notes) Interest Payment Date falling in or nearest to the relevant month and year] 4

1

Notes (including Notes denominated in sterling) in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise constitutes a contravention of section 19 of the FSMA and which have a maturity of less than one year and must have a minimum redemption value of £100,000 (or its equivalent in other currencies).

2

If the specified denomination is expressed to be EUR50,000 (or EUR100,000, to the extent that Directive 2010/73/EU has been implemented in the relevant Member State) or its equivalent and multiples of a lower principal amount (for example EUR1,000), insert the additional wording as follows: EUR50,000 (or EUR100,000, to the extent that Directive 2010/73/EU has been implemented in the relevant Member State) and integral multiples of [EUR1,000] in excess thereof up to and including [EUR99,000]/[EUR199,000]. No Notes in definitive form will be issued with a denomination above [EUR99,000]/ [EUR199,000]. In relation to any issue of the Notes which are a ‘‘Global Note exchangeable for Definitive Notes’’ in circumstances other than ‘‘in the limited circumstances specified in the Global Notes’’, such Notes may only be issued in denominations equal to, or greater than, EUR100,000 (or equivalent) and multiples thereof.

3

For so long as any Notes are listed on the Singapore Exchange Securities Trading Limited (the ‘‘SGX-ST’’) and the rules of the SGX-ST so require, such Notes will be traded on the SGX-ST in a minimum board lot size of not less than S$200,000 (or its equivalent in other currencies).

4

Note that for Renminbi or Hong Kong dollar denominated Fixed Rate Notes where Interest Payment Dates are subject to modification it will be necessary to use the second option here.

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[If the Maturity Date is less than one year from the Issue Date and either (a) the issue proceeds are received by the Issuer in the United Kingdom, or (b) the activity of issuing the Notes is carried on from an establishment maintained by the Issuer in the United Kingdom, (i) the Notes must have a minimum redemption value of £100,000 (or its equivalent in other currencies) and be sold only to ‘‘professional investors’’ or (ii) another applicable exemption from section 19 of the FSMA must be available.] 9.

Interest Basis:

[[•] per cent. Fixed Rate] [[Specify reference rate] +/- [•] per cent. Floating Rate] [Zero Coupon] [Index Linked Interest] [Other (Specify)] (further particulars specified below)

10.

Redemption/Payment Basis:

[Redemption at par] [Index Linked Redemption] [Dual Currency] [Partly Paid] [Instalment] [Other (Specify)]

11.

Change of Interest or Redemption/ Payment Basis:

[Specify details of any provision for convertibility of the Notes into another interest or redemption/payment basis]

12.

Put/Call Options:

[Investor Put] [Issuer Call] [(further particulars specified below)]

13.

[Date [Board] approval for issuance of Notes [and Guarantee of the Notes] [respectively]] obtained

[•] [and [•], respectively]

(N.B. Only relevant where Board (or similar) authorisation is required for the particular tranche of Notes or related Guarantee of the Notes)

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14.

Listing:

[Singapore Exchange Securities Trading Limited/Other (specify)/None] (For Notes to be listed on the SGX-ST, insert the expected effective listing date of the Notes)

15.

Method of distribution:

[Syndicated/Non-syndicated]

PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE 16.

Fixed Rate Note Provisions

[Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph)

17.

(i)

Rate[(s)] of Interest:

[•] per cent. per annum [payable [annually/semiannually/quarterly/monthly/other (specify)] in arrear]

(ii)

Interest 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 Coupon Amount[(s)]:

[•] per Calculation Amount 5

(iv) Broken Amount(s):

[•] per Calculation Amount, payable on the Interest Payment Date falling [in/on] [•]

(v)

[30/360/Actual/Actual (ICMA/ISDA)/other]

Day Count Fraction:

(vi) Determination Dates:

[[•] in each year (insert regular interest payment dates, ignoring Issue Date or Maturity Date in the case of a long or short first or last coupon. N.B. only relevant where Day Count Fraction is Actual/Actual (ICMA))]

(vii) Other terms relating to the method of calculating interest for Fixed Rate Notes:

[Not Applicable/give details]

Floating Rate Note Provisions

[Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph)

(i)

5

Interest Period(s):

[•]

For Renminbi or Hong Kong dollar denominated Fixed Rate Notes where the Interest Payment Dates are subject to modification the following alternative wording is appropriate: ‘‘Each Fixed Coupon Amount shall be calculated by multiplying the product of the Rate of Interest and the Calculation Amount by the Day Count Fraction and rounding the resultant figure to the nearest RMB0.01, RMB0.005 for the case of Renminbi-denominated Fixed Rate Notes and to the nearest HK$0.01, HK$0.005 for the case of Hong Kong dollar denominated Fixed Rate Notes, being rounded upwards.

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(ii)

Specified Period:

[•] (Specified Period and Specified Interest Payment Dates are alternatives. A Specified Period, rather than Specified Interest Payment Dates, will only be relevant if the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention. Otherwise, insert ‘‘Not Applicable’’)

(iii) Specified Interest Payment Dates:

[•] (Specified Period and Specified Interest Payment Dates are alternatives. If the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention, insert ‘‘Not Applicable’’)

(iv) First Interest Payment Date:

[•]

(v)

[Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/other (give details)]

Business Day Convention:

(vi) Additional Business Centre(s):

[Not Applicable/give details]

(vii) Manner in which the Rate(s) of Interest is/are to be determined:

[Screen Rate Determination/ISDA Determination/other (give details)]

(viii) Party responsible for calculating the Rate(s) of Interest and/or Interest Amount(s) (if not the Issuing and Paying Agent):

[[Name] shall be the Calculation Agent (no need to specify if the Issuing and Paying Agent is to perform this function)]

(ix) Screen Rate Determination: •

Reference Rate:

[For example, LIBOR, EURIBOR or CNH HIBOR]



Interest Determination Date(s):

[•]



Relevant Screen Page:

[For example, Reuters LIBOR 01/EURIBOR 01]



Relevant Time:

[For example, 11.00 a.m. London time/Brussels time]



Relevant Financial Centre:

[For example, London/Euro-zone (where Euro-zone means the region comprised of the countries whose lawful currency is the euro]

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(x)

18.

ISDA Determination: •

Floating Rate Option:

[•]



Designated Maturity:

[•]



Reset Date:

[•]

(xi) Linear interpolation:

[Not Applicable/Applicable – the Rate of Interest for the [long/short] [first/last] Interest Period shall be calculated using Linear Interpolation (specify for each short or long interest period)]

(xii) Margin(s):

[+/-][•] per cent. per annum

(xiii) Minimum Rate of Interest:

[•] per cent. per annum

(xiv) Maximum Rate of Interest:

[•] per cent. per annum

(xv) Day Count Fraction:

[•]

(xvi) Fall back 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:

[•]

Zero Coupon Note Provisions

[Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph)

19.

(i)

Accrual Yield:

[•] per cent. per annum

(ii)

Reference Price:

[•]

(iii) Day Count Fraction in relation to Early Redemption Amount:

[30/360/Actual/Actual (ICMA/ISDA)/other]

(iv) Any other formula/basis of determining amount payable:

[Consider whether it is necessary to specify a Day Count Fraction for the purposes of Condition 10(i)]

Index-Linked Interest Note/other variable-linked interest Note Provisions

[Applicable/Not Applicable]

(i)

Index/Formula/other variable:

[give or annex details]

(ii)

Calculation Agent responsible for calculating the interest due:

[•]

(If not applicable, delete the remaining subparagraphs of this paragraph)

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(iii) Provisions for determining Coupon where calculated by reference to Index and/or Formula and/or other variable:

[•]

(iv) Interest Determination Date(s):

[•]

(v)

Provisions for determining Coupon where calculation by reference to Index and/or Formula and/or other variable is impossible or impracticable or otherwise disrupted:

[•]

(vi) Interest or calculation period(s):

[•]

(vii) Specified Period:

[•] (Specified Period and Specified Interest Payment Dates are alternatives. A Specified Period, rather than Specified Interest Payment Dates, will only be relevant if the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention. Otherwise, insert ‘‘Not Applicable’’)

(viii) Specified Interest Payment Dates:

[•] (Specified Period and Specified Interest Payment Dates are alternatives. If the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention, insert ‘‘Not Applicable’’)

20.

(ix) Business Day Convention:

[Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/other (give details)]

(x)

[•]

Additional Business Centre(s):

(xi) Minimum Rate/Amount of Interest:

[•] per cent. per annum

(xii) Maximum Rate/Amount of Interest:

[•] per cent. per annum

(xiii) Day Count Fraction:

[•]

Dual Currency Note Provisions

[Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph)

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(i)

Rate of Exchange/method of calculating Rate of Exchange:

[give details]

(ii)

Calculation Agent, if any, responsible for calculating the principal and/or interest due:

[•]

(iii) Provisions applicable where calculation by reference to Rate of Exchange impossible or impracticable:

[•]

(iv) Person at whose option Specified Currency(ies) is/are payable:

[•]

PROVISIONS RELATING TO REDEMPTION 21.

Call Option

[Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph)

(i)

Optional Redemption Date(s):

[•]

(ii)

Optional Redemption Amount(s) of each Note and method, if any, of calculation of such amount(s):

[•] per Calculation Amount

(iii) If redeemable in part:

22.

(a)

Minimum Redemption Amount:

[•] per Calculation Amount

(b)

Maximum Redemption Amount

[•] per Calculation Amount

(iv) Notice period:

[•]

Put Option

[Applicable/Not Applicable] (If not applicable, delete the remaining subparagraphs of this paragraph)

(i)

Optional Redemption Date(s):

[•]

(ii)

Optional Redemption Amount(s) of each Note and method, if any, of calculation of such amount(s):

[•] per Calculation Amount

(iii) Notice period:

[•]

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23.

Final Redemption Amount of each Note

[•] per Calculation Amount

In cases where the Final Redemption Amount is Index-Linked or other variable-linked:

24.

(i)

Index/Formula/variable:

[give or annex details]

(ii)

Calculation Agent responsible for calculating the Final Redemption Amount:

[•]

(iii) Provisions for determining Final Redemption Amount where calculated by reference to Index and/or Formula and/or other variable:

[•]

(iv) Date for determining Final Redemption Amount where calculation by reference to Index and/or Formula and/or other variable:

[•]

(v)

[•]

Provisions for determining Final Redemption Amount where calculation by reference to Index and/or Formula and/or other variable is impossible or impracticable or otherwise disrupted:

(vi) [Payment Date]:

[•]

(vii) Minimum Final Redemption Amount:

[•] per Calculation Amount

(viii) Maximum Final Redemption Amount:

[•] per Calculation Amount

Early Redemption Amount (i)

Early Redemption Amount (Tax) per Calculation Amount payable on redemption for taxation reasons and/or the method of calculating the same (if required or if different from that set out in the Conditions):

[Not Applicable (if the Early Redemption Amount is the principal amount of the Notes)/specify the Early Redemption Amount if different from the principal amount of the Notes or specify its method of calculation]

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(ii)

Early Redemption Amount (Change of Control) per Calculation Amount payable on redemption on change of control triggering event and/or the method of calculating the same (if required or if different from that set out in the Conditions):

[Not Applicable (if the Early Redemption Amount is the principal amount of the Notes)/specify the Early Redemption Amount if different from the principal amount of the Notes or specify its method of calculation]

(iii) Early Redemption Amount (No Registration Event) per Calculation Amount payable on mandatory redemption on a noregistration event and/or the method of calculating the same (if required or if different from that set out in the Conditions):

[Not Applicable (if the Early Redemption Amount is the principal amount of the Notes)/specify the Early Redemption Amount if different from the principal amount of the Notes or specify its method of calculation]

(iv) Early Redemption Amount (No Registration Event) per Calculation Amount payable on mandatory redemption on event of default or other early redemption and/or the method of calculating the same (if required or if different from that set out in the Conditions):

[Not Applicable (if the Early Redemption Amount is the principal amount of the Notes)/specify the Early Redemption Amount if different from the principal amount of the Notes or specify its method of calculation]

GENERAL PROVISIONS APPLICABLE TO THE NOTES 25.

Form of the Notes:

Bearer Notes:6 [Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes on [•] days’ notice/at any time/in the limited circumstances specified in the Permanent Global Note] [Temporary Global Note exchangeable for Definitive Notes on [•] days’ notice] 7 [Permanent Global Note exchangeable for Definitive Notes on [•] days’ notice/at any time/in the limited circumstances specified in the Permanent Global Note] 8

6

Bearer Notes issued in compliance with the D Rules must initially be represented by a Temporary Global Note.

7

if the Specified Denominations of the Notes in paragraph 6 includes language substantially to the following effect: ‘‘[EUR50,000]/[EUR100,000] and integral multiples of [EUR1,000] in excess thereof up to and including [EUR99,000]/ [EUR199,000]’’, the Temporary Global Note shall not be exchangeable on [•] days notice.

8

if the Specified Denominations of the Notes in paragraph 6 includes language substantially to the following effect: ‘‘[EUR50,000]/[EUR100,000] and integral multiples of [EUR1,000] in excess thereof up to and including [EUR99,000]/ [EUR199,000]’’, the Permanent Global Note shall not be exchangeable on [•] days notice.

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Registered Notes: [Global Note Certificate exchangeable for Individual Note Certificates on [•] days’ notice/at any time/in the limited circumstances described in the Global Note Certificate]9 26.

Additional Financial Centre(s) or other special provisions relating to payment dates:

[Not Applicable/give details.] Note that this paragraph relates to the date and place of payment, and not interest period end dates, to which sub paragraphs 17(vi) and 19(x) relate] [Also ensure London is a Financial Centre for all Notes in which The Bank of New York Mellon, London Branch acts as Issuing and Paying Agent]

27.

Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature):

[Yes/No. As the Notes have more than 27 coupon payments, talons may be required if, on exchange into definitive form, more than 27 coupon payments are left.]

28.

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 (if any) of failure to pay, including any right of the Issuer to forfeit the Notes and interest due on late payment]:

[Not Applicable/give details]

29.

Details relating to Instalment Notes: amount of each instalment, date on which each payment is to be made:

[Not Applicable/give details]

30.

Redenomination, renominalisation and reconventioning provisions:

[Not Applicable/The provisions annexed to this Pricing Supplement apply]

31.

Consolidation provisions:

The provisions in Condition 20 (Further Issues)] [annexed to this Pricing Supplement] apply]

32.

Any applicable currency disruption/ fallback provisions:

[Not Applicable/give details]

33.

Escrow Arrangement:

[Applicable/Not Applicable]

34.

Other terms or special conditions:

[Not Applicable/give details]

9

if the Specified Denominations of the Notes in paragraph 6 includes language substantially to the following effect: ‘‘[EUR50,000]/[EUR100,000] and integral multiples of [EUR1,000] in excess thereof up to and including [EUR99,000]/ [EUR199,000]’’, the Global Note Certificate shall not be exchangeable on [•] days notice.

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DISTRIBUTION 35.

(i)

If syndicated, names of Managers:

[Not Applicable/give names]

(ii)

Stabilising Manager(s) (if any):

[Not Applicable/give names]

36.

If non-syndicated, name and address of Dealer:

[Not Applicable/give name and address]

37.

Total commission and concession:

[•] per cent. of the Aggregate Nominal Amount

38.

U.S. Selling Restrictions:

Reg. S Category [1/2] (In the case of Bearer Notes) – [C RULES/D RULES/ TEFRA not applicable] (In the case of Registered Notes) – Not Applicable 10

39.

Additional selling restrictions:

[Not Applicable/give details]

OPERATIONAL INFORMATION 40.

ISIN Code:

[•]

41.

Common Code:

[•]

42.

CMU Instrument Number:

[•]

43.

Any clearing system(s) other than Euroclear/Clearstream, Luxembourg, the CMU Service and CDP and the relevant identification number(s):

[Not Applicable/give name(s) and number(s)]

44.

Delivery:

Delivery [against/free of] payment

45.

Additional Paying Agent(s) (if any):

[•]

GENERAL 46.

10

Private Bank Rebate/Commission:

[Applicable/Not Applicable]

TEFRA not applicable may only be used for Registered Notes, or Bearer Notes with a maturity of 365 days or less (taking into account any unilateral rights to extend or rollover). Bearer Notes with a maturity of more than 365 days (taking into account unilateral rights to extend or rollover) that are held through the CMU Service or the CDP must be issued in compliance with the C Rules, unless at the time of issuance the CMU Service, the CDP, the CMU Lodging and Paying Agent and the CDP Paying Agent have procedures in place so as to enable compliance with the certification requirements under the D Rules.

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47.

The aggregate principal amount of the Notes issued has been translated into United States dollars at the rate of [•], producing a sum of (for Notes not denominated in United States dollars):

[Not Applicable/U.S.$]

48.

Ratings:

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.)

[USE OF PROCEEDS Give details if different from the ‘‘Use of Proceeds’’ section in the Offering Circular.] STABILISING In connection with this issue, [insert name of Stabilising Manager] (the ‘‘Stabilising Manager’’) (or persons acting on behalf of any Stabilising 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. However, there is no assurance that the Stabilising Manager (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the allotment of the Notes. Any stabilisation action or overallotment must be conducted by the relevant Stabilising Manager (or persons acting on behalf of any Stabilising Manager) in accordance with all applicable laws and rules.] PURPOSE OF PRICING SUPPLEMENT This Pricing Supplement comprises the final terms required for issue and admission to the Official List of the SGX-ST of the Notes described herein pursuant to the U.S.$1,000,000,000 Medium Term Note Programme of the Issuer. RESPONSIBILITY The Singapore Exchange Securities Limited (the ‘‘SGX-ST’’) takes no responsibility for the correctness of any of the statements made or opinions expressed or reports contained in this Pricing Supplement. The admission of the Notes to the Official List of the SGX-ST is not to be taken as an indication of the merits of the Issuer, the Guarantor, the Programme or the Notes.

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The Issuer and the Guarantor each accepts responsibility for the information contained in this Pricing Supplement. Signed on behalf of:

Signed on behalf of:

HNA GROUP (INTERNATIONAL) COMPANY LIMITED

HNA GROUP CO., LIMITED

By: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Duly authorised Name: Title:

By: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Duly authorised Name: Title:

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FORMS OF THE NOTES Bearer Notes Each Tranche of the Notes to be issued in bearer form (‘‘Bearer Notes’’) will initially be in the form of a temporary global note in bearer form (the ‘‘Temporary Global Note’’), without interest coupons. Each Temporary Global Note or permanent global note in bearer form (the ‘‘Permanent Global Note’’) (each a ‘‘Global Note’’) will be deposited on or around the issue date of the relevant Tranche of the Notes with a depositary or a common depositary for Euroclear as operator of the Euroclear System and/ or Clearstream, Luxembourg and/or CDP and/or any other relevant clearing system and/or a subcustodian for the CMU Service. In the case of each Tranche of Bearer Notes, the relevant Pricing Supplement will also specify whether the ‘‘C Rules’’ or the ‘‘D Rules’’ are applicable in relation to the Notes or, if the Notes do not have a maturity of more than 365 days, that neither the C Rules nor the D Rules are applicable. Temporary Global Note exchangeable for Permanent Global Note If the relevant Pricing Supplement specifies the form of Notes as being ‘‘Temporary Global Note exchangeable for a Permanent Global Note’’, then the Notes will initially be issued in the form of a Temporary Global Note which will be exchangeable, in whole or in part, for interests in a Permanent Global Note, without interest coupons, from the date (the ‘‘Exchange Date’’) which is 40 days after the issue date of the relevant Tranche of the Notes upon certification as to non-U.S. beneficial ownership. No payments will be made under the Temporary Global Note after the Exchange Date unless exchange for interests in the Permanent Global Note is improperly withheld or refused. In addition, interest payments in respect of Temporary Global Notes cannot be collected without such certification of nonU.S. beneficial ownership, as described above. Whenever any interest in the Temporary Global Note is to be exchanged for an interest in a Permanent Global Note, the Issuer shall procure (in the case of first exchange) the delivery of a Permanent Global Note, duly authenticated to the bearer of the Temporary Global Note or (in the case of any subsequent exchange) an increase in the principal amount of the Permanent Global Note in accordance with its terms against: (i)

presentation and (in the case of final exchange) presentation and surrender of the Temporary Global Note to or to the order of the Issuing and Paying Agent; and

(ii)

receipt by the Issuing and Paying Agent of a certificate or certificates of non-U.S. beneficial ownership, within 7 days of the bearer requesting such exchange.

Temporary Global Note exchangeable for Definitive Notes If the relevant Pricing Supplement specifies the form of Notes as being ‘‘Temporary Global Note exchangeable for Definitive Notes’’ and also specifies that the C Rules are applicable or that neither the C Rules nor the D Rules are applicable, then the Notes will initially be in the form of a Temporary Global Note which will be exchangeable, in whole but not in part, for Definitive Notes not earlier than 40 days after the issue date of the relevant Tranche of the Notes. If the relevant Pricing Supplement specifies the form of the Notes as being ‘‘Temporary Global Note exchangeable for Definitive Notes’’ and also specifies that the D Rules are applicable, then the Notes will initially be issued in the form of a Temporary Global Note which will be exchangeable, in whole or in part, for Definitive Notes on or after the Exchange Date for the relevant Tranche of the Notes upon, certification as to non-U.S. beneficial ownership as described above. Interest payments in respect of the Notes cannot be collected without such certification of non-U.S. beneficial ownership.

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Whenever the Temporary Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Pricing Supplement), in an aggregate principal amount equal to the principal amount of the Temporary Global Note to the bearer of the Temporary Global Note against the surrender of the Temporary Global Note and in the case where the D Rules are applicable, certification as to non-U.S. beneficial ownership, as described above, to or to the order of the Principal Paying Agent within 30 days of the bearer requesting such exchange. Permanent Global Note exchangeable for Definitive Notes If the relevant Pricing Supplement specifies the form of Notes as being ‘‘Permanent Global Note exchangeable for Definitive Notes’’, then the Notes will initially be issued in the form of a Permanent Global Note which will be exchangeable in whole, but not in part, for Definitive Notes: (i)

on the expiry of such period of notice as may be specified in the relevant Pricing Supplement; or

(ii)

at any time, if so specified in the relevant Pricing Supplement; or

(iii) if the relevant Pricing Supplement specifies ‘‘in the limited circumstances described in the Permanent Global Note’’, then if either of the following event occurs: (a)

Euroclear or Clearstream, Luxembourg, the CMU Service, the CDP or any other relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business;

(b)

the CDP has notified the Issuer that it is unable or unwilling to act as depository for the Notes and to continue performing its duties set out in the terms and conditions for the provisions of depository services and no alternative clearing system is available; or

(c)

any of the circumstances described in Condition 14 (Events of Default) occurs in respect of any Note of the relevant Tranche.

Whenever the Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Pricing Supplement), in an aggregate principal amount equal to the principal amount of the Permanent Global Note to the bearer of the Permanent Global Note against the surrender of the Permanent Global Note to or to the order of the Principal Paying Agent or the CMU Lodging and Paying Agent within 30 days of the bearer requesting such exchange. Terms and Conditions applicable to the Notes The terms and conditions applicable to any Definitive Note will be endorsed on that Note and will consist of the terms and conditions set out under ‘‘Terms and Conditions of the Notes’’ below and the provisions of the relevant Pricing Supplement which supplement, amend and/or replace those terms and conditions. The terms and conditions applicable to any Note in global form will differ from those terms and conditions which would apply to the Note were it in definitive form to the extent described under ‘‘Summary of Provisions Relating to the Notes while in Global Form’’ below. Legend concerning United States persons In the case of any Tranche of Bearer Notes having a maturity of more than 365 days, the Notes in global form, the Notes in definitive form and any Coupons and Talons appertaining thereto will bear a legend to the following effect:

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‘‘Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code.’’ Registered Notes Each Tranche of Notes in registered form (‘‘Registered Notes’’) will be represented by either: (i)

individual Note Certificates in registered form (‘‘Individual Note Certificates’’); or

(ii)

one or more unrestricted global note certificates (‘‘Global Note Certificate(s)’’),

in each case as specified in the relevant Pricing Supplement. Each Note represented by a Global Note Certificate will be registered in the name of a common depositary (or its nominee) for Euroclear and/or Clearstream, Luxembourg and/or, in respect of CMU Notes, a sub-custodian for the CMU Service and/or, in respect of CDP Notes, the CDP and/or any other relevant clearing system, and the relevant Global Note Certificate will be deposited on or about the issue date with the common depositary for Euroclear and/or Clearstream, Luxembourg and/or, in respect of CMU Notes, or a sub-custodian for the CMU Service and/or, in respect of CDP Notes, the CDP and/or any other relevant clearing system. If the relevant Pricing Supplement specifies the form of Notes as being ‘‘Individual Note Certificates’’, then the Notes will at all times be represented by Individual Note Certificates issued to each Noteholder in respect of their respective holdings. Global Note Certificate exchangeable for Individual Note Certificates If the relevant Pricing Supplement specifies the form of Notes as being ‘‘Global Note Certificate exchangeable for Individual Note Certificates’’, then the Notes will initially be represented by one or more Global Note Certificates, each of which will be exchangeable in whole, but not in part, for Individual Note Certificates: (i)

on the expiry of such period of notice as may be specified in the relevant Pricing Supplement; or

(ii)

at any time, if so specified in the relevant Pricing Supplement; or

(iii) if the relevant Pricing Supplement specifies ‘‘in the limited circumstances described in the Global Note Certificate’’, then: (a)

in the case of any Global Note Certificate held by or on behalf of Euroclear and/or Clearstream, Luxembourg, the CMU Service, CDP or any other clearing system, if Euroclear, Clearstream, Luxembourg or any other relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business;

(b)

the CDP has notified the Issuer that it is unable or unwilling to act as depository for the Notes and to continue performing its duties set out in the terms and conditions for the provisions of depository services and no alternative clearing system is available; or

(c)

in any case, if any of the circumstances described in Condition 14 (Events of Default) occurs in respect of any Note of the relevant Tranche.

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Whenever a Global Note Certificate is to be exchanged for Individual Note Certificates, each person having an interest in a Global Note Certificate must provide the relevant Registrar (through the relevant clearing system) with such information as the Issuer and the relevant Registrar may require to complete and deliver Individual Note Certificates (including the name and address of each person in which the Notes represented by the Individual Note Certificates are to be registered and the principal amount of each such person’s holding). Whenever a Global Note Certificate is to be exchanged for Individual Note Certificates, the Issuer shall procure that Individual Note Certificates will be issued in an aggregate principal amount equal to the principal amount of the Global Note Certificate within five business days of the delivery, by or on behalf of the registered holder of the Global Note Certificate to the relevant Registrar of such information as is required to complete and deliver such Individual Note Certificates against the surrender of the Global Note Certificate at the specified office of the relevant Registrar. Such exchange will be effected in accordance with the provisions of the Trust Deed and the Agency Agreement and the regulations concerning the transfer and registration of Notes scheduled to the Agency Agreement and, in particular, shall be effected without charge to any holder, but against such indemnity as the Registrar may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such exchange. Terms and Conditions applicable to the Notes The terms and conditions applicable to any Individual Note Certificate will be endorsed on that Individual Note Certificate and will consist of the terms and conditions set out under ‘‘Terms and Conditions of the Notes’’ below and the provisions of the relevant Pricing Supplement which supplement, amend and/or replace those terms and conditions. The terms and conditions applicable to any Global Note Certificate will differ from those terms and conditions which would apply to the Note were it in definitive form to the extent described under ‘‘Summary of Provisions Relating to the Notes while in Global Form’’ below.

Summary of Provisions relating to the Notes while in Global Form Clearing System Accountholders In relation to any Tranche of Notes represented by a Global Note in bearer form, references in the Terms and Conditions of the Notes to ‘‘Noteholder’’ are references to the bearer of the relevant Global Note which, for so long as the Global Note is held by a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system, and/or a subcustodian for the CMU Service, and/or the CDP, will be that depositary, common depositary, subcustodian or the CDP, as the case may be. In relation to any Tranche of Notes represented by a Global Note Certificate, references in the Terms and Conditions of the Notes to ‘‘Noteholder’’ are references to the person in whose name such Global Note Certificate is for the time being registered in the Register which, for so long as the Global Note Certificate is held by or on behalf of a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system, and/or a sub-custodian for the CMU Service, and/or the CDP, will be such depositary or common depositary (or a nominee for such depositary or common depositary), the Hong Kong Monetary Authority as the operator of the CMU Service or the CDP, as the case may be.

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Each of the persons shown in the records of Euroclear and/or Clearstream, Luxembourg, the CDP and/or any other relevant clearing system as being entitled to an interest in a Global Note or a Global Note Certificate (each an ‘‘Accountholder’’) must look solely to Euroclear and/or Clearstream, Luxembourg, the CDP and/or such other relevant clearing system (as the case may be) for such Accountholder’s share of each payment made by the Issuer to the holder of such Global Note or Global Note Certificate and in relation to all other rights arising under such Global Note or Global Note Certificate. The extent to which, and the manner in which, Accountholders may exercise any rights arising under the Global Note or Global Note Certificate will be determined by the respective rules and procedures of Euroclear and Clearstream, Luxembourg, the CDP and any other relevant clearing system from time to time. For so long as the relevant Notes are represented by a Global Note or Global Note Certificate, Accountholders shall have no claim directly against the Issuer in respect of payments due under the Notes and such obligations of the Issuer will be discharged by payment to the holder of such Global Note or Global Note Certificate. If a Global Note or a Global Note Certificate is lodged with a sub-custodian for or registered with the CMU Service, the person(s) for whose account(s) interests in such Global Note or Global Note Certificate are credited as being held in the CMU Service in accordance with the CMU Rules as notified by the CMU Service to the CMU Lodging and Paying Agent in a relevant CMU Instrument Position Report or any other relevant notification by the CMU Service (which notification, in either case, shall be conclusive evidence of the records of the CMU Service save in the case of manifest error) shall be the only person(s) entitled or in the case of Registered Notes, directed or deemed by the CMU Service as entitled to receive payments in respect of Notes represented by such Global Note or Global Note 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 Note or Global Certificate are credited as being held in the CMU Service in respect of each amount so paid. Each of the persons shown in the records of the CMU Service, as the beneficial holder of a particular nominal amount of Notes represented by such Global Note or Global Note Certificate must look solely to the CMU Lodging and Paying Agent for his share of each payment so made by the Issuer in respect of such Global Note or Global Note Certificate. Conditions applicable to Global Notes Each Global Note and Global Note Certificate will contain provisions which modify the Terms and Conditions of the Notes as they apply to the Global Note or Global Note Certificate. The following is a summary of certain of those provisions: Payments: All payments in respect of the Global Note or Global Note Certificate which, according to the Terms and Conditions of the Notes, require presentation and/or surrender of a Note, Note Certificate or Coupon will be made against presentation and (in the case of payment of principal in full with all interest accrued thereon) surrender of the Global Note or Global Note Certificate to or to the order of any Paying Agent and will be effective to satisfy and discharge the corresponding liabilities of the Issuer in respect of the Notes. On each occasion on which a payment of principal or interest is made in respect of the Global Note, the Issuer shall procure that the payment is noted in a schedule thereto. Payment Business Day: In the case of a Global Note, or a Global Note Certificate, shall be, if the currency of payment is euro, any day which is a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or, if the currency of payment is not euro, any day which is a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre. Payment Record Date: Each payment in respect of a Global Note Certificate will be made to the person shown as the Holder in the Register at the close of business (in the relevant clearing system) on the Clearing System Business Day before the due date for such payment (the ‘‘Record Date’’) where ‘‘Clearing System Business Day’’ means a day on which each clearing system for which the Global Note Certificate is being held is open for business.

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Exercise of put option: In order to exercise the option contained in Condition 9(e) (Redemption at the option of Noteholders) the bearer of a Permanent Global Note or the holder of a Global Note Certificate must, within the period specified in the Conditions for the deposit of the relevant Note and put notice, give written notice of such exercise to the Issuing and Paying Agent specifying the principal amount of Notes in respect of which such option is being exercised. Any such notice will be irrevocable and may not be withdrawn. In order to exercise the option contained in Condition 10(e) (Redemption and Purchase – Redemption for Change of Control) or Condition 10(f) (Redemption and Purchase – Redemption at the option of Noteholders), the bearer of the Temporary Global Note or Permanent Global Note or the holder of a Global Note Certificate must, within the period specified in the Conditions for the deposit of the relevant Note and the Put Option Notice, give written notice of such exercise to the Issuing and Paying Agent or (as the case may be) the CMU Lodging and Paying Agent specifying the principal amount of Notes in respect of which the relevant put option is being exercised. Any such notice shall be irrevocable and may not be withdrawn. Partial exercise of call option: In connection with an exercise of the option contained in Condition 10(c) (Redemption and Purchase – Redemption at the option of the Issuer) in relation to some only of the Notes, where such Notes are held with Euroclear and/or Clearstream, Luxembourg, the CMU Service or the CDP, the Temporary Global Note or Permanent Global Note or Global Note Certificate may be redeemed in part in the principal amount specified by the Issuer in accordance with the Conditions and the Notes to be redeemed will not be selected as provided in the Conditions but in accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg, the CMU Service or the CDP (as the case may be) (to be reflected in the records of Euroclear and Clearstream, Luxembourg, the CMU Service or the CDP (as the case may be) as either a pool factor or a reduction in principal amount, at their discretion). Notices: Notwithstanding Condition 21 (Notices), while all the Notes are represented by a Permanent Global Note (or by a Permanent Global Note and/or a Temporary Global Note) or a Global Note Certificate and the Permanent Global Note is (or the Permanent Global Note and/or the Temporary Global Note are), or the Global Note Certificate is, (i) deposited with a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or the CDP and/or any other relevant clearing system (other than the CMU Service, in respect of which see (ii) below), notices to Noteholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg and/or the CDP and/or any other relevant clearing system and, in any case, such notices shall be deemed to have been given to the Noteholders in accordance with Condition 21 (Notices) on the date of delivery to Euroclear and/or Clearstream, Luxembourg and/or the CDP and/or any other relevant clearing system or (ii) deposited with the CMU Service, notices to the holders of Notes of the relevant Series may be given by delivery of the relevant notice to the persons shown in a CMU Instrument Position Report issued by the CMU on the second business day preceding the date of despatch of such notice as holding interests in the relevant Global Note or Global Note Certificate.

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CLEARANCE AND SETTLEMENT The information set out below is subject to any change in or reinterpretation of the rules, regulations and procedures of Euroclear or Clearstream, Luxembourg or the CMU Service or the CDP currently in effect. The information in this section concerning the Clearing Systems has been obtained from sources that the Issuer believes to be reliable, but none of the Issuer, any Arranger or Dealer, the Trustee or any Agent takes any responsibility for the accuracy thereof. Investors wishing to use the facilities of any of the Clearing Systems are advised to confirm the continued applicability of the rules, regulations and procedures of the relevant Clearing System. None of the Issuer or any other party to the Agency Agreement will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Notes held through the facilities of any Clearing System or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Clearing Systems Euroclear and Clearstream, Luxembourg Euroclear and Clearstream, Luxembourg each holds securities for participating organizations and facilitates the clearance and settlement of securities transactions by electronic book-entry transfer between their respective account holders. Euroclear and Clearstream, Luxembourg provide various services including safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream, Luxembourg also deal with domestic securities markets in several countries through established depository and custodial relationships. Euroclear and Clearstream, Luxembourg have established an electronic bridge between their two systems across which their respective participants may settle trades with each other. Euroclear and Clearstream, Luxembourg participants are world-wide financial institutions, including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to Euroclear and Clearstream, Luxembourg is available to other institutions that clear through or maintain a custodial relationship with an account holder of either system. Distributions of principal with respect to book-entry interests in the Notes held through Euroclear or Clearstream, Luxembourg will be credited, to the extent received by any Paying Agent, to the cash accounts of Euroclear or Clearstream, Luxembourg participants in accordance with the relevant system’s rules and procedures. CMU Service The CMU Service is a central depositary service provided by the Central Moneymarkets Unit of the HKMA for the safe custody and electronic trading between the CMU members of capital markets instruments which are specified in the CMU Service Reference Manual as capable of being held within the CMU Service. The CMU Service is only available to CMU notes issued by a CMU Member or by a person for whom a CMU Member acts as agent for the purposes of lodging instruments issued by such persons. Membership of the CMU Service is open to all members of the Hong Kong Capital Markets Association and ‘‘authorised institutions’’ under the Banking Ordinance (Cap. 155 of the Laws of Hong Kong). Compared to clearing services provided by Euroclear and Clearstream, Luxembourg, the standard custody and clearing service provided by the CMU Service is limited. In particular (and unlike the European Clearing Systems), the HKMA does not as part of this service provide any facilities for the dissemination to the relevant CMU members of payments (of interest or principal) under, or notices pursuant to the notice provisions of, the CMU notes. Instead, the HKMA advises the lodging CMU member (or a designated paying agent) of the identities of the CMU members to whose accounts payments in respect of the relevant CMU notes are credited, whereupon the lodging CMU member (or

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the designated paying agent) will make the necessary payments of interest or principal or send notices directly to the relevant CMU members. Similarly, the HKMA will not obtain certificates of non-U.S. beneficial ownership from CMU members or provide any such certificates on behalf of CMU members. The CMU Lodging and Paying Agent will collect such certificates from the relevant CMU members identified from an instrument position report obtained by request from the HKMA for this purpose. An investor holding an interest through an account with either Euroclear or Clearstream, Luxembourg in any Notes held in the CMU Service will hold that interest through the respective accounts which Euroclear and Clearstream, Luxembourg each have with the CMU Service. Depository System In respect of Notes which are accepted for clearance by the CDP in Singapore, clearance will be effected through an electronic book-entry clearance and settlement system for the trading of debt securities (the ‘‘Depository System’’) maintained by the CDP. Notes that are to be listed on SGX-ST may be cleared through the CDP. The CDP, a wholly-owned subsidiary of Singapore Exchange Limited, is incorporated under the laws of Singapore and acts as a depository and clearing organisation. The CDP holds securities for its accountholders and facilitates the clearance and settlement of securities transactions between accountholders through electronic book-entry changes in the securities accounts maintained by such accountholders with CDP. In respect of Notes which are accepted for clearance by the CDP, the entire issue of the Notes is to be held by the CDP in the form of a global note or global certificate for persons holding the Notes in securities accounts with the CDP (‘‘Depositors’’). Delivery and transfer of Notes between Depositors is by electronic book-entries in the records of CDP only, as reflected in the securities accounts of Depositors. Although the CDP encourages settlement on the third business day following the trade date of debt securities, market participants may mutually agree on a different settlement period if necessary. Settlement of over-the-counter trades in the Notes through the Depository System may only be effected through certain corporate depositors (‘‘Depository Agents’’) approved by the CDP under the Companies Act, Chapter 50 of Singapore to maintain securities sub-accounts and to hold the Notes in such securities sub-accounts for themselves and their clients. Accordingly, Notes for which trade settlement is to be effected through the Depository System must be held in securities sub-accounts with Depository Agents. Depositors holding the Notes in direct securities accounts with the CDP, and who wish to trade the Notes through the Depository System, must transfer the Notes to be traded from such direct securities accounts to a securities sub-account with a Depository Agent for trade settlement. The CDP is not involved in money settlement between Depository Agents (or any other persons) as the CDP is not a counterparty in the settlement of trades of debt securities. However, the CDP will make payment of interest and repayment of principal on behalf of issuers of debt securities. Although the CDP has established procedures to facilitate transfer of interests in the Notes in global form among Depositors, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of the Issuer, the Guarantor, the Paying Agents or any other agent have the responsibility for the performance by the CDP of its obligations under the rules and procedures governing its operations.

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USE OF PROCEEDS The net proceeds from the issue of each Tranche of Notes will be used by the Issuer Group for working capital and general corporate purposes overseas in compliance with the relevant SAFE regulations.

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CAPITALISATION AND INDEBTEDNESS OF THE ISSUER The following table sets forth the capitalisation and indebtedness of the Issuer as at 30 September 2014, as adjusted to give effect to the issue of the Notes and the use of proceeds discussed in ‘‘Use of Proceeds’’ before deducting the underwriting commission and estimated offering expenses payable by the Issuer. This table should be read in conjunction with the financial information and the accompanying Notes included elsewhere in this Offering Circular. The information set out below should be read in conjunction with, and is qualified in its entirety by reference to, the reviewed consolidated financial statements of the Issuer for the nine months ended 30 September 2014 included elsewhere in this Offering Circular. As at 30 September 2014 Actual HK$ Current liabilities Trade payables . . . . . . . . . . . . . . . . . . . . . Accruals and other payables . . . . . . . . . . . . Other current financial liabilities . . . . . . . . . Amounts due to fellow subsidiary companies. Amounts due to related companies . . . . . . . . Amounts due to an associate . . . . . . . . . . . . Security deposits . . . . . . . . . . . . . . . . . . . . Bank loans . . . . . . . . . . . . . . . . . . . . . . . . Obligations under finance leases . . . . . . . . . Provisions . . . . . . . . . . . . . . . . . . . . . . . . Tax payable . . . . . . . . . . . . . . . . . . . . . . . Deferred revenues . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .

496,222,893 685,146,188 40,829,850 7,901,677 74,958 1,558,267,447 43,817,400 7,100,538,482 6,480 9,958,500 49,641,454 34,854,750

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,027,260,079

Non-current liabilities Deferred tax liabilities . . . . . . . . . . . . Other non-current financial liabilities . . Obligations under finance leases . . . . . Net employee defined benefit liabilities Interest bearing loans and borrowings. . Provisions . . . . . . . . . . . . . . . . . . . . Deferred revenues . . . . . . . . . . . . . . . Bonds payable . . . . . . . . . . . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . . . . . .

. . . . . . . .

. . . . . . . .

97,593,300 64,730,250 – 89,626,500 2,558,396,805 43,319,475 87,634,800 993,568,280

Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,934,869,410

Equity Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21,606,011,408 4,392,227,509 43,217,413

Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26,041,456,330

Total capitalisation (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29,976,325,740

Notes:. (1)

Total capitalisation equals the sum of non-current liabilities and total equity.

Unless otherwise disclosed in this Offering Circular, there has not been any material adverse change in the Issuer’s capitalisation or indebtedness since 30 September 2014.

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CAPITALISATION AND INDEBTEDNESS OF THE GUARANTOR The following table sets forth the Guarantor’s consolidated capitalisation and indebtedness as at 31 December 2013 as adjusted to give effect to the issue of the Notes and the use of proceeds discussed in ‘‘Use of Proceeds’’ before deducting the underwriting commission and estimated offering expenses payable by the Issuer. For additional information, see the audited consolidated Guarantor’s financial statements and notes thereto included in this Offering Circular. The information set out below should be read in conjunction with ‘‘Use of Proceeds’’, and is qualified in its entirety by reference to, the audited consolidated financial statement of the Guarantor for the year ended 31 December 2013 included elsewhere in this Offering Circular. As at 31 December 2013 Actual CNY Current liabilities: Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-current liabilities: Long-term borrowings . . . . . Bonds payable . . . . . . . . . . Deferred tax liabilities . . . . . Other non-current liabilities . Total non-current liabilities (2)

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42,790,611,658.92 40,496,319,380.46 83,286,931,039.38

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99,184,652,719.42 16,053,227,421.44 3,940,649,408.80 1,088,750,075.71 120,267,279,625.37

Owner’s equity: Equity attributable to the owners of the company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total owner’s equity(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19,225,991,766.94 37,804,396,943.03 57,030,388,709.97

Total capitalisation (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

177,297,668,335.34

Note: (1)

The current liabilities of the Guarantor as at 30 September 2014 was CNY90,978,104,645.65. Please refer to the review report of 中興財光華會計師事務所 (ZhongXingCaiGuangHua CPA Office) as set out in the section headed ‘‘Financial Statements of the Guarantor’’ in this Offering Circular.

(2)

The non-current liabilities of the Guarantor as at 30 September 2014 was CNY146,054,713,581.69. Please refer to the review report of 中興財光華會計師事務所 (ZhongXingCaiGuangHua CPA Office) as set out in the section headed ‘‘Financial Statements of the Guarantor’’ in this Offering Circular.

(3)

The total owner’s equity of the Guarantor as at 30 September 2014 was CNY64,721,802,407.78. Please refer to the review report of 中興財光華會計師事務所 (ZhongXingCaiGuangHua CPA Office) as set out in the section headed ‘‘Financial Statements of the Guarantor’’ in this Offering Circular.

(4)

Total capitalisation equals the sum of non-current liabilities and total equity.

Unless otherwise disclosed in this Offering Circular, there has not been any material adverse change in the Guarantor’s capitalisation or indebtedness since 31 December 2013.

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DESCRIPTION OF THE ISSUER GROUP OVERVIEW In order to expand globally and drive further growth and development, the Issuer was established in Hong Kong on 12 July 2010 to act as the Group’s offshore investment and foreign capital management platform. The Issuer plays a key role in the Group’s strategy in becoming a global brand by being its platform for globalisation. Since its incorporation, the Issuer has, through capital investment and acquisitions, quickly formed and developed the Issuer Group that engages in various businesses in Hong Kong and overseas. The operating assets and revenues of the Issuer Group are diversified across currencies such as US dollars and Hong Kong dollars reflecting the international nature of its investments and business. The Issuer Group earns fee income through managing offshore investments and foreign capital for the Group, as well as earns dividends and one-off gains from its investments. As at the date of this Offering Circular, the Issuer had 20,264,155,617 shares in issue, of which 18,458,158,537 shares are held by the Guarantor, constituting approximately 91.09% of the shares of the Issuer, and 1,805,997,080 shares are held by Hong Kong Airlines Limited, constituting approximately 8.91% of the shares of the Issuer. Pursuant to a special resolution of the sole member of the Issuer passed on 22 September 2013, the name of the Issuer was changed from ‘‘HNA Group International Headquarter (Hong Kong) Co., Limited 海航集團國際總部 (香港)有限公司’’ to ‘‘HNA Group (International) Company Limited 海航集 團 (國際)有限公司’’. A key strategy of the Issuer is to expand globally through strategic acquisitions. Crucial to the success of this strategy is the ability to identify suitable investments and to manage its investments wisely. The Issuer has established an investment department formed by experienced investment professionals from international financial institutions. The investment department is constantly on a lookout for investment opportunities. It is responsible for analysing the markets in which the Issuer’s businesses operate, tracking relevant government policies and working in conjunction with other external parties to seek appropriate investment opportunities for the Group. The Issuer has also developed good relationships with major financial institutions, further strengthening the Group’s ability to source investment targets worldwide. The Issuer will conduct extensive due diligence to evaluate investment opportunities. These include conducting site visits and meetings with the management, employees, suppliers and customers of the investment target, as well as carrying out in-depth analysis of the relevant industry and in respect of human resources, branding and products. Strategic investments will be decided at the Group’s or Issuer’s board level. Employing such analytical capabilities and resources, the Issuer has made various successful acquisitions overseas, including Seaco SRL (‘‘Seaco’’) in Barbados, TIP Trailer Services (‘‘TIP’’) in the Netherlands, NH Hoteles S.A. (‘‘NH Hoteles’’) in Spain, each of which has furthered the Group’s strategy to globalise, to grow in the relevant businesses, and to enrich the Issuer’s overall business portfolio. For instance, when the Issuer sold Seaco to Bohai Leasing in 2013, the Issuer achieved a return of over HK$2.78 billion. RECENT FINANCIAL INFORMATION As at 31 December 2011, 2012 and 2013 and 30 September 2014, the Issuer Group had total assets of approximately HK$37.553 billion, HK$38.455 billion, HK$41.383 billion and HK$40.004 billion respectively. For each of the years ended 31 December 2011, 2012 and 2013 and the nine months ended 30 September 2013 and 2014, the Issuer Group recorded total revenue of approximately HK$347.2 million, HK$4,628.7 million, HK$8,062.8 million, HK$3,276.4 million and HK$3,347.9 million, respectively and a net profit of approximately HK$74.0 million, HK$627.8 million, HK$3,679.6 million, HK$615.9 million and HK$547.8 million, respectively. Details of the financial information of the Issuer Group are set out in sections entitled ‘‘Index to the Audited Financial Statements’’ and ‘‘Capitalisation and Indebtedness of the Issuer Group’’ in this Offering Circular.

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The Issuer Group believes that its key strengths are as follows: Proven success of capitalising on investment opportunities The Issuer Group has secured consistent investment returns through the rigorous section of strategically viable assets, targeting both short term and long term investments to achieve diversification. As part of its long term investments, in 2011 the Issuer acquired Seaco (formerly named GE Seaco), the world’s fifth largest container leasing company at the time, from GE Capital and its joint venture partner. Providing clear leadership and strategic direction, the Issuer nurtured and developed Seaco. When the Issuer subsequently sold to Bohai Leasing in 2013, it achieved a return of over HK$2.78 billion. Seaco now operates as a core business within the Groups existing logistics and finance operations in the form of Bohai Leasing and is now the largest and most diversified container leasing company in the world by cost equivalent unit. In 2010, the Group acquired the business and assets of Allco Aviation (subsequently rebranded Hong Kong Aviation Capital Limited (‘‘HKAC’’), an Australian based aircraft leasing company originally ranking 13th in the world by fleet value which had gone into receivership. Through further investment and prudent management, HKAC enjoyed steady growth and provided a profitable return to the Group when the Group subsequently sold it to Bohai Leasing in 2013. This marked the first successful investment for the Issuer’s international platform and sparked the development of the current business model adopted by the Issuer. The Issuer has similarly enjoyed a good track record in capitalising on its short term investments: •

Silverlake Axis Ltd (‘‘Silverlake’’) – in 2014, the Issuer achieved a gain of SGD12.8 million when it sold 20 million shares of its shareholding in Silverlake, a market leading developer in core banking technologies.



Tsogo Sun Holdings Limited (‘‘Tsogo Sun’’) – the Issuer has invested in 48.3 million shares of Tsogo Sun Holdings Limited, one of South Africa’s largest hotel chains, as its second largest shareholder with 5% ownership. As at 31 December 2014, the unrealised gain for the Issuer stands at of HKD 67.7 million.



KVB Kunlun Financial Group Limited (‘‘KVB Kunlun’’) – in May 2012, the Issuer invested in KVB Kunlun prior to its IPO on the Growth Enterprise Market of the Hong Kong Stock Exchange, and is currently its third largest shareholder with 5.3% ownership. As at 31 December 2014, the unrealised gain of the Issuer’s holdings stood at HK$56 million, holding 106.6 million shares.



Shengjing Bank Co., Ltd (‘‘Shengjing Bank’’) – The Issuer invested in the IPO of Shengjing Bank, the largest city commercial bank in Northeast China), and was allotted 81.24 million shares, making the Issuer it’s eighth largest shareholder with 5.3% ownership of listed shares. As at 31 December 2014, the unrealised gain for the Issuer stands at HKD8.9 million.

Value enhancement and strategic synergies for the Group The Issuer Group seeks to maintain a diversified portfolio of high quality businesses and stable income source. Seeking to expand internationally with the support from Chinese policy banks, the Issuer Group has acquired interests in high quality businesses overseas with the goal of enhancing value and providing strategic synergies for the Group. The Issuer Group enjoys strategic, financial and operational synergies with the HNA Group through its interests in the Europe-based TIP and NH Hoteles, and seeks to achieve vertical and horizontal integration in the aviation, logistics, finance and retail and logistics value chain businesses of the Group through other acquisitions. After acquisition of TIP by the Issuer Group from GE Capital in October 2013, the Group provided support in management of TIP, enabling TIP to move out of its contractionary phase. The Issuer also received capital support from the Group in funding TIP’s acquisition plans in Europe. After acquisition by the Issuer Group, TIP benefits substantially from the Group’s existing portfolio of leasing businesses such as Cronos and Seaco to deliver holistic leasing and transportation solutions for users across various industries.

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The Issuer also benefits from the strategic cooperation between NH Hoteles and Group. In September 2014, NH Hoteles and the Group signed a memorandum of understanding pursuant to which the parties will set up a jointly owned company, which will take over the management of six of the Group’s hotels located in Beijing, Haikou, Sanya and Tianjin, encompassing 1,312 rooms. Such joint venture converts HNA hotels to NH flagships to develop the local market through management by HN Hoteles of Chinese 3 to 4-star hotels. This move is in line with the Group’s approach to new acquisitions, allowing the Group to acquire, and to enjoy the synergies derived from adapting from the best of Western management and corporate governance principles. The Group also intends to promote NH Hoteles by making them the preferred hotel choice in Europe of the Group’s travel agencies, with the goal of bringing more Chinese tourists to the NH Hoteles. Since its acquisition by HNA Group (International) Co Ltd, NH Hoteles’ market capitalisation has increased over 150% from EUR631 million as at 30 April 2013 to EUR1,653 million as at 12 March 2015, illustrating the realisation of synergies. The Issuer Group intend to leverage on the significant network and diversified business portfolio of the Group to further develop its business. Close cooperation with the Group enables the Issuer to capture business opportunities and deliver products and services to serve its customers on a global basis. Prudent financial management supported by sustainable funding sources As the Group’s offshore investment and foreign capital management platform, the Issuer has adopted prudent financial policies and has maintained a conservative debt profile. The average cost of debt to the Issuer is 4.364%. As at 30 September 2014, 79% of debt for the Issuer is financed through cross-border standby letters of credit (‘‘SBLC’’), with the amount of SBLC-backed debt standing at U.S.$880 million. As at 31 September 2014, the Issuer had US$1.12 billion in offshore debt. As U.S.$880 million of such debt is fully financed by cross-border SBLC, the actual debt level for the Issuer stood at only US$240 million. As at 30 September 2014, debt of the Issuer that is not backed by SBLC comprised only 5% of its total assets, and 88% of its debt comprises of short-term debt. The amount and tenor of such SBLC-backed debt obtained by the Issuer offshore match those of the SBLCs, presenting a very low risk. SLBCs of the Issuer are issued by credible Chinese banks including Bank of China, Industrial and Commercial Bank of China and China Construction Bank. The SBLCs are 100% backed by cash deposits of the Guarantor onshore and are renewed annually. The Issuer does not currently have any priority debt. Acting as the Group’s foreign capital management platform, the Issuer is responsible for overseas money lending for the Issuer Group companies. Since 2008, the Group has been utilising SBLCs to finance various offshore debts through the Issuer. The Issuer charges a 0.5% fee for deploying the SBLC-backed funds offshore, with such fees totally U.S.$4.4 million in 2014. As the SBLCs are renewed on an annual basis, this income source is expected to remain stable. Since the operation of this business line in 2008 to year end 2014, the Issuer Group has cumulatively raised U.S.$2,580 million of SBLC-backed debt, with a balance of U.S.$880 million as at 30 September 2014. Apart from service charges for arranging offshore financing, the Issuer also derives its revenue from its investment companies, majority-owned subsidiaries and associated investment companies, as well as gains from opportunistic acquisitions and divestments of investment projects, providing a diversified and sustainable source of income. Through establishing good relationships with domestic and international financial institutions, the Issuer has access to substantial sources of funding through credit facilities. Key relationship banks and financial institutions providing facilities to the Issuer include Guotai Junan Securities, Bank of China, Industrial and Commercial Bank of China, China Construction Bank, China Merchants Securities, Stand Bank, Bank of Communications, The Export-Import Bank of China, Bank of Taiwan, Korea Exchange Bank, and Shanghai Pudong Development Bank. As at 30 September 2014, the Issuer had U.S.$1.62 billion credit facilities with its relationship banks, with the total drawdown amount standing at U.S.$990 million and unused facilities at U.S.$633 million as at 30 September. Apart from facilities from banks and financial institutions, the Issuer has also maintained substantial cash reserves and available-for-sale financial assets which are available for it funding purposes. As at 30 September 2014, the Issuer had

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HK$1,233 million cash reserves and HK$3,953 million available-for-sale financial assets (including interests in listed entities), compared to cash reserves of HK$1,091 million and available-for-sale assets (including interests in listed entities) of HK$3,523 million held by the Issuer as at 31 December 2013. Experienced management team The Issuer’s management team has extensive experience in the aviation industry as well as in strategic investments. Recent strategic investments identified by our management team demonstrate our commitment to focusing on strategic fit with the Group’s business with strong and consistent profit margins. The management’s experience at the CAAC and the close relationship with the Hainan government authorities and other organisations provides the Issuer a solid platform for growth and establishes significant barriers to entry for potential competitors.

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PRINCIPAL BUSINESSES The Issuer holds interests in the following entities through which the Issuer’s principal business of financial services and travel services are conducted. Business

Entity

Interests held by the Issuer

Financial services . . . . . . . .

TIP Trailer Services Hong Kong International Aviation Leasing Company Limited Hong Kong International Financial Services Limited NH Hoteles S.A.

100% 34% 81% 29.5%

Travel services . . . . . . . . . .

For each of the year ended 31 December 2012 and 2013 and the nine months ended 30 September 2014, the Issuer Group recorded EBITDA of approximately HK$3,248.2 million, HK$6,431.0 million and HK$1,346.8 million, respectively. The table below shows the percentage contribution to (i) the revenue and (ii) the EBITDA of the Issuer Group as at 30 September 2014 by the Issuer and other key subsidiaries. As at 30 September 2014 Entity

(i) Revenue

Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hong Kong International Financial Services Limited TIP Trailer Services . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . .

25% 1% 72% 2%

51% 1% 42% 6%

Total: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100%

100%

i)

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(ii) EBITDA

Financial Services

The Issuer Group engages in trailer leasing, aircraft leasing and general financial services. Trailer Leasing Business The Issuer Group acquired 100% shareholdings in TIP in October 2013 from GE Capital. TIP is Europe’s largest trailer leasing company with over 40 years of experience. Headquartered in Amsterdam, TIP has more than 70 branches located throughout 16 countries across Europe and has over 6,000 customers. TIP provides transportation and logistics customers with leasing, rental, maintenance and other value-added solutions. As at 30 September 2014, TIP had total assets of EUR898.8 million and its total revenue was EUR225.3 million for the nine months ended 30 September 2014. TIP recorded a net profit of EUR13.8 million for the nine months ended 30 September 2014. Owning a fleet of over 50,000 trailers, TIP is one of the leading independent operating lease providers in Europe. With a managed fleet of 61,000 units trailers, TIP is also a leading provider of fleet management solutions, including fleet maintenance, to its own fleet and on a stand-alone basis to third parties. TIP provides stand-alone fleet management services through its own origination network, its relationships with European asset finance providers as part of the TIP Equipment Funding program and its strategic partnerships with leading trailer and tire manufacturers. TIP operates primarily in the trailer segment with a focus on sub-types commonly use by major transportation and logistics companies which cover a diverse range of end users. Other types of widerange equipment includes trailers, drawbars, chassis and swap body units as well as the full range of large commercial trucks to light commercial vehicles.

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TIP’s business model has historically been focused on providing high class operating leases and associated services to a diversified base of high quality customers. Among the large number of local and regional players in the trailer leasing market, TIP is the largest European provider of operating leases with 16% market share in terms of short and long-term operating leases, and is the market leader in 12 of the 16 countries in which it operates. Among all the operating lease providers, TIP has the most comprehensive offering of complementary services. TIP has an average fleet utilisation rate of 85% over the past 5 years and a current utilisation rate of 84%, which drives a historically high EBITDA margin(1) of 44% on average over the past 5 years, which is higher than other key pan- European or local/regional players in the trailer operating lease business. Note: (1)

EBITDA margin is calculated as EBITDA divided by total revenue, expressed as a percentage. EBITDA consists of total revenue less total variable costs, employee benefit expenses, other operating expenses and bad debt expense.

Fleet As the market leader in trailer leasing with a fleet of over 50,000 trailers, TIP owns more than twice as many trailers compared with the nearest competitor. TIP focuses on following trailer types: •

Curtainsider: One of the most commonly used trailer types is the curtainsider, which is used for transportation of general goods requiring less security.



Van: Vans are used for general transport of goods requiring high security such as parcels.



Reefer: Goods that require environmental control, such as food, electronics and flowers are transported in a reefer, which allows for temperature-controlled transportation of goods.



Tanker: A number of different tanker trailer types exist for transportation of liquids, powders and waste depending on whether the freight is food or industrial related.



Chassis: A chassis allows for transportation of swap body units and containers.



Swapbody: A swap body is a freight container, which can be set on ‘‘legs’’ and does not require a crane to be loaded. It exists in different versions such as curtain sider, van, reefer and tanker.



Tractor: A vehicle that can be driven on the roads with or without a trailer.

According to the Issuer’s data, TIP’s fleet is younger than the industry average in every country in which it operates (other than Poland). Main businesses TIP provides flexibility for customers to create a bespoke service package to address all of their trailer needs. The key services provided by TIP are leasing, rental and maintenance. Leasing and Rental Customers can choose either to purchase trailers outright or lease them through two primary lease options: •

Finance Lease: Leased vehicles become the property of the lessee for the duration of the lease for periodic payments over the term. The duration of financing and the expected service levels and costs differ between new and used trailers. While new trailers require a larger upfront capital

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commitment, they tend to have minimal near-term maintenance requirements. On the other hand, used trailers represent a more economic option for certain customers but will potentially require more ongoing maintenance. •

Operating Lease: Vehicles are leased for periodic rental payments that can include service components. The leased asset remains the property of the lessor. The advantages of having an operating lease include the ability of the lessees to secure valued-added services. Some of the value added services are maintenance and fleet management, flexibility to scale the fleet to match customer demand and elimination of residual value risk. TIP leases both new and used trailers – leases on new trailers are typically long-term, ranging from four to ten years, while leases on used trailers tend to be for shorter term, ranging from one to three years.

FleetOptions Branded as ‘‘FleetOptions’’, TIP provides a wide range of equipment with flexible financing options, including short-term rentals, long-term leases, sale and leasebacks equipment sourcing through TEF and vehicle sales. •

Long-term leases: Contracts with duration of 12 months or more are classified as long-term leases. TIP will originate a long-term lease on either a new trailer or equipment from its existing trailer fleet.



Short-term rentals: Contracts with an initial duration of less than 12 months are classified as short‑term rentals. In practice, short-term trailers may remain on rent for longer periods due to renewals. Trailers utilised for short-term rental contracts are from TIP’s existing trailer fleet. As rental periods can be as short as several hours, rapid identification and deployment of available trailers from the rental fleet is critical to maximise returns. TIP’s integrated IT systems allow regional teams to identify available trailers by both type and location. This system enables TIP to efficiently redeploy its used trailer fleet in higher demand locations.

Maintenance services In additional to leasing and rentals, TIP provides the following maintenance and other ancillary services. •

FleetCare: Branded as ‘‘FleetCare’’, the TIP maintenance services are included in the majority of infleet trailer leases and are required for all short-term rentals, which enable TIP to control the quality of the maintenance and asset yet ensuring maximum uptime for customers. TIP leverages on its in-depth understanding of maintenance needs throughout the trailer life cycle and its extensive service network that supports its own trailer fleet to an attractive flat rate contract management and maintenance option to fleet operators on a third-party basis.



FleetProtect: Branded as ‘‘FleetProtect’’, TIP’s damage waiver offering provides for damage protection and tire care and is frequently used with short-term rentals.



FleetIntelligence: Branded as ‘‘FleetIntelligence’’, TIP offers IT solutions for fleet management, including real-time online fleet management tools and telematic services, which are made available to the majority of fleet operators.

Customer Base TIP has over 6,000 customers. Customers are generally global or regional logistics operators that operate a sizable trailer fleet for their intra-European road transportation activities. TIP maintains a high quality credit customer base and practices rigorous risk management system. Most of TIP’s top 20 customers have maintained business relationship with TIP for 10-15 years, and engage TIP for both operating lease and FleetCare services. In addition, the TIP sales team has been implementing a cross selling strategy across its business segments. In order to strengthen customer relationships and further understand the

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changing customers demands from, TIP plays an active role on the Customer Advisory Board (CAB) and European Transport Board (ETB), where TIP has at least two comprehensive dialogues with many trailer operators annually. Management Team The senior management of TIP has an average of 15 years of experience at TIP and/or 20 years of experience at GE and the Group. The senior management has a track record of delivering satisfactory results through cycles, and is considered to be one of the top quality management team in the industry. Turnover at key client interaction and management positions is low with 75% of the sales force having been with TIP for five or more years. Financial Results As at 31 December 2013 and 30 September 2014, Global TIP Holdings Two B.V., the holding company of TIP, had total assets of EUR822.1 million and EUR898.8 million, respectively. For the year ended 31 December 2013 and the nine months ended 30 September 2014, its annual revenue amounted to EUR62.3 million (revenue contribution from TIP Trailer Services did not begin until after its acquisition in October 2013) and EUR225.3 million, respectively. For the year ended 31 December 2013 and the nine months ended 30 September 2014, Global TIP Holdings Two B.V. earned net profit of EUR0.2 million and EUR13.8 million, respectively. TIP Trailer Services was acquired by the Issuer Group in October 2013, after which its results were consolidated with those of the Issuer’s. Aircraft Leasing Business Hong Kong International Aviation Leasing Co., Ltd (‘‘HKIAL’’), founded in February 2007, specialises in aircraft and aviation equipment leasing and also engages in ship and yacht leasing. HKIAL became a subsidiary of the Issuer since June 2011. HKIAL is one of the leading leasing companies in Hong Kong. The fleet includes about 30 aircraft, one luxury yacht and one aircraft engine. HKIAL provides customers with financial leasing, operating leasing and sale-and-leaseback services. As at 31 December 2013 and 30 September 2014, HKIAL had total assets of U.S.$2,631 million and U.S.$2,885 million, respectively. For the year ended 31 December 2013, HKIAL’s total revenue was U.S.$156.8 million and its net profit for the same period was U.S.$8.3 million. For the nine months ended 30 September 2014, HKIAL’s total revenue as U.S.$135.9 million. General Financial Services Business The Issuer Group conducts its general financial services business principally through Hong Kong International Securities Limited (formerly known as Mayfair Securities Limited) (‘‘Hong Kong International Securities’’) and Hong Kong International Futures Limited (formerly known as Mayfair Commodities Limited) (‘‘Hong Kong International Futures’’), which are wholly-owned subsidiaries of Hong Kong International Financial Services Limited (formerly known as Mayfair Finance Limited) (‘‘Hong Kong International Financial Services’’), a Hong Kong company acquired by the Issuer in December 2010. Through Hong Kong International Securities and Hong Kong International Futures, the Issuer Group is capable of providing a comprehensive range of financial services in Hong Kong, including stockbroking, securities and futures dealing, investment consulting and asset management, where asset management is carried out wholly incidental to the securities and/or futures dealing business. Hong Kong International Securities was incorporated in Hong Kong in January 1988 with a current issued share capital of HK$42 million. Hong Kong International Securities is licensed and regulated by the Securities and Futures Commission of Hong Kong (the ‘‘SFC’’) (CE Reference: AAB856), with Hong Kong Stock Exchange Broker code ‘‘3960/3961/3962/3967/3968/3969’’, and Hong Kong Clearing

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House Code B01231. It is a licensed corporation under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the ‘‘SFO’’) to carry on Type 1 (dealing in securities) regulated activities. Hong Kong International Securities engages in securities dealing and securities investment consulting and advises on corporate finance and asset management which are carried out wholly incidental to securities dealing business. The securities trading services include opening cash and margin accounts for its customers. Hong Kong International Futures was incorporated in Hong Kong in January 1988 with a current issued share capital of HK$22 million. Hong Kong International Futures is licensed and regulated by the SFC (CE Reference: ACT373), with Hong Kong Futures Exchange Broker code ‘‘MCL’’ and Hong Kong Clearing House code ‘‘CMCL’’. It is a licensed corporation under the SFO to carry on Type 2 (dealing in future contracts) regulated activities. Hong Kong International Futures engages in futures dealing, futures investment consulting and asset management which are carried out wholly incidental to futures dealing business. It also engages in the local and international futures derivatives trading business, covering Europe, U.S., Singapore, Japan and other international exchanges of commodities futures and financial futures. Both Hong Kong International Securities and Hong Kong International Futures provide customers with international mainstream e-trading systems, such as 2GOTrade and QianLong for securities and Sharppoint for futures trading, which allow customers to conveniently browse market information and place orders. In April 2013, Hong Kong International Financial Services acquired Hong Kong International Capital Management Limited (formerly known as Cathay Asia Advisors Limited) (‘‘Hong Kong International Capital Management’’) which was incorporated in Hong Kong in March 1993 with a current issued share capital of HK$26 million. Hong Kong International Capital Management is licensed and regulated by the SFC (CE Reference: ABT748). It is a licensed corporation under the SFO to carry on Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities. Hong Kong International Capital Management engages in the business of financial consultancy and asset management services. Financial Results As at 31 December 2011, 2012, 2013 and 30 September 2014, Hong Kong International Financial Services had total assets of approximately HKD52.5 million, HKD84.1 million, HKD252.5 million and HKD269.5 million respectively. For the years ended 31 December 2011, 2012, 2013 and the nine months ended 30 September 2014, the consolidated revenue of Hong Kong International Financial Services were HKD13.13 million, HKD11.92 million, HKD40.29 million and HKD26.6 million respectively. The consolidated net profits/(loss) of Hong Kong International Financial Services for the same periods were HKD1.74 million, HKD(1.6 million), HKD19.97 million and HKD1.1 million respectively. ii)

Travel Services

In 2013, the Issuer Group acquired a 20% stake in NH Hoteles, which was increased to 24% in February 2014 and further increased to 29.5% in November 2014. The Issuer Group is currently the largest shareholder of NH Hoteles. NH Hoteles is a hotel chain based in Spain and listed on the Stock Exchange of Madrid. Operating almost 400 hotels with around 60,000 rooms in 28 countries across Europe, America and Africa, NH Hoteles is one of the top 25 hotel chains in the world. According to rankings published by Hosteltur, NH Hoteles is the second largest chain hotel group in Spain, and the third largest business hotel chains in Europe. Its focus is on four-star business hotels, which constitute approximately 60% of the hotels operated by NH Hoteles. As at 31 December 2013, NH Hoteles self-owned 23% of its hotels, leased 53% of its hotels and managed 24% of its hotels. The occupancy rate of hotels operated by NH Hoteles amounted to 63.9%, 66.1% and 67.7% for the years ended 31 December 2012, 2013 and 2014, respectively. The average daily rate of hotels operated by NH

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Hoteles was EUR79.3, EUR77.5 and EUR78.9 for the years ended 31 December 2012, 2013 and 2014, respectively. According to the status report published by NH Hoteles in February 2015 in respect of its five-year plan, NH Hoteles seeks to invest approximately EUR220 million with focus in 63 key hotels between 2014 and 2016 with an estimated return of EBITDA of around 20% as part of its asset repositioning plan. NH Hoteles received support for its recent developments by international institutional investors such as BlackRock, UBS, THS and Fidelity, each of which has in recent months increased its stakes in NH Hoteles. In 2013, the average occupancy rate of hotels operated by NH Hoteles was 66% and average room rate was EUR77.5 per night. Locations NH Hoteles has a wide presence in Europe and South America, with hotels located in 28 countries, including prime destinations such as Amsterdam, Barcelona, Berlin, Bogota, Brussels, Buenos Aires, Frankfurt, London, Madrid, Mexico City, Milan, New York, Paris, Rome and Vienna. Approximately 170 of its hotels are located in Spain, approximately 180 in Europe, with the remainder located in South America and other locations. Brands NH Hoteles operates its hotels and resorts under four distinctive brands: •

NH Hotels: Three and four-star urban hotels for business travellers or tourists seeking excellent location with the best value for money. NH Hotels offer comfortable and functional rooms with services and facilities adapted to the needs of city travellers. NH Hotels also offer solutions business meetings and business events (MICE).



NH Collection: premium hotels located in the main capital across Europe and Latin America. Typically housed in unique and heritage buildings with local character preserved, the NH Collection hotels are carefully designed for guests who want to make the most of their stay. Excellent standards of comfort, a wide range of services on offer and customised service with all types of facilities to ensure guest satisfaction.



nhow: a select range of unique hotels featuring contemporary architecture and designed by prestigious architects and interior designers (Matteo Thun, Rem Koolhaas, Karim Rashid). NH Hoteles currently operates three hotels under the nhow brand in the cosmopolitan cities of Milan, Berlin and Rome. Each hotel has its own personality, inspired by the city it is located.



Hesperia Resorts: contemporary holiday resorts situated in stunning locations, targeted towards couples and families who seek an ideal combination of rest and enjoyment. The Hesperia Resorts offer a wide range of services and leisure activities, as well as facilities for hosting events and business meetings.

Awards and Recognition In 2013, NH Hoteles was awarded the Tripadvisor Excellence Prize for quality, an award that acknowledges hospitality based on travellers’ reviews on the world’s largest travel site. Other awards and recognition received by NH Hoteles and individual hotels under its brands in 2013 include: •

Agenttravel Prize awarded to the best hotel chain in terms of quality/price ratio, best city hotels and best business hotels in Spain;



Second place in the Ranking of America’s Top Companies;



Best Company to Work For in the tourism sector, according to the MERCO Ranking;

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Tripadvisor Excellence Certificate awarded to NH Gran Hotel Provincial, NH Atlantic, NH Puebla, NH Guadalajara, NH Santa Fe, NH Centro Historico, NH Museum Quarter, D’Vijff Vlieghen Restaurant, NH City Centre, NH 9 de Julio, NH Tango, NH Latino, NH Crillon, NH Jousten, NH Monterrey and another 84 hotels in Spain;



Green Star Diamond Prize and Best Resort Prize awarded to the NH Almenara hotel;



Most Popular Hotel in the Dominican Republic Prize and Dominican Ecoservices Prize awarded to the Secrets Royal Beach Punta Cana Hotel; and



Prize awarded the NH Jan Tabak, NH Atlantic and NH Schiphol Airport hotels for being among the 25 best hotels in the Netherlands awarded by Zoover Award.

In addition to providing excellent hotel services, NH Hoteles places great value on corporate responsibility and sustainability in its growth. In 2013, the Group was included in the prestigious FTSE4Good sustainability index. This index includes listed companies from around the world and is designed to help investors to integrate factors such as the environment, stakeholder relations, human rights and labour in their investments. Business Initiatives NH Hoteles has launched numerous business initiatives over the years with the aim to improve the quality of its services, to meet the needs of its clients and to distinguish itself from other hotel brands. Such initiatives include: •

NH Group Rewards: NH Group Rewards is a loyalty programme that allows customers to accumulate points when they stay at NH hotels. Points allows customers to redeem rewards such as free stays at hotels and restaurant services. Other benefits enjoyed by customers that sign up to the rewards programme include exclusive room rates, better room choice, free wi-fi, early check-in, late check-out and express check-in. Currently, the NH Group Rewards loyalty programme has almost one million members.



NH Stock Art: An ongoing commitment to young artists has provided NH Hoteles with a sizeable collection of over 4,000 pieces contemporary art. Such works are displayed in hotels allowing guests the opportunity to enjoy them in their rooms and in the communal areas.



Ecomeeting: NH Hoteles has launched Ecomeeting, which is a new concept for the organisation of events, conferences and conventions that is defined according to standards of sustainability and represents a respectful use of energy resources, as well as the use of fair trade products with low environmental impact.



Sustainability Club NH: A creative laboratory for environmental innovation in the field of product and service development.

Other businesses In addition to the hotel business, NH Hoteles operates other travel services businesses such as a casino in Madrid, gym clubs, beauty salons and fast food restaurants. Financial Results As of 31 December 2013 and 30 September 2014, NH Hoteles had total assets of EUR2,687 million and EUR2,666 million, respectively. For the year ended 31 December 2013 and the nine months ended 30 September 2014, the total revenue of NH Hoteles was EUR1,260 million and EUR935 million, respectively.

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As at 12 March 2015, market capitalisation of NH Hoteles was EUR1,653 million, recording a 150% increase compared to EUR 631 million as at April 2013 when the Issuer Group acquired its shares. Recent Development In September 2014, NH Hoteles and the Group signed a memorandum of understanding pursuant to which the parties will set up a jointly owned company to be named HNA/NH Hotel Management Joint Venture Company. The joint venture company, to be owned 49% person by NH Hoteles and 51% by the Group, would have an initial share capital of US$20 million. The joint venture company will take over the management of six of the Group’s hotels located in Beijing, Haikou, Sanya and Tianjin, encompassing 1,312 rooms. The joint venture company’s incorporation would be subject to receipt of the required authorisations and permits from the relevant PRC authorities. iii)

Others

In addition to its principal businesses, the Issuer Group also makes other investments. The key investments of the Issuer Group include: Long term investments •

Shougang Concord Technology Limited (00521.hk) (‘‘Shougang’’). The Issuer invested in Shongang in July 2013 and currently holds a 28.16% stake in Shougang and is its largest shareholder. Shougang has been listed on the Hong Kong Stock Exchange since 1988. The Issuer Group has successfully injected a quality golf hotel property business into Shougang, which specialises in golf club management and provides hotel and leisure services. The addition of Shougang into the Issuer Group has expanded the income source of the Issuer Group and greater efficiency has resulted from the increased synergy.



Hawker Pacific Airservices Limited (‘‘Hawker Pacific’’). In September 2014, the Issuer acquired 65.8% of shareholding of Hawker Pacific and is its largest shareholder. Hawker Pacific, a Hong Kong company, is one of the leading integrated aviation solutions providers including sales, support, supplies, aircraft management and associated services, with presence across the Asia Pacific and the Middle East. Hawker Pacific complements the Group’s existing aviation business, with its expertise in fixed base operations (FBOs), aircraft management, Continuing Airworthiness Management Organisation (CAMO) services, maintenance, repair and overhaul (MRO) and aircraft leasing. As at 31 March 2014, Hawker Pacific had total assets of US$175.0 million. For the financial year ended 31 March 2014, its total revenue was US$278.0 million.

Short term investments •

KVB Kunlun Financial Group Limited (08077.hk) (‘‘KVB’’). The Issuer invested in KVB in May 2012 prior to its listing on the Growth Enterprise Market of the Hong Kong Stock Exchange in July 2013. As at 31 December 2014, KVB had a market capitalisation of HK$95.87 million.



Silverlake Axis Ltd (SGX:5CP) (‘‘Silverlake’’). As at 31 December 2014, the Issuer Group held 59.6 million shares in Silverlake, which had a market capitalisation of SGD74.8 million. In the year 2014, the Issuer Group sold 20 million shares of Silverlake with a total gain of SGD12.8 million.



Tsogo Sun Holdings Limited (‘‘Tsogo Sun’’). On 25 July 2014, the Issuer entered into a one-year equity forward contract with The Standard Bank of South Africa Limited (‘‘Standard Bank’’) with respect to the sale of 48,299,592 shares in Tsogo Sun Holdings Limited (‘‘Tsogo Sun’’) by Standard Bank to the Issuer. Tsogo Sun is an operator of one of South Africa’s largest hotel chains and its shares are listed on the Johannesburg Stock Exchange.

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Standby letter of credits Due to foreign exchange controls imposed by SAFE, Chinese multinationals would primarily disburse funds to offshore subsidiaries via cross-border trade finance. Therefore Chinese multinationals often adopt the payment method of SBLCs for the daily operating requirements, working capital financing of their offshore subsidiaries. The SBLC is a form of credit line. Since 2008, the Issuer Group has been utilising SBLCs to finance various offshore debts. These SBLCs are backed by 100% cash deposits of the Issuer Group onshore and are issued by reputable Chinese banks. The Issuer will then use such SBLCs to obtain a loan from a bank offshore, with the loan amount and tenor matching that of the SBLC. The debts are shown on the Issuer’s balance sheet. However, this is low-risk borrowing for offshore banks as the offshore debts are fully secured by the SBLCs, which in turn are fully backed by 100% cash deposits from the Issuer Group. In the event of non-payment of the relevant loans, the relevant offshore banks can claim repayment against the SBLCs provided by the onshore banks. In these transactions, the Issuer acts as the offshore investment and capital management platform and foreign capital pool management platform for the Issuer Group. It is responsible for overseas money lending for the Issuer Group companies. Its revenue is derived from service charges and dividends from its investment companies, majority-owned subsidiaries and associated investment companies, as well as gains from opportunistic acquisitions and divestments of investment projects. These SBLCs are renewed on an annual basis and therefore income is expected to remain stable. Since the operation of this business line in 2008 to year end 2014, the Issuer Group has cumulatively raised U.S.$2.58 billion of SBLC-backed debt, with a balance of U.S.$880 million in 2014. As at the date of this Offering Circular, there has not been any default to such debt. As of 30 September 2014, the Issuer had U.S.$1.12 billion in offshore debt, of which U.S.$880 million were fully financed by the cross-border SBLC and therefore actual debt level for the Issuer stands at U.S.$240 million. The Issuer charges a 0.5% fee for deploying the SBLC backed funds offshore, with such fees totalling U.S.$4.4 million in 2014. DISCONTINUED BUSINESS Seaco SRL From December 2011 to December 2013, the Issuer also conducted a container leasing business through Seaco, which was indirectly wholly-owned by the Issuer. In December 2013, the Issuer disposed of its entire interest in Seaco to Bohai Leasing, a subsidiary of the Guarantor. For a description of the business conducted by Seaco, see the section titled ‘‘Business of the Group – Principal Businesses – viii) Financial Services – Container Leasing’’. GC Tankers Pte. Ltd. From December 2011 to July 2014, the Issuer conducted a logistic transportation business through GC Tankers Pte. Ltd. (‘‘GC Tankers’’), in which the Issuer held a 80% indirect interest. In July 2014, the Issuer disposed of its entire indirect interest in GC Tankers to an independent third party for a consideration of U.S.$40 million. Based in Singapore, GC Tankers principally engaged in investment, commercial operations and management of oil tankers and the provision of related consultation services. MATERIAL FUND RAISING ACTIVITY As at the date of this Offering Circular, the Issuer has issued CNY800 million 7.5% guaranteed bonds due 2015 in March 2012, the full principal amount of which remains outstanding. The Issuer has also issued CNY1,250 million 8.00% guaranteed bonds due 2017 in November 2014, the full principal amount of which remains outstanding.

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RECENT DEVELOPMENTS On 13 November 2014, the Issuer issued CNY1,250 million 8.00% bonds due 2017 guaranteed by the Guarantor. The bonds were listed on SGX-ST. On 6 March 2015, the Issuer issued CNY200 million 7.00% bonds due 2018 in Korea. The Issuer was the world’s first non-financial institution to issue RMB bonds in Korea. DIRECTORS The directors of the Issuer are Mr. Chen Feng, Mr. Wang Jian, Mr. Tan Xiang Dong, Mr. Mo Kaixiang, Mr. Smith Stewart Gordon, Mr. Boylan Donal Joseph, Mr. Li Yifan and Mr. Chen Chao. See the section headed ‘‘Directors of the Issuer’’ in this Offering Circular for more detailed information. EMPLOYEES As at 30 June 2014, the Issuer Group had a total of approximately 5,200 employees. The Issuer Group has employment contracts with all of its full-time employees. The Issuer Group has not experienced any significant problems with its employees or disruption to its operations due to labour disputes. The Issuer Group recognises the importance of a good relationship with its employees and believes that it maintains a good working relationship with its employees. LEGAL PROCEEDINGS As at the date of this Offering Circular, the Issuer and its subsidiaries have not been involved in any legal or administrative proceedings or arbitration that could have a material adverse effect on their financial condition or results of operations, nor is the Issuer aware of any potential legal or administrative respective proceedings or arbitration involving the Issuer or any of its subsidiaries that would have a material adverse effect on the Issuer Group’s financial condition or results of operations. The Issuer and its subsidiaries however have from time to time been involved in certain pending or threatened legal or regulatory proceedings arising out of their ordinary course of business. Insofar as the Issuer and its subsidiaries are aware of, none of these proceedings, individually or in aggregate, has had any material adverse effect on the Issuer Group’s financial position or results of operations.

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DESCRIPTION OF THE GUARANTOR GROUP OVERVIEW The Group is a leading conglomerate and an integrated operator in modern service industry with diversified businesses covering airport services, air transportation, real estate, hotel and catering, travel services, commercial retail, logistics and transportation, financial services and other businesses such as culture industry and network information technology. With its beginnings as an airline company, the Group has gradually transformed into a multi-business conglomerate focusing on air travel, modern financial services, modern logistics and other business along the relevant industry value chain. Through rapid‑development and benefiting from China’s economic growth and globalisation, the Group has built a quality portfolio of businesses and assets and established brand recognition within each of its core businesses. With respect to the Group’s air travel business, Hainan Airlines Co., Ltd. (‘‘Hainan Airlines’’) has been named a ‘‘5-star airline’’ by Skytrax for three consecutive years since 2011, being the only Chinese airline to have received such recognition and also one of the seven airlines in the world to have done so. With respect to the Group’s leasing business, Bohai Leasing is an industry leader in financial leasing and operating leasing and is the only leasing company to be publicly listed in China. With respect to the travel services and hotel businesses, the Group provides one-stop services and products to meet travellers’ needs. According to the ‘‘Top 500 Companies in China in 2013’’ list published by the China Enterprise Confederation(中國企業聯合會)and the China Enterprise Directors Association(中國企業家協會), the Guarantor ranked 108th by company revenue in 2012. The Guarantor has maintained its position within the list of Top 500 Companies in China. The Guarantor’s ranking was 129th, 112th and 108th respectively in the years 2011 to 2013. As at 31 July 2014, the Group employed over 81,000 employees. As at 31 December 2011, 2012 and 2013 and 30 September 2014, the Group had total assets of approximately CNY173.1 billion, CNY212.4 billion, CNY266.2 billion and CNY301.8 billion respectively. The Group’s consolidated total revenue totaled approximately CNY33 billion, CNY46.9 billion, CNY56.0 billion and CNY46.2 billion respectively for the years ended 31 December 2011, 2012 and 2013 and the nine months ended 30 September 2014. The Guarantor’s predecessor, Hainan Provincial Airlines Limited was established in 1989 to foster the development of Hainan, which was then a newly established and the largest special economic zone in China, it began operations in 1993. Over the years, the Group has evolved from one single airline company to a leading conglomerate. In the first ten years of its history, with air passenger and cargo service as its principal business, the focus was on enhancing the quality of the service, expansion of business and operations and establishing the HNA brand name. The year 2000 marked the milestone in the history of the Group. In January 2000, the State Administration of Industry and Commerce approved the establishment of the Guarantor in the Hainan province of the PRC as a platform for consolidation, integration and expansion of commercial operations in the province. Building on the established air passenger and cargo business of Hainan Provincial Airlines Limited, the following 10 years saw the development and growth of the key business segments of the Group, the enhancement of synergistic effects and the optimisation of the overall revenue structure. As at the date of this Offering Circular, the Guarantor was 70% owned by Hainan Traffic Control Holding Co., Ltd. and 30% owned by Yangpu Construction Investment Co., Ltd.. The ultimate major beneficial shareholder of the Guarantor is the Trade Union Committee of Hainan Airlines Co., Ltd..

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Over the years, driven in part by the economic growth in the PRC and through reorganisation, capital investment and acquisitions, the assets and revenue of the Group have significantly increased. The table below shows the consolidated total assets, revenue and net profit of the Group for the period specified below. Income Statement (CNY million)

Total Operating Revenue . . . . . . . . . . . . . . . . . . . . Operating Profit . . . . . . . . . . . . . . . . . . . . . . . . . . Net Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance Sheet Statement (CNY million)

Current Assets . . . . . . Non-current Assets . . . Total Assets . . . . . . . . Current Liabilities . . . . Non-current Liabilities . Total Liabilities. . . . . . Total Equity . . . . . . . .

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2014 3Q

2013

2012

2011

(Reviewed)

(Audited)

(Audited)

(Audited)

46,205 1,160 980

56,008 1,532 1,552

46,857 1,511 1,111

33,041 1,335 938

2014 3Q

2013

2012

2011

(Reviewed)

(Audited)

(Audited)

(Audited)

117,575 184,180 301,755 90,978 146,055 237,033 64,722

95,171 171,013 266,184 83,287 125,867 209,154 57,030

71,768 140,674 212,442 70,300 97,086 167,386 45,056

61,380 111,725 173,105 54,572 83,243 137,815 35,290

KEY STRENGTHS Having accumulated years of valuable experience in international markets and having an in-depth understanding of the industries in which it operates, the Group believes that its key strengths and core capabilities will allow it to continue to capture investment opportunities and to benefit from the steady growth of the Chinese economy and the recovery of the world economy. The Group believes its key strengths are as follows: Leading conglomerate in China with established market positions, strong industry reputation and brand recognition The Group is a leading conglomerate in modern service industry with diversified businesses spanning across air transportation, airport services, real estate, hotel and catering, travel services, commercial retail, logistics and transportation, financial services and other businesses such as culture industry and network information technology. According to the ‘‘Top 500 Companies in China in 2013’’ list published by the China Enterprise Confederation(中國企業聯合會)and the China Enterprise Directors Association(中國企業家協會), the Guarantor ranked 108th by company revenue in China in 2013. The Guarantor has maintained its position within the list of Top 500 Companies in China, ranking 129th, 112th and 108th, respectively, in the years 2011 to 2013. The Group enjoys leading market positions in many businesses it engages in. Over the years, the Group has received numerous accolades, awards and recognition in different businesses, particularly in its air passenger and cargo, airports and travel services businesses. See the section titled ‘‘Description of the Group – Awards’’. Such accolades, awards and recognition have built a strong reputation for the Group in the relevant industries and enhanced customer loyalty, trust and confidence in the Group generally. They also helped in attracting new business opportunities and customers. The Group believes that its leading market position in the relevant industries have laid a solid foundation for further growth, integration and expansion of its businesses.

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Business diversification through integrated business segments providing stable earnings Responding to the challenges posed by the SARS epidemic, the Group began to diversify its business after 2003 and successfully transformed itself from an airline company operating under a single-business model to a conglomerate engaging in businesses along the industry value chain such as of air transportation, airport services, real estate, hotel and catering, travel services, commercial retail, logistics and transportation and financial services. Its diversified business allows the Group to derive synergistic benefits. Diversification enables the Group to be less vulnerable to business cycles, mitigates the business concentration risks and reduce volatility in the Group’s overall earnings and financial position. For example, working with airports operated and owned by the Group and by utilising the Group’s airline related businesses such as aircraft maintenance services, aircraft equipment and spare parts procurement and crew training programmes, the airlines under the Group’s air passenger and cargo business have been able to improve its operating efficiency to achieve better financial performance. The Group is also able to cross-market its various services, thereby widening its customer base and increasing business opportunities. For example, the HNA Easycard allows customers to purchase from a wide range of the Group’s travel business partners including hotels, car rental services, and restaurants, which helps to encourage cross-selling and promote business across the Group’s various segments and businesses. The diversification of the Group’s business also ensures stability, consistency and reliability in the Group’s business performance and maintains a balanced revenue and earnings mix. Successful track record in asset integration and value enhancement Striving towards the goal of becoming a Chinese conglomerate with global presence, the Group has a successful track record in identifying suitable investments to further the Group’s strategy and has demonstrated its ability to manage investments prudently and wisely to enhance value. In 2010, the Group acquired the business and assets of Allco Aviation (subsequently rebranded Hong Kong Aviation Capital Limited (‘‘HKAC’’), an Australian based aircraft leasing company originally ranking 13th in the world by fleet value (according to Flight Insight’s Aircraft Finance Special Report 2009) which went into receivership. Through further investment and prudent management, HKAC enjoyed steady growth and provided a profitable return to the Group when the Group subsequently sold it to Bohai Leasing in 2011. Similarly, in 2011 the Issuer acquired Seaco (formerly named GE Seaco), the world’s fifth largest container leasing company at the time, from GE Capital and its joint venture partner. Providing clear leadership and strategic direction, the Group aims to lead Seaco to become the world’s largest container leasing company. In January 2015, the Issuer acquired 80% stake in Cronos Limited (‘‘Cronos’’) from Cronos Holding Company Ltd.. Cronos is one of the world’s leading cargo container lessors and an industry leader in specialised container leasing. The Group has accumulated substantial experience in making use of the equity markets to provide profitable return on its investments and to increase the value of its assets. Since the listing of Hainan Airlines on the Shanghai Stock Exchange in 1997 and the listing of HNA Infrastructure on The Stock Exchange of Hong Kong Limited, the Group has successfully listed many Group companies and acquired stakes in listed companies, bringing its current investment portfolio to 12 listed companies. IPOs and acquisitions of stakes in listed companies provide the Group with means to monetise its investments in addition to increasing value of its assets by providing greater sources of funding, improving corporate governance and increasing market and brand recognition. Prudent financial policies policy with sustainable funding resources The Group has implemented prudent financial polities to ensure a healthy financial profile and stable cash flow. It has established diversified funding sources including equity financing and issuances of domestic corporate bonds and commercial paper. As at 30 September 2014, the Group had listed stocks with a total market value of HK$26.64 billion, comprising Hong Kong-listed stocks with a total market value of HK$0.73 billion, PRC-listed stocks with a total market value of HK$21.29 billion, Europelisted stocks with a total market value of HK$3.90 billion, Singapore-listed stocks with a total market value of HK$0.48 billion and South Africa-listed stocks with a total market value of HK$0.34 billion.

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Through the Group’s holdings in listed companies, it enjoys diversified funding channels including share placements. For instance, in 2012, Hainan Airlines made a placement of A-shares, raising CNY8 billion and in 2013 Bohai Leasing also made an A-share placement and successfully raised CNY3.5 billion. Through effective management of liquidity and funding sources, the Group seeks to maximise returns and value for its businesses to ensure long term sustainable profitability and stability. The Group has established good relationships with over 300 domestic and international financial institutions, including China Development Bank, The Export-Import Bank of China, Bank of China, Agriculture Bank of China, Industrial and Commercial Bank of China, Bank of Communications, China Everbright Bank and China Construction Bank. Currently, the Group’s largest lenders are China Development Bank, the Export-Import Bank of China and China Construction Bank. As at 31 December 2014, the total credit line for the Group stood at RMB420 billion, compared to RMB70 billion as at 31 December 2013. The Group’s relationship banks have extended more credit lines to the Group year-onyear, reflecting their positive views on the outlook of the Group. Relationships with financial institutions worldwide have also strengthened the Group’s investment capability. The Guarantor was rated AA+ by Shanghai Brilliance Credit Rating & Investors Services Co., Ltd. in June 2014. As at 31 December 2014, the unused credit limit of the Group was approximately CNY200 billion. Strategic cooperation with provincial and municipal governments The Group believes that its success has been and will continue to be closely linked to the economic conditions and growth of the various provinces and cities in China. To this end, the Group has, over the years, entered into strategic cooperation framework agreements with various provincial and municipal governments and established or held interests in joint ventures together with entities controlled by various provincial and municipal governments. Due to the strategic nature of airlines and airports, the provincial and municipal governments are, in some cases, strategic shareholders and partners of the airlines and airports which are managed or operated by the Group. As at 31 July 2014, the Group had entered into 116 strategic cooperation agreements with various provincial, municipal and local governments across 28 provinces. Of these, 12 agreements were entered into with provincial governments, including Beijing, Tianjin, Gansu, Yan’an, Haikou, Shizuishan, Guangxi and Hefei. Under the strategic cooperation agreements, the Group benefits from arrangements such as preferential tax treatment, favourable policies for land and project development, subsidies, assistance and/or support from the relevant governments, in return for which the Group agrees to contribute to the development of air transportation, logistics, tourism and other industries in the relevant provinces, municipalities and cities across China. Experienced and savvy management team to capture growth opportunities The Group’s management team has extensive operating experience and in depth market understanding and knowledge of their businesses. They are commercially-oriented with proven capability to capitalise on available opportunities to maximise profitability, improve cost efficiency and synergy within the Group. With a proven track record of sound decision-making, the Group’s current senior management team led the Group throughout the economic cycles since the commencement of the Group’s business operations in 1993 and helped transform the Group from a regional airline to a multi-business conglomerate. The success is attributable to the management style that advocates for an open-minded, creative, strong and effective management. Embracing cultural diversity, the Group has retained the original management team of the acquired entities in each overseas acquisition it completed. Such approach allows continued management by personnel with the best knowledge of the local economy, culture and practices in which the businesses operate, providing a harmonious transition while at the same time allowing the Group to acquire, and be continually updated with, the latest modern Western management and corporate governance principles, facilitating the growth of the Group into a modern, global enterprise.

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STRATEGIES The Group’s goals are to build a world-class Chinese brand, to achieve continual growth and to become a competitive global conglomerate. The Group seeks to achieve its goals through the following strategies: Continue to expand globally to strengthen global presence The Group aims to establish itself as a world class brand with global presence. The Group will seek to identify suitable acquisition targets which are complementary to its businesses and instrumental to the achievements of its goal to become a global brand. Utilising Hong Kong as a platform, the Group aims to drive further growth and development by expanding its foothold to Asia, Africa, Europe and North America. By making suitable acquisitions, the Group also seeks to expand the number of international routes of its air transportation business to reach more destinations. The Group has established an investment department formed by experienced investment professionals to identify suitable acquisition targets. The investment department is responsible for analysing the markets in which the Group’s businesses operate, tracking relevant government policies and working in conjunction with other external parties to seek appropriate investment opportunities for the Group. Placing great emphasis on risk minimisation, the Group carries out extensive due diligence on any identified potential targets, such as by conducting site visits and meetings with the management, employees, suppliers and customers, and will conduct in-depth analysis in the relevant industry and in respect of human resources, branding and products. Focus on and continue to develop the Group’s core businesses The Group enjoys leading market positions in many of its businesses such as air transportation, airports and travel services. The Group will continue to strengthen its management and operation efficiency and to focus on strengthening and further developing each of the Group’s key businesses to improve profitability and to seize a greater market share in an ever competitive market in each business. The Group seeks to adopt a focused, strategic development approach by streamlining its management structure. The Group aims to become more agile, more efficient and more effective by simplifying its internal approval processes and by decentralising business decisions to the level of each core business. The Group will also integrate new technology such as mobile internet, cloud and big data to achieve management and operational efficiency. The Group aims to further build and promote the HNA brand and to achieve increased brand recognition both in the PRC and globally. Continue to build upon the Group’s diversified business The Group seeks to expand and grow strongly while being specialised and focused. Accordingly, the Group continue to diversify whilst at the same time maintaining a high quality investment portfolio, providing the Group with a stable income. Leveraging on the success of its core air transportation, airports and travel services business, the Group closely follows the new trends and developments to explore and develop new businesses that complement the Group’s existing businesses to create further synergy. The latest additions to the Group’s diversified business mix are the e-commerce, culture and health businesses. The Group seeks to integrate a range of digital services such as prepaid cards, thirdparty payment, social networking, internet logistics, cultural communications, online and consumer financing and internet entertainment with its other existing businesses such air transportation, hotels, travel services and retail. Continue to increase capital raising and equity investments The Group will continue to explore means to increase its access to capital. In 2013, Bohai Leasing and Xi’an Minsheng successfully issued corporate notes raising an aggregate of CNY4.1 billion, HNA Infrastructure successfully raised U.S.$250 million offshore, and the issue of CNY300 million corporate notes by Hainan Island Construction Co., Ltd. HNA International Tourism Island had received

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regulatory approval. As part of its development strategy, the Group will also make equity investments in companies whose businesses will help further the Group’s strategic goals. In 2013, the Group acquired stakes in Yicheng Co., Ltd. and Shougang Concord Technology Holdings Ltd, increasing the number of listed companies invested in by the Group to 12. The Group will continually assess the availability of suitable investment or acquisition targets. AWARDS The Group has received numerous awards and recognition in each of its core industry sector as set forth below. Airport Service •

In 2014, the Haikou Meilan International Airport, partially owned and operated by the Group, won the Skytrax ‘‘(China) Regional Best Airport Award’’ and was named by Skytrax as the 2nd ‘‘5-Star Terminal’’ in China and 6th in the world in 2014.



In 2012, the Sanya Phoenix International Airport won the ASQ Award for ‘‘Best Improvement in the Asia-Pacific’’ in the Airports Council International (ACI) Airport Service Quality (ASQ) awards, and was the 5th international airport in Asia to receive such award.

Air Transportation •

In 2014, Hainan Airlines was named a ‘‘5-star airline’’ by Skytrax for three consecutive years. It was also awarded ‘‘(China) Regional Best Airline’’ and ‘‘(China) Regional Best Staff Service’’ by Skytrax for four consecutive years, being the only mainland Chinese airline companies to receive such awards.



In January 2013, Hainan Airlines ranked 8th in the World’s Safest Airlines published by the German aviation magazine, Aero International, ranking the highest among PRC airlines.



In December 2013, Hainan Airlines was awarded the ‘‘Best Economy Class’’ honours by the 20th World Travel Awards.



In 2011, Tianjin Airlines Co., Ltd. (‘‘Tianjin Airlines’’), a subsidiary of the Guarantor, was named ‘‘4-Star Airline’’ and won the ‘‘Best China Regional Airline’’ title awarded by Skytrax;



In 2011, Deer Jet Co., Ltd. (now renamed as Beijing Capital Airlines Co., Ltd., ‘‘Capital Airlines’’), a subsidiary of the Guarantor, became the first Chinese business jet operator to attain ARGUS Platinum Rating and IS-BAO rating;

Real Estate •

In 2013, the Group joined the ranks of the top 50 Chinese real estate enterprises, ranking 48th in terms of sales and 41st in terms of area sold.



In November 2013, the Group was awarded ‘‘Brand Enterprise of the Year’’ organised by the ‘‘Real Estate’’ magazine.



In June 2013, HNA Real Estate received the ‘‘PRC Blue Chip Real Estate’’ award in the 10th PRC Blue Chip Annual Conference organised by the Economic Observer.

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Hotel and Catering •

In 2013, the Group ranked 69th (in terms of number of hotel rooms) in the list of ‘‘Hotels 325’’ published by Hotels Magazine.



In 2012, Tangla Hotel Tianjin was awarded ‘‘International Six Star Diamond Award’’ by American Academy of Hospitality Sciences.

Travel Services •

HNA Tourism was ranked 6th in the ‘‘Top 20 PRC Tourism Groups’’ by China Tourism Academy in both 2011 and 2013.



In 2013, HNA Tourism won the ‘‘Gold Spectrum Award (Tourism Industry)’’ in the 7th Annual Chinese Brand Awards, and the ‘‘2013 Influential Chinese Brands Award’’ in the 2013 China Business Leaders & Media Leaders Annual Conference.

Business Retail •

In 2013, HNA Commercial Holdings Co, Ltd. was ranked 22nd in the ‘‘Top 100 PRC Chain Store Enterprises’’.

Logistics •

In 2014, Gopay Information Technology Co., Ltd. was awarded ‘‘Top 100 brand of China internet finance enterprise’’ organised by CIFC, Huaxia newspaper and He Xun Wang.

Financial Services •

In 2013, Bohai Leasing won the ‘‘Best Management Trust Company in China’’ award at the China Wealth Management Summit and Best Wealth Management Institutions Awards Ceremony organised by Securities Times.



In 2012, Bohai Leasing won the ‘‘PRC leasing Innovative Award’’ in the 2012 PRC leasing Annual Conference.



In 2012, Bohai Leasing won the ‘‘Best Finance Leasing Company’’ award at the Ninth Chinese Enterprise Operation and Financial Strategic Management Summit organised by the China Association of Chief Financial Officers and the China CFO Magazine.

PRINCIPAL BUSINESSES The principal businesses of the Group are airport services, air transportation, real estate, hotel and catering, travel services, business retail, logistics transportation, financial services and other businesses such as culture industry and network information technology. The tables below show the respective contribution to (1) the operating revenue and (2) the gross profit of the Group by various business segments for the years ended 31 December 2011, 2012 and 2013.

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(1)

Operating Revenue Business Segment

Operating Revenue (CNY) Year Ended 31 December 2013 . . . . . . . . .

(million) 16,106 3,854 8,159 1,269 12,121 3,247 1,982 6,352 1,327

Total . . . . . . . . . . . . . . . . . . . . . . . .

54,417

Air transportation . . . . Financial services. . . . Travel services . . . . . Airport services . . . . . Business retail. . . . . . Real estate . . . . . . . . Hotel and catering . . . Logistic transportation . Others. . . . . . . . . . .

(2)

. . . . . . . . .

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. . . . . . . . .

. . . . . . . . .

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. . . . . . . . .

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. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

% of Total 29.6 7.1 15.0 2.3 22.3 6.0 3.6 11.7 2.4

(million) 12,153 3,720 5,477 1,064 10,888 5,509 1,739 3,895 1,232

100

45,677

% of Total

Year Ended 31 December 2011

% of Total

26.6 8.1 12.0 2.3 23.9 12.1 3.8 8.5 2.7

(million) 9,167 3,169 3,721 781 9,086 1,614 2,075 129 2,359

28.5 9.9 11.6 2.4 28.3 5.0 6.5 0.4 7.4

100

32,101

100

Gross profit Business Segment

Gross Profit (CNY) Year Ended 31 December 2013 . . . . . . . . .

(million) 2,661 1,550 1,347 602 2,772 1,045 1,107 1,606 387

Total . . . . . . . . . . . . . . . . . . . . . . . .

13,077

Air transportation . . . . Financial services. . . . Travel services . . . . . Airport services . . . . . Business retail. . . . . . Real estate . . . . . . . . Hotel and catering . . . Logistic transportation . Others. . . . . . . . . . .

i)

Year Ended 31 December 2012

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

. . . . . . . . .

% of Total

Year Ended 31 December 2012

20.3 11.9 10.3 4.6 21.2 8.0 8.5 12.3 2.9

(million) 2,426 2,195 1,142 511 2,292 2,456 507 1,425 316

100

13,270

% of Total

Year Ended 31 December 2011

% of Total

18.3 16.5 8.6 3.9 17.3 18.5 3.8 10.7 2.4

(million) 1,563 1,384 487 423 2,055 655 1,441 81 1,285

16.7 14.8 5.2 4.5 21.9 7.0 15.4 0.8 13.7

100

9,374

100

Air Transportation

According to statistics published by CAAC the Group was ranked the 4th largest domestic airline group in China in 2013 in terms of total air traffic. The Group is engaged in trunk line and regional airlines, business jet, air cargo, helicopter and low-cost carrier businesses. As at 31 December 2013, the Group held 139 aircrafts and operated 413 flight routes. For the year ended 31 December 2013, it achieved passenger traffic (in RPKs) of approximately 24.43 billion and the total cargo throughout of China was 128.3 million tonne kilometres. As at the date of this Offering Circular, HNA operates the following 18 airline companies: No.

Airlines Company

1 2 3 4 5 6 7 8 9 10 11

Hainan Airlines Tianjin Airlines Capital Airlines Hong Kong Airlines Grand China Air Co., Ltd. Hong Kong Express Airways Limited West Air Co., Ltd. Lucky Air Co., Ltd Changan Airlines Co., Ltd. Shanxi Airlines Co., Ltd. Yangtze River Express Airlines Co., Ltd.

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No.

Airlines Company

12 13 14 15 16 17 18

China Xinhua Airlines Limited Liability Company Shanghai Deer Jet Co., Ltd. Africa World Airlines Limited Aigle Azur Urumqi Air Fuzhou Airlines Guangxi Beibu Gulf Airlines

Among the airlines operated by the Group, the principal airlines are Hainan Airlines, Tianjin Airlines, Capital Airlines and Hong Kong Airlines. Hainan Airlines Hainan Airlines, an associated company of the Guarantor, is a leading provider of air passenger, air cargo and airline-related services in China. It is the fourth-largest airline in China in terms of fleet size, revenue and number of passengers carried in 2013. The shares of Hainan Airlines are listed on the Shanghai Stock Exchange (600221.SS). As at 31 December 2013, Hainan Airlines provided scheduled domestic, regional and international services using a hub and spoke strategy on 622 routes to 89 cities in 10 countries. Hainan Airlines is one of seven airlines in the world ranked as a 5-Star airline by the independent airline benchmarking firm Skytrax in 2013. The first and only PRC airline to receive this rating, Hainan Airlines received the rating for a third consecutive year. Hainan Airlines was ranked 14th in 2014 in the airline safety ranking published by Germany’s JACDEC, ranking highest among Chinese airlines. In addition to passenger services, Hainan Airlines provides cargo and mail services through bellyhold space of its passenger aircraft. It also leases out a total of 54 aircrafts to other affiliated airline companies of the Guarantor, and provides other airline-related services, including property leasing, lodging, catering, ticketing and ground services in Beijing, Haikou, Xi’an and other locations through its subsidiaries. Hainan Airlines has a fleet primarily comprising Boeing 737-800 aircraft, along with Boeing 787-8, Boeing 767-300, Boeing 737-700, Boeing 737-400, Airbus A340-600, Airbus A330-300, Airbus A330-200 and Airbus A330-200VIP aircraft for passenger and cargo transportation. As at 31 December 2013, Hainan Airlines operated a fleet of 131 aircrafts, serving 75 domestic and regional and 14 international destinations. In 2011, 2012 and 2013, Hainan Airlines carried approximately 20.49 million, 22.55 million and 26.26 million passengers and had revenue passenger kilometres of 35,744.40 million, 39,063.44 million and 45,489.19 million, respectively. In 2013, Hainan Airlines achieved an average loan factor of 86.44%. Tianjin Airlines Established in November 2006, Tianjin Airlines, a subsidiary of the Guarantor, is a regional airline operating domestic scheduled passenger and cargo flights out of Tianjin Binhai International Airport. Tianjin Airlines operates approximately 130 routes to over 90 domestic destinations, including Beijing, Chongqing, Dalian, Nanjing, Hailar, Shanghai, Xi’an, Wuhan, with an annual passenger throughput of over 8 million passengers. As of May 2014, the Tianjin Airlines fleet consisted of 85 aircrafts including 22 Embraer EMB 145, 50 Embraer ERJ 190 and 13 Airbus 320. In addition to scheduled air passenger service, Tianjin Airlines also provides charter flight services. Since the commencement of operation, Tianjin Airlines has received recognition for its good quality performance. In 2009, Tianjin Airlines was named ‘‘Best China Regional Airline’’ at Centre for Asia Pacific Aviation’s annual Awards for Excellence in 2009. In 2011, it was named a ‘‘4-Star Airline’’, and won the ‘‘Best China Regional Airline’’ title awarded, by the independent consultancy firm Skytrax.

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Capital Airlines Capital Airlines, a subsidiary of the Guarantor, operates scheduled air passenger service with a fleet of 46 Airbus A319 and A320. It is the largest tourist charter flights operator in China. Since the commencement of operation, it has established over 250 passenger routes to approximately 190 destinations in China including regional hubs such as Beijing, Guangzhou, Nanjing, Chongqing, and Kunming. Deer Jet, another line of business of Capital Airlines, is a leading provider of corporate and private charter services in China. It operates 65 corporate jets, including Boeing Business Jet, Gulfstream G500/GV/GIV/GIV-SP/G200, Hawker 900xp/850xp/800xp and Airbus 319. Deer Jet’s corporate and private jet charter offers efficient travel solutions with premium comfort and style. The fleet represents approximately 40% of the total of China corporate jets and market share is approximately 65% as at April 2014. Its clientele includes government officials, top business executives and celebrities. Hong Kong Airlines Hong Kong Airlines, an associated company of the Guarantor, is the second largest airline group in Hong Kong in terms of market share and route network. Besides its international network, Hong Kong Airlines has established passenger route network in the PRC comprising the cities of Beijing, Shanghai, Guilin, Chengdu, Chongqing, Guiyang, Nanning, Haikou, Sanya, Tianjin, Hangzhou, Nanjing, Xiamen, Fuzhou, Xuzhou, Taiyuan and Hohhot. It has entered into passenger codeshare agreements with Hainan Airlines, China Eastern Airlines, Shanghai Airlines, EVA Airways and Air India to strengthen the frequency of its flight schedule and offer increased access to certain destinations for its passengers. So far, it has approximately 340 scheduled codeshare flights every week operated by its codeshare partners and it operates approximately 448 scheduled codeshare flights every week. Hong Kong Airlines currently operates 23 aircrafts, comprising of 17 passenger aircrafts and 5 pure cargo aircrafts. Since 2010, Hong Kong Airlines was awarded ‘‘4-Star Airline’’ title by Skytrax for consecutive 4 years, and was awarded ‘‘The World’s Best Improved Airline’’ in 2014. The above airlines are participating airlines in the frequent flyer programme known as Fortune Wings Club. ii)

Financial Services

The Group provides a range of financial services, including leasing, trust and other financial services such as insurance, securities, futures, investment banking, funds, factoring, equity investments and guarantee provision. Leasing The Group conducts its leasing business primarily through Bohai Leasing. Listed on the Shenzhen Stock Exchange, Bohai Leasing (SHSE: 415) mainly engages in the finance lease, operating lease and financing guarantee businesses, specialising in aircrafts, ships, containers, infrastructure, high-end machineries. Its financing products and services include finance lease, operating lease, sale-leaseback, leveraged leasing, vendor leasing, aircraft prepayment financing, aircraft mortgage financing, financial advisory services and risk management services. It is the only listed leasing company in China and has a full leasing license. Bohai Leasing is the largest container leasing company in the world in terms of cost equivalent unit (CEU). The Guarantor held 44.9% interests in Bohai Leasing as at 31 March 2014, and is its largest controlling shareholder. In August 2013, Bohai Leasing successfully issued CNY3.5 billion domestic bonds, becoming the first leasing company to issue bonds in the PRC.

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On December 27, 2013, Bohai Leasing, through its offshore subsidiary, Global Sea Containers Ltd, completed its acquisition of the entire stake in Seaco from Global Sea Containers Two SRL, a subsidiary of the Issuer. At the time of acquisition, Seaco owned and managed over 870,000 20-foot equivalent units. On January 20, 2015, Bohai Leasing, through its offshore subsidiary, Global Sea Containers Ltd, completed its acquisition of 80% stake in Cronos from Cronos Holding Company Ltd.. As at 31 December 2013, assets under lease and lease receivables of Bohai Leasing amounted to CNY50.551 billion and CNY25.071 billion, respectively. For the year ended 31 December 2013, the operating revenue and operating profit of Bohai Leasing were CNY6.376 billion and CNY1.452 billion, respectively. Aircraft Leasing As at 31 December 2013, the Group had contracted to lease 182 aircraft, of which 168 aircraft had been delivered. The assets under lease as at 31 December 2013 totalled CNY30.28 billion. The size of the fleet held by the Group is one of the largest in the world. The aircraft leasing business of the Group is conducted through Bohai Leasing’s subsidiary, HKAC. Established by the Group in January 2010, HKAC is an international aircraft leasing company headquartered in Hong Kong, with offices in Dublin and New York. It is mainly engaged in aircraft leasing and asset management. Customers of HKAC include Qantas, British Airways, Emirates Airlines, Ryanair and Wizz Air. According to Flightglobal Insight’s Aircraft Finance Special Report 2014, HKAC ranks 22nd by fleet value and ranks 24th by fleet size in 2013 worldwide. Container Leasing The container leasing business of the Group is primarily conducted through Seaco, a subsidiary of Bohai Leasing, and Cronos. Seaco was a joint venture established by General Electric Capital Corporation and Sea Containers Ltd. (since reformed as Seaco Limited) in Barbados in 1998 and was originally named as GE Seaco SRL. Acquired by the Issuer in 2011 and sold to Bohai Leasing in 2013, Seaco now operates as a core business within the Groups existing logistics and finance operations in the form of Bohai Leasing. Seaco is now the largest and most diversified container leasing company in the world by cost equivalent unit. It has an issued capital of U.S.$113.23 million. Seaco is headquartered in Singapore and has 13 sales and support offices worldwide. By working closely with container manufacturers and offering advanced container leasing services, Seaco is recognised worldwide as an industry leader. The majority of Seaco’s fleet is on long-term leases to a diverse group of world’s leading liners, logistics companies and shippers, allowing Seaco to maintain strong and stable cash flow. Being one of the largest and most diversified container leasing company in the world by cost equivalent unit, Seaco manages one of the most diversified container fleets amongst its industry peers, providing consistent cashflows throughout economic cycles. A diversified fleet also enables Seaco to have a broader customer base than other lessors, with its top 10 customers representing less than 48% of its total revenue in 2013. Seaco also has an established track record in selling end-of-life assets worldwide, maximising asset value to shareholders. Cronos is headquartered in San Francisco, United States and has 18 leasing and sales offices worldwide. Cronos is one of the world’s leading cargo container lessors and an industry leader in specialised container leasing. Cronos leases dry, refrigerated, tank and specialized intermodal container equipment to users worldwide across a number of industries. The company also offers design and procurement services for companies needing specialized built-to-order container equipment. In addition, it manages equipment leasing investment programs on behalf of third-party equipment owners.

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Trust The Group conducts its trust business primarily through Bohai International Trust Co., Ltd. (‘‘Bohai Trust’’). •

Bohai Trust was incorporated in October 1982. Pursuant to a restructuring in December 2006, Bohai Trust became a subsidiary of the Guarantor. Further to several rounds of capital increase, it currently has registered capital of CNY2,000 billion. Based in Hebei, Bohai Trust has established branch offices in Beijing, Shanghai and Chengdu, etc.. Its products range from infrastructure trust, securities trust to real estate trust. As at 31 December 2013, Bohai Trust had assets under its management totaling CNY188.18 billion. For the year 2013, it recorded total revenue of approximately CNY1,005.98 million and net profit of approximately CNY508.68 million. In the same year, Bohai Trust was named ‘‘China Most Potential Trust Company’’ by Shenzhen Secutimes at the ‘‘3rd China Trust Companies Awards of Excellence’’.

Other Financial Services •

Approved by the China Insurance Regulatory Commission, Min’an Property and Casualty Insurance Co., Ltd. (‘‘Min’an Insurance’’), a company in which the Guarantor has an interest, is an insurance company based in Shenzhen. Its businesses include home insurance, liability insurance, credit insurance, health insurance, casualty insurance and re-insurance of the above insurances. It has a well established sales and distribution network covering the whole of China with over 150 branch offices, including in Shenzhen, Hainan, Guangdong, Beijing, Shanghai, Sichuan, Hunan, Henan, Tianjin and Hong Kong. Min’an Insurance received a second tier ‘‘Shenzhen Financial Innovation Award’’ issued by the Shenzhen Municipal Government in 2009. Lianxun Securities Co., Ltd. (‘‘Lianxun Securities’’), a company in which the Guarantor has an interest, was established in 1988. Its business includes security brokerage, fund retail, security investment consultation, financial advisory and security asset management. It has over 30 branches in China. Lianxun Securities is listed on the over-the-counter bulletin board in Shenzhen.



Yingkou Coastal Bank Co., Ltd. (‘‘Yingkou Coastal Bank’’), a company in which the Guarantor has an interest, was established in December 2010 with a registered capital of CNY1.5 billion. Headquartered in Yingkou city of Liaoning province, Yingkou Coastal Bank is a newly formed commercial bank jointly established by four urban credit cooperatives in Yingkou city; it is situated at a strategic location in the coastal economic zone of Liaoning province, and aims to take advantage of the economic development in the region and to become a bank with expertise in logistics network.

iii)

Travel Services

Operating under the core development strategy of ‘‘one card, one network, and one center’’, the Group seeks to provide a one-stop solution for all the travel needs of its customers from travel planning and booking, financing, air travel, hotel accommodations, tour guides to shopping and entertainment, with integrated internet and e-commerce platforms. The Group is one of the largest travel services groups in China and in 2013 it ranked sixth in the list of ‘‘Top 20 Chinese Tourism Groups’’ published by the China Tourism Academy. The Group’s travel services span from travel agencies, stored value smart card, to currency exchange, with companies (including Grand China MICE, Hainan HNA Yisheng Co., Ltd., Tianjin Bohai Huitong Currency Exchange, Yisheng Capital Fund Co., Ltd. etc) approximately 50 travel agencies, over 470 travel agency outlets, approximately 30 HNA Easycard promoting companies and almost 40 currency exchange outlets. With ‘‘one card, one network, and one center’’ as core development strategy and creative business model, the Group aspires to become the largest domestic and one of the leading international provider of modern comprehensive and seamless travel services and to create, promote and lead a new lifestyle of travel and consumption as part of its key strategies.

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The key subsidiaries of the Group engaged in travel services are Hong Thai Travel Services Co., Ltd. (‘‘Hong Thai’’) and Bohai E-Business Service (‘‘Bohai E-Business’’). Grand China MICE A subsidiary of the Guarantor, Grand China MICE provides marketing, incentives, conferences, and exhibitions (‘‘MICE’’) solutions to numerous reputable Top 500 multinational corporations from pharmaceutical, telecommunication, insurance, financial, car and information technology industries. Its headquarter is located at Beijing with subsidiaries in Shanghai, Guangzhou and Chengdu targeting eastern region, southern region and western region respectively. The company has approximately 200 employees and their average year of experience in MICE is over 5 years. Some highlighted events of Grand China MICE include hosting FIVB Beach Volleyball World Tour Beijing Station(國際排聯沙灘 排球世界大滿貫北京賽)that served about 300 FIVB staff and athletics in April 2011, 5th and Congress of Critical Care Medicine(第5次全國重症醫學大會)at Guangzhou that served more than 5,000 attendees in May 2011. Hong Thai Acquired in 2011, Hong Thai, a subsidiary of the Guarantor, is one of the largest travel agencies in Hong Kong. Founded in 1966, it has 24 sales outlets located in Hong Kong, Macau, Shenzhen, Guangzhou and Singapore. Over the years, it has received numerous awards and accolades for its achievements and market leader position. According to Nielson Media Index Hong Kong Report, Hong Thai is the leading travel and tour operator in terms of customers served for 12 consecutive years from 2001 to 2012. Hong Thai won Yahoo! Hong Kong’s ‘‘Emotive Brand Awards (Travel Agent Category)’’ for 10 consecutive years from 2003 to 2013 and Asiaweek magazine’s ‘‘Asian Premier Brands Award’’ for three consecutive years from 2011 to 2013. Bohai E-Business Incorporated in Tianjin in December 2008, Bohai E-Business is a subsidiary of the Guarantor and its principal businesses and core business development directions are to develop and market HNA Easycard as an electronic payment platform on the internet. Aspiring to become the Chinese version of American Express card, HNA Easycard is a rechargeable stored value card which the holders can use for payment at affiliated shops and sales and services outlets. The economic growth of Tianjin and its vicinity area and the increase in personal wealth helps the business of HNA Easycard grow significantly. In 2013, the revenue of the sales transactions completed through HNA Easycard exceeded CNY69 million. Meanwhile, the sales volume of HNA Easycard has reached 202,912 and the stored value on the cards has exceeded CNY71 million. HNA Easycard business mainly focuses on individual clients which are relatively scattered. It has partnered with outstanding enterprises like Tianjin Business Federation, China UnionPay, China Telecom, China Unicom, Hainan Airlines, Tianjin Airlines Co., Ltd. etc. Bohai E-Business is also amongst the 269 enterprises and the first batch of enterprises which have been issued with the third party payment authorisation certificate by the People’s Bank of China. iv)

Airport Services

The Group is engaged in the businesses of airport investment, airport restructuring, airport operation and management and related ground and consultancy services, and owns and manages a portfolio of 10 airports across China.

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The Guarantor has a stake in and manages the following airports in China: No.

Airport

1 2 3 4 5 6 7 8 9 10

Sanya Phoenix International Airport Yichang Sanxia Airport Weifang Nanyuan Airport Dongying Yong’an Airport Manzhouli West Skirts Airport Yingkou Airport An’qing Tianzhushan Airport Tangshan Sannuhe Airport Haikou Meilan International Airport Jinzhou Airport

As at 31 December 2013, the total assets of the Group’s airports business amounted to approximately CNY38.8 billion. According to the information published by CAAC, in 2013, the Group’s airports group achieved the total passenger throughput of approximately 32.87 million passengers and total cargo throughout of approximately 431,900 tonnes. Sanya Phoenix International Airport is a modern airport located in Sanya, Hainan constructed to 4E standards with capacity to handle large aeroplanes like Boeing 747-400. The airport was officially opened to air traffic in July 1994, it has a network of over 214 domestic and international routes connecting to major international and domestic cities, including Singapore, Moscow, Bangkok, Tokyo, Osaka, Seoul, Hong Kong and Taiwan. In 2013, it handled over 12.87 million passengers, making it the 19th busiest airport in terms of passenger traffic. Total cargo traffic handled for the same period reached approximately 62,945.5 tonnes. Haikou Meilan International Airport, located southeast of Haikou, the capital city of Hainan province, was officially opened on 25 May 1999. It is the largest airport in Hainan, covering an area of 583 hectares. With modern facilities meeting the 4E standards as required by the International Civil Aviation Organisation, it serves both domestic and international passengers. After expansion, its passenger terminal building has an area of 102,000 square metres, raising its capacity to handle passenger throughput of up to 9.3 million passengers annually. In 2013, it handled approximately 11.94 million passengers, 94,436 flight movements and 111,813.6 tonnes of cargo and was the 21st busiest airport in China in terms of passenger traffic. Haikou Meilan International Airport is operated by HNA Infrastructure, the shares of which are listed on The Stock Exchange of Hong Kong Limited (Stock Code:357). Both located in Hainan, Sanya Phoenix International Airport and Haikou Meilan International Airport are well positioned to play an important role in the development of Hainan as an international tourist destination, which is part of the 12th Five-Year Plan promulgated by the PRC National People’s Congress. A number of these member airports of the Group are exemplification of strategic cooperation between the Group and various provincial and municipal governments in the PRC, including Haikou Meilan International Airport, Sanya Phoenix International Airport, Yichang Sanxia Airport, Tangshan Sannuhe Airport and Manzhouli West Skirts Airport.

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v)

Retail Business

The Group has retail business in Western China and is exploring the rest of the Chinese domestic market. The Group seeks to bring the concepts of ‘‘health, wealth, happiness and harmony’’ to its retail business and to adopt a business strategy that integrates real and virtual businesses, electronic commerce and financial services. The Group carries out its retail business through 16 companies with an established nationwide retail network of 316 retail stores in locations including Shaanxi, Gansu, Tianjin, Shanghai and Beijing, comprising 15 department stores, 300 supermarkets and a shopping mall covering an operating floor area of 1.26 million square metres. In 2013, HNA Commercial Holding Co., Ltd., a subsidiary of the Guarantor, ranked 20th in the list of Top 100 Chain Stores in China in terms of sales volume, which was awarded by the China Chain Store & Franchise Association. The Group’s key retail operations include the following: •

Xi’an Minsheng Group Co., Ltd. (‘‘Minsheng Group’’), a subsidiary of the Guarantor, is a longestablished brand name in Xi’an, Shaanxi province with leading position in retail markets. Its shares have been listed on the Shenzhen Stock Exchange since 1994. Minsheng Group has 13 department stores across central cities in Shaanxi, such as Xi’an, Baoji, Hanzhong, Yan’an, and Ankang, as well as eastern areas of Gansu province, and more than 100 supermarkets covering Shaanxi and eastern Gansu. It employs over 5,000 employees.



Hunan Joindoor Supermarket is a large Hunan-based chain retail enterprise, operating over 60 stores, including hypermarkets, supermarkets and convenience stores. Its stores are located in Changsha, Yueyang, Yiyang, Changde, Hengyang, Zhuzhou, Loudi, Xiangxiang. With its total operating area of 300,000 square meters, Hunan Joindoor Supermarket has over 4,800 employees.



Haikou Seaview International Plaza, a mid to high-end shopping centre located in the business centre of Haikou, is the first and only commercial enterprise selected by the Ministry of Commerce as ‘‘Jinding Department Store’’, the highest grading accorded to stores. In 2011, it was among the first batch of designated tax rebate shops for foreign tourists in Hainan. In 2012, it won the title of Hainan’s Top Ten Consumer Goods Enterprise with its total score ranking the first place in Hainan.



Qingdao HNA Wanbang Center is a complex of office buildings, apartments and commercial buildings located in the central business district of Qingdao. It comprises a 51-storey, 5A class intelligent office building, the highest in Qingdao, a 30-storey luxury apartment and a four-storey high-end commercial shopping mall.

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Real Estate

The Group has developed various types of luxury hotels, office buildings, urban complexes, high-end residences and large-scale eco-tourism scenic spots. As of June 2014, the Group has 44 projects in construction with an approximate area of 7.03 million square meters. As at 31 December 2013, the Group had real estate operations over 40 cities in China, including Hainan, Beijing, Shanghai, Shenzhen, Tianjin, Chongqing, Qingdao and Dalian. It employed a total of over 7,500 employees. In 2013, the Group completed seven real estate development projects with a gross saleable area of 490,000 square metres, with pre-payments amounting to CNY6.567 billion. As at the end of 2013, the Group held over 100 real estate projects, with construction area of over 4 million square metre and land reserves of over 20,000 mu. Of these, 35 projects were under development or which were about to commence development, and of which 12 were located in Haikou, 13 were located in other areas of Hainan Province and 10 were located in other areas of China.

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vii) Hotel and Catering The Group owns 21 hotels that are consolidated into the results of the Group, of which seven are fivestar hotels and four are four-star hotels. As at the end of 2013, such hotels had a total of 5,291 guest rooms and received over 1.9 million guests during 2013. In 2013, the Group ranked fifth among hotels in China in terms of number of rooms operated. Through its subsidiary, HNA Hotel, the Group also operates and holds interests over 60 hotels, including high end business hotels, resorts hotels, condominiums, budget hotels, clubhouses and golf courses etc. The locations of the Group’s hotel operations are located in major cities and tourist destinations in the PRC as well as overseas, including Brussels, Hainan, Beijing, Guangzhou, Hangzhou, Xi’an, Qingdao, Nanchang, Kunming, Harbin, Changchun, Ningbo, Dalian and Baoji. The Group also cooperates with international hotel groups such as Westin, Raffles and Marriott for the management of over 20 hotels owned by the Group, including Marriott Beijing Northeast, Tianjin HNA Raffles and Guangzhou HNA Westin. In 2013, the Group ranked 69th (in terms of number of hotel rooms) globally in the list of ‘‘Hotels 325’’ published by the Hotels Magazine. The Group has developed two distinctive series of brands for different types of hotels, aiming to create unique following and loyalty for each of such brands. The Tangla series of hotel brands is used for the Groups premium luxury hotels, including the Tangla Grand Place, Tangla Hotels & Resorts, the Tang Hotel and Gardenlane Select. HNA series of hotel brands include HNA Grand Hotel, HNA Business Hotel and HNA Express Inn. The Group uses the advanced management concepts and systems and firstrate quality standards and methods to consolidate brands through standardised operation, expand brands through scale mergers and acquisitions, and seeks to become a world-class Chinese hotel brand enterprise. In conjunction with its hotel business, the Group also operates restaurants at various hotels operated by the Group, offering a range of cuisines and dining options for its hotel guests. viii) Logistics and Transportation The Group conducts the following principal areas of logistics business: shipping and marine engineering construction, marine transportation, bulk commodity trading and cold chain system logistics. •

Shipping and marine engineering construction. Jinhai Heavy Industry Co., Ltd., an affiliated enterprise of HNA Logistics Group Co., Ltd and among the top ten shipbuilding enterprises in China, is engaged in the businesses of shipbuilding, marine shipping equipment, marine engineering equipment and non-shipbuilding equipment manufacturing, and aims to become a world-class equipment manufacturer. It has equipped itself with the capacity and conditions to build various types of vessels for the domestic and international customers, including large and medium container vessels, liquefied natural gas (LNG) carriers, liquefied petroleum gas (LPG) carriers, ro-ro vessels, floating storage tankers, refined oil tankers, crude oil tankers, bulk carriers, passenger ships and special working vessels.



Marine transportation operation. The maritime operations under HNA Logistics Group Co., Ltd cover container transport, bulk cargo transport, tanker transport, ship and crew management and many other businesses. It has operated almost 40 vessels. It has also signed many long and midterm cargo transport contracts with regular customers and operates the foreign trade routes including the Oceania route, America route, Japan route, Korea route and Southeast Asia routes and a number of domestic routes.



Bulk commodity trading. Gopay Information Technology Co., Ltd. under HNA Logistics Group Co., Ltd is a third-party payment company with the full licenses including licence for Internet payment, mobile phone payment, prepaid card and acquiring service. It operates in market segments such as bulk commodity trading, business-to-consumer (B2C) business, prepaid card, acquiring service and financial service. Relaying on its payment business, data processing technology and trade settlement platform, Gopay has well integrated HNA’s industrial resources

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and by virtue of three major tools including Internet of things, big data and cloud computing, has created a new Internet based financial mode and is striving to develop to a leading comprehensive third-party payment platform. •

Cold chain system logistics. HNA Sinosun Logistics Co., Ltd. under HNA Logistics Group Co., Ltd specialises in cold chain transport operations, and is among the top 50 enterprise in China’s food cold chain logistics. Presently, it has established good business relationship with Nestle, Starbucks, KFC, IKEA, DHL and other brands, and is devoted to become the first integrated air and sea intermodal service provider throughout the cold chain.

ix)

Other Businesses

The Group is also engaged in the businesses of culture, media and new energy. EMPLOYEES As at 31 July 2014, the Group had approximately 81,000 employees. Amongst the employees, over 30% had bachelor degrees and over 2% had postgraduate or doctorate degrees. The Group believes that its employees are critical to its performance and success. Its human resources policy promotes motivation and innovation, which it believes help boost the efficiency of the Group and its competitive edge. Remuneration of its employees comprises fixed basic salary, bonus (determined with reference to the relevant company’s results and the relevant employee’s performance) and allowances. The Group also provides its employees with welfare benefits in accordance with the applicable laws and regulations, including but not limited to provident fund contributions, medical insurance schemes and insurance. The Group has further established a platform to facilitate dialogue and interaction between employees’ representatives and the senior management of the Group. As social responsibility is one of the important values of the Group, community service events are organised from time to time to promote such value and to maintain harmonious working environment for the employees of the Group. The Group adheres to, and complies with, the relevant labour laws of the PRC in all material respects. It has not experienced any major strike or work stoppage, and there is currently no unresolved major labour dispute that could cause material adverse effect to the operation and performance of the Group. CORPORATE GOVERNANCE The Guarantor has established a Management Consultancy Committee which oversees operations of the Group and its subsidiaries and the implementation of its strategies, and liaises with various levels of governments. The Safety Management Committee monitors the potential safety hazards relating to each of the Group’s business segments, and issues relevant handbooks and guidelines. The Budget Management Committee controls investment decision making and risk management processes to ensure effective supervision during each stage of investment. INSURANCE The operations of the Group involve a number of inherent risks, such as mechanical failure, fatality, personal injury, property loss and damage, business interruption, hostilities and labour strikes. The Group is covered by insurance policies by reputable insurance companies in the relevant jurisdictions and with commercially reasonable deductibles and limits on coverage. It believes that the insurance coverage in place are in line with industry and market standards and is adequate and sufficient for the conduct of its businesses.

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LEGAL PROCEEDINGS As at the date of this Offering Circular, the Guarantor and its subsidiaries have not been involved in any legal or administrative proceedings or arbitration that could have a material adverse effect on their respective financial condition or results of operations, nor is the Guarantor aware of any potential legal or administrative proceedings or arbitration involving the Guarantor or any of its subsidiaries that would have a material adverse effect on the Group’s financial condition or results of operations. The Guarantor and its subsidiaries however may from time to time be involved in certain legal proceedings arising out of their ordinary course of businesses. The Group is currently involved in legal proceedings with Shagang Shipping involving disputed claims of U.S.$66.4 million and the Group believes that it has a legitimate defence in the lawsuit. The Group believes that none of these legal proceedings, individually or in the aggregate, will have any material adverse effect on the Group’s financial position or results of operations.

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DIRECTORS AND SENIOR MANAGEMENT OF THE ISSUER DIRECTORS The members of the board of directors of the Issuer as of the date of this Offering Circular are as follows: Name Chen Feng . . . . . . . . Wang Jian . . . . . . . . Tan Xiangdong . . . . . Mo Kaixiang . . . . . . Smith Stewart Gordon Donal Boylan Joseph . Li Yifan . . . . . . . . . . Chen Chao . . . . . . . .

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Chen Feng Mr. Chen, aged 61, is a senior economist, and has been a member of the board of directors of the Issuer since October 2013. He is also the chairman of the board of directors( 董事局主席)of the Guarantor. He obtained a master degree in management science from Lufthansa Aviation Transportation Management College in the Federal Republic of Germany in 1984, a master degree in business administration from Holland Maastricht School of Management in 1995, and a graduate certificate in senior management from Harvard Business School in the United States in 2004. Mr. Chen was granted special government allowance by the State Council in October 1994. Mr. Chen has many years of management working experience at the CAAC and the National Air Traffic Control Bureau(國家空中交 通管制局), and was an aviation affair assistant to the governor of the Hainan Province(海南省省長航 空事務助理)who presided over the formation of Hainan Airlines Company Limited. In addition, Mr. Chen was a member of the standing committee of the 2nd session of the Hainan Province People’s Congress( 第二屆海南省人民代表大會常務委員會), the 16th, 17th and 18th National Congress of the Communist Party of China(中國共產黨第十六次、十七次及十八次全國代表大會), and the 10th and 11th National Committee of the Chinese People’s Political Consultative Conference(中 國人民政治協商會議第十屆及第十一屆全國委員會). Mr. Chen has been granted a number of awards by various government authorities and other organisations, including without limitation, the Best Asian Business Leader Award(亞洲最佳商業領袖獎)sponsored by CNBC in 2005 and the Leader of Chinese Entrepreneurs For The Year Award(華商領袖年度人物大獎)in 2010. Wang Jian Mr. Wang, aged 53, has been the chairman of the board of directors of the Issuer since August 2013. He is also chairman(董事長)of the Guarantor. He obtained an undergraduate degree in Aviation Management from Civil Aviation University of China (formerly China Civil Aviation College(中國民 航大學,前稱中國民航學院)in 1983, and a master degree in business administration from Holland Maastricht School of Management in 1995. In 1990, he participated in the establishment of Hainan Provincial Airlines Company and played an outstanding role in the formation of HNA Group. Mr. Wang worked for CAAC for many years and he is now one of the main responsible persons and decision makers of both the Issuer and the Guarantor. Tan Xiangdong Mr. Tan, aged 47, has been the vice chairman of the board of directors of the Issuer and the chief executive officer of the Issuer since October 2013. He is also vice chairman of the board of directors of the Guarantor, the president of HNA Group Co., Ltd. and the chairman of the board of directors of HNA

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Capital Holdings Limited(海航資本控股有限公司). He obtained a degree in finance from Beijing College of Finance and Commerce(北京財貿學院), a master degree in economics from Beijing College of Finance and Commerce(北京財貿學院)in 1989, and a master degree in business administration from the Insurance Institute of America in 1999. Mr. Tan successively worked for China’s Rural Trust and Investment Corporation(中國農村信託投資公司)in its worldwide bank loans office, the World Bank loans office in Hainan province(世界銀行海南省貸款辦公室), China Xingnan Group Company(中國 興南集團公司)and Hainan Meizhou Company Limited(海南美洲有限公司). Mo Kaixiang Mr. Mo Kaixiang has been a member of the board of directors of the Issuer since February 2011. He graduated from Xi’an Jiaotong University(西安交通大學), and holds an EMBA degree from the Hong Kong University of Science and Technology. Mr. Mo joined the HNA Group in 2001 and served in managerial roles in aircraft purchasing, leasing and financing, as well as cash management, overseas acquisitions and capital operations at the Issuer Group level. Mr. Mo currently serves as the Deputy CEO and CFO at Hong Kong Aviation Capital Limited(香港航空租賃有限公司)in 2010. Smith Stewart Gordon Mr. Smith has been a member of the board of directors of the Issuer since February 2011. Mr. Smith attended Manchester University in the UK in the late 1960’s and later attended London Business School (Corporate Finance Program). Until 2001 Mr. Smith followed a career in banking with Kleinwort Benson, Hill Samuel, Nordic Bank and latterly held senior management positions over many years with the leading Norwegian bank, DnB NOR Bank ASA in London. Since 2002 he has been Chairman of Bravia. Mr. Smith is also director of Hong Kong Aviation Capital Limited (formerly known as HNA Group (HK) Co., Limited), a major aircraft leasing company based in Hong Kong. Over the years Mr. Smith has held many other directorships in banking, transportation businesses and leasing companies. Donal Joseph Boylan Mr. Donal Joseph Boylan has been a member of the board of directors of the Issuer since August 2013. Mr. Donal Joseph Boylan has been Chief Executive Officer of Hong Kong Aviation Capital Limited since April 4, 2011. Mr. Boylan’s served as Head of Aerospace & Defence, Structured Asset Finance at the Royal Bank of Scotland. Mr. Boylan prior experience includes twenty years of significant industry experience in technical and commercial roles at GPA Group plc, GE Capital Aviation Services (GECAS), and RBS Aviation Capital. He was Co-founder of RBS Aviation Capital and served as its director in 2001. He has worked extensively in the Middle East where Niche, together with OR, is actively seeking investment opportunities in the oil and gas sectors. He serves as Executive Chairman of Niche Group PLC (The) and has been its Executive Director since October 2010. He served as Non Executive Director of Niche Group PLC (The) from May 2010 to October 2010. Li Yifan Mr. Li Yifan has been member of the board of directors of the Issuer since May 2014. He has over 20 years management experience. Chen Chao Mr. Chen Chao has been a member of the board of directors of the Issuer since September 2014. Mr. Chen has been a consultant of the Issuer since June 2013 and has been the director of the Investment and Development Department of the Issuer since June 2014. He has over 9 years management experience.

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SENIOR MANAGEMENT Chui Ka Hing Mr. Chui, aged 50, is the Chief Operating Officer of the Issuer. He joined the Issuer in August 2013. Mr. Chui graduated from the Queen’s University, Belfast in 1987 in accounting and has a master’s degree in Business Administration from the City University of Hong Kong and a Hong Kong Securities Diploma. He is a member of the Institute of Chartered Accountants in England and Wales, and a member of the Hong Kong Society of Accountants and has 20 years of extensive banking, asset management and securities industry experience. Wang Shuang Wang Shuang, aged 31, is the Chief Financial Officer of the Issuer. He joined the Group in 2007. Mr. Wang graduated from the Central University of Finance and Economics of China in 2006. Mr. Wang successively served as the Head of Sales of Changjiang Leasing Co., Ltd from 2007 to 2010, the Vice President of GC Tankers Pte. Ltd from Aug 2010 to Apr 2012 and as Assistant to the President Seaco Asia Pte Ltd. from 2012 to 2014.

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DIRECTORS OF THE GUARANTOR DIRECTORS The members of the board of directors of the Guarantor as of the date of this Offering Circular are as follows: Name Chen Feng . . . . Wang Jian . . . . Li Xian Hua . . . Tan Xiang Dong Chen Wen Li . . Huang Gan . . . . Zhang Lin . . . . Lu Ying . . . . . . Li Qing . . . . . .

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Chen Feng Mr. Chen, aged 61, is a senior economist, and has been the chairman of the board of directors( 董事局 主席)of the Guarantor since October 2000. He obtained a master degree in management science from Lufthansa Aviation Transportation Management College in the Federal Republic of Germany in 1984, a master degree in business administration from Holland Maastricht School of Management in 1995, and a graduate certificate in senior management from Harvard Business School in the United States in 2004. Mr. Chen was granted special government allowance by the State Council in October 1994. Mr. Chen has many years of management working experience at the CAAC and the National Air Traffic Control Bureau(國家空中交通管制局), and was an aviation affair assistant to the governor of the Hainan Province(海南省省長航空事務助理)who presided over the formation of Hainan Airlines Company Limited. In addition, Mr. Chen was a member of the standing committee of the 2nd session of the Hainan Province People’s Congress( 第二屆海南省人民代表大會常務委員會), the 16th, 17th and 18th National Congress of the Communist Party of China(中國共產黨第十六次、十七次及十八次全國代表大會), and the 10th and 11th National Committee of the Chinese People’s Political Consultative Conference(中 國人民政治協商會議第十屆及第十一屆全國委員會). Mr. Chen has been granted a number of awards by various government authorities and other organisations, including without limitation, the Best Asian Business Leader Award(亞洲最佳商業領袖獎)sponsored by CNBC in 2005 and the Leader of Chinese Entrepreneurs For The Year Award(華商領袖年度人物大獎)in 2010. Wang Jian Mr. Wang, aged 53, has been the chairman(董事長)of the Guarantor since 2013. He obtained an undergraduate degree in Aviation Management from Civil Aviation University of China (formerly China Civil Aviation College(中國民航大學,前稱中國民航學院)in 1983, and a master degree in business administration from Holland Maastricht School of Management in 1995. In 1990, he participated in the establishment of Hainan Provincial Airlines Company and played an outstanding role in the formation of HNA Group. Mr. Wang worked for CAAC for many years and he is now one of the main responsible persons and decision makers of the Guarantor.

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Li Xian Hua Mr. Li, aged 51, has been a member of the board of directors of the Guarantor since September 2000 and CEO and vice-chairman of the Guarantor. Mr. Li obtained an undergraduate degree in economics and management from Wu Han University in 1986 and obtained a MBA degree from Maastricht School of Management in the Netherlands in 1995. Mr. Li has worked at the National Price Bureau(國家物價 局)and Hainan Airlines, Chairman of HNA Airport Group Co., Ltd and Chairman of HNA Hinhua Culture Holding (Group) Co. Ltd and has many years of experience in management. Tan Xiang Dong Mr. Tan, aged 47, has been the vice chairman of the board of directors of the Guarantor since 2013. He is also the President of HNA Group Co., Ltd. and the chairman of the board of directors of HNA Capital Holdings Limited(海航資本控股有限公司). He obtained a degree in finance from Beijing College of Finance and Commerce(北京財貿學院), a master degree in economics from Beijing College of Finance and Commerce(北京財貿學院)in 1989, and a master degree in business administration from the Insurance Institute of America in 1999. Mr. Tan successively worked for China’s Rural Trust and Investment Corporation(中國農村信託投資公司)in its worldwide bank loans office, the World Bank loans office in Hainan province(世界銀行海南省貸款辦公室), China Xingnan Group Company(中國 興南集團公司)and Hainan Meizhou Company Limited(海南美洲有限公司). Chen Wen Li Mr. Chen, aged 51, has been the vice chairman of the board of directors of the Guarantor since 2013. He obtained an undergraduate degree in mechanics from Civil Aviation University of China (formerly China Civil Aviation College) (中國民航大學,前稱中國民航學院)and an EMBA degree from Guang Hua School of Management, Peking University(北京大學光華管理學院). He is the holder of an FAA A/P license issued by the United States Bureau of Aeronautics. Mr. Chen had served the following positions in Hainan Airlines Co., Ltd(海南航空股份有限公司): the general manager in the maintenance department, the assistant to the president, the senior assistant to the president, the general manager in the flight navigation department, the vice president, and the chairman of the board of Haikou Meilan Airport( 海口美蘭機場). Huang Gan Mr. Huang, aged 37, has been a member of the board of directors of the Guarantor since 2013. He is also the chairman of HNA Logistics Group Co., Ltd. and the Chairman of HNA Grand China Cultural Holding Co., Ltd.. He graduated from Jilin University in 2000 and received a bachelor’s degree in law. Mr. Huang has served various positions in the Guarantor such as the deputy director and director of the office, the spokesman, the deputy financial director, the assistant to executive president, general manager of human resources department, the general manager of information management department and executive vice president. In addition, he also served as the Chairman of Sanya Aviation & Tourism College, the Chairman of HNA Grand China Culture Holding Co., Ltd. and the Executive Chairman of HNA Industry Holding (Group) Co., Ltd.. Zhang Lin Mr. Zhang, aged 37, has been a member of the board of directors of the Guarantor since 2013. He is also the chairman and CEO of HNA Tourism Group Co., Ltd.. He graduated from Central South University in 2000. Mr. Zhang has served the following positions in the Guarantor: the deputy general manager of the human resources department, the managing deputy general manager of the project development and management department, the director of the office, the general manager of information management department, the general manager of international investment management department and the assistant to the CEO, the secretary of the communist youth league committee and the spokesman. He has also served as the special assistant to the chairman of HNA Infrastructure Company Limited, and the chairman of Hainan HNA Aviation Information System Co., Ltd.

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Lu Ying Mr. Lu, aged 47, has been a member of the board of directors of the Guarantor since 2013 and the Chairman of HNA Industry Group Co., Ltd.. He graduated from Nankai University in 2002, and received a master’s degree in law. He got a doctorate in law from Nankai University in 2008. He successively served as the managing director and CEO of Tianjin Datong Construction Development Group Co., Ltd., the chairman of Tianjin Airlines Co., Ltd., the vice chairman of HNA Property Holdings (Group) Co., Ltd. and the president and executive chairman of HNA Daji Investment and Development Co., Ltd.. Li Qing Mr. Li, aged, 58, has been a current member of the board of directors of the Guarantor since 2015. Mr. Li also previously served as a member of the board of directors of the Guarantor from 2010 to 2013. He graduated from the Shanxi School of Finance and Economics with majoring in Planning & Statistics in 1982 and obtained a MBA from Maastricht School of Management in the Netherlands in 1995. Mr. Li began his career in the Guarantor in August 1990 and was one of its founders. He has successively served as the General Manager and Vice Chairman of Shangxi Airlines Company Limited, Director of Taiyuan Operating Base of Hainan Airlines Company Limited, Chief Representative of the Chairman of the Guarantor and acted as the Director of Management Advisory Committee of the Group in January 2013.

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REMITTANCE OF RENMINBI INTO AND OUTSIDE THE PRC AND PRC REGULATIONS ON THE GUARANTEE OF THE NOTES CURRENT ACCOUNT ITEMS Under the applicable PRC foreign exchange control regulations, current account items refer to any transaction for international receipts and payments involving goods, services, earnings and other frequent transfers. 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. On 17 June 2010, 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 (Yin Fa (2010) No. 186) (關於擴大跨境貿 易人民幣結算試點有關問題的通知)(the ‘‘Circular’’), pursuant to which (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 20 provinces and cities, and (iii) the restriction on designated offshore districts has been uplifted. Accordingly, any enterprises in the designated pilot districts and offshore enterprises are entitled to use Renminbi to settle imports and exports of goods and services and other current account items between them. Renminbi remittance for exports of goods from the PRC may only been effected by approved pilot enterprises in designated pilot districts in the PRC. In August 2011, the PRC government promulgated the Circular on Expanding the Regions of Cross-border Trade Renminbi Settlement( 關於擴大跨境貿易人民幣結算地區的通知)to further expand Renminbi cross-border trade settlement nationwide. On 5 July, 2013, the PBOC promulgated the Circular on Policies related to Simplifying and Improving Cross-border Renminbi Business Procedures( 關於簡化跨境人民幣業務流程和完善有關政策的通 知)(the ‘‘2013 PBOC Circular’’) which, in particular, simplifies the procedures for cross border Renminbi trade settlement under current account items. For example, PRC banks may conduct settlement for PRC enterprises (excluding those on the Supervision List) upon the PRC enterprises presenting the payment instruction. PRC banks may also allow PRC enterprises to make/receive payments under current account items prior to the relevant PRC bank’s verification of underlying transactions (noting that verification of underlying transactions is usually a precondition for cross border remittance). As new regulations, the Circulars and the 2013 PBOC Circular will be subject to interpretation and application by the relevant PRC authorities. Local authorities may adopt different practices in applying the Circulars and the 2013 PBOC Circular and impose conditions for settlement of current account items. CAPITAL ACCOUNT ITEMS Under the applicable PRC foreign exchange control regulations, capital account items include crossborder transfers of capital, direct investments, securities investments, derivative products and loans. Capital account payments are generally subject to approval or registration of the relevant PRC authorities. Settlements for capital account items are generally required to be made in foreign currencies. For instance, foreign investors (including any Hong Kong investors) are required to make any capital contribution to foreign invested enterprises in a foreign currency in accordance with the terms set out in the relevant joint venture contracts and/or articles of association as approved by the relevant authorities. Foreign invested enterprises or relevant PRC parties are also generally required to make capital item payments including proceeds from liquidation, transfer of shares, reduction of capital, interest and principal repayment to foreign investors in a foreign currency. That said, the relevant PRC authorities may grant approval or registration for a foreign entity to make a capital contribution or a shareholder’s

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loan to a foreign invested enterprise with Renminbi lawfully obtained by it outside the PRC and for the foreign invested enterprise to service interest and principal repayment to its foreign investor outside the PRC in Renminbi on a trial basis. The foreign invested enterprise may be required to complete a registration and verification process with the relevant PRC authorities before such Renminbi remittances. On 7 April 2011, SAFE promulgated the Circular on Issues Concerning the Capital Account Items in connection with Cross-Border Renminbi( 國家外匯管理局綜合司關於規範跨境人民幣資本專案業務操 作有關問題的通知)(the ‘‘SAFE Circular’’), which became effective on 1 May 2011. According to the SAFE Circular, in the event that foreign investors intend to use cross-border Renminbi (including offshore Renminbi and onshore Renminbi held in the capital accounts of non-PRC residents) to make a contribution to an onshore enterprise or make payment for the transfer of equity interest of an onshore enterprise by a PRC resident, such onshore enterprise shall be required to submit the relevant MOFCOM’s prior written consent to the relevant local branches of SAFE of such onshore enterprise and register for a foreign invested enterprise status. Further, the SAFE Circular clarifies that the foreign debts borrowed, and the external guarantee provided by onshore entities (including financial institutions) in Renminbi shall, in principle, be regulated under the current PRC foreign debt and external guarantee regime. On 13 October 2011, PBOC promulgated the Measures for Administration of RMB Settlement Business in Relation to Foreign Direct Investment( 外商直接投資人民幣結算業務管理辦法)(‘‘The PBOC Renminbi FDI Measures’’), pursuant to which, PBOC special approval for Renminbi FDI and shareholder loans which was required by the PBOC Notice concerning Clarification of Certain Issues on Cross-border Renminbi Settlement( 中國人民幣銀行關於明確跨境人民幣業務相關問題的通知)(the ‘‘PBOC Notice’’) promulgated on 3 June 2011 is no longer necessary. The PBOC Renminbi FDI Measures provide that, among others, foreign invested enterprises are required to conduct registrations with the local branch of PBOC within ten working days after obtaining the business licenses for the purpose of Renminbi settlement. Under the measures, a foreign investor is allowed to open a Renminbi preliminary expense account( 人民幣前期費用專用存款賬戶)to reimburse some expenses before the establishment of a foreign invested enterprise and the balance in such an account can be transferred to the Renminbi capital account( 人民幣資本金專用存款賬戶)of such foreign invested enterprise when it is established. Commercial banks can remit a foreign investor’s Renminbi proceeds from distribution (dividends or otherwise) by its PRC subsidiaries out of the PRC after reviewing certain requisite documents. If a foreign investor intends to use its Renminbi proceeds from distribution (dividends or otherwise) by its PRC subsidiaries, the foreign investor may open a Renminbi re-investment account( 人 民幣再投資專用賬戶)to pool the Renminbi proceeds, and the PRC parties selling stock in domestic enterprises to foreign investors can open Renminbi accounts and receive the purchase price in Renminbi paid by foreign investors. The PBOC Renminbi FDI Measures also state that the foreign debt quota of a foreign invested enterprise constitutes its Renminbi debt and foreign currency debt from its offshore shareholders, offshore affiliates and offshore financial institutions, and a foreign invested enterprise may open a Renminbi account( 人民幣一般存款賬戶)to receive its Renminbi proceeds borrowed offshore by submitting the Renminbi loan contract to the commercial bank and make repayments of principal of and interest on such debt in Renminbi by submitting certain documents as required to the commercial bank. On 14 June 2012, the PBOC promulgated the Notice concerning Clarification of Renminbi Settlement in relation to Foreign Direct Investment( 關於明確外商直接投資人民幣結算業務操作細則的通知)(the ‘‘PBOC Notice 2012’’), which provides more detailed requirements with respect to all accounts concerning capital injection, payment of purchase price in the merger and acquisition of PRC domestic enterprises, remittance of dividends and distribution, as well as Renminbi denominated cross-border loans. Foreign investors, foreign enterprises and domestic shareholders must check and clarify all the existing Renminbi accounts and provide supplementary documents to open an account or modify the information within three months after the promulgation of the PBOC Notice 2012. For those who have more than one preliminary expense account( 前期費用專用存款賬戶), capital account( 資本金專用存款 賬戶), merger and acquisition account( 併購專用存款賬戶) or equity transfer account( 股權轉讓專用 存款賬戶), they are required to choose one of them and close all of the other accounts. The funds in the

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accounts for Renminbi capital and Renminbi denominated cross-border loan(資本金專用存款賬戶及人 民幣境外借款一般存款賬戶)shall not be used for investment in securities, financial derivatives, entrusted loans, financial products or properties of non-self use. In addition, the foreign-invested noninvestment enterprises shall not use the funds in the Renminbi capital account and Renminbi denominated cross-border loan account( 資本金專用存款賬戶及人民幣境外借款一般存款賬戶)for reinvestment in the PRC. On 11 May 2013, SAFE promulgated the Provisions on Foreign Exchange Administration over Direct Investment Made by Foreign Investors in China(外國投資者境內直接投資外匯管理規定)(the ‘‘SAFE Provisions’’), which became effective on 13 May 2013. According to the SAFE Provisions, a Foreigninvested Enterprise that needs to remit funds abroad due to capital reduction, liquidation, advance recovery of investment, profit distribution, etc. may purchase foreign exchange and make external payment with the relevant bank after going through corresponding registration. On 3 December 2013, the MOFCOM promulgated the ‘‘Circular on Issues in relation to Cross-border Renminbi Foreign Direct Investment’’( 商務部關於跨境人民幣直接投資有關問題的公告 )(the ‘‘MOFCOM Circular’’), which became effective on 1 January 2014, to further facilitate FDI by simplifying and streamlining the applicable regulatory framework. Pursuant to the MOFCOM Circular, the appropriate office of MOFCOM and/or its local counterparts will grant written approval for each FDI and specify ‘‘Renminbi Foreign Direct Investment’’ and the amount of capital contribution in the approval. Unlike previous MOFCOM regulations on FDI, the MOFCOM Circular removes the approval requirement for foreign investors who intend to change the currency of its existing capital contribution from a foreign currency to Renminbi. In addition, the MOFCOM Circular also clearly prohibits the FDI funds from being used for any investment in securities and financial derivatives (except for investment in the PRC listed companies as strategic investors) or for entrustment loans in the PRC. CROSS-BORDER SECURITY LAWS On 19 May 2014, the SAFE promulgated the Notice concerning the Foreign Exchange Administration Rules on Cross-Border Security and the relating implementation guidelines( 國家外匯管理局關於發布 《跨境擔保外匯管理規定》的通知)(collectively the ‘‘New Regulations’’). The New Regulations, which come into force on 1 June 2014, replace twelve other regulations regarding cross-border security and introduce a number of significant changes, including: (i) abolishing prior SAFE approval and quota requirements for cross-border security; (ii) requiring SAFE registration for two specific types of crossborder security only; (iii) removing eligibility requirements for providers of cross-border security; (iv) the validity of any cross-border security agreement is no longer subject to SAFE approval, registration, filing, and any other SAFE administrative requirements; (v) removing SAFE verification requirement for performance of cross-border security. A cross-border guarantee is a form of security under the New Regulations. The New Regulations classify cross-border security into three types: •

Nei Bao Wai Dai( 內保外貸)(‘‘NBWD’’): security/guarantee provided by an onshore security provider for a debt owing by an offshore debtor to an offshore creditor.



Wai Bao Nei Dai( 外保內貸)(‘‘WBND’’): security/guarantee provided by an offshore security provider for a debt owing by an onshore debtor to an onshore creditor.



Other Types of Cross-border Security(其他形式跨境擔保): any cross-border security/guarantee other than NBWD and WBND.

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In respect of NBWD, in the case where the onshore security provider is a non-financial institution, it shall conduct a registration of the relevant security/guarantee with SAFE within 15 working days after its execution (or 15 working days after the date of any change to the security). The funds borrowed offshore shall not be directly or indirectly repatriated to or used onshore by means of loans, equity investments or securities investments without SAFE approval. The onshore security provider can pay to the offshore creditor direct (by effecting remittance through an onshore bank) where the NBWD has been registered with SAFE. In addition, if any onshore security provider under a NBWD provides any security or guarantee for an offshore bond issuance, the offshore issuer’s equity shares must be fully or partially held directly or indirectly by the onshore security provider. Moreover, the proceeds from any such offshore bond issuance must be applied towards the offshore project(s), where an onshore entity holds equity interest, and in respect of which the related approval, registration, record, or confirmation have been obtained from or made with the competent authorities subject to PRC Laws. The Guarantor will unconditionally and irrevocably guarantee the due payment of all sums expressed to be payable by the Issuer under the Notes and the Trust Deed. The Guarantor’s obligations in respect of the Notes and the Trust Deed are contained in the relevant Deed of Guarantee for each Tranche of Notes. Each Deed of Guarantee will be executed by the Guarantor on or before the relevant Issue Date. Under the New Regulations, a Deed of Guarantee does not require any pre-approval by SAFE and is binding and effective upon execution. The Guarantor is required to submit a Deed of Guarantee to the local SAFE for registration within 15 working days after its execution. The SAFE registration is merely a post signing registration requirement, which is not a condition to the effectiveness of the Guarantee of the Notes. Under the New Regulations, the local SAFE will go through a procedural review (as opposed to a substantive approval process) of the Guarantor’s application for registration. Upon completion of the review, the local SAFE will issue a registration notice or record to the Guarantor to confirm the completion of the registration. Under the New Regulations: •

non-registration does not render the Guarantee of the Notes ineffective or invalid under PRC law although SAFE may impose penalties on the Guarantor if submission for registration is not carried out within the stipulated time frame of 15 working days; and



there may be logistical hurdles at the time of remittance (if any cross-border payment is to be made by the Guarantor under the Guarantee of the Notes) as domestic banks may require evidence of SAFE registration in order to effect such remittance, although this does not affect the validity of the Guarantee of the Notes itself.

The Terms and Conditions of the Notes provide that the Guarantor will register, or cause to be registered, the Deed of Guarantee with SAFE in accordance with, and within the time period prescribed by, the New Regulations and use its best endeavours to complete the registration and obtain a registration record from SAFE on or before the date following 90 China Business Days after the Issue Date (the ‘‘Registration Deadline’’). If the Guarantor fails to complete the SAFE registration and deliver the registration records to the Trustee before the Registration Deadline, the Notes will be redeemed by the Issuer at their principal amount together with accrued interest (see Condition 5(d) of the Terms and Conditions of the Notes).

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DIFFERENCES BETWEEN PRC ACCOUNTING STANDARDS AND INTERNATIONAL FINANCIAL REPORTING STANDARDS The audited financial statements of the Guarantor for the years ended 31 December 2012 and 2013 have been prepared in accordance with PRC Accounting Standards, and the Application Guidance for Accounting Standards for Business Enterprises, Interpretations of Accounting Standards for Business Enterprises and other relevant regulations issued thereafter. Other than on reversal of impairment provisions taken on assets, PRC Accounting Standards have substantively converged with IFRS. Accordingly, there are no other significant differences between the principal accounting policies adopted by the Guarantor and IFRS. The difference on reversal of impairment provisions taken on assets is discussed in further detail in this section. REVERSAL OF IMPAIRMENT LOSES ON ASSETS In accordance with ‘‘PRC Accounting Standards No.8 – Impairment of Assets’’, an asset impairment loss that has been recognised shall not be reversed in subsequent accounting periods, while in accordance with International Accounting Standards 36 ‘‘Impairment of Assets’’, an entity shall assess at the end of each reporting period whether there is any indication that an impairment loss recognised in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the entity shall estimate the recoverable amount of that asset. An impairment loss recognised in prior periods for an asset other than goodwill can be reversed if, and only if, there has been a change in the estimates used to determine the recoverable amount of that asset since the last impairment loss was recognised. As at 30 June 2014, the Guarantor had no such reversal of impairment losses on assets. Therefore, the above technical difference had no substantial impact on the audited financial statements of the Guarantor for the years ended 31 December 2012 and 2013 included in this Offering Circular. The above analysis is not meant to be an exhaustive description of all significant differences between PRC Accounting Standards and IFRS. In making an investment decision, investors must rely upon their own examination of the Guarantor, the Group, the terms of the offering and the financial information included herein. Potential investors should consult their own professional advisors for an understanding of any differences that may exist between PRC Accounting Standards and IFRS, and how those differences might affect the financial information included herein.

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TAXATION The following summary of certain tax consequences of the purchase, ownership and disposition of the Notes in Hong Kong and the PRC is based upon applicable laws, regulations, rulings and decisions in effect as of the date of this Offering Circular, all of which are subject to change (possibly with retroactive effect). This discussion does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of the Notes and does not purport to deal with consequences applicable to all categories of investors, some of which may be subject to special rules. Neither these statements nor any other statements in this Offering Circular are to be regarded as advice on the tax position of any holder of the Notes or any persons acquiring, selling or otherwise dealing in the Notes or on any tax implications arising from the acquisition, sale or other dealings in respect of the Notes. This Offering Circular is not and shall not offer any tax planning or investment advice to any investor. Persons considering the purchase of the Notes should consult their own tax advisers concerning the possible tax consequences of buying, holding or selling any Notes under the laws of their country of citizenship, residence or domicile. HONG KONG Withholding tax No withholding tax is payable in Hong Kong in respect of payments of principal (including any premium payable on redemption of the Notes) or interest on the Notes or in respect of any capital gains arising from the sale of the Notes. 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). Under the Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong) (the ‘‘Inland Revenue Ordinance’’), interest on the Notes may be deemed to be profits arising in or derived from Hong Kong from a trade, profession or business carried in Hong Kong in the following circumstances: (a)

Interest on the Notes is derived from Hong Kong and is received by or accrues to a corporation carrying on a trade, profession or business in Hong Kong;

(b)

Interest on the Notes is derived from Hong Kong and is received by or accrues to a person other than a corporation (such as a partnership), carrying on a trade, profession or business in Hong Kong and is in respect of the funds of the trade, profession or business; or

(c)

Interest on the Notes is received by or accrues to a financial institution (as defined in the Inland Revenue Ordinance) by way of interest which arises through or from the carrying on by the financial institution of its business in Hong Kong.

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 or redemption of the Notes will be subject to Hong Kong profits tax. Sums derived from the sale, disposal or redemption of the Notes 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 sums are revenue in nature and have a Hong Kong source. The source of such sums will generally be determined by having regard to the manner in which the Notes are acquired and disposed of.

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Stamp duty Stamp duty will not be payable on the issue of Bearer Notes provided that either: (i)

such Notes 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 Notes constitute loan capital (as defined in the Stamp Duty Ordinance (Cap.117) of Hong Kong).

If stamp duty is payable it is payable by the Issuer on the issue of Bearer Notes at a rate of 3% of the market value of the Notes at the time of issue. No stamp duty will be payable on any subsequent transfer of Bearer Notes. No stamp duty is payable on the issue of Registered Notes. Stamp duty may be payable on any transfer of Registered Notes if the relevant transfer is required to be registered in Hong Kong. Stamp duty will, however, not be payable on any transfer of Registered Notes provided that either: (i)

such Notes 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 Notes constitute loan capital (as defined in the Stamp Duty Ordinance).

If stamp duty is payable in respect of the transfer of Registered Notes it will be payable at the rate of 0.2% (of which 0.1% is payable by the seller and 0.1% 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 Notes if the relevant transfer is required to be registered in Hong Kong. Estate duty No Hong Kong estate duty is payable in respect of the Notes. PRC The following summary describes the principal PRC tax consequences of ownership of the Notes by beneficial owners who, or which, are not residents of mainland China for PRC tax purposes. These beneficial owners are referred to as Non-PRC Noteholders in this section. In considering whether to invest in the Notes, investors should consult their individual tax advisers with regard to the application of PRC tax laws to their particular situations as well as any tax consequences arising under the laws of any other tax jurisdiction. Reference is made to PRC taxes from the taxable year beginning on or after 1 January 2008. Pursuant to the New Enterprise Income Tax Law and its implementation regulations, enterprises that are established under laws of foreign countries and regions (including Hong Kong, Macau and Taiwan) but whose ‘‘de facto management bodies’’ are within the territory of China will be deemed as PRC tax resident enterprises for the purpose of the New Enterprise Income Tax Law and must pay enterprise income tax at the rate of 25% in respect of their income sourced from both within and outside China. The ‘‘de facto management body’’ is defined as the organisational body that effectively exercises overall management and control over production and business operations, personnel, finance and accounting, and properties of the enterprise. It remains unclear how the PRC tax authorities will interpret such a broad definition. If relevant PRC tax authorities decide, in accordance with applicable tax rules and regulations, that the ‘‘de facto management body’’ of the Issuer is within the territory of PRC, the Issuer may be deemed as a PRC tax resident enterprise for the purpose of the New Enterprise Income Tax Law and be subject to PRC enterprise income tax at the rate of 25% in respect of its income sourced from both within and outside PRC.

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As confirmed by the Issuer, as of the date of this Offering Circular, the Issuer has not been given notice or informed by the PRC tax authorities that it is considered as a PRC tax resident enterprise for the purpose of the Enterprise Income Tax Law. On that basis, holders of the Notes who are not considered as PRC tax residents will not be subject to withholding tax, income tax or any other taxes or duties (including stamp duty) imposed by any governmental authority in the PRC in respect of the holding of the Notes or any repayment of principal and payment of interest made thereon. However, there is no assurance that the Issuer will not be treated as a PRC tax resident enterprise under the Enterprise Income Tax Law and related implementation regulations in the future. Pursuant to the PRC Enterprise Income Tax Law and the PRC Individual Income Tax Law as well as their respective implementation rules, any non-resident enterprise shall pay enterprise income tax at the rate of 10% on the incomes sourced inside the PRC and any non-resident individual shall pay individual income tax at the rate of 20% on the incomes sourced inside the PRC unless there is an applicable tax treaty between the PRC and the jurisdiction in which the holders reside that reduces or exempts such PRC income tax, and such income tax shall be withheld by sources with the PRC payer acting as the obligatory withholder, who shall withhold the tax amount from each payment or payment due. In the event that the Issuer is deemed to be a PRC tax resident enterprise by the PRC tax authorities in the future, the Issuer shall withhold income tax from the payments of interest in respect of the Notes for any Noteholder who is not considered as a PRC tax resident. However, despite the potential withholding of PRC tax by the Issuer, the Issuer has agreed to pay additional amounts to holders of the Notes so that holders of the Notes would receive the full amount of the scheduled payment, as further set out in the Terms and Conditions of the Notes. A Noteholder who is not considered as a PRC tax resident will not be subject to the PRC tax on any capital gains derived from a sale or exchange of Notes consummated outside mainland China between Non-PRC Noteholders, except however, if the Issuer is treated as PRC tax resident enterprise under the Enterprise Income Tax Law and related implementation regulations in the future, any gain realised by the Noteholders who are not considered as PRC tax residents from the transfer of the Notes may be regarded as being derived from sources within the PRC and accordingly may be subject to a 10% PRC withholding tax (for non-resident enterprise) or a 20% PRC withholding tax (for non-resident individual) unless there is an applicable tax treaty between the PRC and the jurisdiction in which the holders reside that reduces or exempts such PRC income tax. In addition, in the event that the Guarantor is required to discharge its obligations under the Guarantee of the Notes, the Guarantor will be obliged to withhold PRC enterprise income tax at the rate up to 10.00% on the payments of interest made by it under the Guarantee of the Notes to non-PRC resident enterprise Noteholders as such interest payment obligations will be regarded as being derived from sources within the PRC. 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 Noteholders. Repayment of the principal will not be subject to PRC withholding tax. EU DIRECTIVE ON THE TAXATION OF SAVINGS INCOME Under EC Council Directive 2003/48/EC on the taxation of savings income, each Member State is required to provide to the tax authorities of another Member State details of payments of interest or other similar income paid by a person within its jurisdiction to, or collected by such a person for, an individual resident or certain limited types of entity established in that other Member State; however, for a transitional period, Austria may instead apply a withholding system in relation to such payments, deducting tax at a rate of 35 per cent. The transitional period is to terminate at the end of the first full fiscal year following agreement by certain non-EU countries to the exchange of information relating to such payments.

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A number of non-EU countries and certain dependent or associated territories of certain Member States, have adopted similar measures (either provision of information or transitional withholding) in relation to payments made by a person within its jurisdiction to, or collected by such a person for, an individual resident or certain limited types of entity established in a Member State. In addition, the Member States have entered into provision of information or transitional withholding arrangements with certain of those dependent or associated territories in relation to payments made by a person in a Member State to, or collected by such a person for, an individual resident or certain limited types of entity established in one of those territories. The Council of the European Union formally adopted a Council Directive amending the Directive on 24 March 2014 (the ‘‘Amending Directive’’). The Amending Directive broadens the scope of the requirements described above. Member States have until 1 January 2016 to adopt the national legislation necessary to comply with the Amending Directive. The changes made under the Amending Directive include extending the scope of the Directive to payments made to, or collected for, certain other entities and legal arrangements. They also broaden the definition of ‘‘interest payment’’ to cover income that is equivalent to interest. Investors who are in any doubt as to their position should consult their professional advisers. THE PROPOSED EU DIRECTIVE ON FINANCIAL TRANSACTIONS TAX (‘‘FTT’’) On 14 February 2013, the European Commission published a proposal (the ‘‘Commission’s Proposal’’) for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the ‘‘participating Member States’’). The Commission’s Proposal has very broad scope and could, if introduced, apply to certain dealings in Notes (including secondary market transactions) in certain circumstances. The issuance and subscription of Notes should, however, be exempt. Under the Commission’s Proposal the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in Notes where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, ‘‘established’’ in a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a participating Member State. Joint statements issued by participating Member States indicate an intention to implement the FTT by 1 January 2016. However, the FTT proposal remains subject to negotiation between the participating Member States and the scope of any such tax is uncertain. Additional EU Member States may decide to participate. Prospective holders of Notes are advised to seek their own professional advice in relation to the FTT.

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FATCA FATCA imposes a U.S. federal withholding tax of 30 per cent. on certain payments to certain non-U.S. entities unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of certain interests in or accounts with those entities) have been satisfied. The scope of FATCA, as enacted, is not entirely clear, and future U.S. Treasury regulations may be issued that broaden or change the scope of FATCA. Under current guidance, withholding under FATCA would not apply to payments on Notes that are issued prior to the date that is six months after the date on which the final regulations that define ‘‘foreign passthru payments’’ are published, unless the Notes are materially modified after such date or are characterised as equity for U.S. federal income tax purposes. A tax for withholding may be payable under FATCA if an investor or custodian of the Notes is unable to receive payments free of withholding. Whilst the Notes are in global form and held within the Clearing Systems, it is expected that FATCA will not affect the amount of any payments made under, or in respect of, the Notes by the Issuer, the Guarantor, any paying agent and the common depositary, given that each of the entities in the payment chain between the Issuer and the participants in the Clearing Systems is a major financial institution whose business is dependent on compliance with FATCA and that any alternative approach introduced under an intergovernmental agreement will be unlikely to affect the Notes. The documentation expressly contemplates the possibility that the Notes may go into definitive form and therefore that they may be taken out of the Clearing Systems and also provides for the issuance of Bearer Notes. If either of these were to happen, then a non-FATCA compliant holder could be subject to withholding. However, definitive notes will only be printed in remote circumstances. If an amount in respect of FATCA were to be deducted or withheld from any payments on or with respect to the Notes, neither the Issuer nor the Guarantor would have any obligation to pay additional amounts or otherwise indemnify a holder or investor for any such withholding or deduction by the Issuer, the Guarantor, a Paying Agent or any other party as a result of the deduction or withholding of such amount. As a result, if FATCA withholding is imposed on such payments, investors may receive less interest or principal than expected, and would need to pursue a refund of any excess amounts withheld from the U.S. Internal Revenue Service. Investors should consult their own tax advisers to obtain a more detailed explanation of FATCA and how FATCA may affect them. SINGAPORE The statements below are general in nature and are based on certain aspects of current tax laws in Singapore, administrative guidelines and circulars issued by the Monetary Authority of Singapore in force as of the date of this Offering Circular and are subject to any changes in such laws, administrative guidelines or circulars, or the interpretation of those laws, administrative guidelines or circulars, occurring after such date, which changes could be made on a retroactive basis. These laws, administrative guidelines and circulars are also subject to various interpretations and the relevant tax authorities or the courts could later disagree with the explanations or conclusions set out below. Neither these statements nor any other statements in this Offering Circular are intended or are to be regarded as advice on the tax position of any holder of the Notes or of any person acquiring, selling or otherwise dealing with the Notes or on any tax implications arising from the acquisition, sale or other dealings in respect of the Notes. The statements made herein do not purport to be a comprehensive or exhaustive description of all the tax considerations that may be relevant to a decision to subscribe for, purchase, own or dispose of the Notes and do not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers in securities or financial institutions in Singapore which have been granted the relevant Financial Sector Incentive(s)) may be subject to special rules or tax rates. Prospective holders of the Notes are advised to consult their own tax advisers as to the

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Singapore or other tax consequences of the acquisition, ownership of or disposal of the Notes, including, in particular, the effect of any foreign, state or local tax laws to which they are subject. It is emphasised that neither the Issuer, the Guarantor nor any other persons involved in the Programme accepts responsibility for any tax effects or liabilities resulting from the subscription for, purchase, holding or disposal of the Notes. Interest and Other Payments Subject to the following paragraphs, under Section 12(6) of the Income Tax Act, Chapter 134 of Singapore (the ‘‘ITA’’), the following payments are deemed to be derived from Singapore: (a)

any interest, commission, fee or any other payment in connection with any loan or indebtedness or with any arrangement, management, guarantee, or service relating to any loan or indebtedness which is (i) borne, directly or indirectly, by a person resident in Singapore or a permanent establishment in Singapore (except in respect of any business carried on outside Singapore through a permanent establishment outside Singapore or any immovable property situated outside Singapore) or (ii) deductible against any income accruing in or derived from Singapore; or

(b)

any income derived from loans where the funds provided by such loans are brought into or used in Singapore.

Such payments, where made to a person not known to the paying party to be a resident in Singapore for tax purposes, are generally subject to withholding tax in Singapore. The rate at which tax is to be withheld for such payments (other than those subject to the 15% final withholding tax described below) to non-resident persons (other than non-resident individuals) is 17% with effect from the Year of Assessment 2010. The applicable rate for non-resident individuals is 20%. However, if the payment is derived by a person not resident in Singapore otherwise than from any trade, business, profession or vocation carried on or exercised by such person in Singapore and is not effectively connected with any permanent establishment in Singapore of that person, the payment is subject to a final withholding tax of 15%. The rate of 15% may be reduced by applicable tax treaties. However, certain Singapore-sourced investment income derived by individuals from financial instruments is exempt from tax, including: (a)

interest from debt securities derived on or after 1 January 2004;

(b)

discount income (not including discount income arising from secondary trading) from debt securities derived on or after 17 February 2006; and

(c)

prepayment fee, redemption premium and break cost from debt securities derived on or after 15 February 2007,

except where such income is derived through a partnership in Singapore or is derived from the carrying on of a trade, business or profession. In addition, on the basis that the Programme as a whole is arranged by such Arrangers and Dealers which are Financial Sector Incentive – Standard Tier, Financial Sector Incentive – Bond Market or Financial Sector Incentive – Capital Market Companies (as defined in the ITA), any tranche of Notes issued as debt securities before 31 December 2018 (the ‘‘Relevant Notes’’) would be, pursuant to the ITA and the MAS Circular FSD Cir 02/2013 entitled ‘‘Extension and Refinement of Tax Concessions for Promoting the Debt Market’’ issued by the MAS on 28 June 2013 (the ‘‘MAS Circular’’), qualifying debt securities (‘‘QDS’’) for the purposes of the ITA, to which the following treatment shall apply:

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(i)

subject to certain prescribed conditions having been fulfilled (including the furnishing of a return on debt securities in respect of the Relevant Notes in the prescribed format within such period as the relevant authorities may specify and such other particulars in connection with the Relevant Notes as the relevant authorities may require to the MAS and such other relevant authorities as may be prescribed and the inclusion by the Issuer in all offering documents relating to the Relevant Notes of a statement to the effect that where interest, discount income, prepayment fee, redemption premium or break cost from the Relevant Notes is derived by a person who is not resident in Singapore and who carries on any operation in Singapore through a permanent establishment in Singapore, the tax exemption for qualifying debt securities shall not apply if the non-resident person acquires the Relevant Notes using funds from that person’s operations through the Singapore permanent establishment), interest, discount income (not including discount income arising from secondary trading), prepayment fee, redemption premium and break cost (collectively, the ‘‘Qualifying Income’’) from the Relevant Notes derived by a holder who is not resident in Singapore and who (aa) does not have any permanent establishment in Singapore or (bb) carries on any operation in Singapore through a permanent establishment in Singapore but the funds used by that person to acquire the Notes are not obtained from such person’s operation through a permanent establishment in Singapore, are exempt from Singapore tax;

(ii)

subject to certain conditions having been fulfilled (including the furnishing of a return on debt securities in respect of the Relevant Notes in the prescribed format within such period as the relevant authorities may specify and such other particulars in connection with the Relevant Notes as the relevant authorities may require to the MAS and such other relevant authorities as may be prescribed), Qualifying Income from the Relevant Notes derived by any company or a body of persons (as defined in the ITA) in Singapore is subject to tax at a concessionary rate of 10% (except for holders of the relevant Financial Sector Incentive(s) who may be taxed at different rates); and

(iii) subject to: (aa) the Issuer including in all offering documents relating to the Relevant Notes a statement to the effect that any person whose interest, discount income, prepayment fee, redemption premium or break cost derived from the Relevant Notes is not exempt from tax shall include such income in a return of income made under the Income Tax Act; and (bb) the furnishing to the MAS and such other relevant authorities as may be prescribed of a return on debt securities in respect of the Relevant Notes in the prescribed format within such period as the relevant authorities may specify and such other particulars in connection with the Relevant Notes as the relevant authorities may require, payments of Qualifying Income derived from the Relevant Notes are not subject to withholding of tax by the Issuer. However, notwithstanding the foregoing: a)

if during the primary launch of any tranche of the Relevant Notes, the Relevant Notes of such tranche are issued to less than four persons and 50% or more of the issue of such Relevant Notes is beneficially held or funded, directly or indirectly, by related parties of the Issuer, such Relevant Notes would not qualify as QDS; and

b)

even though a particular tranche of Relevant Notes are QDS, if, at any time during the tenure of such tranche of Relevant Notes, 50% or more of the issue of such Relevant Notes is held beneficially or funded, directly or indirectly, by any related party(ies) of the Issuer, Qualifying Income derived from such Relevant Notes held by: (i)

any related party of the Issuer; or

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(ii)

any other person where the funds used by such person to acquire such Relevant Notes are obtained, directly or indirectly, from any related party of the Issuer,

shall not be eligible for the tax exemption or concessionary rate of tax as described above. The term ‘‘related party’’, in relation to a person, means any other person who, directly or indirectly, controls that person, or is controlled, directly or indirectly, by that person, or where he and that other person, directly or indirectly, are under the control of a common person. The terms ‘‘break cost’’, ‘‘prepayment fee’’ and ‘‘redemption premium’’ are defined in the ITA as follows: •

‘‘break cost’’, in relation to debt securities and qualifying debt securities, means any fee payable by the issuer of the securities on the early redemption of the securities, the amount of which is determined by any loss or liability incurred by the holder of the securities in connection with such redemption;



‘‘prepayment fee’’, in relation to debt securities and qualifying debt securities, means any fee payable by the issuer of the securities on the early redemption of the securities, the amount of which is determined by the terms of the issuance of the securities; and



‘‘redemption premium’’, in relation to debt securities and qualifying debt securities, means any premium payable by the issuer of the securities on the redemption of the securities upon their maturity.

References to ‘‘break cost’’, ‘‘prepayment fee’’ and ‘‘redemption premium’’ in this Singapore tax disclosure have the same meaning as defined in the ITA. Gains on Disposal of the Notes Any gains considered to be in the nature of capital made from the disposal of the Notes will not be taxable in Singapore. However, any gains derived by any person from the disposal of the Notes which are gains from any trade, business, profession or vocation carried on by that person, if accruing in or derived from Singapore, may be taxable as such gains are considered revenue in nature. Holders of the Notes who apply or who are required to apply Singapore Financial Reporting Standard 39 Financial Instruments: Recognition and Measurement (‘‘FRS 39’’) may for Singapore income tax purposes be required to recognise gains or losses (not being gains or losses in the nature of capital) on the Notes, irrespective of disposal, in accordance with FRS 39. Please see the section below on ‘‘Adoption of FRS 39 Treatment for Singapore Income Tax Purposes.’’ Adoption of FRS 39 Treatment for Singapore Income Tax Purposes The Inland Revenue Authority of Singapore has issued a circular entitled ‘‘Income Tax Implications Arising from the Adoption of FRS 39 – Financial Instruments: Recognition and Measurement’’ (the ‘‘FRS 39 Circular’’). The ITA has since been amended to give effect to the FRS 39 Circular. The FRS 39 Circular generally applies, subject to certain ‘‘opt-out’’ provisions, to taxpayers who are required to comply with FRS 39 for financial reporting purposes. Holders of the Notes who may be subject to the tax treatment under the FRS 39 Circular should consult their own accounting and tax advisers regarding the Singapore income tax consequences of their acquisition, holding or disposal of the Notes. Estate Duty Singapore estate duty was abolished with respect to all deaths occurring on or after 15 February 2008.

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SUBSCRIPTION AND SALE SUMMARY OF DEALER AGREEMENT The Dealers have, in a dealer agreement (the ‘‘Dealer Agreement’’) dated 17 March 2015, agreed with the Issuer a basis upon which they or any of them may from time to time agree to severally, and not jointly, subscribe the Notes. Any such agreement will extend to those matters stated under ‘‘Form of the Notes’’ and ‘‘Terms and Conditions of the Notes’’. The Issuer will pay each relevant Dealer a commission as agreed between them in respect of the Notes subscribed by it. Where the Issuer agrees to sell to the Dealer(s), who agree to subscribe and pay for, or to procure subscribers to subscribe and pay for, the Notes at an issue price (the ‘‘Issue Price’’), any subsequent offering of those Notes to investors may be at a price different from such Issue Price. The Issuer has agreed to be responsible for certain of the Sole Arranger’s expenses incurred in connection with the establishment, and any future update, of the Programme and reimburse the Dealers certain of their activities in connection with the Programme. The commissions in respect of an issue of the Notes on a syndicated basis may be stated in the relevant Pricing Supplement. The Issuer has agreed to indemnify the Dealers against certain liabilities in connection with the offer and sale of the Notes. The Dealer Agreement entitles the Dealers to terminate any agreement that they make to subscribe Notes in certain circumstances prior to payment for such Notes being made to the Issuer. In connection with the issue of any Tranche of the Notes, the Dealer(s) (if any) named as the stabilising manager(s) (the ‘‘Stabilising Manager(s)’’) (or persons acting on behalf of any Stabilising Manager(s)) in the applicable Pricing Supplement may, to the extent permitted by applicable laws and rules, over allot the 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. However, there is no assurance that the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. 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 the Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of the Notes and 60 days after the date of the allotment of the relevant Tranche of the Notes. In connection with each Tranche of the Notes issued under the Programme, the Dealers or certain of their affiliates may subscribe or purchase Notes and be allocated Notes for asset management and/or proprietary purposes but not with a view to distribution. Further, the Dealers or their respective affiliates may purchase Notes 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 Notes and/or other securities of the Issuer, the Guarantor or their respective subsidiaries or affiliates at the same time as the offer and sale of each Tranche of the Notes 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 the Notes to which a particular Pricing Supplement relates (notwithstanding that such selected counterparties may also be purchasers of such Tranche of the Notes). The Dealers and their affiliates are full service financial institutions engaged in various activities which may include securities trading, commercial and investment banking, financial advice, investment management, principal investment, hedging, financing and brokerage activities. Each of the Dealers may have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with the Issuer, the Guarantor or their respective subsidiaries, jointly controlled entities or associated companies from time to time. In the ordinary course of their various business activities, the Dealers and their affiliates may make or hold (on their own account, on behalf of clients or in their capacity of investment advisers) a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments and enter into other transactions, including credit derivatives

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(such as asset swaps, repackaging and credit default swaps) in relation thereto. Such transactions, investments and securities activities may involve securities and instruments of the Issuer, the Guarantor or their respective subsidiaries, jointly controlled entities or associated companies, including Notes issued under the Programme, may be entered into at the same time or proximate to offers and sales of the Notes or at other times in the secondary market and be carried out with counterparties that are also purchasers, holders or sellers of the Notes. If a jurisdiction requires that the offering be made by a licensed broker or dealer and a Dealer or any affiliate of that Dealer is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by that Dealer or such affiliate on behalf of the Issuer in such jurisdiction. In connection with an issue of the Notes under the Programme, the Issuer may, pursuant to the subscription agreement relating to such issue, agree to pay, through the Dealers, a commission to certain private banks based on the principal amount of the Notes purchased by the clients of such private banks. If such commission is payable, it shall be specified in the Pricing Supplement relating to such issue of the Notes. SELLING RESTRICTIONS United States of America The Notes have not been, and will not be, registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States, and Bearer Notes are subject to U.S. tax law requirements. The Notes may not be offered, sold or (in the case of Bearer Notes) delivered within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except in certain transactions exempt from the registration requirements of the Securities Act. Each of the Dealers has agreed that, except as permitted by the Dealer Agreement, it will not offer, sell or, in the case of Bearer Notes, deliver the Notes within the United States or to U.S. persons. In addition, until 40 days after the commencement of any offering, an offer or sale of Notes within the United States by any Dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act. European Economic Area Public Offer Selling Restriction under the Prospectus Directive In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a ‘‘Relevant Member State’’), each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the ‘‘Relevant Implementation Date’’) it has not made and will not make an offer of the Notes which are the subject of the offering contemplated by the Offering Circular as completed by the Pricing Supplement in relation thereto to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of such Notes to the public in that Relevant Member State: (a)

Approved prospectus: if the Pricing Supplement in relation to the Notes specify that an offer of those Notes may be made other than pursuant to Article 3(2) of the Prospectus Directive in that Relevant Member State (a ‘‘Non-exempt Offer’’), following the date of publication of a prospectus in relation to such Notes which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, provided that any such prospectus has subsequently been completed by the Pricing Supplement contemplating such Non-exempt Offer, in

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accordance with the Prospectus Directive, 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; (b)

Qualified Investors: at any time to any legal entity which is a qualified investor as defined in the Prospectus Directive;

(c)

Fewer than 150 offerees: at any time to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or

(d)

Other exempt offers: at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive.

provided that no such offer of the Notes referred to in (b) to (d) above shall require the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. For the purposes of this provision, the expression an ‘‘offer of Notes to the public’’ in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression ‘‘Prospectus Directive’’ means Directive 2003/71/EC (as amended, including by 2010/73/EU), and includes any relevant implementing measure in the Relevant Member State. United Kingdom Each Dealer has represented, warranted and undertaken and each further Dealer appointed under the Programme will be required to represent, warrant and undertake that: (a)

No deposit-taking: in relation to any Notes having 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 Notes other than to persons: (A) whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses; or (B)

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 Notes would otherwise constitute a contravention of Section 19 of the FSMA by the Issuer. (b)

Financial promotion: it has only communicated or caused to be communicated and will only communicate or cause to be communicated any 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 Notes in circumstances in which section 21(1) of the FSMA does not apply to the Issuer or the Guarantor.

(c)

General compliance: it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom.

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PRC Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree, that the offer of the Notes is not an offer of securities within the meaning of the PRC Securities Law or other pertinent laws and regulations of the PRC and the Notes are not being offered or sold and may not be offered or sold, directly or indirectly, in the PRC (for such purposes, not including the Hong Kong and Macau Special Administrative Regions or Taiwan), except as permitted by the securities laws of the PRC. Hong Kong Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that: (a)

it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes, except for Notes which are a ‘‘structured product’’ as defined in 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 the Laws of Hong Kong) (the ‘‘CWUMPO’’) or which do not constitute an offer to the public within the meaning of the CWUMPO; and

(b)

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 the Notes, which is directed at, or the 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 Notes 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.

Japan The Notes 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 ‘‘FIEA’’). Accordingly, 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, directly or indirectly, offered or sold and will not, directly or indirectly, offer to sell any Notes in Japan or to, or for the benefit of, a 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 resale, directly or indirectly, in Japan or to, or for the benefit of, any resident in Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, FIEA and other relevant laws and regulations of Japan. Singapore Each Dealer has acknowledged 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 Notes or caused the Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell such Notes or cause such Notes 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 or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the ‘‘SFA’’), (ii) to a relevant person pursuant to Section 275(1),

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or any person pursuant to Section 275(1A), 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. This Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Offering Circular and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of any Notes may not be circulated or distributed, nor may any Notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), 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 the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (x)

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

(y)

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 (as defined in Section 239(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 Notes pursuant to an offer made under Section 275 of the SFA except: (i)

to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, 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 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

General These selling restrictions may be modified by the agreement of each of the Issuer and the Dealer following a change in a relevant law, regulation or directive. Any such modification will be set out in the relevant Pricing Supplement issued in respect of the issue of the Notes to which it relates or in a supplement to this Offering Circular.

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GENERAL INFORMATION 1.

Listing Approval-in-principle has been received from the SGX-ST to list the Notes issued pursuant to the Programme on the SGX-ST. However, Notes may be issued under the Programme that will not be listed on the SGX-ST or any other stock exchange, and the Pricing Supplement applicable to each Series or Tranche of Notes will specify whether or not the Notes will be listed on the SGX-ST or any other stock exchange. For so long as the Notes are listed on the SGX-ST and the rules of the SGX-ST so require, the Issuer shall appoint and maintain a Paying Agent in Singapore, where such Notes may be presented or surrendered for payment or redemption, in the event that any of the Global Notes is exchanged for definitive Notes. In addition, in the event that the Global Notes are exchanged for Definitive Notes, an announcement of such exchange will be made by or on behalf of the Issuer through the SGX-ST and such announcement will include all material information with respect to the delivery of the definitive Notes, including details of the Paying Agent in Singapore.

2.

Authorisation The Issuer has obtained all necessary consents, approvals and authorisations in connection with the establishment of the Programme, the issue of the Notes thereunder and performance of its obligations under the Notes, the Trust Deed, each Escrow Deed, the CDP Deed of Covenant, the Depository Agreement and the Agency Agreement. The establishment of the Programme and the issue of the Notes thereunder were authorised by a resolution of the board of directors of the Issuer passed on 16 March 2015. The Guarantor has obtained all consents, approvals and authorisations in connection with the giving of the Guarantee of the Notes and the performance of its obligations under the Trust Deed, each Deed of Guarantee, each Escrow Deed and the Agency Agreement. The giving of the Guarantee of the Notes was authorised by resolutions of the Guarantor passed on 16 March 2015.

3.

Significant/Material Change Save as disclosed in this Offering Circular, there has been no material adverse change in the financial or trading position or prospects of the Issuer, the Guarantor and the Group since 30 September 2014.

4.

Legal and Arbitration Proceedings None of the Issuer, the Guarantor or any member of the Group is involved in any litigation or arbitration proceedings, which the Issuer, the Guarantor or the Group, as the case may be, believes may have, or have had during the 12 months period prior to the date of this Offering Circular a significant adverse effect on the financial position or profitability of the Issuer, the Guarantor or the Group and, so far as the Issuer or the Guarantor is aware, no such litigation or arbitration proceedings are pending or threatened.

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5.

Auditor The Issuer’s audited consolidated financial statements for the years ended 31 December 2012 and 2013, which are included elsewhere in this Offering Circular, have been audited by Li, Tang, Cheng & Co., independent auditor in accordance with Hong Kong Standards on auditing issued by Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). The Issuer’s unaudited consolidated financial statements as of and for the nine months ended 30 September 2014, which are included elsewhere in this Offering Circular, have been reviewed by Li, Tang, Chen & Co., in accordance with Hong Kong Financial Reporting Standards (‘‘HKFRSs’’) issued by the HKICPA. The Guarantor’s audited consolidated financial statements as of and for the year ended 31 December 2012, which are included elsewhere in this Offering Circular, have been audited by Peking Certified Public Accountants, independent auditor in accordance with PRC Accounting Standards. The Guarantor’s audited consolidated financial statements as of and for the year ended 31 December 2013, which are included elsewhere in this Offering Circular, have been audited by ZhongXingCaiGuangHua Certified Public Accountants LLP, in accordance with PRC Accounting Standards. The Guarantor’s selected unaudited consolidated financial information as of and for the nine months ended 30 September 2014, which is included elsewhere in this Offering Circular, have been reviewed by ZhongXingCaiGuangHua Certified Public Accountants LLP, in accordance with PRC Accounting Standards.

6.

Documents on Display Copies of the following documents will be available for inspection at the specified office of the Issuer at 26/F, Three Pacific Place, 1 Queen’s Road East, Hong Kong during normal business hours, for so long as the Notes are capable of being issued under the Programme: (i)

the Issuer’s audited consolidated financial statements for the years ended 31 December 2012 and 2013;

(ii)

the Guarantor’s audited consolidated financial statements as of and for the years ended 31 December 2012 and 2013;

(iii) the Issuer’s unaudited consolidated financial statements for the nine months ended 30 September 2014; (iv) the Guarantor’s unaudited consolidated financial statements for the nine months ended 30 September 2014; (v)

the most recent annual audited consolidated financial statements of the Issuer and the Guarantor and the most recently published unaudited consolidated interim financial statements of the Issuer and the Guarantor;

(vi) each Pricing Supplement; (vii) a copy of this Offering Circular, together with any Supplement to this Offering Circular and any other documents incorporated herein or therein referenced; (viii) the Dealer Agreement;

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(ix) the Agency Agreement; (x)

the Trust Deed (which contains the forms of the Notes in global and definitive form);

(xi) each Deed of Guarantee; (xii) each Escrow Deed; (xiii) the CDP Deed of Covenant; (xvi) the Depositary Agreement; and (xv) the Programme Manual. 7.

Clearing of the Notes The Notes may be accepted for clearance through Euroclear and Clearstream, Luxembourg and CMU Service and/or CDP. The appropriate common code and the International Securities Identification Number in relation to the Notes of each Series will be specified in the relevant Pricing Supplement. The relevant Pricing Supplement shall specify any other clearing system as shall have accepted the relevant Notes for clearance together with any further appropriate information.

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INDEX TO FINANCIAL INFORMATION Page Financial Information of the Issuer As of and for the year ended 31 December 2012 Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheet as at 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance Sheet as at 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes on the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-2 F-4 F-5 F-7 F-9 F-10 F-12

As of and for the year ended 31 December 2013 Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheet as at 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance Sheet as at 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes on the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-86 F-88 F-90 F-92 F-94 F-95 F-99

As of and for the nine months ended 30 September 2014 Review Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-194 F-195 F-197

Financial Information of the Guarantor As of and for the year ended 31 December 2012 Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheet as at 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Comprehensive Income for the year ended 31 December 2012 . . . Consolidated Statement of Cash Flows for the year ended 31 December 2012 . . . . . . . . . . . . . Consolidated Statement of Changes in Equity for the year ended 31 December 2012 . . . . . . . Consolidated Statement of Changes in Equity for the year ended 31 December 2011 . . . . . . . Balance Sheet as at 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Statement of Comprehensive Income for the year ended 31 December 2012 . . . . . . . . . . . . . . . Statement of Cash Flows for the year ended 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . Statement of Changes in Equity for the year ended 31 December 2012 . . . . . . . . . . . . . . . . . . . Statement of Changes in Equity for the year ended 31 December 2011 . . . . . . . . . . . . . . . . . . . Notes to the Consolidated Financial Statements of the year ended 31 December 2012 . . . . . .

F-199 F-201 F-203 F-204 F-205 F-206 F-207 F-209 F-210 F-211 F-212 F-213

As of and for the year ended 31 December 2013 Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheet as at 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Comprehensive Income for the year ended 31 December 2013 . . . Consolidated Statement of Cash Flows for the year ended 31 December 2013 . . . . . . . . . . . . . Balance Sheet as at 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Statement of Comprehensive Income for the year ended 31 December 2013 . . . . . . . . . . . . . . . Statement of Cash Flows for the year ended 31 December 2013 . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Changes in Equity for the year ended 31 December 2013 . . . . . . . Consolidated Statement of Changes in Equity for the year ended 31 December 2012 . . . . . . . Statement of Changes in Equity for the year ended 31 December 2013 . . . . . . . . . . . . . . . . . . . Statement of Changes in Equity for the year ended 31 December 2012 . . . . . . . . . . . . . . . . . . . Notes to Consolidated Financial Statements for the year ended 31 December 2013 . . . . . . . . .

F-288 F-290 F-292 F-293 F-295 F-297 F-298 F-300 F-302 F-304 F-305 F-306

As of and for the nine months ended 30 September 2014 Review Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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THE ISSUER

THE GUARANTOR

HNA Group (International) Company Limited 26/F, Three Pacific Place 1 Queen’s Road East Hong Kong

HNA Group Co., Limited Haihang Building 7 Guo Xing Road Haikou City Hainan Province PRC

THE TRUSTEE The Bank of New York Mellon, London Branch One Canada Square London E14 5AL United Kingdom PRINCIPAL REGISTRAR AND TRANSFER AGENT The Bank of New York Mellon (Luxembourg) S.A. Vertigo Building - Polaris 2-4 rue Eugene Ruppert L-2453 Luxembourg ISSUING AND PAYING AGENT, CALCULATION AGENT AND ESCROW AGENT

CDP PAYING AGENT, CDP REGISTRAR AND CDP TRANSFER AGENT

CMU LODGING AND PAYING AGENT, CMU REGISTRAR AND CMU TRANSFER AGENT

The Bank of New York Mellon, London Branch One Canada Square London E14 5AL United Kingdom

The Bank of New York Mellon, Singapore Branch One Temasek Avenue #03-01 Millenia Tower Singapore 039192

The Bank of New York Mellon, Hong Kong Branch Level 24, Three Pacific Place 1 Queen’s Road East Hong Kong

LEGAL ADVISERS To the Issuer as to Hong Kong Law Linklaters 10/F, Alexandra House Chater Road Hong Kong

To the Guarantor as to PRC Law King and Wood Mallesons 40th Floor, Tower A Beijing Fortune Plaza 7 Dongsanhuan Zhonglu Chaoyang Beijing, 100020 PRC

To the Sole Arranger, the Dealers and the Trustee as to English Law Clifford Chance 27/F, Jardine House One Connaught Place Central, Hong Kong

To the Sole Arranger, the Dealers and the Trustee as to PRC Law Global Law Office 15&20F, Tower 1 China Central Place No.81 Jianguo Road Chaoyang Beijing 100025 PRC

AUDITORS OF THE ISSUER

AUDITORS OF THE GUARANTOR

Li, Tang, Chen & Co., CPA Sun Hung Kai Centre 30 Harbour Road Wanchai Hong Kong

ZhongXingCaiGuangHua Certified Public Accountants LLP 501 Xinda Commercial Building 48 Guomao Avenue Haikou City Hainan Province PRC

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ANNEXURE 2 – ISSUER’S CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014

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ANNEXURE 3 – GUARANTOR’S CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014

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THE ISSUER

THE GUARANTOR

HNA Group (International) Company Limited 26/F, Three Pacific Place 1 Queen’s Road East Hong Kong

HNA Group Co., Limited Haihang Building 7 Guo Xing Road Haikou City Hainan Province PRC

THE TRUSTEE The Bank of New York Mellon, London Branch One Canada Square London E14 5AL United Kingdom

PRINCIPAL REGISTRAR AND TRANSFER AGENT

ISSUING AND PAYING AGENT, CALCULATION AGENT AND ESCROW AGENT

The Bank of New York Mellon (Luxembourg) S.A. Vertigo Building - Polaris 2-4 rue Eugene Ruppert L-2453 Luxembourg

The Bank of New York Mellon, London Branch One Canada Square London E14 5AL United Kingdom LEGAL ADVISERS

To the Issuer as to Hong Kong Law Linklaters 10/F, Alexandra House Chater Road Hong Kong

To the Guarantor as to PRC Law King and Wood Mallesons 40th Floor, Tower A Beijing Fortune Plaza 7 Dongsanhuan Zhonglu Chaoyang Beijing, 100020 PRC

To the Sole Arranger, the Dealers and the Trustee as to English Law Clifford Chance 27/F, Jardine House One Connaught Place Central, Hong Kong

To the Sole Arranger, the Dealers and the Trustee as to PRC Law Global Law Office 15&20F, Tower 1 China Central Place No.81 Jianguo Road Chaoyang Beijing 100025 PRC

AUDITORS OF THE ISSUER

AUDITORS OF THE GUARANTOR

Li, Tang, Chen & Co., CPA Sun Hung Kai Centre 30 Harbour Road Wanchai Hong Kong

ZhongXingCaiGuangHua Certified Public Accountants LLP 501 Xinda Commercial Building 48 Guomao Avenue Haikou City Hainan Province PRC

SINGAPORE LISTING AGENT

IRELAND LISTING AGENT

Linklaters Singapore Pte. Ltd. One George Street #17-01 Singapore 049145

Arthur Cox Listing Services Limited Earlsfort Centre Earlsfort Terrace Dublin 2 Ireland

A.Plus International

FINANCIAL PRESS LIMITED

150680114

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HNA Group - Irish Stock Exchange

FINAL HNA Group (International) Company Limited (incorporated with limited liability in Hong Kong) U.S.$50,000,000 8.125 per cent. Guaranteed Notes ...

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