KEY ATTRIBUTES OF A LISTED GLOBAL AIRCRAFT OPERATING LESSOR Robert - - PowerPoint PPT Presentation

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Private & Confidential KEY ATTRIBUTES OF A LISTED GLOBAL AIRCRAFT OPERATING LESSOR Robert Martin Managing Director & Chief Executive Officer Growth Frontiers Asia Pacific Conference 2 nd November 2016 Private & Confidential


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KEY ATTRIBUTES OF A LISTED GLOBAL AIRCRAFT OPERATING LESSOR

Robert Martin Managing Director & Chief Executive Officer

Growth Frontiers Asia Pacific Conference 2nd November 2016

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Disclaimer

This presentation contains general background information about the activities of BOC Aviation Limited (“BOC Aviation”), current as at the date hereof. This document does not constitute or form part of and should not be construed as, an offer to sell orissue or the solicitation of an offer to buy or acquire secur ities of BOC Aviation or any of its subsidiaries or affiliates in any jurisdiction or an inducementto enter into investment activity. The information contained in this document has not been independently verified and no representation or warranty, expressed or implied, is made as to, and no reliance should be placed on, the information or opinions contained herein. The information set out herein may be subject to revision and may change materially. BOC Aviation is not under any

  • bligation to keep current the information contained in this document and any opinions expressed in it are subject to change without notice. None of BOC Aviation or any of its

affiliates, advisers or representatives (including director s, officer s and employees) shall have any liability w hatsoever for any loss whatsoever ar ising from any use of this document or its contents or otherwise arising in connection with this document (whether direct, indirect, consequential or other). No part of this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of BOC Aviation or any of its affiliates, advisors, agents or representatives including directors, officers and employees shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the

  • document. This document is highly confidential and is being given solely for your information and for your use and may not be shared, copied, reproduced or redistributed to any
  • ther person in any manner.

This document may contain “forward-looking statements”, which include all statements other than statements of histor ical facts,including, without limitation, any statements preceded by, followed by or that include the words “will”, “would”, “aim”, “aimed”, “will likely result”, “is likely”, “are likely”, “believe”, “expect”, “expected to”, “will continue”, “will achieve”, “anticipate”, “estimate”, “estimating”, “intend”, “plan”, “contemplate”, “seek to”, “ seeking to”, “tr ying to”, “target”, “propose to”, “future”, “objective”, “goal”, “project”, “ should”, “can”, “could”, “may”, “will pursue” or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown r isks, uncertainties and other important factors beyond BOC Aviation’s control that could cause the actual results, performance or achievements of BOC Aviation to be materially different from future results, performance or achievements expressed orimplied by such forward-looking statements. N eitherBOC Aviation nor any of its affiliates, agents, advisors or representatives (including directors, officers and employees) intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document. Any securities or strategies mentioned herein ( if any) may not be suitable for all investors. Recipients of this document are required to make their own independentinvestigation and appraisal of the business and financial condition of BOC Aviation, and any tax, legal, accounting and economic considerations that may be relevant. This document contains data sourced from and the views of independent third parties. In replicating such data in this document, BOC Aviation does not make any representation, whether express or implied, as to the accuracy of such data. The replication of any views in this document should not be treated as an indication that BOC Aviation agrees with or concurs with such views. The information contained in this document is provided as at the date of this document and is subject to change without notice. 2

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Private & Confidential 63

Summary

The BOC Aviation Journey Core Competencies of a Leasing Company BOC Aviation Today

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The BOC Aviation Journey

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Core Competencies of a Leasing Company

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  • Sales
  • Transitions
  • Repossessions
  • Procurement
  • Leasing
  • Debt financing

Aircraft sold, with or without leases attached, to capture maximum value Limit based on long lease terms to quality airlines and sales programmes Limited based on success of customer risk assessment The right aircraft – at the lowest price possible Aircraft to good quality airlines on long term leases At the lowest cost of funds possible, based on minimum acceptable tenors

  • Equity financing
  • Operational efficiencies
  • Risk management

Influenced by track record and strength of business model Generated by scale and human capital management Focused on both sides of the balance sheet

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Core Competencies of a Leasing Company

BOC Aviation Performs on Every Measure

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  • Sales
  • Transitions
  • Repossessions1
  • Procurement
  • Leasing
  • Debt financing

More than 240 aircraft sold More than 60 transitions 29 aircraft in 11 jurisdictions More than 680 aircraft purchased totaling more than US$33 billion More than 660 leases executed with more than 130 airlines in 52 countries More than US$17 billion in debt raised since 1 January 2007

  • Equity financing
  • Operational efficiencies
  • Risk management

More than US$1.1 billion in primary equity financing raised Forward planning for future scale through five-year plans; aligning employee and shareholder interests 360-degree enterprise risk management focussing on both assets & liabilities Key is having a forward-looking and experienced management team

All data as at 30 September 2016, since inception unless otherwise indicated Notes: 1. Includes repossessions and consensual early returns

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Private & Confidential All data as at 30 September 2016

Steven Townend, Chief Commercial Officer

  • In charge of revenue activities for Americas, Europe, Africa
  • 15 years with BOC Aviation
  • 25 years of banking and leasing experience

David Walton, Chief Operating Officer

  • Joined BOC Aviation senior management team in 2014
  • Previously held aircraft leasing company COO and general counsel roles
  • 30 years of legal and leasing experience

Robert Martin, Managing Director & Chief Executive Officer

  • Appointed Chief Executive Officer of BOC Aviation since 2004
  • A member of Board of Directors since July 1998
  • 29 years of banking and leasing experience

Phang Thim Fatt, Deputy Managing Director & Chief Financial Officer

  • 20 years as Chief Financial Officer of BOC Aviation
  • Previously held treasury role at Singapore Airlines
  • 36 years of industry experience; involved in establishing the Company

Wang Genshan, Vice-Chairman & Deputy Managing Director

  • A member of Board of Directors since December 2006
  • Involved in the acquisition of the Company by Bank of China
  • 38 years experience at BOC

Chris Gao, Chief Commercial Officer

  • In charge of revenue activities for Asia Pacific and Middle East
  • Member of Board of Directors since December 2006
  • Extensive capital markets experience with BOC

Importance of a Global, Stable and Experienced Management Team

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BRITISH CHINESE SINGAPOREAN BRITISH CHINESE AMERICAN Supported by a strong bench of specialist heads of department

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Strong Operational Day-to-day Management

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Procurement: Young, Fuel-efficient, In-demand Aircraft

69 Notes: 1. Source: Ascend, by number of aircraft (>100 seats), as at 30 September 2016 2. BOC Aviation fleet breakdown by number of owned aircraft, as at 30 September 2016

20,698 aircraft (>100 seats) Currently In Service1 55% of Current In-service Aircraft are 10 Years Old or Younger1 BOC Aviation Fleet Breakdown2

We invest in young aircraft with a large operator base and a large investor base

A320 737NG

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Private & Confidential As at 30 September 2016 * Estimated dates, subject to change

Looking Forwards, Many More Choices will become Available

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Purchases from both Manufacturers and Airlines

Notes: 1. As at 30 September 2016 2. As at 31 December 2015 11

Continue to purchase aircraft through multiple industry cycles

  • BOC Aviation has closed more than 140 purchase and leaseback (PLB) transactions and

acquired more than 530 aircraft from OEMs since inception in 19931 BOC Aviation Deliveries Across 2007 - 20152

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Significant Aircraft Orders Placed by BOC Aviation Direct Purchases From Manufacturers

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Order Book Underpins Future Balance Sheet Growth

All data as of 30 September 2016 unless otherwise indicated

Future Deliveries of 215 Aircraft

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Average of 41 aircraft committed for delivery until 2021

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Committed Future Aircraft Investments

All data as of 30 June 2016 unless otherwise indicated

Aircraft Capital Expenditure Commitment

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Private & Confidential 75 All data as at 31 December of relevant year unless otherwise indicated

Disciplined Fleet Growth

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Leasing: Customer Segmentation is Key

  • 793 airlines in service today
  • Focus on 133 airlines or only 17% of the airlines in the market – minimum credit score, above 20 aircraft

76 Source: Ascend, by number of airlines and aircraft, as at 30 September 2016

Airline Segmentation by Credit Score and Fleet Size Our Target 133 Airlines Operate 72%

  • f the Current In-service Aircraft

Credit above minimum, fleet >20 aircraft Credit above minimum, fleet 10-20 aircraft Credit above minimum, fleet < 10 aircraft Credit below minimum, fleet >20 aircraft Credit below minimum, fleet 10-20 aircraft Credit below minimum, fleet < 10 aircraft

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Private & Confidential 77 Source: Ascend, by number of aircraft, across the period 2000 to 2012

Larger Airlines Show Greater Resilience

Airlines (Fleet >20 Aircraft) Which Left the Market, By Year No more than 4 airlines (fleet >20 aircraft) per year left the market

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Aircraft Operation is Highly Concentrated by Airline

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The largest 126 airlines today operate 75% of aircraft in the market

Source: Ascend, by number of airlines and aircraft, as at 30 September 2016

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Private & Confidential As at 30 September 2016

67 Airline Customers in 31 Countries

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50% covered – plenty of room to grow

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Financing: Strong Credit Rating is Key

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BOC Aviation has had external credit ratings since 2012

Source: Bloomberg, as at October 2016

Lessor Fitch S&P Moody’s BOC Aviation A- A- NR ACG BBB A- NR SMBC Aviation Capital BBB+ BBB+ NR AerCap Holdings BBB- BBB- Ba1 ALC NR BBB NR CIT Group BB+ BB+ Ba3 AirCastle NR BB+ Ba1 AWAS NR BB Ba3 FLY Leasing NR BB B1

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Raising Debt at Low Cost

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Debt capital markets growing in importance

  • Investment grade credit ratings and access to diversified funding sources
  • BOC Aviation taps a global debt investor base across different markets

Notes: 1. Data as at 30 June 2016 2. Updated as at 30 June 2016, based on respective Company filings

BOC Aviation Debt Sources1 Low Cost of Debt Remains a Competitive Advantage2

2.3%

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Global Equity Financing

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Allocation by Region1 2 Allocation by Type1 Largest Ever Global Aircraft Lessor IPO

More than US$1.1 billion in Equity Financing Raised Since Inception BOC Aviation Initial Public Offering, June 2016

Source: Bloomberg, Dealogic Source: BOC Aviation Notes: 1. Only includes institutional allocations, excludes HKPO and cornerstone allocations 2. “China” only refers to Mainland China funds and does not include HK or Taiwan, which are covered under “Asia”

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BOC Aviation Cornerstone Investors at IPO

Cornerstone Investor Amount % of Total Ownership

CIC US$100mn 2.7 Silk Road Fund US$100mn 2.7 CDB International US$60mn 1.6 China Life US$50mn 1.3 Hony US$50mn 1.3 Oman Investment Fund US$50mn 1.3 Elion US$40mn 1.1 Fullerton US$38mn 1.0 Fosun US$35mn 0.9 China South Industries AM US$30mn 0.8 Boeing US$30mn 0.8

All info as at 1 June 2016

A quality set of cornerstone investors

23 Indicates sovereign wealth fund

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Private & Confidential 84 Notes: 1. Source: Bloomberg as at 26 October 2016; Market capitalisation for each year-end includes aggregate of three companies as at respective year end: BOC Aviation, CALC, CDB Financial Leasing

Listed Aircraft Lessor Presence Expanding

Exponential Growth in HK-listed Aircraft Lessors Market Capitalisation1 Market capitalisation grew from zero to almost US$8 billion in less than three years

31-Dec-14 31-Dec-15 26-Oct-16 BOC Aviation CDB Financial Leasing CALC CALC CALC

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Operational Efficiencies

  • Forward planning for future scale:

– Work in five-year plans with specific targets – Pipeline development focused on procuring in-production, in-demand aircraft in bulk – Leasing to our targeted universe of quality airlines, with a focus on large transaction size and long term contracted leases – Use of capital markets to facilitate large scale fundraising – Use of global network to access individual and portfolio sales – Recruiting & retaining talent with the right expertise and knowledge to ensure personnel development and succession planning

  • Align staff and shareholder objectives through compensation plans

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  • Centralised planning done across the entire company

– Forecasts include both base case and downside scenarios – Intensive market analysis involved across all stages of planning

  • Harness experience of senior management team and day-to-day specialists in maintaining

efficiency and growth Key focus is long term profitability

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Focusing on the Economies of Scale

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Customer Aircraft Air China 3 x 777-300ER and 2 x A330-300 Air France 2 x 777-300ER and 2 x 777-200LRF Cathay Pacific 6 x 777-300ER EVA Air 6 x A321 Iberia 8 x A330-300 and 4 x A320 Jet Airways 10 x 737-800 Southwest 16 x 737-700 Thai Airways 8 x 777-300ER Vistara (owned by SIA and TATA) 13 x A320CEO and 7 x A320 NEO Closing Volume Transactions with Multi-year / Multi-aircraft Delivery Schedules

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Driving Efficiency

US$2.6 million NPAT per average employee in 2015

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Average NPAT Per Employee

All data as at 31 December of relevant year unless otherwise indicated

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Risk Management – 360O Focus

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Culture and Values Policies and Procedures Business Strategy Regular Review

  • f External Environment

Enterprise Risk

Asset Risk n Portfolio diversification n Airline credit n Investor credit n Aircraft n Jurisdiction n Concentration n Structural n Technical Liability Risk n Diversification

  • f debt sources

n Liquidity n Hedging n Funding n Counterparty n Capitalisation

A successful lessor will focus risk management on both sides of the balance sheet

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Risk Management in Action

29 Notes: 1. Owned aircraft with leases expiring in each calendar year, excluding any aircraft with lease or sale commitments as at 30 September 2016, weighted by Net Book Value (unless otherwise indicated) 2. As at 30 June 2016

Long-Term Contracted Lease Revenue1 High Collection Rate2

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The result – Well-dispersed lease expirations and quality airlines that pay

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Aircraft Sales

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Institutional Investors Airlines Tax Investors Corporates Lessors

With Lease Attached Without Lease Attached

Who Do We Sell Aircraft To?

  • Global sales team
  • Global investor base
  • Sold more than 240 aircraft since

inception

  • Aircraft sold to more than 80 investors

in more than 20 countries

As at 30 September 2016

Exit strategy management is important to redeploy debt and equity in the business

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Transitions & Repossessions Kept Low

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>60 Transitions Since Inception 29 Aircraft Repossessions Since Inception Strong sales performance and rigorous customer selection are important attributes

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Private & Confidential 32 All data as at 31 December of relevant year

Disciplined Approach to Core Competencies Drives Desired Financial Outcome

Growing profitability and consistent returns across the cycle

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BOC Aviation Today

  • Largest HK-listed aircraft leasing company in a growing global market

A top five global lessor with industry-leading financial metrics

Consistent profitable performance over 23 years

Investment grade credit ratings of A- by Standard & Poor’s and A- by Fitch

  • Portfolio of young, in-demand aircraft with long-term leases

One of the youngest owned fleets amongst top tier aircraft leasing companies

Focused on new aircraft with high liquidity

Long-term leases with globally diversified customer base

  • Strong and diversified financing platform

Long-standing bank relationships and access to both debt and equity capital markets

  • Stable & experienced management and ownership

Successfully managed through multiple cycles

Proactively focused on long term planning across all parts of the cycle

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A global aircraft lessor with strong fundamentals and an outstanding track record

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www.bocaviation.com

BOC Aviation Limited 8 Shenton Way #18-01 Singapore 068811 Phone +65 6323 5559 Facsimile +65 6323 6962

Incorporated in the Republic of Singapore with limited liability Company Registration No. 199307789K

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Private & Confidential 95 Source: Ascend, by number of aircraft, across the period 2000 to 2012

Appendix

Number of Airlines Which Left the Market, By Year 242 airlines left the market across 2000-2012, of which 10% had more than 20 aircraft in their fleet