CALC 2016 annual results achieve record high

China Aircraft Leasing Group Holdings Limited, a full value-chain aircraft solutions provider for airlines globally, is pleased to announce the Group’s annual results for the year ended 31 December 2016.

Financial Highlights

• Total revenue and other income increased by 58.0% to HK$2,448.1 million on the back of continued expansion of the aircraft leasing business and gains from the disposal of finance lease receivables.

• Net profit grew 67.9% to HK$638.4 million.

• Basic earnings per share increased by 58.6% to HK$1.009.

• Return on average shareholders’ equity increased by 5.2 percentage points to 24.4%.

• Total assets increased by 29.0% to HK$30,900.2 million as a result of a larger fleet size.

• Gearing ratio dropped by 3.1 percentage points to 83.6%.

• Completed the disposal of the finance lease receivables of 14 aircraft, which constitutes a recurrent part of the Group’s business.

• Declared a final dividend of HK$0.39 per share (2015: HK$0.18 per share), bringing the total dividend for the year ended 31 December 2016 to HK$0.53 per share (2015: HK$0.22 per share).

• The Group plans to adopt a new dividend policy, which targets to increase its dividend payout ratio from 30% to 50-60%, in order to attract long-term investors

Business Review

Implemented Globalization Strategies and Expanded Fleet

• Delivered 18 aircraft in 2016. Fleet size rose to 81 aircraft with an average age of less than four years and an average remaining lease term of nine years.

• The Group’s client base increased by five airlines to 16 and CALC expanded its global footprint to cover Europe, Southeast Asia, Japan and the US.

• The Group maintained a 100% aircraft lease occupancy rate in 2016.

• An order book of 92 aircraft with Airbus.

• The Group expects to deliver at least 19 aircraft in 2017 and to expand its fleet to not fewer than 173 aircraft by 2022 based on its current order of commitments (not including aircraft transactions under ARI).

Expanded Global Footprint

• Delivered two aircraft to the Group’s first European client, Pegasus Airlines of Turkey.

• Delivered four aircraft to Jetstar Pacific Airlines, the Group’s first client in Southeast Asia.

• Entered the Japanese market by signing an aircraft lease agreement with ANA Holdings.

• Expanded into the North America market through an aircraft lease agreement with Hawaiian Airlines.

Enhanced Financing Flexibility with New Channels and Asset Structures

• The Group continued to explore a variety of onshore and offshore financing channels that will provide flexibility for the Group’s sustainable development and support its globalization strategy.

• The Group issued its first and second senior unsecured US dollar bonds of US$600 million in aggregate.

• Launched Asia’s first syndicated loan of US$195 million for financing pre-delivery payments of aircraft.

• In order to optimize its financial position, the Group repurchased convertible bonds with a face value of HK$581.9 million in July. China Everbright Financial Investment Limited continues to hold the remaining HK$310.3 million convertible bonds.

• The Group completed a share placement of 40,000,000 new shares at HK$8.00 per share in September.

• The Group completed its first Japanese Operating Lease with Call Option (“JOLCO”) financing arrangement in relation to two new Airbus A320 aircraft delivered to Turkey’s Pegasus Airlines in June 2016, marking the first JOLCO for airline lease in Turkey.

• The Group issued a medium-term note in China of RMB330.0 million, which was rated AA+ by China Cheng Xin International Credit Rating Co. Ltd.

Strengthened Group’s Downstream Aviation Value Chain

• In 2016, Aircraft Recycling International Limited, a member company of CALC and the first service provider of total aircraft solutions for aging aircraft in Asia, completed its first large-scale aircraft leasing transaction through the signing of a sale-and-leaseback agreement with Sichuan Airlines for four old aircraft (one under a joint venture) aged approximately 12 years old.

CALC holds 48% equity interest in ARI.

• ARI also won bids for six Boeing 737-700 aircraft from Xiamen Airlines in late 2016, all of which were aged 16-18 years old. The deal was closed in March 2017.

• In order to provide aircraft full-life solutions, the Group has been building Asia’s first aircraft recycling center in Harbin, China, with phase I of the project to commence operations in 2017.

Mr. CHEN Shuang, Chairman of CALC, said, “The successful disposal of finance lease receivables and business expansion recorded rapid growth in 2016. This strong growth and the Group’s excellent performance have reaffirmed our strengths and reinforced our confidence in future development. With a notable expansion of our client base and the increase of our global footprint, we are well positioned to further develop into a world-class aircraft service provider globally.”

Mr. Mike POON, Chief Executive Officer of CALC, added, “In 2016, we took full advantage of the opportunities presented by the market, and enhanced our position as a leading full value-chain aircraft solutions provider by proactively implementing our globalization strategy and fleet expansion plan.

“ARI’s first sale-and-leaseback deal, together with its first aged aircraft purchase transactions, highlights our first-mover advantages as Asia’s first full value-chain aircraft solutions provider, and validates our unique operating model. We intend to maintain a relatively attractive dividend payout ratio for shareholders on a long-term basis. In addition, ARI recently completed the acquisition of a 100% equity interest in Universal Asset Management, Inc. (“UAM”), a provider of commercial aviation asset management, aircraft recycling services and component sales based in Tennessee in the United States. ARI will gain immediate access to the influence of UAM’s strong brand, extensive clientele and professional team to forge ahead with its globalization strategy.

“Looking ahead, we see the demand for full value-chain aircraft solutions increasing as airline fleets continue to expand, age and retire. With the aircraft disassembly center to commence operations soon, we are well placed to deliver profitable growth and create excellent shareholder value in the future.”