Stock Code: 1848.HK

Full value-chain aircraft solutions provider

Experience sharing by Christian Mc CORMICK, Managing Director – Finance, CALC

InvestHK Workshop on Aircraft Leasing @Airline Economics Growth Frontiers Dublin 2018 CALC at a glance As of 16 January 2018:

Aircraft fleet On backlog: Total orderbook Not including aircraft held under ARI* 143 + 50 One of the launch customers of COMAC C919 aircraft with an order of 20 planes

As of 30 June 2017:

average fleet age average remaining total assets lease term

listed aircraft lessor aircraft recycling in 11 branches worldwide** in Asia facility in China

* Fleet does not include ARI’s aircraft: four leases with Sichuan Airlines (one of which is under joint venture) * * ARI is the first Chinese aircraft recycling services provider to acquire a US aircraft solutions company (UAM). ARI’s total staff number is 93 with two offices.

# 2

CALC established in 2006, headquartered in Hong Kong

From: China’s first aircraft operating lessor

China’s first aircraft operating Asia’s first aircraft full life-cycle lessor & largest independent solution provider • A completely new aircraft disassembly centre in China, the largest aircraft lessor of its kind in World • In terms of the total number of aircraft in service and • ARI is the first Chinese aircraft recycling services provider to new aircraft order book acquire a US aircraft solutions company (UAM) • First Hong Kong-based aircraft lessor

Asia’s first listed aircraft lessor Pioneer of aircraft financing products • Listed on the Main Board of the Stock Exchange of Hong Kong in July 2014 (Stock Code: 01848.HK) in China and beyond • Constituent stock of MSCI China Small Cap/Hang Seng • Introduced the 1st batch of rental realisation transactions in China Composite Indexes in 2013 and continued to introduce innovative products • An eligible stock under southbound trading of Shenzhen-Hong Kong Stock Connect

“Aircraft Lessor of the Year” Market leader in China 2015 to 2017 - Global Transport Finance • Significant market share of Airbus aircraft deliveries in China • The first Chinese lessor to win such award

Flying high in global ranking Thought leader of aircraft leasing in terms of fleet and backlog Industry • Accumulative order book of >260 new aircraft with • Worked with Tianjin government in developing the city into one Airbus, Boeing and COMAC of China’s major leasing hubs • Supporting Hong Kong government to establish Hong Kong as an international aircraft leasing hub and aviation finance centre • Facilitate the establishment of Hong Kong Aircraft Leasing and Aviation Finance Association # 4 To: Full aircraft value-chain solutions provider for global airlines

Aviation financing Mid-to-old aged Aircraft leasing Aircraft financing Aircraft recycling solutions aircraft solutions

Traditional Traditional old aircraft aircraft lessors solutions provider

Full aircraft value-chain solutions provider CALC provides SPECIAL AVIATION FINANCING SOLUTIONS at every stage of the aircraft life cycle to maximize value across the value chain # 5 Growing our global reach

Aviation partners of CALC, ARI and UAM around the world

# 6 As HK’s leading lessor - CALC enlists top global lessors

Fleet Fleet Order Order Total Total Ranking Lessor/ Owner units value ($B) units value ($B) units value ($B) 1 AerCap 1,074 $28.7 375 $21.7 1,449 $50.4 2 GECAS 1,345 $28.2 401 $22.0 1,746 $50.3 3 Air Lease Corporation 252 $11.2 375 $29.3 627 $40.5 4 602 $19.3 258 $18.6 860 $37.9 5 BOC Aviation 321 $13.3 190 $10.2 511 $23.5 6 SMBC Aviation Capital 356 $12.0 217 $11.3 573 $23.3 Industrial and Commercial 7 317 $13.2 111 $4.9 428 $18.1 Bank of China (ICBC) 8 Aviation Capital Group 254 $5.9 149 $7.7 403 $13.7 9 91 $3.1 155 $7.5 246 $10.6 Dubai Aerospace Enterprise 10 311 $9.5 15 $0.7 326 $10.2 (DAE) 11 ALAFCO 64 $2.3 122 $7.8 186 $10.1 12 CDB Leasing Company Ltd 175 $6.1 53 $3.1 228 $9.3 Babcock & Brown Aircraft 13 145 $7.6 0 $0.0 145 $7.6 Management (BBAM) 14 Avia Capital Leasing 33 $1.3 72 $5.2 105 $6.4 15 Aircastle 190 $4.9 25 $0.9 215 $5.8

Source: As of 22 Sep, 2017 # 7

Hong Kong is Ready to Take off

Resetting of aviation world to the east

Deliveries by region in next 20 years Asia-Pacific becomes one of the biggest aviation markets globally

• Asia-Pacific is responsible for almost 40 percent of future airplane demand • Emerging markets in the region set to become the largest growth driver • China expected to be the single fastest-growing market for aircraft sales in the next 20 years Source: Boeing CMO 2017, Flight Global Ascend Online Data Chinese capital changing global leasing landscape Chinese capital’s effect on global aviation finance

• Chinese capital in aviation grew by 860% over the past 10 years 2022 • Total capital deployed by aircraft 2017 2008 lessors has grown 51% to $261 billion, with $71 billion coming from Chinese 5% sources over the last decade 28% 35% • Chinese capital expected to claim more than a third of the aircraft leasing market by 2022, a seven-fold Source: Flight Global rise in just 14 years # 9 A unique position to become an aviation financial center

Q The new tax regime resulting in a reduced Competitive effective tax rate of about 3-4% for aircraft transactions in Hong Kong (more attractive dedicated tax than Ireland’s 12.5% corporate tax and regime Singapore’s 8%)

Q One of the world’s top 3 IPO fundraising Sophisticated Hong Kong market for equity financing financing Q Sophisticated financing platform with active platform turnover to enable the convenience of debt financing

Backed by high- Q Geographic proximity: HK, backed by China growth Chinese and located in the heart of Asia Pacific, the growth driver for future aviation market market Q Bilingual language advantage

Q Convenient living infrastructure appeals to Established aviation, financing, accounting and legal living talents to work in HK as well as leasing infrastructure companies to set up operations

# 10 The first step

Concessionary tax regime for aircraft leasing Passed by Legislative Council in June 2017, to reduce the profits tax of qualifying aircraft lessors and aircraft leasing managers

HK as a more appealing option for aircraft leasing than Singapore and Ireland

15.0%

12.0% Ireland 9.0% Singapore 6.0% 3.0% Hong Kong Effective tax rate 0.0% 1 2 3 4 5 6 7 8 9 10 11 12 Year Source: PricewaterhouseCoopers

Q Effective tax rate for aircraft leasing lowered to 3-4% after the tax reform Q Tax exemption for capital gain derived from sale of an aircraft where the aircraft has been used to carry out qualifying aircraft leasing activities for 3 years Q Double Tax Agreement between HK and Mainland China offers a more favourable withholding tax rate of 5% (relative to 6% in both Singapore and Ireland)

# 11 CALC’s collaborative efforts with the industry

CALC in supporting HKSAR’s leasing industry development

• Efforts we’ve made • CALC has worked with the Financial Services Development Council (FSDC) to publish an industry paper in July 2017 - “Recommendations for Developing Hong Kong as an Aircraft Leasing and Financing Hub”

• CALC promptly responses to Consultation Paper on Proposed Exemption for Aircraft Leasing Activities published by The Stock exchange of Hong Kong in December 2017 in reducing disclosure and shareholder approval requirements

• CALC seeking for all opportunities to promoting the development of Hong Kong as an aircraft leasing and financing hub, includes: • global industry conferences • capital market of aviation finance • OEMs • Airlines • CALC continues active communications with all sectors of the aviation industry to promote the development of Hong Kong's aircraft leasing and aviation finance initiative

# 13 Establishment of Hong Kong Aircraft Leasing and Aviation Finance Association • As a founding member, CALC has worked with the community to establish Hong Kong Aircraft Leasing and Aviation Finance Association (HKAL) in June 2017 • Chen Shuang - Chairman of CALC, is the Chairman of the Association • Mike Poon - CALC’s CEO, is the Founding Chief Advisor • The Association has drawn the participation of all key international and local players in connection with aircraft leasing and aviation finance in Hong Kong, including: • aircraft lessors • airline lessees • banks and financial institutions • law firms • audit firms • other interested parties and service providers • CALC sponsored inaugural ceremony of The HKAL Association in 1 November 2017 in Hong Kong

I am a staunch believer in the Hong Kong's unique advantages with conviction to the rule of law and the commitment to provide a level playing field.” The Hon Mrs Carrie Lam Cheng Yuet-ngor, The Chief Executive of the Hong Kong Special Administrative Region said on the inauguration ceremony of HKAL Association, “Policy and tax incentives aside, the Government cannot act alone to build up our aircraft leasing and financing sector. The Hon Mrs Carrie Lam Cheng Yuet-ngor, the Chief Executive of Hong Kong Special Administrative Region (5th from left); # 14 CALC in supporting HKSAR’s leasing industry development

CALC extends Hong Kong aircraft leasing platform

CALC is among the first lessors to have completed an aircraft transaction through Hong Kong platform in 2017

Q Completed the delivery of one aircraft through the newly established HK leasing platform to a Japanese airline Q Confirmed another transaction scheduled for delivery in 2018 which is set to enjoy the new tax regime Q In positive negotiation with a number of airline clients to lease more aircraft through HK platform in near future

# 15 To accelerate the path of Hong Kong to become an aircraft global leasing Hub

• More works for the next steps:

• Expanding the double tax treaty network: the current tax treaty network of Hong Kong is relatively limited, with only 38 double taxation agreements signed

• Cape Town Convention: The Hong Kong Government may consider exploring with the Central Government to extend the application of the Convention to Hong Kong, which will reduce risks for creditors, and consequently bringing down the operating costs to debtors, through the resulting improved legal certainty

• Reforms of aviation financing policy: negotiate with banks and Hong Kong Monetary Authority to adjust aviation financing rules in terms of maturity period, amount and product diversification

• Reforms of listing rules: attract more international aircraft lessors to list in HK and enabling the listing of aircraft securitisation products

• Talent Nurturing: Aviation financing training to improve the aircraft leasing and aviation financing community’s understanding and introduce more aviation related professionals to HK

# 16 To forge a globally competitive integrated aircraft leasing platform with mainland FTZs

Complementary

Hong Kong - Highly Mainland FTZs – Established globalised edge domestic leasing platform

Q Share experience to bring down operating costs of aircraft lessors and airlines and properly handle in case of default risks Q Encourage more mainland lessors’ to set up operation in Hong Kong with simplified application procedures, extending their overseas business

To forge a integrated aircraft leasing platform that is competitive globally

Support “One Belt One Road” initiative

# 17 Welcome to join us in Hong Kong!

Full value-chain aircraft solutions provider

www.calc.com.hk