CALC Delivers Robust 2017 Results in a Year of Transition

Editor -
  • Total Lease Income and Other Income Surge 18.1% to HK$2,891.6 Million
  • Net Profit Up 15.1% to HK$734.7 Million while
  • Dividend Payout Ratio Reaches 55.1%

Hong Kong – 23 March 2018, CALC (the “Group”, SEHK stock code: 01848), a full value-chain aircraft solutions provider for global airlines, is pleased to announce the Group’s annual results for the year ended 31 December 2017.

Financial Highlights
• Total lease income and other income increased by 18.1% to HK$2,891.6 million supported by the continued expansion of the aircraft leasing business and successful implementation of its globalization strategy.
• Net profit grew 15.1% to HK$734.7 million, while basic earnings per share were HK$1.088.
• Gearing ratio dropped by 1.3 percentage points to 82.3%.
• Final dividend increased by 7.7% to HK$0.42 per share. Full year dividend incremented by 13.2% to HK$0.60 per share, representing a dividend payout ratio of 55.1% (2016: 52.5%).

Business Review
Fleet Expansion Backed by a Strong Order Book and an Accelerating Globalization Initiative
• The Group added 26 aircraft in 2017, the largest annual recorded increase in CALC’s history, expanding its fleet to 107 aircraft as of 31 December 2017.
• Of the 26 deliveries in 2017, 15 were leased to non-mainland carriers, growing CALC’s overseas client share to 28% as of 31 December 2017 from approximately 20% a year earlier. As of 31 December 2017, our client portfolio included 27 airlines spreading across 13 countries and regions.
• In 2017, the Group made forays into new markets such as Japan, Thailand, Malaysia and Indonesia in the Asia Pacific region, as well as Spain and Russia in Europe, and the US and Chile in the Americas.
• The Group placed its first purchase order with Boeing for 50 new 737 MAX series aircraft. This order includes 15 of the 737 MAX 10 model, making CALC one of the launch customers of this latest edition.
• The Group purchased a total of 108 aircraft in 2017, with the total backlog for new aircraft orders reaching 193 aircraft, including pending deliveries of 143 from Airbus and 50 from Boeing.
• The Group continued to maintain one of the youngest and most modern fleets in the industry with an average age of 3.7 years and an average remaining lease of 8.4 years.

Diversified Financing Channels to Boost Flexibility
• CALC raised a total of US$3,242 million through diversified financing channels.
• The Group launched China’s first listed asset-backed security (“ABS”) denominated and settled in foreign currency, and the first aircraft lease receivable ABS, which was listed on the Shanghai Stock Exchange in January 2018.
• CALC took advantage of the low interest rate environment – before US interest rate hikes – and issued senior unsecured bonds to the value of US$500 million, consisting of five-year US$300 million and seven-year US$200 million bonds bearing coupon rates of 4.7% and 5.5% respectively.
• The Group closed its first unsecured syndicated loan with a 4.5-year maturity, for financing or refinancing part of the Pre-Delivery Payments (“PDP”) for aircraft acquisition.
• Established a US$3 billion senior unsecured medium-term note (“MTN”) program.

Continued Downstream Expansion to Entrench its Position as a Full Value Chain Solutions Provider
• With CALC’s 48% equity interest, in March 2017 Aircraft Recycling International Limited (“ARI”) completed the acquisition of 100% equity interest in Universal Asset Management, Inc., one of the world’s leading global diversified aviation solutions providers in the US.
• ARI completed its first aircraft trading transaction for six aircraft and carried out its first engine purchase and leaseback transaction, involving four brand new CFM56-7B26 engines in 2017.
• The first phase of construction of ARI’s aircraft recycling facility in Harbin has been completed.

Transitioned towards an Asset-light Business Model with a New Platform
• CALC embarked on a new phase of corporate development with the objective of adopting an asset-light approach in this traditionally capital-intensive industry.
• The new business model paves the way for the Group to turn over its capital more efficiently, which in turn will enable CALC, as an asset manager, to scale up aircraft assets under management with greater flexibility going forward.
• The Group is establishing an aircraft investment vehicle which mainly manages the overseas fleet portfolio. This new platform complements the current arrangement of disposals of finance lease receivables, which mainly involve leases attached to airlines in mainland China.

Mr. CHEN Shuang, Chairman of CALC, said, “Last year was a challenging yet fruitful one for CALC. Riding on its unique business model and all-around capabilities, CALC is well positioned to tap the vast potential of the next wave of market developments. As one of the few lessors established and headquartered in Hong Kong, CALC is set to benefit from the city’s newly-enacted concessionary tax regime dedicated to aircraft leasing. We also stand behind the concerted effort to develop Hong Kong into an international aircraft leasing and aviation hub. Looking ahead, CALC will be playing an important role in carrying out the mission of China’s One Belt One Road (“OBOR”) initiative and supporting China Everbright Limited’s future aviation silk road fund and China’s growing aviation industry.”

Mr. Mike POON, Chief Executive Officer of CALC, added, “CALC is proud to have delivered on its vision of providing full aircraft life-cycle solutions for global airlines in 2017. We have transformed from one of the leading aircraft lessors in Asia into an international full value-chain aircraft solutions provider. To create sustainable growth, CALC undertook a series of transformational initiatives that involved ecosystem innovation for aircraft solutions throughout the year. With the asset-light business model well in place, we will continue to carry out CALC’s vision: to provide value-added aircraft solutions, maximize value in every part of the aircraft value chain for business partners, and implement our strategy to grasp successful results in the future.”