Information MEMORANDUM ALAFCO Aviation Lease And Finance Co. KSCC Mr. Ahmad A. Alzabin Vice Chairman and Chief Executive Officer The 6th Forum for Listed Companies and Analysts Kuwait 20 May 2014
Core Business Alafco specializes in its core business of aircraft leasing with a Vision to be one of the most successful and prominent aircraft leasing companies in the world. It offers the following products: Operating leases Sale & lease back (SLB) Lease management solutions 1
Attractiveness of Core Business Benefits from the projected long-term growth in air travel and aircraft demand. Aircraft Leasing - a growing trend in the industry. Global reach, diversified customer base not dependent on a single market. Aircraft are movable assets and can be transferred (unlike real estate) to airline customers among any of world regions during times of distress. Air transport is the most important mode of transport, commanding a 51% share of the global transport market. 2
Resilience of the Industry source Ascend; sourcing IMF / Ascend Flightglobal Fleet Forecast Alafco operates in the air travel industry which is resilient and grows consistently (doubling approximately every 15 years) despite short term adversities. Ascend has forecasted that there will be over 33 thousands new aircraft deliveries in coming 20 years. 3
Aircraft Leasing Market Source Boeing The leasing market continues to grow. The current share of world fleet on lease is expected to grow to 50% by 2020. 4
Investment in Aircraft Source - Ascend Source Ascend Ascend Aircraft Investment Index vs. Comparative Indices Aircraft are a good investment 5
Business Model Acquire aircraft that are liquid such as Airbus A320 and Boeing B737 (narrow body) that are widely operated in the world and are easy to place with customers and move them to other customers at the end of lease. When a good opportunity arises, we acquire wide body aircraft as well on a selected basis. Timing is critical when acquiring aircraft as this impacts the aircraft residual value and return on investment. We invest early in the product life cycle - ordering new technology aircraft, obtaining favorable delivery slots and benefitting from the long useful life. Aircraft acquired with 20% equity and 80% financed by international banks and US and European export credit agencies. Aircraft are leased to credit worthy airlines on long term Sharia compliant leases. 6
Achievements Alafco has now successfully operated in the aircraft leasing market for over 12 years. All new ordered aircraft have been delivered to customers. Alafco was successful in obtaining financing during difficult times., funding 8 new Boeing and 27 new Airbus aircraft deliveries. Remarketed 26 aircraft by either releasing or selling them between 2001-2013. Possess in-house marketing, technical, legal and finance capability. Reported profit every year since 2000. 7
in million KD Financial Results Financial Figures From 2003-2013 60 50 Revenue (CAGR) +26.3% 40 30 20 Operating Profit (CAGR) +28.8% Net Profit (CAGR) +23.2% 10 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Fiscal Year * CAGR is Compound Annual Growth Rate Revenue Operating Profit Net Profit Consistently meet or exceed financial targets. Declaring dividend every year since listing. Recorded double digit average growth in Revenue, Operating profit and Net Profit. 8
Portfolio Distribution Current portfolio comprised of 47 current generation aircraft on lease to 14 customers in 12 countries. Alafco also manages 3 aircraft for an investor. 21% By Region 2% 6% While Alafco operates its business on a global basis, its primary focus is on emerging markets in particular Middle East and Asia-Pacific region (71% of its current portfolio). 30% 41% Africa Middle East Asia-Pacific Europe Latin America 9
Growth Opportunity source Ascend; sourcing IMF / Ascend Flightglobal Fleet Forecast Middle East and Asia-Pacific region expected to lead growth in world traffic by 2032. We target airlines in the Middle East and Asia-Pacific and currently lease 71% of our portfolio in these regions. 10
Aircraft Acquisition Strategy 85 A320NEO 20 B737-8MAX 12 A350-900XWB The company plans to acquire up to 15 narrow-body aircraft from now till 2016 through Sale and Leaseback. Positioning the company for sustained long term growth by ordering 117 new aircraft from Boeing and Airbus to lease to global airlines 2017-2021. Alafco targets a portfolio of over 100 owned aircraft by end of decade 11
New technology aircraft ordered by lessors Strategic Aircraft Orders Order Book as a percentage of current fleet Source - Ascend Among the lessors around the world: Alafco ranked FIRST in terms of order book as a percentage of current fleet. Alafco ranked FOURTH in terms of new technology aircraft order. 12
Conclusion Key attributes of high quality global aircraft lessors are as follows: Diversified asset and customer base A strong order book, which provides highly visible earnings growth A well-capitalized company A strong financial track record An experienced management team Alafco possesses these attributes and is well positioned to create wealth for its shareholders by realizing its growth plans 13
Thank You
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