TIDMAA4
RNS Number : 3608G
Amedeo Air Four Plus Limited
26 July 2021
26 July 2021
AMEDEO AIR FOUR PLUS LIMITED (the "Company")
Annual Results for the year ended 31 March 2021
Annual Report
The Board of the Company is pleased to announce its results for
the year ended 31 March 2021.
To view the Company's Annual Financial Report please follow the
link below:
http://www.rns-pdf.londonstockexchange.com/rns/3608G_1-2021-7-23.pdf
In compliance with DTR 4.1, reproduced below is the full text of
the annual financial report. The report will also shortly be
available on the Company's website, http://www.aa4plus.com/.
Investor Call
The Company also today announces that a webinar will be held on
18 August 2021 at 2.00 p.m. BST to provide shareholders with an
update on the Company along with the opportunity to ask questions
during a Q&A session.
Shareholders who wish to attend the webinar should register
their interest by contacting JTC at: GSYCoSec.Listed@jtcgroup.com
before 5:00 BST on 13 August 2021.
For further information, please contact:
JTC Fund Solutions (Guernsey) Limited
+44 (0) 1481 702 400
Liberum Capital Limited
Chris Clarke / Darren Vickers / Owen Matthews
+44 (0) 20 3100 2000
LEI: 21380056PDNOTWERG107
Amedeo Air Four Plus Limited
Consolidated
Annual Financial
Report (audited)
For the year ended 31 March 2021
STRATEGIC REPORT Summary Information
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Trading SFS
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Ticker AA4
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BKY41C6 (Effective from 28 September
SEDOL 2020)
BWC53H4 (Prior to compulsory redemption
on 28 September 2020)
GG00BKY41C61 (Effective from 28 September
ISIN 2020)
GG00BWC53H48 (Prior to compulsory
redemption on 28 September 2020)
LEI 21380056PDNOTWERG107
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Reporting Currency Sterling
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Launch Date / Share Price 13 May 2015 / 100 pence*
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Share Price 24.00 pence (as at 31 March 2021)
23.50 pence (as at 22July 2021)
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Market Capitalisation GBP104 million (as at 31 March 2021)
GBP102.02 million (as at 22 July
2021)
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Target Dividend The original target of 2.0625 pence
per Share per quarter (8.25 pence
per annum) was suspended on 6 April
2020
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Dividend Payment Dates January, April, July, October
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Year End 31 March
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Stocks & Shares ISA Eligible
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Aircraft Registration Numbers A6-EEY, A6-EOB, A6-EOM, A6-EOQ, A6-EOV,
A6-EOX, A6-EPO, A6-EPQ, HS-THF, HS-THG,
HS-THH, HS-THJ
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Website www.aa4plus.com
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*On 28 September 2020, 214,083,243 Shares (33.33%) were compulsorily
redeemed by the Company at 46 pence per Share.
CHAIRMAN'S STATEMENT
THE PAST YEAR
The past financial year has been challenging for everyone
involved with the Company. The share price continues to languish,
we have had to deal with requests by our lessees for rent
deferrals, government mandated closure of borders and the
international travel which widebody aircraft were designed for, the
continuing deterioration in prospects for the A380 notwithstanding
Emirates support for them, the bankruptcy of Thai Airways and the
cessation of rent from them from May onwards, the termination of a
costly advisory contract, and like everyone else, trying to
transact the Company's business by Zoom. The saviour of Vaccine
roll out is inexplicably slow in some places, such as Australia, by
contrast the USA and the UK have been most impressive. There will
be no wholesale restoration of international travel without it.
The process of rehabilitation of Thai Airways continues and our
assumption is that resolution will be achieved during Q3 2021. On
15 June 2021, the Court rendered its order to approve the
Rehabilitation Plan and appointed the Plan Administrators, who will
begin implementing the terms of the Plan. The Asset Manager is in
negotiations to agree the binding lease amendment documentation
with the airline, on a power by the hour basis initially, before
moving to a fixed rate lease for the remaining term of the lease
including an extension of the lease from the original term. The
Company targets Q3 2021 to document and effect the restructuring of
debt with its lenders. As soon as the documentation is agreed and
signed, we will inform shareholders.
DIVIDS
Whilst two dividends were declared and paid in October 2020 and
January 2021, the Board took the decision to suspend quarterly
dividends until the rehabilitation of Thai Airways and agreement
with the Company's lenders was complete, which is currently
expected in Q3 2021. We were able to return to shareholders
c.GBP98.5 million on 28 September 2020 by way of a compulsory
redemption of one-third of the ordinary shares in the capital of
the Company at a redemption price of 46 pence per each redeemed
share. Due to the diversity of our shareholder base the compulsory
redemption route was considered the most equitable way to treat all
shareholders fairly. This resulted in the redemption of 214,083,243
Shares. The Board is committed to reinstating a sustainable
dividend policy as soon as is practicable.
Following completion of the rehabilitation, as well as agreement
with the Company's lenders, the Board will assess what income is to
be received and debt service is to be maintained with our lenders.
The Board will then assess when a regular dividend will be
reinstated and in what amount.
BOARD COMPOSITION AND DIVERSITY
The Board mandated BoardAlpha Limited to carry out a review of
the Board's effectiveness. The report was positive and made
suggestions which will be implemented in the course of this year.
The Board is already very aware that it lacks female
representation, notwithstanding the powerful representation of
women in management roles at both Amedeo Limited and JTC Fund
Solutions (Guernsey) Limited. In addition, a new independent
director to assume responsibility for the Audit Committee is
required. Active independent searches commenced earlier in the year
and our intention is to make two new appointments shortly.
John Le Prevost resigned as a director of the Company, for
personal reasons, with effect from 21 June 2021. On behalf of the
Board, I would like to thank John for his service and valuable
contribution to the Company and we wish him all the best in his
future endeavours.
IMPAIRMENTS
The recent crisis has had a negative, and I would say permanent,
effect on widebody values, particularly the A380. Our fleet of 12
aircraft has suffered an aggregate USD199m charge. The Board has,
with Amedeo's help, carried out extensive analysis on likely future
values, a difficult exercise given the lack of reliable data, and
the ability of Subsidiaries to meet their future obligations.
The A350s have suffered barely any reduction in base value. It
is still the case that no arm's length secondary trade, either for
sale or lease, has taken place for the A380 and the worldwide fleet
remains 80% grounded. The numbers of operators who say they intend
to return such aircraft to service is small. Therefore
availability, whether of aircraft, engines or spare parts, will
exceed demand with the inevitable effect on values and prices. Our
leases have at least 6 years left to run and opportunities may
emerge.
The B777-300ER has also suffered due to its size, its high
engine overhaul costs and the perception that the modern fuel
efficient twins, such as the B787 and A350, are the future.
However, there is still a wide user base and a viable conversion
programme has emerged. It is also clear that the 777-X will be
delayed but not as far out as the lease end date for our aircraft
in 2028.
FINANCIAL SUMMARY
Financial Year 2020-21 2019-20 2018-2019
Total Rental Income (GBP) 201,374,560 256,560,337 254,648,768
-------------- -------------- --------------
Net Asset Value Per Share
(Pence) 71.80 98.43 109.70
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Distributions Made (GBP)(1) 11,346,419 52,985,622 52,985,621
-------------- -------------- --------------
Outstanding Shares 434,141,757 642,250,000 642,250,000
-------------- -------------- --------------
Outstanding Debt (GBP) 1,033,556,018 1,233,244,765 1,574,112,490
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Change in Portfolio Residual
Value(2) -20% -16% -1%
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I should like to add here that the commitment and application
brought by my fellow directors to managing the numerous challenges
faced by your Company has been impressive. However hard the
decisions have been, however unpopular, there has always been a
full quorum of all directors on the dozens of Zoom and other calls
needed.
In a similar vein, Amedeo Limited, our asset manager, has worked
tirelessly to protect our interests. Their experience in managing
distressed situations has been invaluable.
Liberum Capital Limited joined us as our Corporate Broker and
has quickly established good and cooperative working relationships
with the Board and Amedeo Limited. We have noted a useful
improvement in information flow, particularly a broad and thorough
feedback exercise with our shareholders which has helped us focus
on actual expectations rather than our assumptions as to what they
might be.
We note that Emirates has recently published its annual
financials. Whilst these make sober reading, it is clear that their
energy in devoting their 777 fleet to cargo has helped stem the
losses from the rest of their fleet and they benefit from a
committed and supportive Government shareholder.
Finally, may I also thank our shareholders for their patience
and support. I am hopeful that the fast uptake in domestic flying
which is evident in China and the USA, where domestic traffic is
back to 83%, will be copied across into international long haul
travel, albeit at a slower pace.
Robin Hallam
Chairman
Date: 23 July 2021
(1) Interim dividends of 1.15 pence and 1.50 pence per
Redeemable Ordinary Share in respect of the financial year ending
31 March 2021
(2) Based on appraisal assumptions used for each respective
financial year
Asset M a nager's Report
O n the invitation of the Directors of the Company, the
following c o m mentary has been provided by A medeo Limited as A
ss et Manager of the Company and is provided without any warranty
as to its accuracy and without any liability incurred on the part
of the Company, its Directors and officers and service providers.
The commentary is not intended to constitute, and should not be
construed as, investment advice. Potential investors in the Company
should seek their own independent financial advice and may not rely
on this communication in evaluating the merits of an investment in
the Company. The commentary is provided as a source
of information f or shareholders of the Company but is not attributable to the C o mpany.
AA4P PORTFOLIO UPDATE
As set out in the Company's announcement on 19 May 2021, the
meeting to vote on the Rehabilitation Plan (and amendments to it)
occurred as scheduled on 19 May at 9am Bangkok time by way of a
virtual meeting. In accordance with the Thailand Bankruptcy Act,
the Rehabilitation Plan proposed by the Planners along with certain
proposed amendments to the Rehabilitation Plan tabled by the
Planners and certain creditors, was approved by the creditors
committee. On 15 June 2021, the Court rendered its order to approve
the Plan and appointed the Plan Administrators, who will have
rights, duties, and powers to manage and operate Thai Airways in
accordance with the conditions and terms stipulated in the Plan.
The Asset Manager is in negotiations to agree the binding lease
amendment documentation with the airline, on a power by the hour
basis initially, before moving to a fixed rate lease for the
remaining term of the lease including an extension of the lease
from the original term. The Company is targeting Q3 2021 to
document and effect the restructuring of debt with its lenders.
Emirates continues to fulfil its current lease obligations. The
airline has released its 2020/21 financial statements at the end of
Q2 2021, highlighting its first annual loss in over 30 years,
however the carrier also ended the year with a much-improved
passenger network and strong cash reserves of AED 15.1 billion (USD
4.1 billion(3) ) that will help its recovery. The Company has given
permission to Emirates to add "premium economy" to three of its
A380 aircraft. MSNs 201, 206, & 208 have been selected by
Emirates to undergo the modification and the airline will bear the
cost in full. The Company is encouraged by this step forward in
Emirates' A380 programme and believes that the cabin refurbishment
will enhance the value of its aircraft.
(3) US$ Figures are converted at US$ 1 = AED 3.67
AMEDEO'S ASSET INSPECTION REPORT TO AA4P
The utilisation figures below represent the totals for each
aircraft from first flight to 31 May 2021
Lessee Model MSN REG Delivery Lease Flight Flight
Date Expiry Hours Cycles
Date
Emirates A380-861 157 A6-EEY 04/09/2014 04/09/2026 23,633 3,761
------------ ------ ------- ----------- ----------- ------- --------
A380-861 164 A6-EOB 03/11/2014 03/11/2026 23,475 3,773
--------------------------- ------ ------- ----------- ----------- ------- --------
A380-861 187 A6-EOM 03/08/2015 03/08/2027 23,993 2,210
--------------------------- ------ ------- ----------- ----------- ------- --------
A380-861 201 A6-EOQ 27/11/2015 27/11/2027 17,707 2,799
--------------------------- ------ ------- ----------- ----------- ------- --------
A380-861 206 A6-EOV 19/02/2016 19/02/2028 19,331 3,098
--------------------------- ------ ------- ----------- ----------- ------- --------
A380-861 208 A6-EOX 13/04/2016 13/04/2028 16,110 2,543
--------------------------- ------ ------- ----------- ----------- ------- --------
B777-300ER 42334 A6-EPO 28/07/2016 28/07/2028 18,498 4,560
--------------------------- ------ ------- ----------- ----------- ------- --------
B777-300ER 42336 A6-EPQ 19/08/2016 19/08/2028 18,218 4,188
--------------------------- ------ ------- ----------- ----------- ------- --------
Thai Airways A350-900 123 HS-THF 13/07/2017 13/07/2029 12,930 2,189
------------ ------ ------- ----------- ----------- ------- --------
A350-900 130 HS-THG 31/08/2017 31/08/2029 12,516 2,012
--------------------------- ------ ------- ----------- ----------- ------- --------
A350-900 142 HS-THH 22/09/2017 22/09/2029 12,266 2,018
--------------------------- ------ ------- ----------- ----------- ------- --------
A350-900 177 HS-THJ 26/01/2018 26/01/2030 10,745 1,764
--------------------------- ------ ------- ----------- ----------- ------- --------
Recent Technical Activity:
Ø No significant technical events have been reported by Emirates
for this period.
Ø No significant technical events have been reported by Thai
Airways for this period.
Ø Emirates aircraft have been grounded from the end of March
2020, with the exception of the B777-300ER aircraft and A380's MSN
187 & 206.
Ø Thai Airways aircraft have undergone the relevant checks and
confirmed as serviceable and seen limited operations, with all
aircraft returning to full revenue service.
Ø Emirates fleet last operated as per the dates listed
below:
o MSN 157: 12 July 2021 (Positioning Flight from DXB - DWC)
o MSN 164: 19 March 2020
o MSN 187: In service (last revenue flight on 20 July 2021)
o MSN 201: 18 August 2020 (Positioning Flight from DWC - DWC)
o MSN 206: In service (Last revenue flight on 20 July 2021)
o MSN 208: 26 August 2020 (Positioning Flight from DWC - DWC)
o MSN 42334: In service (Last revenue flight on 20 July 2021)
o MSN 42336: In service (Last revenue flight on 20 July 2021)
Ø Thai Airways fleet last operated as per the dates listed
below:
o MSN 123: In service (Last revenue flight on 12 July 2021)
o MSN 130: 03 June 2021
o MSN 142: In service (Last revenue flight on 18 July 2021)
o MSN 177: 14 February 2021
Industry Update: COVID-19(4)
On 3 February 2021, IATA announced full-year global passenger
traffic results for 2020 showing that demand (RPKs fell by 65.9%
compared to the full year of 2019. IATA describes this as by far
the sharpest traffic decline in aviation history. International
passenger demand in 2020 was 75.6% below 2019 levels, while
capacity, measured in ASKs, declined 68.1% and load factor fell
19.2 percentage points to 62.8%. Unsurprisingly, domestic demand in
2020 was slightly better than international demand, but was still
down 48.8% compared to 2019 levels, while capacity contracted by
35.7% and load factor dropped 17 percentage points to 66.6%.
In June, IATA published the latest data from April performance
showing that total demand for air travel in April 2021 (measured in
revenue passenger kilometres or RPKs) was down 65.4% compared to
April 2019. That was an improvement over the 66.9% decline recorded
in March 2021 versus March 2019. The better performance was driven
by gains in most domestic markets. Total domestic demand was down
25.7% versus pre-crisis levels (April 2019), much improved over
March 2021, when domestic traffic was down 31.6% versus the 2019
period. All markets except Brazil and India showed improvement
compared to March 2021, with both China and Russia reporting
traffic growth compared to pre-COVID-19 levels.
Willie Walsh, IATA's Director General, claims that "The
continuing strong recovery in domestic markets tells us that when
people are given the freedom to fly, they take advantage of it." He
mentioned that international travel remained stagnant due to travel
regulations, however offered optimism that there will be "a similar
resurgence in demand" to domestic travel once restrictions are
relaxed and global vaccination rates improve.
Despite the underwhelming results in 2021 thus far, IATA
estimates that travel demand (RPKs) will recover to 43% of 2019
levels over the year. While that is a 26% improvement on 2020, it
is far from a recovery. Domestic markets will improve faster than
international travel. Overall passenger numbers are expected to
reach 2.4 billion in 2021. That is an improvement on the nearly 1.8
billion who travelled in 2020, but well below the 2019 peak of 4.5
billion. Industry revenues are expected to total USD 458 billion.
That's just 55% of the USD 838 billion generated in 2019 but
represents 23% growth on the USD 372 billion generated in 2020.
(4) As of publication of this report.
EMIRATES GROUP
2020/21 Financial Results (5) :
Emirates did well to design and implement bio-safety measures
across operations to gradually restore its passenger network and
hub connectivity from mid-June 2020 when the UAE re-opened its
borders. By the 31 March 2021, Emirates increased its flight
network to over 120 destinations across the globe, an impressive
achievement considering that the airline recorded zero scheduled
passenger flights at the start of its financial year. Despite its
efforts, Emirates recorded its first loss in over 30 years, during
the 2020/21 financial year.
Due to ongoing pandemic-related flight and travel restrictions,
the airline reported a loss of AED 20.3 billion (USD 5.5 billion)
after last year's AED 1.1 billion (USD 288 million) profit, and a
negative profit margin of 65.6%. Emirates' total revenue for the
financial year declined 66% compared to AED 30.9 billion (USD 8.4
billion) recorded during the same period last year. Emirates
focused their attention towards preserving cash and ultimately
ended the year holding AED 15.1 billion (USD 4.1 billion) in cash
assets. The airline claims that its cash position would have been
stronger if not for a one-time pay-out of AED 8.5 billion (USD 2.3
billion) for customer refunds. Emirates was well supported by its
biggest shareholder, the Government of Dubai, and ultimately
received a capital injection of AED 11.3 billion (USD 3.1 billion)
during the year.
Emirates carried 6.6 million passengers (down 88% from 56.2
million in 2019-20) in 2020-21, with seat capacity down by 83%. The
airline reports a Passenger Seat Factor of 44.3%, compared with
last year's passenger seat factor of 78.5%; and a 48% increase in
passenger yield to 38.9 fils (10.6 US cents) per Revenue Passenger
Kilometre (RPKM), due largely to a favourable route mix, fares and
continued healthy demand for premium seats.
Emirates SkyCargo did very well to respond to new demand in a
changed global marketplace, and ultimately contributed to 60% of
the airline's total transport revenue. It supplemented its existing
freighter capacity by bringing into service 19 modified Boeing
777-300ER, which acted as "mini freighters". This helped Emirates
to upscale and take advantage of the strong demand in air freight
and end the financial year with revenue of AED 17.1 billion (USD
4.7 billion), an increase of 53% over last year.
In February 2021, Emirates' president Sir Tim Clark stated that
the carrier will recover from the COVID-19 crisis without any
fundamental changes to its business model. Rather, Emirates intends
to use its mix of widebody aircraft to take advantage of
anticipated supply-side shortages in medium- and long-haul sectors
in the coming years. At the same time, Sir Tim Clark walked back
his prediction according to which medium- and long-haul
international traffic would ramp up significantly in July and
August this year but expects such developments in the last quarter
of 2021: "At the end of the day, my view is that once we are
through this, demand for air travel will return, consumer
confidence will return."
As of the publishing of the annual results, Emirates' order book
for 200 aircraft remains unchanged as the airline is firmly
committed to its strategy of operating a modern and efficient fleet
that is in line with its "Fly Better" brand. However, during a
webinar that took place on 8 April, Sir Tim Clark publicized that
Boeing's 777X programme is in "a state of disarray". Sir Tim Clark
stated that he expects the jets will begin arriving "either [at]
the back end of '23, '24 or possibly even '25", over five years
later than scheduled. He also added that the absence of the
aircraft is causing difficulties for the airline as it assesses its
fleet and network strategy for the coming years. Emirates had
planned to begin replacing some of its A380s with 777-9s, however
given the delays, the timeline "has been shifted to the right".
Amid the uncertainty, the Airbus A380 will potentially play an
ongoing role at the carrier for at least another 15 years. The
double-deck type has formed the backbone of the airline's fleet for
over a decade, and Clark highlights that pre-pandemic the A380
accounted for 85% of profits and was "always full", proving popular
across all classes, something that "we see continuing".
(5) US$ Figures are converted at US$ 1 = AED 3.67
Thai Airways International
As detailed in the AA4P Portfolio Update section above, the
airline, with the help of its Planners, submitted the
Rehabilitation Plan to the Official Receiver on 2 March 2021. The
Court will now review the extensive details before providing a
decision that will likely be announced in a hearing during Q3 2021.
Furthermore, on 15 June 2021, the Central Bankruptcy Court rendered
its order to approve the Plan and appointed the Plan
Administrators, who will have rights, duties, and powers to manage
and operate Thai in accordance with the conditions and terms
stipulated in the Plan.
During the first quarter of 2021, Thai Airways published its
annual report for the financial year ending in December 2020. Thai
reported a net loss of 141.2-billion-baht (c. USD 4.5 billion)(6) ,
widening the 12-billion-baht (c. USD 388 million) loss incurred in
2019. The annual loss was the largest ever for a Thai company,
according to data compiled by the Stock Exchange of Thailand.
The airline's losses last year included one-time expenses of
almost 92 billion baht (c. USD 2.9 billion) from an employee
separation plan and impairment losses on aircraft, right-of-use
assets and aircraft spare parts. In efforts to rebuild the
airline's fortunes, Thai is gradually cutting its workforce with
the aim to reduce its current 28,000 workforce by half, paying out
severance along the way. However, the majority of 92-billion-baht
was attributed to impairment loss of 83-billion-baht (c. USD 2.7
billion). At the operational level, Thai incurred a loss of
38.6-billion-baht (c. USD 1.2 billion), far greater than the
10.6-billion-baht (c. USD 340 million) loss suffered in 2019.
In April 2020, the Thai government imposed strict travel
restrictions, causing passenger numbers to drop to unprecedentedly
low figures. In December, the Government of Thailand eased travel
restrictions to allow citizens from 56 countries to visit Thailand
without visa requirements. However, the travellers were still
forced to follow other health safety measures. Given these severe
travel restrictions, Thai and its subsidiaries carried around 5.87
million passengers in 2020, which was a decrease of 76.1% from the
previous year. Capacity (in ASKs) decreased by 73.7% while
passenger traffic (in RPKs) decreased by 78.5%. In its outlook,
Thai notes that vaccines will go some way towards helping the
industry recover, though it notes that its financial performance
for the first half of 2021 will continue to remain "negative".
Thailand faced a third wave of COVID-19 in the initial periods
of 2021, which slowed down Thai's progress on its commercial
operations. Towards the end of April, the government of Thailand
implemented travel restrictions from India over concerns of
imported coronavirus cases. The government also ordered parks,
gyms, cinemas, day-care centres and other venues in Bangkok, the
epicentre of the latest wave of infections, to shut from April 26
until May 9.
The Civil Aviation Authority of Thailand (CAAT) said in an 18
July statement that it would require local airlines to suspend
commercial passenger flights to and from "dark red" zones, which
are provinces classified as having the highest infection risk,
starting 21 July, in line with travel restrictions imposed on these
provinces. In support of the Covid-19 containment efforts by the
government of Thailand, Thai Airways has suspended several domestic
routes from the capital Bangkok until September and its regional
subsidiary Thai Smile will temporarily suspend all of its scheduled
domestic commercial flight operations from 21 July until 3
August
Fortunately, Prime Minister Prayuth Chan-ocha made a statement
in June, mentioning that fully inoculated foreign visitors and Thai
citizens must be allowed entry "without quarantine or other
inconvenient restrictions," and that his goal is to open up the
country within 120 days. He stated that "this decision comes with
some risk because, once the country is open there will be an
increase in infections, no matter the precautions they choose to
take. However, he added that "when we take into consideration the
economic needs of the people, the time has come for us to take that
calculated risk." We will have to wait and see how things progress,
but this is provides hope for the country, that heavily relies on
tourism, and offers positive indication for the upcoming operations
of Thai. There is further optimism after the Government of Thailand
passed the "Phuket Sandbox" initiative, which from 1 July 2021 will
allow free movement on the island for tourists fully vaccinated
against COVID-19, with no self-isolation on arrival. This "sandbox
initiative" is not affected by the tightening of restrictions in
Thailand and tourists will be given a green light to travel
elsewhere in Thailand after 14 days.
(6) US$ Figures are converted at US$ 1 = 30.5923 Thai Baht
ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICY
Introduction
The Board recognises that shareholders now have a growing
interest in the ESG considerations resulting from a company's
business. This report sets out our current policy and approach to
ensuring that the Company's level of engagement on ESG matters
moves towards being commensurate to the size, nature and complexity
of the business.
This Board's current policy is in its infancy as it strives to
address today's ESG considerations within a company which was
established in 2015 on a business model designed to run for twelve
years without interruption. Subsequent acquisitions of aircraft
have pushed that end date out to March 2030.
The Board has adopted a policy to uphold ESG standards where
possible and applicable although recognising that this may be
constrained somewhat by the nature of the Company's activities and
the existing contracts it has already entered into on behalf of
shareholders.
The Company has granted "quiet enjoyment" of its aircraft to its
lessees, Emirates and Thai Airways. Shareholders are invited to
review the environmental and sustainability criteria published by
Emirates on page 14 of their most recent annual report and the
statements made by Thai on their website as further detailed on
page 12.
The Company
The Company is a Guernsey company incorporated on 16 January
2015.
The Company is under the control of its Board on behalf of the
shareholders. All directors are independent and non-executive. The
Board has overall responsibility for the Company's activities
including all business decisions and the declaration of
distributions.
The Company has delegated the following activities to its
appointed service providers:
-- arranging the financing, acquisition and disposal of aircraft
and the management of such aircraft whilst owned by the Group are
delegated to the Asset Manager;
-- arranging meetings with major shareholders and other
shareholders as may reasonably be requested by the Company to
discuss proposed developments in relation to the Company and
providing feedback to the Board has been delegated to the Corporate
Broker;
-- Company secretarial, administration and accounting services
are delegated to the Secretary and Administrator; and
-- share registration services are delegated to the Registrar.
The Company has no executive directors nor employees and for all
purposes its business is deemed to be operating out of its
registered office which is also the office of the Company Secretary
in Guernsey. The Board conducts the Company's business via a series
of meetings held in Guernsey or via a video link.
Sometimes directors are required to travel in the fulfilment of
their duties and, where circumstances allow, travel is kept to a
minimum. Where travel restrictions put in place as a result of the
COVID-19 pandemic permit, the directors are required to travel to
Guernsey on at least a quarterly basis for Board meetings, to the
UK to visit shareholders and service providers as and when required
and very occasionally, to the middle east or Asia to meet the
Assets' lessees.
The Company consequently has a limited physical footprint and
therefore its environmental impact is low.
The Board of Directors
The Board recognises the importance of gender diversity and
ethnic inclusion. The Board will take such considerations into
account whilst searching for a new director. The Company's service
providers also engage a number of executive women who are involved
heavily in the affairs of the Company.
As a Guernsey incorporated company and under the DGTRs of the
UK's FCA the Company is not required to comply with the UK Code but
has instead chosen voluntarily to comply with the provisions of the
AIC Code to the extent that they are considered relevant to the
Group.
The Board has adopted a comply or explain approach to the AIC
Code and exceptions are reported in the Directors' Report section
of this publication.
The Board has considered and determined the following two
additional policies:
-- there are no relevant disclosures to be made with regard to
modern slavery in relation to the Company's own operations; and
-- the Board takes a zero-tolerance approach to bribery and
corruption; and has procured from all service providers their own
similar undertaking.
Finally, the Board monitors potential conflicts of interest
closely and has engaged with its service providers to request them
to do the same and to adopt appropriate policies to deal with such
matters.
The Assets
The principal activity of the Group is to acquire, lease and
then sell aircraft. The Group currently owns six A380-800 aircraft,
two 777-300ER aircraft and four A350-900 aircraft. The six A380s
and the two Boeing 777 aircraft are leased to Emirates and the four
A350 aircraft are leased to Thai Airways.
The nature of the leases entered into with these lessees means
the Company has no influence whatsoever in the use by each lessee
of the relevant aircraft; and each such lease is fixed for twelve
years and is non-cancellable. The terms of each lease were fixed
when they were entered into and afford the lessees quiet enjoyment
of the relevant aircraft for the duration of the initial lease
term; whilst ensuring each aircraft is maintained to the highest
standard and remain as efficient as possible.
The Aviation Industry
The increased focus on climate change and greenhouse gas
emissions, inevitably means that further focus has landed on the
aviation industry and its emissions profile. In this regard the
Company is fortunate to have two responsible flag carrying airlines
as its lessees who each demonstrate on their websites a
considerable amount of concern for their respective businesses'
environmental and social impact. The following links to these
websites explain this:
Emirates = https://www.emirates.com/english/about-us/
Thai Airways =
https://www.thaiairways.com/en_GB/about_thai/company_profile/index.page
The ATAG reports that aircraft flights produced 895 million tons
of carbon dioxide, or 2% of total "human-induced" carbon dioxide
emissions. Among transport sources of carbon dioxide, aviation is
responsible for just 12%, with road emissions comprising the vast
majority at 74%.
ATAG aims for net carbon emissions neutrality from 2020 onwards
and for net carbon emissions to be 50% of 2005 levels by the year
2050. Airframe and engine manufacturers can and will contribute
significantly to this effort.
As an asset owner, the Group is fortunate that its choice of
aircraft were among the most environmentally efficient jet aircraft
in service at the time of acquisition.
In the context of the aircraft the Group owns and their
associated leases, the Board will continue to monitor the
sustainability efforts of the industry and the lessees and will
continue to have regard to environmental concerns when considering
changes in the future to the Group's existing contracts.
BUSINESS MODEL
COMPANY OVERVIEW
The Company is a Guernsey company incorporated on 16 January
2015. The Company operates under the Law and the DGTRs of the UK's
FCA.
All of the Company's Shares have since 13 May 2015 been admitted
to trading on the SFS.
The initial and six subsequent share raisings resulted in the
issue and admission to trading on the SFS of 642,250,000 Shares
issued at an average offer price of 102 pence. On 28 September 2020
the Company compulsorily redeemed 214,083,243 Shares on a one for
three shares held basis as at 25 September 2020 paying a redemption
price of 46 pence per Share redeemed.
As at 22 July 2021, the last practicable date prior to the
publication of this report, the Company's total issued share
capital was 434,141,757 Shares trading at 23.50 pence per Share
giving the Company a market capitalisation of GBP102.02
million.
Investment Objective and Policy
Since launch the Company's investment objective has been to
obtain income returns and a capital return for its shareholders by
acquiring, leasing and then selling aircraft.
To pursue its investments objective, the Company sought to use
the net proceeds of placings and/or other equity capital raisings,
together with debt facilities, to acquire aircraft which it leased
to one of three major airlines. In February 2020 all aircraft
leased to Etihad Airways were disposed of and now the remaining
aircraft are leased either to Emirates or Thai Airways.
Given the current COVID-19 crisis and the devastating affect it
has had upon the long-haul air travel industry, plus the fact that
one of the Group's lessees, Thai Airways is now under bankruptcy
protection, the Board considers it unlikely that in the near term
there will be any further expansion of the Company but rather all
effort is concentrated on managing the current economic challenges
to ensure the Company's long term survival.
Investment Portfolio
As at the financial reporting date of 31 March 2021 the Company
had twelve wholly-owned aircraft owning subsidiaries and two Irish
leasing subsidiaries, see note 1 for further details.
Distribution Policy
The Company aims to provide shareholders with a total return
comprising income from distributions through the period of the
Group's ownership of the Assets and a capital distribution upon the
sale, or other disposition of the Assets.
Up until December 2019 the Group regularly received income in
the form of lease payments and income distributions were made to
shareholders quarterly in accordance with the Company's then target
of a distribution to shareholders of 2.0625 pence per Share per
quarter.
However, on 6 April 2020, as a result of the impact of COVID-19
on the airline industry, the Company announced that the Board had
resolved to temporarily suspend the payment of any kind of
distribution to shareholders, as the Board's priority lay in
preserving the long-term financial stability of the Company for the
benefit of its shareholders and creditors. The Board considered
that maintaining the Company's liquidity was vital and prudent in
doing so.
Whilst two dividends were declared and paid in October 2020 and
January 2021, the Board has taken the decision to suspend quarterly
dividends until the rehabilitation of Thai Airways and agreement
with the Company's lenders are complete which is currently expected
at the end of July 2021. The Board is committed to reinstating a
sustainable dividend policy as soon as is practicable.
Details of special dividends declared by the Board during the
year under review are set out below.
Return of Capital
Following the sale of an Asset the Board may, as it deems
appropriate at its absolute discretion, either return to
shareholders all or part of the net capital proceeds of such sale
(subject to satisfaction of the Solvency Test), or re-invest the
proceeds in accordance with the Company's investment policy,
subject to shareholder approval.
Following the sale in February 2020 of the two aircraft leased
to Etihad Airways, on 23 September 2020 the Company announced the
return to shareholders of GBP98.5 million of the resultant proceeds
by means of a compulsory redemption of one share for every three
shares held as at 25 September 2020 for a payment of 46 pence per
each share redeemed. Accordingly, 214,083,243 Shares were redeemed
and have now been cancelled.
The Asset Manager regularly monitors the market valuations of
the Assets and, subject to any lease obligations, will consider the
most appropriate time for the sale of any one or more of the
Assets. The Board will consider any recommendation from the Asset
Manager as to the sale of any Asset and proceed as the Board
considers appropriate.
Liquidation Resolution
Although the Company does not have a fixed life, the Articles
require that the Board convenes a Liquidation Proposal Meeting in
2029 or such other date as shareholders may approve by ordinary
resolution.
Stakeholders and Section 172
An intention of the AIC Code, to which the Company fully
subscribes, is that the Board should understand the views of the
Company's key stakeholders and describe in the annual report how
their interests and the matters set out in section 172 of the UK's
Companies Act 2006 have been considered in Board discussions and
decision-making.
Such guidance says that the board has a duty to promote the
success of their company for the benefit of the members as a whole
and, in doing so, have regard to:
a. the likely consequences of any decision in the long term;
b. the interests of the company's employees;
c. the need to foster the company's business relationships with suppliers, customers and others;
d. the impact of the company's operations on the community and the environment;
e. the desirability of the company maintaining a reputation for
high standards of business conduct; and
f. the need to act fairly between members of the company .
As an aircraft leasing company, the Company has no employees and
all of the directors are non-executive, so the Board considers that
its key stakeholders are its shareholders and its service
providers.
The Company has managed its relationship with the lessees in the
knowledge that the recent difficulties in air travel have not
arisen due to default by lessees and we have cooperated with them
with a view to overcoming such difficulties.
The Board's engagement with shareholders is described in the
section "Dialogue with Shareholders" below. All shareholders are
treated equally and no shareholder receives preferential treatment.
When making decisions of relevance to shareholders, the Board
considers first and foremost the likely consequences of their
decisions in light of their duty to act in the best interests of
the Group in the longer term. The Board also considers what is
likely to be in the best interests of shareholders as a whole, but
does not consider individual shareholders' specific circumstances
or desires when making its decisions.
The Company engages third party service providers and, in
addition to the regular reporting provided by these key service
providers, the Board performs a review of the performance of these
key service providers on an annual basis. The services provided by
these key service providers are critical to the ongoing operational
performance of the Group. The Board believes that fostering
constructive and collaborative relationships with the Company's
service providers will assist in their promotion of the success of
the Group for the benefit of all shareholders.
The Board considers the interests of all stakeholders and
oversees the activities of the Asset Manager, as further explained
below.
As described in detail in the Company's viability statement
below, the Board considers the prospects of the Group for at least
the duration of each lease whenever it considers the Group's
sustainability. All strategic decisions are therefore taken with
the long-term success of the Group in mind and the Board would take
external advice whenever it considered that such would be
beneficial to its decision making process, primarily from its
retained service providers (including legal counsel), but also from
other external consultants.
The Board recognises that ESG considerations can have a
significant impact on investment activity in terms of raising
funds, identifying investment opportunities and long-term value
creation for shareholders. Please see more information regarding
ESG in the report above.
The Board ascribes to the highest standards of business conduct
and has policies in place to ensure compliance with all applicable
laws and regulations. In addition to the monitoring of the
Company's compliance with its own obligations, the Board also
monitors compliance by its key service providers with their own
obligations. Each provider is required to have in place suitable
policies to ensure that they maintain high standards of business
conduct, treat customers fairly and are committed to ensuring that
high standards of corporate governance are maintained.
The Board encourages openness and transparency with its service
providers.
Management of the Group
The directors are responsible for managing the business affairs
of the Group in accordance with the Company's Articles and have
overall responsibility for the Group's activities, including
investment activity. The Group has delegated management of the
Assets to Amedeo Limited, a company incorporated in Ireland. The
directors delegate secretarial and administrative functions to JTC
Fund Solutions (Guernsey) Limited which is a company incorporated
in Guernsey and licensed by the GFSC for the provision of
administration services. JTC Registrars Limited is the Company's
Registrar, Transfer Agent and Payment Agent. Following the
termination of the appointment of Nimrod Capital LLP as the
Company's corporate and shareholder adviser on 31 January 2021, on
15 March 2021 the Company appointed Liberum Capital Limited as the
Company's Corporate Broker.
Asset Manager, Agency Services and Liaison Agent
The Asset Manager has been appointed by the Company to provide
asset management services to the Group. Pursuant to the Asset
Management Agreement dated 30 April 2015, the Asset Manager will:
(i) monitor and, to the extent required pursuant to the terms and
conditions set out in each lease, administer each relevant lessee's
performance of its obligations under the relevant lease (including
such lessee's obligations relating to the insurance of the Assets);
(ii) as the Group's exclusive remarketing agent in respect of the
Assets, use all reasonable endeavours to solicit offers to lease or
sell each of the Assets on the best terms reasonably obtainable
having due regard to the then current market conditions (including
current industry and market practice); (iii) carry out mid-lease
inspections of the Assets; (iv) provide the Group with information
and analysis with respect to each Asset, including a quarterly
asset monitoring report which will include recent developments and
a forward looking statement including inspection results, events,
any material information, significant changes, decisions which
have been or need to be made, events affecting distributions,
and other major or pending events, issues or outcomes as far as
known to Amedeo; and (v) if requested by the Group, acting
reasonably, provide a financial model that would allow the Board to
prepare or re-assess target distributions based on the Asset
Manager's view of projected cash flows and liabilities.
The Asset Manager has further undertaken that it will dedicate
sufficient time and resources as they reasonably believe is
sufficient from time to time to fulfil any contractual arrangements
it enters into with the Group.
Amedeo Limited has also been appointed as Agency Services
provider by the Company, pursuant to the Agency Agreement dated 30
April 2015, to assist the Group, and act as the Group's agent, in
relation to the arrangement, negotiation, review, and, following
the approval and execution by the Group, the management of the
acquisition of assets, the borrowings of the Group relating to the
acquisition of the assets (including any financing documentation),
each lease and ensuring that material agreements are consistent
with market practice in the aviation industry.
Amedeo Services (UK) Limited has been appointed as Liaison and
Administration Oversight Agent by the Company, pursuant to the
Liaison and Administration Oversight Agreement dated 30 April 2015,
to: (i) co-ordinate the provision of services by service providers
to the Group under the Asset Management Agreement, the Agency
Agreement and the Administration Agreement; (ii) facilitate
communication between the Group and its service providers in
relation to the services provided under the Administration
Agreement, Asset Management Agreement and Agency Agreement; (iii)
in relation to the acquisition of any asset, monitor and review the
timing or payments and any currency exchanges to be effected in
order to ensure payments are made in a timely maker; (iv) monitor
the on-going budget of the Group and the payment of recurring and
certain non-recurring costs, fees and expenses, and (v) assist the
Administrator in monitoring the balances in the bank accounts of
the Group and, where appropriate, provide the Administrator with
any assistance it might reasonably require with respect to making
payments, transferring balances or entering into currency exchanges
as appropriate. Amedeo Services (UK) Limited is authorised and
regulated by the FCA.
Amedeo is a recognised aircraft asset manager and principal
investor in leasing transactions to customer airlines globally. The
aircraft portfolio currently managed by the Amedeo group, includes
thirty nine aircraft under management and an additional 8 aircraft
under oversight. The volume of assets under management is c. $7
billion, which include commercial airliners including A380, A350,
A330 and Boeing 777 and 747-F. Amedeo is a member of the
International Society of Transport Aircraft Trading ("ISTAT").
Corporate Broker
Liberum Capital Limited were engaged by the Company on 15 March
2021 to act at the Company's corporate broker. In such a capacity,
the Corporate Broker maintains a regular dialogue with shareholders
in order to ensure that any significant developments in relation to
the Company are communicated appropriately to shareholders. The
Corporate Broker also provides shareholder feedback to the Company
following shareholder meetings or interaction.
Liberum is a leading independent UK provider of investment
banking, research, sales and trading. Liberum is authorised and
regulated by the FCA.
Secretary and Administrator
JTC Fund Solutions (Guernsey) Limited is an independent provider
of institutional and private client services to clients in numerous
jurisdictions and is a member of the JTC Group. See the JTC Group's
website at www.jtcgroup.com.
JTC Fund Solutions (Guernsey) Limited is a Guernsey incorporated
company, which is licensed by the GFSC. JTC Fund Solutions
(Guernsey) Limited provides administration and secretarial services
to the Group pursuant to the Administration Agreement dated 30
April 2015, as amended.
In such capacity, the Secretary is responsible for the general
secretarial functions required by the Law and assists the Group in
its compliance with its continuing legal and regulatory
obligations, as well as providing advice on good corporate
governance and best practice for a publicly traded company.
The Administrator is also responsible for the Group's general
administrative functions and for the preparation of unaudited
half-yearly and audited annual financial reports, subject to the
direction and oversight of the Board.
Registrar
JTC Registrars Limited has been appointed as registrar, transfer
agent and paying agent by the Company pursuant to a Registrar's
Agreement dated 30 April 2015. The Registrar performs all the usual
duties of a registrar, transfer agent and paying agent in relation
to the Shares and the maintenance of the Company's Share
register.
Review of Service Providers
The Board keeps under review the performance of the Asset
Manager, Corporate Broker, the Secretary and Administrator and the
Registrar and the powers delegated to each service provider. In the
opinion of the Board the continuing appointments of the current
service providers on the terms agreed is in the interest of the
Company and its shareholders as a whole.
A full list of the Group's service providers is set out
below.
BOARD OF DIRECTORS
As at 31 March 2021, the Company had four directors, all of whom
are independent and non-executive. All directors held office
throughout the period under review.
Robin Hallam (Chairman) (Independent non-executive)
Until 31 December 2015, Robin Hallam was a partner and co-head
of Asset Finance at international law firm Hogan Lovells
Internationa LLP. He became a partner in 1995 specialising in
aircraft finance, particularly leasing, export credit and
structured financing. Between January and December 2016, Robin was
a consultant at Hogan Lovells. He has represented financial
institutions, operating lessors, investors, airlines and export
credit agencies. Robin holds a degree in law from Trinity College,
Cambridge, is a member of the International Society of Transport
Aircraft Trading ("ISTAT") and was ranked Band 1 for Asset Finance
in Chambers UK 2015.
David Gelber (SID) (Independent non-executive) (Acting Chairman
of the Audit Committee with effect from 21 June 2021)
David Gelber began his career with Citibank in London in 1974.
Over the course of the next twenty years he held a variety of
trading roles in foreign exchange, fixed income and derivatives at
Citibank, Chemical Bank and HSBC where he was Chief Operating
Officer of HSBC Global Markets. In 1994 he joined ICAP, an
inter-dealer broker, as COO and oversaw two mergers and a number of
acquisitions. He is currently a non-executive director of Walker
Crips PLC, a stock broker and wealth manager; and a non-executive
director of IPGL, a holding company with investments in numerous
companies on several of which he serves as a director (DDCAP an
arranger of Sharia Compliant transactions, Tellimer Ltd an online
research platform for frontier markets, Veridium ID a biometric
identification provider, Opportunity Network a B2B CEO platform and
Aviva Singapore Life Ltd, a entity recently formed from a merger of
Singapore Life with the local operations of Aviva PL). David holds
a BSc in Statistics and Law from the University of Jerusalem and an
MSc in Computer Science from the University of London.
Laurence Barron (Independent non-executive)
Having begun his career as a commercial lawyer in Paris and then
in Tokyo, where he first became involved in aircraft financing
transactions, Laurence joined Airbus in 1982 as an in-house lawyer
specialising in aircraft finance. He subsequently moved to the
business side when, in 1984, he was appointed Sales Finance
Director North America, becoming Head of Sales Finance in 1985, and
then, in 1987, Vice President of Customer Finance. In 1994, he was
asked to set up the Asset Management Organisation within Airbus and
that year became Vice President and Head of Asset Management.
Airbus Asset Management has full responsibility for all used
aircraft transactions at Airbus and acts as an in-house leasing
company for the used Airbus aircraft owned or controlled by the
Airbus group of companies. In 2001 he was promoted to Senior Vice
President of Airbus before assuming the role of President of Airbus
China in 2004, with responsibility for Airbus' overall activities
in the People's Republic of China. In January 2013, Laurence was
appointed Chairman of EADS China, now rebranded Airbus China.
Laurence retired from salaried Airbus employment at the end of
April 2016 and was non-executive Chairman of Airbus China until the
end of 2017. He holds an LLB from Bristol University Law
Faculty.
John Le Prevost
John Le Prevost resigned as director of the Company, for
personal reasons, with effect from 21 June 2021.
A selection process for additional non-executive directors, one
of which it is intended will become Chairman of the Audit
Committee, commenced earlier in the year and our intention is to
make two new appointments shortly. Senior independent director
David Gelber will assume chairmanship of the Audit Committee
pending appointment of a successor.
CORPORATE information
Principal Risks and Uncertainties
The Board has undertaken a robust assessment of the principal
risks facing the Group and has undertaken a detailed review of the
effectiveness of the risk management and internal control systems.
The Board is comfortable that the risks are being appropriately
monitored and the documentation to support these processes
undergoes review and enhancement with each new acquisition.
The risks set out below are those which are considered by the
Board to be the material risks relating to the Company and the
Group.
Risk Explanation/Mitigation
Global Pandemic COVID-19 has spread globally and resulted
in widespread restrictions on individuals
socialising and travelling which is having
a significant effect on the airline industry,
in particular, international business travel
on which widebody aircraft operation is dependent.
With the majority of aircraft grounded and
the financial impact on airlines, it is probable
that a number will enter into bankruptcy,
as Thai Airways has done. The Board has been
focussed on cash conservation for the Company
and suspended dividend payments during the
year under review.
Operational risk There is a risk that the Group will not achieve
its investment objective and that the value
of a shareholder's investment could decline
substantially or entirely as a consequence.
The Board is ultimately responsible for all
operational aspects of performance, including
cash management, asset management and legal
and regulatory obligations.
The Group has no employees and so the Company
enters into legal agreements with service
providers to ensure that all operational
functions are fulfilled. Failure by any service
provider to carry out its obligations to
the Company in accordance with the terms
of its appointment could have a materially
detrimental impact on the operation of the
Group and could adversely affect the ability
of the Company to meet its investment objective.
This risk has been mitigated by the Company
using well established, reputable and experienced
service providers. The Board assess service
providers' continued performance on an annual
basis.
Remote working may restrict the ability of
the Board to monitor performance of service
providers
Key Personnel at The ability of the Company to achieve its
Asset Manager investment objective is significantly dependent
upon the expertise of certain key personnel
at Amedeo Limited. The exact impact of the
departure of a key individual from Amedeo
Limited on the ability of the Company to
achieve its investment objective cannot be
determined and may depend on the ability
of Amedeo Limited to recruit a new individual
of a similar level of experience and calibre.
There can be no guarantee that Amedeo Limited
would be able to do so and this could adversely
affect the ability of the Company to meet
its investment objective.
The service provision agreements in place
seek to ensure that the level of service
remains continuous.
Investment risk The Group will only enter into leases on
terms which stipulate that the cost of repair
and maintenance of the Assets will be borne
by the lessee. However, upon expiry or termination
of leases, the cost of repair and maintenance
will fall upon the Group. Upon expiry of
leases, the Group may therefore bear higher
costs and the terms of any subsequent leasing
arrangements may be adversely affected, which
may reduce the distributions paid to the
shareholders from such point. Repair and
maintenance issues may adversely affect the
price of the Assets upon sale. Further, if
the Group were to dispose of the Assets at
the end of the lease terms, there is a risk
that indicative values may not be realised
on disposal. This could affect the ability
of the Company to meet its investment objective.
Intervening bankruptcy or other legal constraints
may result in substantial renegotiation of
long term contracts on which the Group relied
to meet these objectives.
No new investments are currently envisaged.
Insurance risks The lease for each Asset requires that the
lessee insures the Asset and this is monitored
by the Asset Manager. However, inflation,
changes in ordinances, environmental consideration
and other factors may make the insurance
proceeds insufficient to repair or replace
the Assets if they are damaged or destroyed.
If the insurance proceeds are insufficient
to repair or replace the Assets if they are
damaged or destroyed, this may affect the
ability of the Company to meet its investment
objective. If a lease is terminated, the
Group will have to insure the relevant Asset
directly which will cause additional expenses
to be incurred.
Return of the Assets At the end of each of the leases, the relevant
at the end of the Asset must, subject to certain conditions,
Leases be redelivered in accordance with the relevant
terms of the lease.
Any redelivery of an Asset in a condition
other than contracted condition may impact
upon the amount that can be realised upon
any subsequent sale or re-lease of such Asset,
including that it may create additional,
unforeseen expenses, such as re-fitting,
storage and insurance costs, for the Group
at that time.
The Asset Manager performs regular checks
of the Assets and updates the Board of any
material developments.
Airline industry The airline industry is particularly sensitive
related risks to changes in economic conditions. Unfavourable
economic conditions can also impact the ability
of airlines to raise fares to counteract
increase in fuel, labour and other costs.
The airline industry is also subject to other
risks including competition between airlines,
dependency on rapidly evolving technology,
inability to obtain additional equipment
or support for aircraft and engine suppliers,
availability and price of fuel, staff and
employee related issued (including employee
strikes), security concerns and the threat
of terrorism, airport capacity constraints,
air traffic control inefficiencies, changes
in or additional governmental regulations
relating to air travel and acts of God (including
adverse weather, natural disasters and pandemics).
There is also a risk that the behaviour of
airline competitors could restrict the lessees'
activities in certain jurisdictions. Any
of these risks could materially affect the
ability of the lessees to comply with payment
obligations. Furthermore, a general downturn
in the airline industry would have an impact
on attainable leasing rates in the event
of any termination or at expiry of the leases
as well as on attainable sales revenue for
the Assets.
The Asset Manager actively monitors the Company's
Assets, as well as the credit status of the
lessees. Routine maintenance checks and inspections
are carried out to ensure the Assets are
kept at the required quality standards.
Valuation of Assets The Group's net asset value for accounting
purposes is calculated in accordance with
IFRS and may not properly reflect the actual
realisable value of the Assets at any particular
point of time.
Valuations of the Assets by IEV will be considered
in any valuation of the Group's Assets. The
Board will consider these valuations and
shall, if there are indicators that would
suggest a permanent diminution in book value
of one or more of the Assets, determined
in consultation with the Administrator and
the Asset Manager, there will be made an
appropriate adjustment for accounting purposes
to the net asset value and net asset value
per Share of the Group.
Valuations (including valuations provided
by any IEV), and in particular valuations
of assets for which market quotations are
not readily available, are inherently uncertain.
Valuations may therefore fluctuate over short
periods of time and may be based on estimates.
Valuations of an Asset (including valuations
provided by any IEV) will not constitute
a guarantee of value and may not necessarily
reflect the prices at which that Asset could
be, or could have been, purchased or sold
at any given time, which may be subject to
significant volatility and uncertainty, and
depend on various factors beyond the control
of the Group, Amedeo Limited and the IEV.
Therefore, there can be no guarantee that
the Assets could ultimately be realised at
the Group's valuation. The "highest and best
use" value has been used for accounting purposes
given that the aircraft are held for use
in a leasing business.
The Group has a robust audit process to ensure
that valuations accurately reflect the requirements
of IFRS. The IEV will be engaged on an annual
basis to report on fair value for accounting
purposes only.
Borrowings and There is a risk that the Group is exposed
financing risk to fluctuations in market interest rates
and foreign exchange rates.
This risk has been partially mitigated by
ensuring that loan repayments are made from
lease rental revenues received in the matching
currency and by fixing the interest rate
on loans and lease rentals. In the case of
the four Thai Airways aircraft, the floating
rate lease rentals are closely matched to
floating rate loan repayments.
As with the current situation, the Company
would make its best effort to fulfil any
obligations as a borrower under the loan
through various means, if necessary, such
as refinancing and/or restructuring of the
lease, etc.
The Asset Manager provides the Board with
a quarterly report on the performance of
the lessees and of the Assets.
An expense budget is also reviewed on at
least a quarterly basis to ensure that adequate
reserves are maintained to meet operational
expenses.
Lessee risk The Group's airline lessees are responsible
for all maintenance and safety checks. The
requirement for each airline lessee to service
and maintain the aircraft are set out in
the lease agreements. There is a risk that
airlines may not properly maintain aircraft
which may lead to an impairment of the aircraft's
value. In order to mitigate against this
risk the Group closely monitors each airline's
usage of aircraft and their compliance with
agreed maintenance schedules.
In certain cases, the Group requires lessees
to pay maintenance reserve payments in order
to ensure that there is adequate funding
at all times for proper maintenance of the
aircraft.
The credit quality and risk of lease transactions
with counterparty airlines is evaluated upon
conception of the transaction. In addition,
ongoing updates as to the operational and
financial stability of the airlines are provided
by the Company's Asset Manager in its quarterly
reports to the Company. Downturns in the
aviation industry on a systemic level could
weaken the financial stability of the Group's
lessees and result in the increased risk
that they could default on lease obligations.
If a lessees are not able to meet their obligations
to the Group, the Company's own cash flows
and financial results could be adversely
affected.
Legal and Compliance The Group is required to comply with the
Risks Law, the obligations of a listing on the
SFS, the DGTRs and various European Union
regulations. Any failure to comply with applicable
laws and regulations or to respond in a timely
manner to changes could lead to criminal
or civil proceedings.
The Company is a member of the AIC which
is the trade body for closed-ended investment
companies. Amongst other things, the AIC
keeps its member companies up-to-date with
legal and regulatory changes and provides
guidance and advice on how to comply with
them.
The Board receives periodic updates from
the Company's external auditor, legal advisers
and other professionals.
Although responsibility ultimately lies with
the Board, the Secretary also monitors and
assists the Board with compliance with its
legal and regulatory obligations.
Impact of the United The Board is mindful of the fact that aviation
Kingdom leaving is a global business and the aircraft owned
the European Union by the Group are active all globally. However,
as the Group has no business with companies
based in the European Union, and the aircraft
owned by the Group are leased to airlines
based in the Middle East and Thailand, the
Board expects that the Group is unlikely
to be significantly impacted by the departure
of the United Kingdom from the European Union.
Emerging Risks
The Board has developed a risk matrix for the Company which is
reviewed at each Board meeting and continually monitors emerging
risk areas relevant to the performance of the Group including those
that would threaten its business model, future performance,
solvency and liquidity on an ongoing basis.
Additional risks and uncertainties of which the Board is
presently unaware may also adversely affect its business, financial
condition, results of operations or the value of shares.
Internal Control and Financial Reporting
The Board is responsible for establishing and maintaining the
Group's system of risk management and internal controls, which is
reviewed fully for effectiveness on an annual basis. Internal
controls are designed to meet the particular needs of the Group and
the risks to which it is exposed. Accordingly, the internal control
systems are designed to manage rather than eliminate the risk of
failure to achieve business objectives and by their nature can only
provide reasonable and not absolute assurance against misstatement
and loss.
The key procedures which have been established to provide
effective internal controls are as follows:
-- The Board is responsible for the Group's systems of risk
management and internal controls and for reviewing their
effectiveness. The Board confirms that there is an on-going process
for identifying, evaluating and monitoring the significant risks
faced by the Group. The internal controls, which are delegated to
the applicable service providers as appropriate, are designed to
meet the Group's particular needs and the risks to which it is
exposed;
-- the Board clearly defines the duties and responsibilities of
their service providers. The appointment of agents and advisers is
conducted by the Board after consideration of the quality of the
parties involved and the Board monitors their on-going performance
and contractual arrangements;
-- the Board regularly reviews the performance of, and the
contractual arrangements with, the Group's agents, advisers and
service providers;
-- asset management services are provided to the Group by the Asset Manager;
-- corporate broking services are provided to the Company by the Corporate Broker;
-- administration and secretarial services are provided to the
Group by the Secretary and Administrator;
-- cash investment transactions and expense payments are
approved by the Board or their delegates;
-- the Board reviews financial information produced by the Administrator on a regular basis;
-- the Board also specifies which matters are reserved for a
decision by the Board and which matters may be delegated to its
service providers.
Going Concern
The Group's principal activities are set out above. The
financial position of the Group is set out below. In addition, note
19 to the consolidated financial statements includes the Group's
objectives, policies and processes for managing its capital, its
financial risk management objectives and its exposures to credit
risk and liquidity risk.
The directors have considered the going concern for the next
12-18 months.
The directors believe that international travel has not
rebounded in the way predicted at the start of the COVID-19 crisis.
Airlines have used up much of the liquidity provided to them by
governments and shareholders, but the expected restoration in air
travel has been blighted by poor COVID-19 testing facilities, lack
of coordinated action by governments, increased infection rates and
the expected ending of many of the most generous furlough
schemes.
In the case of materialisation of the risk related to the lessee
counterparty creditworthiness, the fixed rents receivable under the
leases may not be sufficient to meet the loan interest and regular
capital repayments of debt scheduled during the life of each loan
and may not provide surplus income to pay for the Group's
expenses.
As announced on 6 April 2020 the Board decided to temporarily
suspend the declaration of dividends until the future prospects of
the Group's two lessees becomes more assured. Such a decision was
made after the Board had carefully considered and assessed the
above mentioned factors against the background of the Company's
investment objectives and the maintenance of the long-term
financial stability of the Company for the benefit of all
shareholders as a class and the Group's creditors.
However, pursuant to the announcements released by the Company
on 23 September 2020 and 14 January 2021, the directors of the
Company declared interim dividends of 1.15 pence and 1.50 pence per
Share in respect of the financial year ending 31 March 2021.
As announced on 23 September 2020, the Board resolved on that
date to redeem one Share for every three existing Shares from
shareholders on the register of members as at close of business on
25 September 2020. Accordingly, 214,083,243 Shares were redeemed
and have now been cancelled. The redemption proceeds due on these
redemptions were paid on 9 October 2020.
On 18 February 2021 the Company announced that it had entered
into an agreement with Nimrod Capital LLP to terminate their
appointment as sole corporate and shareholder advisor to the
Company with effect from 31 January 2021 and settle outstanding
matters between them (the "Termination Agreement"). Under the
Termination Agreement, the Company made a payment of GBP9.45
million and issued 5,975,000 Shares to Nimrod Capital LLP as a
complete settlement of contractual obligations to Nimrod Capital
LLP. Nimrod Capital LLP has undertaken to the Company not to
dispose of the said shares for a period of 12 months (subject to
certain customary exceptions). The Board estimates that such
termination will result in net gains of a minimum GBP7,000,000 by
15 May 2027.
Thai Airways
As noted in the annual report for the year ended 31 March 2020,
on 27 May 2020 the Central Bankruptcy Court of Thailand issued an
order to accept the rehabilitation petition for consideration and
set the date of 17 August for the first hearing on the
rehabilitation petition. Effectively, from 27 May 2020 an automatic
stay came into effect which restricted Thai Airway's right to pay
and incur debts and a moratorium affecting creditors' rights comes
into force. Thai Airways has not paid any lease payments to the
Company's subsidiaries since 22 May 2020.
From such time, Planners and counsel were appointed to the
carrier's restructuring case and a Rehabilitation Plan was
proposed. After many extensions to Court hearings, the Central
Bankruptcy Court of Thailand rendered its order to approve the Plan
on 15 June 2021 and appointed the Plan Administrators, who will
have rights, duties, and powers to manage and operate Thai Airways
in accordance with the conditions and terms stipulated in the Plan.
The Asset Manager is in negotiations to agree the binding lease
amendment documentation with the airline, on a power by the hour
basis (PBH) initially, before moving to a fixed rate lease for the
remaining term of the lease including an extension of the lease
from the original term. The Company targets Q3 2021 to document and
effect the restructuring of debt with its lenders.
Thailand was facing threats of new waves of COVID, which would
further impact the country's tourism industry as well as Thai
Airways' operations. The Civil Aviation Authority of Thailand
(CAAT) says in an 18 July statement that it will require local
airlines to suspend commercial passenger flights to and from "dark
red" zones7, classified as having the highest infection risk,
starting 21 July, in line with travel restrictions imposed on these
provinces. Exceptions will be made for regions with a
tourism-oriented "sandbox" initiative, as well as emergency or
technical landings, and other CAAT-authorised flights. Outside of
the "dark red" provinces, other flights are capped at 50% passenger
capacity to account for social distancing
These are positive development for Thai Airways, as the carrier
is gradually restarting its operations in line with the updates
from local authorities Thai Airways has resumed key international
routes to Japan, South Korea, Australia and Europe. Flights to
London, Frankfurt, Paris, Zurich and Copenhagen, as part of the
Phuket Sandbox travel scheme, will continue to be operated directly
from Bangkok or via Phuket. From Phuket, flights to London and
Frankfurt will run weekly, while London, Frankfurt and Copenhagen
will be served twice weekly. In Southeast Asia, Thai Airways has
recommenced flights to Manila in the Philippines from Bangkok,
operating three times a week. Flights to North Asian destinations
has also restarted, including daily flights to Hong Kong,
twice-weekly flights to Haneda and Nagoya in Japan, four-times
weekly to Osaka and six-times weekly to Tokyo Narita. Flights to
Seoul in South Korea and Sydney in Australia will be operated on a
thrice-weekly and twice-weekly basis.
Going Concern Assessment
While the Group has made a loss in the current period, it is in
a net current asset position and continues to generate strong
positive operating cash flows. The Group's cash levels rose
significantly due to the sale of two A380-800 aircraft on 25
February 2020 in the prior financial year. The sales included the
full repayment of the financing arrangements on both aircraft,
including applicable swap breakage and facility prepayment
costs.
The Board decided to return to Shareholders GBP98.5 million on
25 September 2020 by way of a redemption of one-third of the
ordinary shares in the capital of the Company (being the redemption
of approximately 214,083,243 Shares) at a redemption price of 46
pence per each redeemed share.
On 23 February 2021 the Company made a payment of GBP9.45
million and issued 5,975,000 new shares to Nimrod as a complete
settlement of contractual obligations to Nimrod.
During the current year, due to the non-payment of lease rentals
by Thai Airways, a provision has been raised for the impairment of
amounts due (see the Consolidated Statement of Comprehensive
Income). Management has completed a high-level analysis which
considers both historical and forward-looking qualitative and
quantitative information, to assess the credit risk of the
receivables from Thai Airways. The security deposits payable were
utilised in full against the lease rentals due by Thai Airways at
year end, with the remaining rental amounts due recognised as
receivable (discounted for the time value of money) at year end in
accordance with the Thai rehabilitation plan. The remaining amounts
receivable were impaired in full in the Statement of Comprehensive
Income as this is considered not recoverable.
The Company reviewed plausible downside scenarios (such as
receiving no power-by-the hour rental income from Thai) and
implemented sufficient measures, such as the temporary suspension
of dividends, in order to best position itself to settle its future
debt obligations in the short term to medium term. Additionally,
the company is also arranging with the lenders an optimal solution
that will facilitate servicing of the loan in line with the rent
received under the lease amendment documentation
The Board was also of the opinion that the Planning Committee's
initial timeline of having a plan agreed with all creditors and
implemented and working within Q1 2021, was optimistic. The Board
is therefore working on the basis that the timeline should be
realistically shifted further out and that the Group will receive
little or no income before Q3 2021 from the Thai leases.
Whilst progress has been made, the Directors are uncertain as to
the final outcome of these matters.
However, on the basis of (i) the Group's current liquid assets
and (ii) cash-flow projections, the Directors nevertheless believe
that the going concern basis of accounting is appropriate but there
are material uncertainties.
The Board will continue to monitor actively the financial impact
on the Group resultant from the evolving position with its aircraft
lessees and lenders whilst bearing in mind its fiduciary
obligations and the requirements of Law which determines the
ability of the Company to make dividends and other
distributions.
Refer to note 2(i) for further details in relation to Going
Concern.
(7) Thirteen provinces have been classified as "dark red" zones
and these are Bangkok, Chachoengsao, Chonburi, Nakhon Pathom,
Nonthaburi, Narathiwat, Pathum Thani, Pattani, Phra Nakhon Si
Ayutthaya, Yala, Songkhla, Samut Prakan and Samut Sakhon.
Viability Statement
The directors confirm that they have carried out a robust
assessment of the principal risks facing the Group, including those
that would threaten its business model, future performance,
solvency or liquidity, and that are reported elsewhere in the
consolidated annual financial report.
The directors regularly consider the viability of the Company
and the Group and are required by the Law to do so on every
occasion that any distribution is to be declared. When the
directors consider the declaration of a distribution to
shareholders and under the Law they are required to consider the
Company's future solvency and the directors consider future cash
flows for at least the next three years on the assumption that
lease income will continue to flow throughout that time. Likewise
for the purposes of this annual financial report, the Directors
have considered the prospects of the Company and the Group over a
three year period to March 2024.
The Directors, in assessing the viability of the Group, have
paid particular attention to the principal risks faced by the Group
as disclosed in this report, the Audit Committee report and the
notes to the consolidated financial statements, reviewing the risks
faced and ensuring that any mitigation measures in place are
functioning correctly.
In addition, the directors have considered a detailed cash flow
forecast for the running costs of the Group, which is updated
regularly, on the assumption that Emirates continues to fulfil its
current lease obligations and Thai Airways follows its obligations
according to the revised lease terms agreed with the Planner. The
directors have also considered current cash-flow projections under
various scenarios (including worst case scenarios of default for
Thai). Based on all financial and other information available,
including the cash flow forecast and cash flow scenario
projections, the directors believe that unencumbered cash held and
forecast cash receipts will be sufficient to cover all forecast
operating costs of the Group for the period up to at least March
2023 and that the Group will therefore be able to meet its debt
obligations as they fall due during that period. However, material
uncertainties remain and assumptions must be made on the length of
the crisis and whether or not the Plan Administrators in Thailand
will reaffirm the leases as negotiations are ongoing, and therefore
determining whether the aircraft will be returned. The airline is
reportedly rumoured to be in talks with government and private
financial institutions to obtain near 50 billion baht in new
capital to help sustain its cash flow.
The directors believe that their assessment of the viability of
the Group over the period chosen was sufficiently robust and as a
result of their review, the directors have a reasonable expectation
that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period of their
assessment.
DIRECTORS' REPORT
The directors present their consolidated annual financial report
of the Group, for the financial year ended 31 March 2021.
Principal Activities and Business Review
The principal activity of the Group is to acquire, lease and
then sell aircraft. The directors do not envisage any change in
these activities for the foreseeable future. A description of
important events that have occurred during the financial year,
their impact on the financial statements and a description of the
principal risks and uncertainties facing the Group, together with
an indication of important events that have occurred since the end
of the financial year and are likely to affect the Group's future
development are included in the Company Overview, the Chairman's
Statement, Asset Manager's Report, this Directors Report, the
Principal Risks and Uncertainties, Audit Committee Report and the
notes to the consolidated financial statements below and are
incorporated herein by reference.
All payments due from Emirates were made in accordance with the
terms of the respective leases. However, Thai Airways are in
rehabilitation proceedings and the meeting to vote on the
Rehabilitation Plan (and amendments to it) occurred as scheduled on
19 May at 9am Bangkok time by way of a virtual meeting. In
accordance with the Thailand Bankruptcy Act, the Rehabilitation
Plan proposed by the Planners along with certain proposed
amendments to the Rehabilitation Plan tabled by the Planners and
certain creditors, was approved by the creditors committee and
finally approved by the official receiver on 15 June 2021. The
Company, through its Asset Manager, will now continue to negotiate
and agree binding lease amendment documentation with the airline,
on a power by the hour basis initially, before moving to a fixed
rate lease for the remaining term of the lease including an
extension of the lease from the original term. The Company
continues to target the end of July 2021 to document and effect the
restructuring of debt with its lenders. Please see the Chairman's
Statement and Asset Managers Report above for more information
regarding this process.
Status
The Company is a Guernsey domiciled company with registered
number 59675, the shares of which have been admitted to trading on
the SFS.
Directors
The directors in office are shown below. Save for John Le
Prevost who resigned as director effective from 21 June 2021, all
other directors remain in office as at the date of approval of this
consolidated annual financial report. Further details of the
directors' responsibilities are given below.
Management of Conflicts of Interest
The Company has established guidelines to ensure management of
conflicts of interest. The Board has also communicated their
expectations to the Company's service providers and each
director.
The Board considers the directors conflicts of interest at each
Board meeting by reviewing a schedule of each directors other
directorships and other interests held. Each director is required
to notify the Secretary of any potential, or actual, conflict
situations that would need to be considered by the Board.
Results and Dividends
The financial results of the Group for the financial year are
set out below.
The Company declared and paid the following dividends during the
financial year:
Announcement Payment Date Dividend per Share
Date (pence)
13 October 2020 30 October 2020 1.15
14 January 2021 29 January 2021 1.50
The Board has since taken the decision to suspend quarterly
dividends until the rehabilitation of Thai Airways and agreement
with the Company's lenders are complete which is currently expected
in July 2021. The Board is committed to reinstating a sustainable
dividend policy as soon as is practicable.
Related Parties
There were no events or changes in the related parties during
the financial year which had or could have had a material impact on
the financial position of the Group, other than those disclosed in
note 27 to this consolidated annual financial report.
Substantial Shareholdings
As of the date of this report, the following shareholders had
notified the Company that they held or controlled 5% or more of the
total voting rights of the Company in issue:
Holder % of Total Voting Number of Shares
Rights
Weiss Asset Management
LP 10.12% 43,935,145
Metage Funds Limited 5.16% 22,415,726
Mirabelle Financial Services
LLP 6.77% 29,391,396
Disclosure of information to the auditor
The directors who held office at the date of approval of this
report confirm in accordance with the provisions of Section 249 of
the Law that, so far as they are each aware, there is no relevant
audit information of which the Company's auditor is unaware; and
each director has taken all the steps that he ought to have taken
as a director to make himself aware of any relevant audit
information and to establish that the Company's auditor is aware of
that information.
Auditor
KPMG has expressed its willingness to continue in office as
auditor and the Audit Committee has recommended their
reappointment. A resolution proposing its reappointment will be
submitted at the forthcoming annual general meeting to be held
pursuant to section 199 of the Law.
The strategic report above was approved by the Board on 23 July
2021 and is signed on their behalf by:
Robin Hallam, Director
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations. The Law requires directors to prepare
financial statements for each financial year. Under the Law, they
have elected to prepare the Groups financial statements in
accordance with IFRS as adopted by the European Union.
The financial statements are required by Law to give a true and
fair view of the state of affairs of the Group and of the profit or
loss of the Group for that period.
In preparing these financial statements, IAS1 requires that
directors:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRS are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
-- make an assessment of the Group's ability to continue as a going concern.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that the
financial statements comply with the Law. They are also responsible
for safeguarding the assets of the Company and Group and for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Guernsey governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
The directors jointly and severally confirm that to the best of
their knowledge:
-- this management report (including the information
incorporated by reference) includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties that the Group faces;
-- the consolidated financial statements, prepared in accordance
with IFRS, as adopted by the European Union, give a true and fair
view of the assets, liabilities, financial position and
Consolidated statement of comprehensive income of the Group and the
undertakings included in the consolidation taken as a whole;
and
-- the consolidated annual financial report, taken as a whole,
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group's performance,
business model and strategy.
Signed on behalf of the Board on 23 July 2021
Robin Hallam, Director
REMUNERATION REPORT
Overview
In accordance with the Company's Articles, the directors shall
determine the directors' fees payable provided that the aggregate
amount of such fees paid in respect of services rendered to the
Company shall not exceed GBP400,000 per annum.
Directors are also entitled to re-imbursement of out-of-pocket
expenses incurred in connection with the performance of their
duties or in attending meetings of the Board or of any committees
or general meetings.
Directors' and Officers' liability insurance cover is also
maintained by the Company on behalf of the Directors.
Directors' Remuneration
Fees paid to the non-executive directors in the 2021 and 2020
financial years were as follows:
Director 2021 fees 2020 fees
Robin Hallam (Chairman) GBP76,875 GBP76,875
---------- ----------
John Le Prevost (Chairman of the GBP69,187 GBP69,187
Audit Committee)*
---------- ----------
David Gelber GBP61,500 GBP61,500
---------- ----------
Laurence Barron GBP61,500 GBP61,500
---------- ----------
*John Le Prevost resigned as a director of the Company with
effect from 21 June 2021.
All directors receive an annual fee and there are no share
options or other performance related benefits available to them.
Further details of the directors' fees are disclosed in note 70
The terms and conditions of appointment of the non-executive
directors are available for inspection at the Company's registered
office by prior arrangement with the Secretary.
At the time of writing no director has a contract of service
with the Group, nor are any such contracts proposed. There were
also no outstanding loans or guarantees between the Group and any
director as at the year-end nor as at the date of this report
Directors Interest in Shares
The interests in Shares of the Company held by persons
discharging managerial responsibility and their persons closely
associated are shown below:
Number of Shares held Number of Shares
as at 31 March 2021 held as at the date
of this report
Robin Hallam 30,000 30,000
Amanda Hallam 30,000 30,000
John Le Prevost* 33,334 33,334
David Gelber 221,679 221,679
Vivienne Gelber 22,630 22,630
Laurence Barron - -
*John Le Prevost resigned as a director of the Company with
effect from 21 June 2021.
Corporate GOVERNANCE STATEMENT
Statement of Compliance with the AIC Code, as published in
February 2019
The Company, and its wholly-owned subsidiaries, is committed to
complying with the corporate governance obligations which apply to
Guernsey registered companies. As a Guernsey incorporated
investment company and under the DGTRs of the UK's FCA the Company
is not required to comply with the UK Code.
However, the Board places a high degree of importance on
ensuring that high standards of corporate governance are maintained
and has considered the principles and provisions of the AIC Code,
which addresses all of those set out in the UK Code, as well as
setting out additional principles and provisions on issues that are
of specific relevance to investment companies. The Board considers
that reporting in accordance with the principles and provisions of
the AIC Code provides more relevant and comprehensive information
to shareholders.
A copy of the AIC Code is available on the AIC website at
www.theaic.co.uk/aic-code-of-corporate-governance-0 .
For the reasons set out in the introduction to the AIC Code, the
Board has considered that the role of the chief executive and
executive directors' remuneration are not relevant to the position
of the Company and has therefore not reported further in respect of
these matters.
Having reviewed the AIC Code, the Board considers that it has
maintained procedures during the financial year under review to
ensure that it has complied with the AIC Code, subject to the
following provisions with explanations provided further within this
statement:
-- Provision 17: Non-executive directors should review at least
annually the contractual relationships with, and scrutinise and
hold to account the performance of, the manager. Either the whole
board or a management engagement committee consisting solely of
directors independent of the manager (or executives) should perform
this review at least annually with its decisions and rationale
described in the annual report. If the whole board carries out this
review, it should explain in the annual report why it has done so
rather than establish a separate management engagement committee.
The company chair may be a member of, and may chair, the management
engagement committee, provided that they are independent of the
manager.
-- Provision 22: The board should establish a nomination
committee to lead the process for appointments, ensure plans are in
place for orderly succession to the board and oversee the
development of a diverse pipeline for succession. A majority of
members of the committee should be independent non-executive
directors. If the board has decided that the entire board should
fulfil the role of the nomination committee, it will need to
explain why it has done so in the annual report.
-- Provision 23: All directors should be subject to annual
re-election. The board should set out in the papers accompanying
the resolutions to elect each director the specific reasons why
their contribution is, and continues to be, important to the
company's long-term sustainable success.
-- Provision 37: The board should establish a remuneration
committee of independent non-executive directors, with a minimum
membership of three, or in the case of smaller companies [i.e. not
in the FTSE 350], two. In addition, the chair of the board can only
be a member if they were independent on appointment and cannot
chair the committee. Before appointment as chair of the
remuneration committee, the board should satisfy itself that the
appointee has relevant experience and understanding of the company.
If the board has decided that the entire board should fulfil the
role of the remuneration committee, it will need to explain why it
has done so in the annual report.
Board Composition
The Board comprises three directors, their biographies appear
above demonstrating the wide range of skills and experience they
each bring to the Board. All the directors are non-executive and,
for the purpose of provision 13 of the AIC Code, all considered to
be independent, with the Chairman being independent on appointment.
As part of their examination of the independence of the Board, the
Board has concluded that all directors remain independent under the
principles of the AIC Code.
Robin Hallam is the Chairman.
David Gelber is the SID. As the appointed SID, Mr Gelber
provides a sounding board to the Chairman and serve as an
intermediary for shareholders. Mr Gelber also leads on the
evaluation of the performance of the Chairman.
None of the directors have directorships or employments in any
other public company nor do any of the directors hold
cross-directorships or have significant links with each other
through involvement in any other companies or bodies.
Tenure
The Board notes that provision 23 of the AIC Code expects all
directors to be subject to annual re-election. However, the
Company's Articles require that all directors who held office at
the two preceding annual general meetings of the Company and did
not retire from office at either of those meetings shall retire
from office and shall be eligible for re-election at the same
meeting. The Board considers that the annual re-election of all the
directors would be disruptive to the Company for continuity
purposes and therefore the directors will continue to be re-elected
in accordance with the Company's Articles.
Accordingly, at the forthcoming annual general meeting Robin
Hallam and Laurence Barron will retire and, being eligible, offer
themselves for re-election. Having considered the performance and
contributions made by Messrs Hallam and Barron, and having regard
to their biographies above which demonstrate the key skills,
experience and knowledge they each bring to the Board, the Board
believes that they continue to perform effectively and with
commitment to their roles and, as such, the Board recommends their
re-election.
The composition of the Board had been considered by the
directors and on 30 March 2021 the Board engaged Nurole Ltd, an
external search consultancy which has no connection with the
Company, to assist with a search for an additional director to
enhance the existing skills and experience of the current Board
members and to promote diversity of gender on the Board.
The Board will consider the tenure of all directors, including
the chairman, once any director has been appointed to the Board for
a continuous period of nine years.
Directors are able and encouraged to provide statements to the
Board of their concerns and ensure that any items of concern are
recorded in the Board minutes. The Chairman also encourages all
directors to present their view on matters in an open forum.
Board Evaluation
In December 2021, the Board re-engaged an external facilitator,
BoardAlpha Limited, which has no other connection with the Company,
to lead a performance evaluation of the Board, its committees and
each of the directors, as required by the principle 7.1L of the AIC
Code, such evaluation having been delayed from January 2020 due to
the restrictions in place resulting from COVID-19 during 2020.
As part of this process the external facilitator:
-- interviewed each director and the key service providers separately;
-- performed a review of recent Board and committee meeting
packs and other documents that informed them about the business
strategy and key risks, the nature and quality of the Board's work
and the relationships with the key service providers;
-- attended a Board meeting and key committee meeting; and
-- considered the Boards succession plan.
At the conclusion of its evaluation, the facilitator provided
the directors with a written report of their findings, which
included suggestions for improvements thereon, and it was
considered by the Board. No significant corporate governance issues
arose from this review.
Board Meetings
The Board meets in Guernsey at least four times per year to
consider the business and affairs of the Group for the previous
quarter and the outlook for the coming quarter and beyond, at which
meetings the directors review the Group's assets and all other
important issues to ensure control is maintained. At two of these
meetings the Board considers and, if deemed appropriate, approves
the Group's financial statements.
Between these regular meetings the Board keeps in contact by
email, telephone and video conference as well as meeting to
consider specific matters of a transactional nature. Additionally,
the directors hold strategy meetings with relevant advisers as
appropriate.
The directors are kept fully informed by the Asset Manager, of
all matters concerning the Assets and their financial arrangements
and by the Secretary of all matters that are relevant to the
business of the Group and which should be brought to the attention
of the directors and / or shareholders. All directors have direct
access to the Secretary who is responsible for ensuring that Board
procedures are followed and that there are effective information
flows both within the Board and between the Board and its Asset
Manager.
The directors also have access to the advice and services of the
Corporate Broker as required. The directors may also, in the
furtherance of their duties, take independent professional advice
at the Group's expense.
In the financial year under review the directors held nineteen
Board meetings and two Audit Committee meetings in order to carry
out their duties. Director's attendance at these meetings was as
follows:
Director Board Audit Committee
Robin Hallam 19 of 19 N/A*
David Gelber 18 of 19 2 of 2
John Le Prevost** 19 of 19 2 of 2
Laurence Barron 18 of 19 2 of 2
*Robin Hallam is not as a member of the Audit Committee.
**John Le Prevost resigned from the Company effective 21 June
2021.
No fixed time commitment for Board duties has been set in the
director's letters of appointment, as the Board considers that the
time required by directors may vary depending on the demands of the
Group and any other events. Therefore, it is required that each
director allocates sufficient time to the Group to perform their
duties effectively. It is also expected that each director will
attend all Board meetings and meetings of committees of which they
are a member. The Chairman has confirmed that he considers the
performance of each director to be satisfactory and that each
director demonstrates continued commitment to their role.
The Board was equally satisfied during the year under review
that the Chairman had the commitment to his role and the time to
make himself available at short notice when the need arose.
Board Committees
The Board has considered the establishment of a remuneration
committee as set out in provision 37 of the AIC Code, a management
engagement committee as set out in provision 17 of the AIC Code,
and a nomination committee as set out in provision 22 of the AIC
Code.
The Board has concluded that, given the small size of the
exclusively non-executive and independent Board, the Company has no
requirement for these committees and instead, the full Board
performs these functions.
The Board has established an Audit Committee and a Dividend
Committee. Details of the activities of each of these committees
are set out below.
Audit Committee
As at the financial year end, the members of the Audit Committee
were John Le Prevost, David Gelber and Laurence Barron. Following
John's resignation as director on 21 June 2021, David Gelber has
assumed chairmanship of the Audit Committee pending appointment of
a successor. The Audit Committee has regard to the Guidance on
Audit Committees published by the FRC in September 2012 and most
recently updated in April 2016. The Audit Committee examines the
effectiveness of the Group's and its service providers' internal
control systems as appropriate, the annual and half-yearly reports
and financial statements, the auditor's remuneration and
engagement, as well as the auditor's independence.
The Audit Committee considers the nature, scope and results of
the auditor's work and reviews it annually prior to providing a
recommendation to the Board on the reappointment or removal of the
auditor. When evaluating the external auditor, the Audit Committee
has regard to a variety of criteria including industry experience,
independence, reasonableness of audit plan, ability to deliver
constructive criticism, effectiveness of communication with Board
and the Group 's service providers, quality control procedures,
effectiveness of audit process and added value beyond assurance in
audit opinion.
Auditor independence is maintained through limiting non-audit
services to specific audit-related work that falls within defined
categories; for example, the provision of advice on the application
of IFRS or formal reports for any Stock Exchange purpose. All
engagements with the auditor are subject to pre-approval from the
Audit Committee and fully disclosed within the consolidated annual
financial report for the relevant period. A new lead audit partner
will be appointed every five years and the Audit Committee ensures
the auditor has appropriate internal mechanisms in place to ensure
its independence.
The Audit Committee has recommended to the Board that the
re-appointment of KPMG as the Company's external auditor be
proposed to shareholders at the 2021 annual general meeting. The
Audit Committee will, if appropriate, consider arranging for the
external audit contract to be tendered in 2028 (being 10 years from
the initial appointment) with the aim of ensuring a high quality
and effective audit.
The Audit Committee meets in Guernsey at least twice a year,
shortly before the Board meets to consider the Group's half-yearly
and annual financial reports, and reports to the Board with its
deliberations and recommendations and also holds an annual audit
planning discussion with the auditor. The ultimate responsibility
for reviewing and approving the half-yearly and the annual
financial report remains with the Board.
The Audit Committee also operates within clearly defined terms
of reference based on the Institute of Chartered Secretaries and
Administrators recommended terms and provides a forum through which
the Group's external auditor reports to the Board. The Audit
Committee can request information from the Company's service
providers with the majority of information being directly sourced
from the Asset Manager, Secretary and Administrator and the
external auditor. The terms of reference of the Audit Committee are
available on the Company's website and on request from the
Secretary.
Each year, for good governance, the full Board examines the
Audit Committee's performance and effectiveness, and ensures that
its tasks and processes remain appropriate. Key areas covered
include the clarity of the committee's role and responsibilities,
the balance of skills among its members and the effectiveness of
reporting its work to the Board. The Board is satisfied that all
members of the Audit Committee have relevant financial experience
and knowledge and ensure that such knowledge remains up to date.
Overall the Board considers that the Audit Committee has the right
composition in terms of expertise and has effectively undertaken
its activities and reported them to the Board during the year.
During the financial year the Audit Committee met to consider
the annual financial report for the year ended 31 March 2020 and
the half-yearly financial report for the period ended 30 September
2020. The report from the Chairman of the Audit Committee is
below.
Dividend Committee
The Dividend Committee consists of any one director, who has
been given full power and authority to consider and, if thought
suitable, declare and approve the payment of a dividend in
accordance with the Company's Distribution Policy as set out above;
subject to no other director having raised an objection to the
declaration of such a dividend.
However, given the suspension of dividends and their importance
to shareholders, the full Board will consider the declaration of a
dividend.
Bribery
The directors have undertaken to operate the business in an
honest and ethical manner and accordingly take a zero-tolerance
approach to bribery and corruption. The key components of this
approach are implemented as follows:
-- the Board is committed to acting professionally, fairly and
with integrity in all its business dealings and relationships;
-- the Group will implement and enforce effective procedures to counter bribery; and
-- the Group requires all its service providers and advisers to
adopt equivalent or similar principles.
Data Protection
The Group has implemented measures designed to ensure its
compliance with the EU General Data Protection Regulation (EU)
2016/679 and associated legislation in Guernsey and in other
jurisdictions. The Company has also issued a privacy notice
explaining the data it holds, how the data is processed and its
procedures etcetera. This notice is available for review and
download at the Company's website.
Dialogue with Shareholders
All shareholders have the right to receive notice of, and
attend, general meetings of the Company, at which one or more
members of the Board will be available to discuss issues affecting
the Group.
The Company reports on the number of votes lodged on each
resolution proposed at an AGM. This information is published via a
regulatory information service and on the Company's website
immediately following the AGM.
Following the 2020 AGM, the Board noted the votes against the
resolutions to re-elect David Gelber (23.23%) and John Le Prevost
(30.46%) as directors of the Company. In order to understand the
reasons for the votes against these resolutions the Board sought
feedback from shareholders who voted in this manner. Whilst not all
shareholders responded to the Company's request for this feedback,
the responses received indicated that voting against the
resolutions reflected the following :
-- lack of information regarding the Board's decision making
process, specifically in regard to dividend payments and returns of
capital ;
-- general lack of engagement with the Company's shareholders ;
-- the Board's management of its relationship with Nimrod Capital LLP; and
-- concerns over the Company's governance, specifically in
relation to the independence of the directors and members of the
Audit Committee .
During the period since the AGM, the Board has been focused on
improving communications with shareholders and improving governance
within the Company. Actions taken to date include:
-- the termination of the appointment of Nimrod Capital LLP as
the Company's sole corporate and shareholder advisor with effect
from 31 January 2021 and settlement of outstanding matters between
them and the Company;
-- the appointment of Liberum as the Company's sole corporate
broker with effect from 15 March 2021;
-- Investor webinars have been held and the Board intends to hold these at regular intervals;
-- more regular news announcements have been made via regulatory information service; and
-- a search for an independent non-executive director to act as
chairman of the Audit Committee is underway.
The primary responsibility for shareholder relations lies with
the Board which has delegated this role to the Company's Corporate
Broker. The Corporate Broker has met with the Company's
shareholders to discuss the Company and seek feedback for the
benefit of the Board and will continue to meet with shareholders on
a periodic basis or when there is significant information
pertaining to the Company which needs to be discussed with
shareholders. In addition, the directors are available to enter
into dialogue with shareholders by telephone or email and the
Chairman is always willing to meet shareholders, as the Company
believes such communication to be important. Shareholders also have
the opportunity to address questions to the Chairman and the Audit
Committee at the Company's annual general meeting.
The Board reviews the Company's Share register at every Board
meeting to monitor the Company's shareholder profile and seeks to
ensure that information is presented to shareholders in a fair,
balanced and understandable manner. The Board would also take
action to address any shareholder concerns. The Company provides
regular updates to shareholders through factsheets and annual and
half-yearly financial reports.
The directors contact details are given below and can also be
found on the last page of each factsheet issued. The directors can
also be contacted by shareholders via correspondence sent to the
Group's registered office or via the Secretary if they have any
concerns.
AUDIT COMMITTEE REPORT
Membership
David Gelber - Acting Chairman of the Audit Committee
Laurence Barron - Non-executive Director
John Le Prevost - Chairman of the Audit Committee until his
resignation as Director of the Company on 21 June 2021
A selection process for additional non-executive directors, one
of which it is intended will become Chairman of the Audit
Committee, commenced earlier in the year and the Board's intention
is to make two new appointments shortly.
Key Duties
The Audit Committee's key duties are as follows:
-- reviewing and monitoring the integrity of the Groups
financial statements and financial results announcements, and
reviewing significant financial reporting judgements contained
therein, and monitoring compliance with relevant statutory and
listing requirements;
-- reporting to the Board on the appropriateness of the Group's
accounting policies and practices including critical accounting
policies and practices;
-- advising the Board on whether the annual report and accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group's
performance, business model and strategy;
-- overseeing the relationship with the external auditor and
reviewing the effectiveness of the external audit process;
-- conducting the tender process and making recommendations to
the Board, for it to put to the shareholders for their approval in
general meeting, in relation to the appointment, reappointment and
removal of the external auditor and to approve the remuneration and
terms of engagement of the external auditor;
-- reviewing and monitoring the external auditor's independence and objectivity;
-- monitoring the systems of internal controls and risk
management operated by the Group and by the Group's principal
service providers;
-- monitoring and reviewing the effectiveness of the Group's internal audit function;
-- developing and implementing policy on the engagement of the
external auditor to supply non-audit services, taking into account
relevant ethical guidance regarding the provision of non-audit
services by the external auditor; and to report to the Board,
identifying any matters in respect of which it considers that
action or improvement is needed and making recommendations as to
the steps to be taken; and
-- reporting to the Board on how it has discharged its responsibilities.
Audit Committee Meetings
The Audit Committee meets in Guernsey at least twice a year. The
Audit Committee reports to the Board on its activities and on
matters of particular relevance to the Board in the conduct of its
work.
Main Activities of the Committee during the year
The Audit Committee assisted the Board in carrying out its
responsibilities in relation to financial reporting requirements,
compliance and the assessment of internal controls. The Audit
Committee also managed the Group's relationship with the external
auditor.
Fair, Balanced and Understandable
In order to comply with the AIC Code, the Board has requested
that the Audit Committee advise them on whether it believes that
the Group's annual financial report, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Group's performance, business model
and strategy.
Financial Reporting and Significant Issues
The Audit Committee's primary role in relation to financial
reporting is to review, with its service providers and the external
auditor, the appropriateness of the half-yearly and annual
financial reports, the significant financial reporting issues and
accounting policies and disclosures in the financial statements.
The Audit Committee has considered the key risks identified as
being significant to this consolidated annual financial report and
the most appropriate treatment and disclosure of any new
significant issues identified during the audit, as well as any
recommendations or observations made by the external auditor. To
aid its review, the Audit Committee considered reports prepared by
external service providers and reports from the external auditor on
the outcome of their annual audit.
The significant issues considered by the Audit Committee in
relation to this consolidated annual financial report and how these
were addressed were as follows:
Significant issues for How the Audit Committee addressed these
the year significant issues
Global Pandemic Risk COVID-19 has spread globally and resulted
The emergence of a global in widespread restrictions on individuals
pandemic may have a socialising and travelling which, in
profound and negative particular, is having a significant
impact on the operations effect on the airline industry
and performance of the
Group and may directly The Audit Committee has noted how the
or indirectly affect Board and the Company's key service
some of the other risks providers are all acting and supporting
mentioned in this table the group for as long as it is required.
The Audit Committee also monitored
the Board's decision to preserve liquidity.
The impact of COVID-19 has been considered
in respect of other risks such as risk
of default by lessee and impairment.
Residual value of aircraft At the time of purchase of each Asset,
Assets the Group engaged three internationally
The Assets of the Group recognised expert appraisers to provide
comprise six A380-800 the Group with third party consultancy
aircraft, two B777-300ER valuation services. All appraisers
aircraft and four A350-900 have used similar methodologies to
aircraft. An annual derive their opinions on the current
review is required of market values and future values. In
the residual value of the absence of used sales data for
the Assets as per IAS similar assets, appraisers are heavily
16 Property, Plant and reliant on databases containing historical
Equipment, which defines data points of aircraft sales relating
residual value as "the to large commercial aircraft. Interpretation
estimated amount that of historical data, as well as the
an entity would currently current landscape within the aviation
obtain from disposal industry, is the basis for the current
of the asset, after market value and provides, together
deducting the estimated with the expected developments in the
costs of disposal, if future, the foundation for their opinions
the asset were already on future values. Furthermore, the
of an age and in the appraisers' valuations take into account
condition expected at specific technical and economic developments
the end of its useful as well as general future trends in
life". The Group's estimation the aviation industry and the macro-economic
technique is to make outlook.
reference to the current
forecast market value The Group believes that the use of
(excluding inflation) forecast market values excluding inflation
using MRC for the A380's, best approximates residual value as
and base values for required per IAS 16 Property, Plant
the A350's and B777-300ERs, and Equipment. The effect of a significant
which the Group believes decrease in USD terms in the aggregate
is a reasonable application residual values of the aircraft from
of the IAS 16 definition the prior year, has resulted in an
as detailed in note adjustment made to depreciation in
3 to the financial statements. the current year, details of which
have been disclosed in note 9.
This approach has been
taken because current Updated investment valuations of all
market values in today's Assets as at the year-end were commissioned
prices for twelve year and received from third party professional
old A380 and A350's appraisers and analysed by Amedeo and
do not exist at the the Directors. The Audit Committee
reporting date. It should believes that those valuations are
be noted that in relation appropriate for use in preparing the
to B777-300ERs residual financial statements.
values, there is minimal
to no public secondary Therefore, the average residual value
market trading data excluding inflation used in the accounts
available. As such the is based on these appraisals using
Group has made reference values for the A380 aircraft with minimum
to current forecast return conditions and monetary compensation
base values (excluding as well as base values for the A350
inflation) in determining and 777-300ER aircraft at the end of
residual values for the lease. MRC refers to minimum return
the B777-300ERs. conditions per the lease contracts
whereby the aircraft is returned in
the specified minimum life condition
and includes monetary compensation
from Emirates for the A380s.
With respect to the A380s, the aircraft
type faces a unique situation in terms
of its operator base and value offered
to operations. Furthermore, given the
ongoing developments in the market
and the lack of historical data points,
it has not been easy to value the aircraft
type, which is evident by the appraisers'
reports. An average of the three independent
appraisers is therefore used to determine
the appropriate residual value.
Functional currency The functional currency of all the
and foreign exchange subsidiaries had in prior years been
movements determined by the Directors to be US
Dollars. For the year under review
IFRS require that all the Audit committee still considers
entities have a functional this to be appropriate.
currency, representing The subsidiaries are classified as
the currency of the foreign operations in accordance with
primary economic environment IAS 21, and translation movements in
in which such an entity such entities are recognised through
operates. The functional Other Comprehensive Income as appropriate.
currency of the Company The Audit Committee has carefully considered
is Sterling. However, the disclosure in notes 2(f) and 19(b)
functional currency to the financial statements to ensure
must be assessed at that the impact of the functional currency
an individual entity of the subsidiaries being US Dollars,
level. as well as the reality of the Group's
foreign exchange risk exposure, is
The functional currency properly explained.
of entities determines
the accounting treatment
for exchange gains or
losses and for the re-translation
of monetary items. In
particular o consolidation,
the treatment of re-translations
of a foreign operation
will differ from that
of a subsidiary with
a matching functional
currency to that of
its parent.
Risk of default by Lessee The Audit Committee receives regular
on lease rentals receivable reports, sometimes weekly from the
Asset Manager which comment on the
Should Emirates or Thai situation of both lessees .
(collectively the 'Lessees')
default on the rental The Audit Committee has carefully considered
payments, it is unlikely the disclosure in note 19(c) to the
the Company will be financial statements to ensure that
able to meet its debt the concentration of credit risk exposure
obligations or, in the is properly reflected.
case of ongoing default,
continue as a going The Group has chosen to apply the simplified
concern. approach to measuring expected credit
losses which uses a lifetime expected
Under IFRS 9, The Group loss allowance for all trade receivables.
is required to assess Due to non-payment of lease rentals
on a forward looking by Thai Airways for the period since
basis the expected credit May 2020 as explained in note 2(i)
losses associated with Going Concern, the security deposits
its trade receivables payable were utilised in full against
carried at amortised the lease rentals due by Thai Airways
cost. at year end, with the remaining rental
amounts due recognised as receivable
(discounted for the time value of money)
at year end in accordance with the
Thai rehabilitation plan.
The remaining amounts receivable were
impaired in full in the Statement of
Comprehensive Income as this is considered
not recoverable. The credit risk for
Emirates has been assessed as low and
no impairment has been identified.
Except for the trade receivables with
respect to Thai Airways, any identified
impairment losses on such assets are
not significant.
As with the current situation, the
Company would make its best effort
to fulfil any obligations as a borrower
under the loan through various means,
if necessary, such as refinancing and/or
restructuring of the lease, etc.
Consideration of any The Audit Committee considered the
triggers for impairment issue at length and were of the opinion
that, an impairment review be undertaken
IAS 36 Impairment of in the current year.
Assets requires that
a review for impairment The Audit Committee has considered
be carried out by the various factors as in the prior year
Group when there is such as: a lack of conclusive comparable
an indication of impairment current market data for the A380 and
of an asset and if events A350 aircraft, the lack of publicly
or changes in circumstances available secondary market data for
indicate that the carrying the B777-300ER aircraft, the nature
amount of an asset may of the operations of the Group being
not be recoverable. aircraft leasing as opposed to an airline
The review will compare operating business, as well as other
the carrying amount mitigating factors such as the close
of the asset with its monitoring by the Group of each airline's
recoverable amount, usage of aircraft and their compliance
which is the higher with agreed maintenance schedules.
of its current market
value and its value The Audit Committee has also considered
in use. pertinent factors for the current year
as referred to in note 3 including:
the impact of COVID-19 on the business
of airlines and indirectly aircraft
values and on the credit risk profile
of the Group's lessees, information
and updates in relation to market demand
for the A380 aircraft in particular
as well as for the B777-300ER and A350
aircraft, and the latest available
updates on the financial position of
the Group's lessees in order to assess
the recoverability potential for future
lease income.
As detailed in note 3, the above factors
have impacted the variables used in
the impairment analysis including residual
values and discount rates, in order
to determine the recoverable amount
of its aircraft. The resulting impairment
loss is disclosed in notes 3 and 9
to the financial statements.
Recognition of the derivative The Audit committee has reviewed the
financial instruments accounting recognition of the interest
in respect of the interest rate swaps prevailing during the year
rate swaps and continues to be of the opinion
that on an on-going basis, the variable
IFRS 9 Financial Instruments: loan and corresponding interest rate
Recognition and Measurement swap will gives rise to cash flows
requires that separately which, in combination will match the
identifiable derivative lease income.
financial instruments
such as interest rate The fair value of the interest rate
swaps are carried at swaps on a mark-to-market basis represents
fair value at the reporting the net present value of the estimated
date and are accounted differential between the fixed and
for separately in the variable interest rates that will arise
financial statements. given the market "assessment" of interest
These derivative financial rates over the balance of the interest
instruments are recorded rate swap contracts. This financial
at mark-to-market fair instrument will have a zero value at
values as either a financial the end of the swap contracts.
asset or a financial
liability.
Internal Controls
The Audit Committee has made due enquiry of the internal
controls of the Administrator. The Audit Committee is satisfied
with the controls currently implemented by the Administrator and
will continue to review them regularly. The Audit Committee has
also requested the Secretary keeps the Group informed of any
in-house developments and improved internal control procedures
effected.
Internal audit
The Group has no employees and operates no systems of its own,
relying instead on the employees and systems of its external
service providers. The Board has therefore taken the decision that
it would not be of any material benefit for the Group to appoint an
internal auditor.
External Audit
The effectiveness of the external audit process is dependent on
appropriate audit risk identification at the start of the audit
cycle . The Audit Committee received from the external auditor, a
detailed audit plan, identifying their assessment of the key risks.
For the year the primary risks identified were in respect of
valuation of the aircraft assets, depreciation and management
override of controls.
Using its collective skills, the Audit Committee evaluated the
effectiveness of the audit process in addressing the matters raised
through the reporting it received from the external auditor at the
conclusion of the audit.
In particular the Audit Committee formally appraise the external
auditor against the following criteria:
-- Independence
-- Ethics and conflicts
-- Knowledge and experience
-- Challenge
-- Promptness
-- Cost
-- Overall quality of service
In addition the Audit Committee sought feedback from the
Administrator on the effectiveness of the audit process.
For the year, the Audit Committee were satisfied that there had
been appropriate focus on the primary areas of audit risk and
assessed the quality of the audit process to be good. The Audit
Committee discussed their findings with the external auditor and
will consider if future external audits could be improved.
The Audit Committee holds meetings with the external auditor to
provide additional opportunity for open dialogue and feedback from
the auditor. If felt necessary, Audit Committee members meet with
the external auditor without the Administrator and Asset Manager
being present. Matters discussed include the residual valuation of
aircraft, the auditor's assessment of business risks and management
activity thereon, the transparency and openness of interactions
with the Administrator, confirmation that there has been no
obstruction of the auditor by the Administrator or undue influence
on the independence of their audit and how they have exercised
professional scepticism.
Appointment and Independence
The Audit Committee considers the reappointment of the external
auditor, including the rotation of the audit partner, each year and
also evaluate their independence on an on-going basis.
The Audit Committee has recommended to the Board the
re-appointment of KPMG as the Group's external auditor be proposed
for the year ending 31 March 2022. Accordingly a resolution
proposing the re-appointment of KPMG as the Group's external
auditor will be put to shareholders at the Company's 2021 annual
general meeting.
The Audit Committee will, if appropriate, consider arranging for
the external audit contract to be tendered in 2028 (being ten years
from the initial appointment) with the aim of ensuring a high
quality and effective audit.
There are no contractual obligations restricting the Audit
Committee's choice of external auditor. The Audit Committee
continues to consider the audit tendering provisions outlined in
the AIC Code, of which it is supportive.
The external auditor is required to rotate the audit partner
responsible for the audit every five years. The current lead audit
partner has been in place since October 2018.
Audit Committee Evaluation
Our activities formed part of the external review of Board
effectiveness performed in December 2020.
An internal evaluation of our effectiveness will be carried out
in 2021.
David Gelber
Chairman of the Audit Committee
Independent auditor's report to the members of Amedeo Air Four Plus Limited
1 Our opinion is unmodified
We have audited the financial statements of Amedeo Air Four Plus
Limited ("the Company"), and its subsidiaries (together, "the
Group"), for the year ended 31 March 2021 which comprise the
Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Financial Position, the Consolidated Statement of Cash
Flows, the Consolidated Statement of Changes in Equity, and the
related notes, including the accounting policies in note 2. The
financial reporting framework that has been applied in their
preparation is Guernsey Law and International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU).
In our opinion, the consolidated financial statements:
-- give a true and fair view of the state of affairs of the
Group as at 31 March 2021 and of its loss for the year then
ended;
-- have been properly prepared in accordance with IFRS as adopted by the EU; and
-- have been properly prepared in accordance with the
requirements of the Companies (Guernsey) Law 2008.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our
responsibilities under those standards are further described in the
Auditor's Responsibilities section of our report. We are
independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the Financial Reporting Council
(FRC)'s Ethical Standards as applied to a listed entity, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 2 (i) ('Accounting Policies - Going
Concern') in the financial statements, which indicates that in case
of materialisation of the risk related to the lessee counterparty
creditworthiness and non-compliance by lessee with the
rehabilitation plan agreed with its creditors, the fixed rents
receivable under the leases may not be sufficient to meet the loan
interest and regular principal repayments of debt scheduled during
the life of each loan and may not provide surplus income to pay for
the Group's expenses. Additionally, Note 2 (i) indicates that the
Group currently has Thai Airways International Public Company
Limited aircraft temporarily in storage and is currently earning no
income from these aircraft. Furthermore as part of the Thai Airways
International Public Company Limited rehabilitation plan, the Group
is in negotiations to agree the binding lease amendment
documentation with this airline, on a power by the hour basis (PBH)
initially, before moving to a fixed rate lease for the remaining
term of the leases including an extension of the leases from the
original term, which will earn less income depending on the
aircraft utilisation. These events or conditions, along with other
matters as set forth in Note 29 ('Subsequent Events'), indicate
that a material uncertainty exists that may cast significant doubt
on the Group's ability to continue as a going concern and,
therefore, it may be unable to realise its assets and discharge its
liabilities in the normal course of business. Our opinion is not
modified in respect of this matter.
The Directors have prepared the financial statements on a going
concern basis as they do not intend to liquidate the Group or to
cease their operations, and as they have concluded that the Group
and the Company's financial position means that this is realistic.
As set out in note 2 (i) in the financial statements, they have
also concluded that there is a material uncertainty that could cast
significant doubt over their ability to continue as a going concern
for at least a year from the date of approval of the financial
statements ("the going concern period").
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the Directors' assessment of the Group and Company's
ability to continue to adopt the going concern basis of accounting
included, inter alia, review of the Directors' cash flow forecasts
and details of the Thai rehabilitation plan.
We evaluated the Directors' assessment of the Group and
Company's ability to continue to adopt the going concern basis of
accounting. In our evaluation of the Directors' conclusions, we
considered the inherent risks to the Group and Company's business
model and analysed how those risks might affect the Group and
Company's financial resources or ability to continue operations
over the going concern period.
The risks that we considered most likely to adversely affect the
Group and Company's available financial resources over this period
were:
- Impact of the Thai rehabilitation plan to the Group's loan repayment obligations; and
- The impact of COVID-19 on the Group's rental income and aircraft values.
As these were risks that could potentially cast significant
doubt on the Group and the Company's ability to continue as a going
concern, we considered sensitivities over the level of available
financial resources indicated by cash flow forecasts taking account
of reasonably possible (but not unrealistic) adverse effects that
could arise from these risks individually and collectively. We
evaluated the achievability of the actions that the Directors have
considered that they could take to improve the position should the
risks materialise.
As a result of our evaluation we note that assumptions used by
the Directors in the cash flow forecasts are reasonable and the
amounts used are supportable.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Detecting irregularities including fraud
We identified the areas of laws and regulations that could
reasonably be expected to have a material effect on the financial
statements and risks of material misstatement due to fraud, using
our understanding of the entity's industry, regulatory environment
and other external factors and inquiry with the Directors. In
addition, our risk assessment procedures included:
-- Inquiring with the Directors as to the Group's policies and
procedures regarding compliance with laws and regulations,
identifying, evaluating and accounting for litigation and claims,
as well as whether they have knowledge of non-compliance or
instances of litigation or claims.
-- Inquiring of Directors, the audit committee and inspection of
policy documentation as to the Group's high-level policies and
procedures to prevent and detect fraud ,as well as whether they
have knowledge of any actual, suspected or alleged fraud.
-- Inquiring of Directors, the Audit Committee, regarding their
assessment of the risk that the financial statements may be
materially misstated due to irregularities, including fraud.
-- Inspecting the Group's regulatory and legal correspondence.
-- Reading Board and Audit Committee minutes.
-- Performing planning analytical procedures to identify any
usual or unexpected relationships.
We discussed identified laws and regulations, fraud risk factors
and the need to remain alert among the audit team.
Firstly, the Group is subject to laws and regulations that
directly affect the financial statements including companies and
financial reporting legislation. We assessed the extent of
compliance with these laws and regulations as part of our
procedures on the related financial statement items, including
assessing the financial statement disclosures and agreeing them to
supporting documentation when necessary.
Secondly, the Group is subject to many other laws and
regulations where the consequences of non-compliance could have a
material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely
to have such an effect: health and safety, anti-bribery, employment
law, environmental law, regulatory capital and liquidity and
certain aspects of company legislation recognising the financial
and regulated nature of the Group's activities and its legal
form.
Auditing standards limit the required audit procedures to
identify non-compliance with these non-direct laws and regulations
to inquiry of the Directors and inspection of regulatory and legal
correspondence, if any. These limited procedures did not identify
actual or suspected non-compliance.
We assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to
commit fraud. As required by auditing standards, we performed
procedures to address the risk of management override of controls
and the risk of fraudulent revenue recognition. On this audit we do
not believe there is a fraud risk related to revenue recognition.
We did not identify any additional fraud risks.
In response to the fraud risks, we also performed procedures
including:
-- Identifying journal entries and other adjustments to test for
all full scope components based on risk criteria and comparing the
identified entries to supporting documentation.
-- Evaluating the business purpose of significant unusual
transactions
-- Assessing significant accounting estimates for bias
-- Assessing the disclosures in the financial statements
As the Group is regulated, our assessment of risks involved
obtaining an understanding of the legal and regulatory framework
that the Group operates and gaining an understanding of the control
environment including the entity's procedures for complying with
regulatory requirements.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-compliance
with laws and regulations (irregularities) is from the events and
transactions reflected in the financial statements, the less likely
the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remains a higher risk of
non-detection of irregularities, as these may involve collusion,
forgery, intentional omissions, misrepresentations, or the override
of internal controls. We are not responsible for preventing
non-compliance and cannot be expected to detect non-compliance with
all laws and regulations.
2 Key audit matters: our assessment of risks of material
misstatement
Key audit matters are those matters that, in our professional
judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and consequently
are incidental to that opinion, and we do not provide a separate
opinion on these matters.
In addition to the matter described in the Material Uncertainty
Related to Going Concern section, we have determined the matter
described below (unchanged from prior year) to be the key audit
matter to be communicated in our report:
Valuation of Aircraft GBP1.2bn (31 March 2020 - GBP1.7bn)
Refer to the accounting policy and Property, Plant and Equipment
disclosures below
The key audit matter How the matter was addressed in our
The Group's aircraft portfolio audit
makes up 84.13% of its total The procedures we undertook included
assets by value. Aircraft valuation but were not limited to:
is requires the exercise of * documenting and assessing the design and
significant judgement around implementation of controls over the valuation of
the forecast and timing of sale aircraft;
used to assess recoverable amount,
and the discount rates applied,
particularly for certain of * obtaining the Directors' impairment assessment model
the aircraft owned by the Group. and:
Appropriate consideration needs
to be given to the market for
the Group's aircraft both at (i) assessing whether the significant
present and at the end of their assumptions used for determining
current leases. The secondary recoverable amounts for aircraft
market for certain of the Company's were applied consistently across
aircraft is still nascent and/or the portfolio;
uncertain, and as such valuation * testing the accuracy of the impairment assessment
can be challenging. model via re-performance.
In addition, the COVID-19 pandemic
has had an impact on aircraft
values and market lease rates. * evaluating and challenging the Board of Directors'
It has had a significant impact significant assumptions in determining the
on global financial markets, recoverable amount by:
and, in particular, on the airline
industry. As a direct result
of global aircraft groundings (i) comparing them to evidence obtained
and reduced passenger numbers, through external sources where possible,
airlines are experiencing unprecedented our industry knowledge and market
liquidity issues and threats experience;
of bankruptcy. (ii) performing scenario analysis
and stress-testing of the discount
rates and forecast timing of sale
and comparing results to those used
by the Group;
(iii) holding discussions with Directors
and management's experts and challenging
the basis for their recoverable amount
by assessing the reasonableness of
all underlying significant assumptions
by comparing it to the external sources
where possible, our industry knowledge
and market experience.
* challenging the significant assumptions applied by
the servicer with regard to the commercial outlook by
comparing with outlook presented by the appraisers
and resultant impairment assessment for the aircraft;
* reperforming the calculations of recoverable amount
and impairment charge to verify the mathematical
accuracy in the assessment of impairment;
* evaluating the competence, capabilities and
objectivity of the external independent aircraft
appraisers appointed by the Group;
* benchmarking the discount rates used in the
impairment assessment against other industry
participants and the Group's weighted average cost of
capital; and
* performing extended stress testing analysis for
aircraft on lease assuming different scenarios based
on aircraft specific risk and possible changes in
lessee cash flows in order to assess the Group's
liquidity and address future uncertainties presented
by Covid-19.
Based on procedures performed, we
found that the significant assumptions
and data inputs into the valuation
of aircraft are reasonable.
3 Our application of materiality and an overview of the scope of
our audit
Materiality for the group financial statements as a whole was
set at GBP8.0m (2020: GBP10.1m), determined with reference to a
benchmark of Total Assets, of which it represents 0.5% (2020:
0.5%).
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding GBP398,750 (2020:
GBP505,781), in addition to other identified misstatements that
warranted reporting on qualitative grounds.
We applied materiality to assist us determine what risks were
significant risks and the procedures to be performed.
Our audit of the Group was undertaken to the materiality
specified above and was all performed by one engagement team in
Ireland.
4 Other Information
The Directors are responsible for the other information
presented in the annual report together with the financial
statements. The other information comprises the information
included in the annual report but excluding the financial
statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except as
explicitly stated below, any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or
inconsistent with the financial statements or our audit knowledge.
Based solely on that work we have not identified material
misstatements in the other information.
5 We have nothing to report on the other matters on which we are
required to report by exception
Under the Companies (Guernsey) Law, 2008 we are required to
report to you if, in our opinion:
-- we have not received all the information and explanations
which to the best of our knowledge and belief are necessary for the
purpose of our audit; or
-- proper accounting records have not been kept; or
-- the financial statements are not in agreement with the accounting records.
We have nothing to report in these respects.
6 Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out above, the
Directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing the
Group and parent Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
using the going concern basis of accounting unless they either
intend to liquidate the Group or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud, other irregularities, or error,
and to issue our opinion in an auditor's report. Reasonable
assurance is a high level of assurance, but does not guarantee that
an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise
from fraud, other irregularities or error and are considered
material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
basis of the financial statements.
A fuller description of our responsibilities is provided on the
FRC's website at www.frc.org.uk/auditorsresponsibilities.
7 The purpose of our audit work and to whom we owe our
responsibilities
Our report is made solely to the Company's members, as a body,
in accordance with Section 262 of the Companies (Guernsey) Law,
2008. Our audit work has been undertaken so that we might state to
the Company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's
members, as a body, for our audit work, for this report, or for the
opinions we have formed.
Ian Nelson 23 July 2021
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Harbourmaster Place,
IFSC,
Dublin 1,
Ireland
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2021
1 Apr 2020 to 1 Apr 2019 to
31 Mar 2021 31 Mar 2020
Notes GBP GBP
INCOME
US Dollar based rent income 4 166,837,378 212,140,601
British Pound based rent
income 4 34,537,182 44,419,736
Gain on sale of aircraft 9 - 3,032,605
201,374,560 256,560,337
EXPENSES
Operating expenses 5 (19,898,131) (7,020,360)
Depreciation and amortisation
of aircraft 9 (137,167,102) (158,605,615)
Impairment of aircraft 9 (152,115,323) (43,714,477)
Expected credit loss 13 (28,854,971) -
(338,035,527) (209,340,452)
Net (loss)/profit for the year
before finance income, finance
costs and foreign exchange gains
/(losses) (136,660,967) 47,219,885
FINANCE INCOME
Finance income 10 8,233,554 538,269
FINANCE COSTS
Finance costs 11 (43,953,810) (97,324,554)
Foreign exchange gains /(losses) 318,899 (222,713)
Foreign exchange gain on
liquidation of foreign operations - 13,329,057
Loss before tax (172,062,324) (33,427,451)
Income tax expense 25 - (60,984)
Loss for the year after
tax (172,062,324) (33,488,435)
-------------- --------------
OTHER COMPREHENSIVE LOSS
Items that may be reclassified
subsequently to profit or
loss
Translation adjustment on
foreign operations 2f (40,380,606) 27,364,231
Reclassified to (loss)/profit
for the year on liquidation
of foreign operations - (13,329,057)
Total comprehensive loss
for the year (212,442,930) (19,453,261)
============== ==============
Pence Pence
Loss per share for the year
- basic and diluted 8 (32.17) (5.21)
-------------- --------------
In arriving at the results for the financial year, all amounts
above relate to continuing operations.
The notes below form an integral part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2021
Notes 31 Mar 2021 31 Mar 2020
GBP GBP
NON-CURRENT ASSETS
Aircraft 9 1,270,311,830 1,714,508,850
CURRENT ASSETS
Accrued income 26 13,045,326 14,446,150
Short term investments 14 22,789,120 7,737,776
Trade and other receivables 13 12,830,033 7,478,539
Cash and cash equivalents 21 118,060,583 247,911,207
-------------- --------------
166,725,062 277,573,672
TOTAL ASSETS 1,437,036,892 1,992,082,522
============== ==============
CURRENT LIABILITIES
Payables 15 121,026 182,873
Deferred income 26 8,195,657 9,470,038
Borrowings 16 97,081,633 103,593,531
105,398,316 113,246,442
NON-CURRENT LIABILITIES
Derivatives at fair value through
profit and loss 18 4,939,122 12,783,866
Security deposits 22 - 14,150,289
Maintenance reserves 23 54,934,474 59,444,834
Borrowings 16 936,474,385 1,129,651,234
Deferred income 26 23,596,288 30,666,285
-------------- --------------
1,019,944,269 1,246,696,508
TOTAL LIABILITIES 1,125,342,585 1,359,942,950
============== ==============
TOTAL NET ASSETS 311,694,307 632,139,572
-------------- --------------
EQUITY
Share capital 17 550,982,781 647,638,697
Foreign currency translation reserve 18,957,528 59,338,134
Retained deficit (258,246,002) (74,837,259)
-------------- --------------
311,694,307 632,139,572
============== ==============
Pence Pence
-------------- --------------
Net Asset Value Per Share based
on 71.80 98.43
-------------- --------------
434,141,757 (2020: 642,250,000)
shares in issue
The financial statements were approved by the Board of Directors
and authorised for issue on 23 July 2021 and are signed on its
behalf by:
_____________________________
Robin Hallam, Director
The notes b form an integral part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2021
1 Apr 2020 1 Apr 2019
to to
Notes 31 Mar 2021 31 Mar 2020
GBP GBP
OPERATING ACTIVITIES
Loss for the year after tax (172,062,324) (33,488,435)
Decrease in accrued income (1,808,197) (6,578,651)
Decrease in deferred income (3,785,427) (4,067,195)
Interest income (388,810) (538,269)
Depreciation of aircraft 9 137,167,102 158,605,615
Expected credit loss 28,854,971 -
Impairment of aircraft 9 152,115,323 43,714,477
Gain on sale of aircraft 9 - (3,032,605)
Taxation expense 25 - 60,984
Loan interest payable and fair value
adjustments on financial assets 11 34,468,765 91,785,893
(Decrease)/Increase in payables (12,323,190) 5,347
Maintenance reserves received 1,520,757 27,079,260
Decrease/(increase) in receivables (33,118,750) 21,939
Foreign exchange movement (318,899) 222,713
Amortisation of debt arrangement costs 11 1,640,301 5,538,661
Taxation paid (66,571) (62,907)
NET CASH FROM OPERATING ACTIVITIES 131,895,051 279,266,827
-------------- --------------
INVESTING ACTIVITIES
Proceeds from sale of aircraft 9 - 441,372,710
Investment in short term deposits 14 (22,789,120) (7,737,776)
Withdrawal from short term deposits 14 7,737,776
Interest received 388,810 538,269
NET CASH (USED IN) /FROM INVESTING
ACTIVITIES (14,662,534) 434,173,203
-------------- --------------
FINANCING ACTIVITIES
Dividends paid 7 (11,346,419) (52,985,622)
Repayments of capital on senior loans 24 (84,500,698) (374,788,685)
Repayments of capital on junior loans 24 - (34,666,245)
Payments of interest on senior loans 24 (32,706,583) (52,650,603)
Payments of interest on junior loans 24 (11,085,646) (12,958,096)
Security trustee and agency fees 11 (200,044) (275,973)
Share redemption paid 17 (98,478,292) -
NET CASH USED IN FINANCING ACTIVITIES (238,317,682) (528,325,224)
-------------- --------------
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 247,911,207 91,070,150
(Decrease)/increase in cash and cash
equivalents (121,085,165) 185,114,806
Effects of foreign exchange rates (8,765,459) (28,273,749)
CASH AND CASH EQUIVALENTS AT OF
YEAR 21 118,060,583 247,911,207
-------------- --------------
The notes on below form an integral part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2021
Notes Share capital Retained Foreign Total
deficit currency
translation
reserve
GBP GBP GBP GBP
Balance as at 1
April 2020 647,638,697 (74,837,259) 59,338,134 632,139,572
Loss for the year - (172,062,324) - (172,062,324)
Other comprehensive
loss for the year - - (40,380,606) (40,380,606)
Total comprehensive
loss for the year - (172,062,324) (40,380,606) (212,442,930)
Transactions with
owners of the Company:
Share redemption 17 (98,478,292) - - (98,478,292)
Share capital raised
in the period 1,822,376 - - 1,822,376
Dividends paid 7 - (11,346,419) - (11,346,419)
------------------- --------------------- ------------------- ------------------
Total transactions
with owners of
the Company: (96,655,916) (11,346,419) - (108,002,335)
Balance as at 31
March 2021 550,834,003 (258,097,224) 18,957,528 311,694,307
------------------- --------------------- ------------------- ------------------
Notes Share capital Retained Foreign Total
earnings currency
/(deficit) translation
reserve
GBP GBP GBP GBP
Balance as at 1
April 2019 647,638,697 11,636,798 45,302,960 704,578,455
Loss for the year - (46,817,492) - (46,817,492)
Other comprehensive
income for the
year - - 27,364,231 27,364,231
Reclassified to
(Loss)/profit for
the year on liquidation
of foreign operations - 13,329,057 (13,329,057) -
------------------- --------------------- ------------------- ------------------
Total comprehensive
(loss)/ income
for the year - (33,488,435) 14,035,174 (19,453,261)
Transactions with
owners of the Company:
Dividends paid 7 - (52,985,622) - (52,985,622)
Balance as at 31
March 2020 647,638,697 (74,837,259) 59,338,134 632,139,572
The notes on below form an integral part of these consolidated
financial statements.
Notes to the Consolidated Financial Statements
For the year ended 31 March 2021
1. GENERAL INFORMATION
The consolidated financial information incorporates the results
of Amedeo Air Four Plus Limited (the "Company"), AA4P Alpha
Limited, AA4P Beta Limited, AA4P Gamma Limited, AA4P Delta Limited,
AA4P Epsilon Limited, AA4P Zeta Limited, AA4P Eta Limited, AA4P
Theta Limited, AA4P Lambda Limited, AA4P Mu Limited, AA4P Nu
Limited, AA4P Leasing Ireland Limited, AA4P Leasing Ireland 2
Limited and AA4P Xi Limited (each a "Subsidiary" and together the
"Subsidiaries") (together the Company and the Subsidiaries are
known as the "Group").
The Company was incorporated in Guernsey on 16 January 2015 with
registered number 59675. Its share capital consists of one class of
redeemable ordinary shares ("Shares"). The Shares are admitted to
trading on the SFS of the London Stock Exchange's Main Market. The
Company and the Guernsey Subsidiaries are tax residents in
Guernsey. AA4P Leasing Ireland Limited and AA4P Leasing Ireland 2
Limited are Irish tax resident trading companies.
The Company's investment objective is to obtain income returns
and a capital return for its Shareholders by acquiring, leasing and
then selling aircraft.
Since the completion of its initial public offering on 13 May
2015, the Company has acquired eight Airbus A380, two Boeing
777-300ER and four Airbus A350-900 aircraft. Eight of the aircraft
are leased to Emirates and four aircraft are leased to Thai
Airways. During the 31 March 2020 financial year, two Airbus A380
aircraft were sold to Etihad after which the related subsidiaries
were liquidated. All aircraft are leased for a period of 12 years
from each respective delivery date. In order to complete the
purchase of these aircraft, subsidiaries of the Company entered
into debt financing arrangements which together with the equity
proceeds were used to finance the acquisition of the aircraft.
Rental income received is used to pay loan interest and regular
capital repayments of debt. US Dollar lease rentals and loan
repayments, with the exception of the four Thai aircraft which
incorporate floating rate lease rentals, are furthermore fixed at
the outset of the Group's acquisition of an aircraft and are very
similar in amount and timing save for the repayment of bullet and
balloon repayments of principal due on the final maturity of a loan
to be paid out.
2. ACCOUNTING POLICIES
The significant accounting policies adopted by the Group are as
follows:
(a) Basis of preparation
The consolidated financial information has been prepared in
conformity with IFRS as adopted by the European Union, which
comprise standards and interpretations approved by the
International Accounting Standards Board ("IASB") and International
Financial Reporting Interpretations Committee ("IFRIC") and
applicable Guernsey law. The financial information has been
prepared on a historical cost basis except for financial assets and
financial liabilities at fair value through profit and loss.
The accounting policies adopted are consistent with those of the
previous financial year, except for the adoption of the new and
amended standards set out below.
Change in comparatives
Certain comparative figures have been reclassified in statement
of profit or loss (gain on sale of aircraft has been included in
income and bank interest received has been included in finance
income) and presentation was changed of certain figures in the cash
flow statement (changes in accrued income and deferred income were
separately presented) in order to conform to the current year
presentation . There is no material impact of these amendments on
the financial statements.
Changes in accounting policies and disclosure
The following Standards or Interpretations have been adopted in
the current year. Their adoption has not had a material impact on
the amounts reported in these consolidated financial statements and
is not expected to have any impact on future financial periods
except where stated otherwise.
New and amended IFRS Standards that are effective for the
current period
The following Standard and Interpretation issued by the
International Accounting Standards Board (the "IASB") and
International Financial Reporting Standards Interpretations
Committee ("IFRIC") has been adopted in the current year. The
adoption has not had any impact on the amounts reported in these
financial statements and is not expected to have any impact on
future financial periods:
IAS 1 'Presentation of financial statements' and IAS 8
'Accounting policies, changes in accounting estimates and error' on
definition of material - These amendments to IAS 1, IAS 8 and
consequential amendments to other IFRSs: use a consistent
definition of materiality throughout IFRSs and the Conceptual
Framework for Financial Reporting; clarify the explanation of the
definition of material; and incorporate some of the guidance in IAS
1 about immateriality information. The effective date is for annual
periods beginning on or after 1 January 2020. The standard does not
have a material impact on the financial statements or performance
of the Group and is endorsed by the EU.
Amendments to References to Conceptual Framework in IFRS
Standards. The revised Conceptual Framework, issued by the IASB in
March 2018: includes a new chapter on measurement; guidance on
reporting financial performance; improved definitions of an asset
and a liability, and guidance supporting these definitions. The
effective date is for annual periods beginning on or after 1
January 2020. The standard does not have a material impact on the
financial statements or performance of the Group and is endorsed by
the EU.
IFRS 3 'Definition of a Business'-The amendments are a response
to feedback received from the post-implementation review of IFRS
3.They clarify the definition of a business, with the aim of
helping entities to determine whether a transaction should be
accounted for as an asset acquisition or a business combination.
The effective date is for annual periods beginning on or after 1
January 2020. The standard does not have a material impact on the
financial statements or performance of the Group and is endorsed by
the EU.
IFRS 9, IAS 39 and IFRS 7 'Financial Instruments'- Interest Rate
Benchmark Reform - Phase 1 deals with pre-replacement issues
(issues affecting financial reporting in the period before the
replacement of an existing interest rate benchmark. The Group is
monitoring the developments and effect and is in the process of
considering the impact of the US Dollar LIBOR reform on the debt
and derivatives. As this will be published until June 2023, there
is no impact on the current year. The effective date is for annual
periods beginning on or after 1 January 2020. The standard does not
have a material impact on the financial statements or performance
of the Group and is endorsed by the EU.
IFRS 16 'Leases' - Covid-19 related rent concessions. As a
result of the coronavirus (COVID-19) pandemic, rent concessions
have been granted to lessees. Such concessions might take a variety
of forms, including payment holidays and deferral of lease
payments. Lessees can elect to account for such rent concessions in
the same way as they would if they were not lease modifications. In
many cases, this will result in accounting for the concession as
variable lease payments in the period(s) in which the event or
condition that triggers the reduced payment occurs. The standard
does not have a material impact on the financial statements or
performance of the Group and is endorsed by the EU.
New and Revised Standards in issue but not yet effective
IAS 1 'Presentation of financial statements' Classification of
Liabilities as Current or Non-current. The IASB issued amendments
to paragraphs 69 to 76 of IAS 1 to specify the requirements for
classifying liabilities as current or non-current. The effective
date is for annual periods beginning on or after 1 January 2023.
The standard is not expected to have a material impact on the
financial statements or performance of the Group and is not
endorsed by the EU.
IAS 37 'Onerous Contracts' - Cost of Fulfilling a Contract. The
IASB amended the standard regarding costs a company should include
as the cost of fulfilling a contract when assessing whether a
contract is onerous. The standard is not expected to have a
material impact on the financial statements or performance of the
Group and is not endorsed by the EU.
IFRS 1 'First-time Adoption of International Financial Reporting
Standards', IFRS 9 'Financial Instruments', and IAS 41
'Agriculture'- Annual Improvements to IFRS Standards 2018-2020.
This project tracks developments in the annual improvements process
for the 2018-2020 cycle. The standard is not expected to have a
material impact on the financial statements or performance of the
Group and is not endorsed by the EU.
IAS 16 'Property, Plant and Equipment' - Proceeds before
Intended Use. The proposed amendment would prohibit an entity from
deducting from the cost of an item of property, plant and equipment
any proceeds from selling items produced while bringing that asset
to the location and condition necessary for it to be capable of
operating in the manner intended by management. The standard is not
expected to have a material impact on the financial statements or
performance of the Group and is not endorsed by the EU.
IFRS 3 'Business Combinations'- Reference to the Conceptual
Framework. The IASB published 'Reference to the Conceptual
Framework (Amendments to IFRS 3)' with amendments to IFRS 3
'Business Combinations' that update an outdated reference in IFRS 3
without significantly changing its requirements. The standard is
not expected to have a material impact on the financial statements
or performance of the Group and is not endorsed by the EU.
IAS 1 'Presentation of Financial Statements'- Classification of
Liabilities as Current or Non-current. The IASB deferred the
effective date of the January 2020 Classification of Liabilities as
Current or Non-Current to annual reporting periods beginning on or
after January 1, 2023. Earlier application of the January 2020
amendments continues to be permitted. The standard is not expected
to have a material impact on the financial statements or
performance of the Group and is not endorsed by the EU.
IFRS 17 'Insurance Contracts' - IFRS 17 sets out the
requirements
for a company reporting information about insurance contracts it
issues and reinsurance contracts it holds. The amendments are aimed
at helping companies implement the Standard and making it easier
for them to explain their financial performance. The standard is
not expected to have a material impact on the financial statements
or performance of the Group and is not endorsed by the EU.
(b) Basis of consolidation
The consolidated financial information incorporates the results
of the Company and the Subsidiaries. The Company owns 100% of all
the shares in the Subsidiaries which grants it exposure to variable
returns from the entities and the power to affect those returns,
granting it control in accordance with IFRS 10.
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated
in preparing the consolidated financial information.
(c) Taxation
Income tax expense comprises current and deferred tax. Current
tax and deferred tax are recognised in profit or loss except to the
extent that it relates to a business combination, or items
recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the period, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to
tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for the following
temporary differences: the initial recognition of assets or
liabilities in a transaction that is not business combination and
that affects neither accounting nor taxable profit or loss, and
differences relating to investments in subsidiaries and jointly
controlled entities to the extent that it is probable that they
will not reverse in the foreseeable future. In addition, deferred
tax is not recognised for taxable temporary differences arising on
the initial recognition of goodwill. Deferred tax is measured at
the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date. Deferred
tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority on the
same taxable entity, or on different tax entities, but they intend
to settle current tax liabilities and assets on a net basis or
their tax assets and liabilities will be realised
simultaneously.
A deferred tax asset is recognised for unused tax losses, tax
credits and deductible temporary differences, to the extent that it
is probable that future taxable profits will be available against
which they can be utilised. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
The Company and the Guernsey Subsidiaries have been assessed for
tax at the Guernsey standard rate of 0%. Since AA4P Leasing Ireland
Limited and AA4P Leasing Ireland 2 Limited are Irish tax resident
trading companies, they will not be subject to Guernsey tax, but
their net lease rental income earned (after tax deductible
expenditure) will be taxable as trading income at 12.5% under Irish
tax regulations. Please refer to note 25 for more information.
(d) Share capital
Shares are classified as equity. Incremental costs directly
attributable to the issue of Shares are recognised as a deduction
from equity.
(e) Interest income and expenses
Interest income and expenses are accounted for on an effective
interest rate basis.
(f) Foreign currency translation
The currency of the primary economic environment in which the
Company operates (the functional currency) is Great British Pounds
("GBP") which is also the presentation currency. The Subsidiaries
of the Company all have the same functional currency being US
Dollar ("USD").
Transactions denominated in foreign currencies are translated
into GBP at the rate of exchange ruling at the date of the
transaction.
Retranslation of subsidiaries:
Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated into the functional
currency at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the
Consolidated Statement of Comprehensive Income.
On consolidation the financial statements of foreign
subsidiaries whose functional currency is not GBP are translated
into GBP as follows: statement of financial position items are
translated into GBP at the period end exchange rate; statement of
income items are translated into GBP at the exchange rates
applicable at the transaction dates or at the average exchange
rates at each respective quarter end, as long as this is not
rendered inappropriate as a basis for translation by major
fluctuations in the exchange rate during the period; unrealised
gains and losses arising from the translation of the financial
statements of foreign subsidiaries are recorded under "Translation
adjustment on foreign operations" in other comprehensive income to
be reclassified to income. The cumulative gains and losses arising
from the translation of the financial statements of foreign
subsidiaries are reclassified to profit and loss on disposal or
liquidation of foreign subsidiaries.
(g) Cash and cash equivalents
Cash at bank and short term deposits which are held to maturity
are carried at cost. Cash and cash equivalents are defined as call
deposits, short term deposits with a term of no more than three
months from the start of the deposit and highly liquid investments
readily convertible to known amounts of cash and subject to
insignificant risk of changes in value.
(h) Segmental reporting
The Directors have overall responsibility for the Group's
activities, including investment activity and are therefore
considered the chief operating decision maker.
The Directors are of the opinion that the Group is engaged in a
single segment of business, being acquiring, leasing and selling
aircraft (together the "Assets" and each an "Asset"). The Directors
consider this appropriate due to the nature of the revenue earned
for the business as a whole from its aircraft, being lease income
from lessees predominantly as a result of passenger revenue earned
by the airlines. However the Directors have chosen to disclose
certain geographical information as per note 28.
(i) Going concern
The Directors have prepared these financial statements for the
year ended 31 March 2021 on the going concern basis. However, the
Directors have identified the matters referred to below which may
indicate the existence of one or more material uncertainties that
may cast doubt on the Group's ability to continue as a going
concern and that the Group may, as a consequence, be unable to
realise its assets and discharge its liabilities in the normal
course of business.
The directors have considered the going concern for the next
12-18 months.
The Directors believe that international travel has not
rebounded in the way predicted at the start of the COVID-19 crisis.
Airlines have used up much of the liquidity provided to them by
governments and shareholders, but the expected restoration in air
travel has been blighted by poor COVID-19 testing facilities, lack
of coordinated action by governments, increased infection rates and
the expected ending of many of the most generous furlough
schemes.
In the case of materialisation of the risk related to the lessee
counterparty creditworthiness, the actual rent received under the
leases may not be sufficient to meet the loan interest and regular
capital repayments of debt scheduled during the life of each loan
and may not provide surplus income to pay for the Group's
expenses.
As announced on 6 April 2020 the Board decided to temporarily
suspend the declaration of dividends until the future prospects of
the Group's two lessees becomes more assured.
Such a decision was made after the Board had carefully
considered and assessed the above mentioned factors against the
background of the Company's investment objectives and the
maintenance of the long-term financial stability of the Company for
the benefit of all shareholders as a class and the Group's
creditors.
However, pursuant to the Compulsory Redemption of Shares
announcement released by the Company on 23 September 2020 and the
Dividend announcements on 13 October 2020 and 14 January 2021, the
directors of the Company declared interim dividends of 1.15 pence
and 1.50 pence per Redeemable Ordinary Share in respect of the
financial year ending 31 March 2021.
As announced on 23 September 2020, the Board of directors of the
Company resolved on that date to redeem one ordinary share for
every three existing ordinary shares of shareholders on the
register of members as at close of business on 25 September 2020
(the "Redemption Record Date"). Accordingly, 214,083,243 ordinary
shares were redeemed and have now been cancelled.
The redemption proceeds due on the redemptions of these ordinary
shares were paid on 9 October 2020.
On 18 February 2021 the Company announced that it had entered
into an agreement with Nimrod to terminate Nimrod's appointment as
sole corporate and shareholder advisor to the Company with effect
from 31 January 2021 and settle outstanding matters between them
(the Termination Agreement). Under the Termination Agreement, the
Company made a payment of GBP9.45 million and issued 5,975,000 new
shares to Nimrod as a complete settlement of contractual
obligations to Nimrod. Nimrod has undertaken to the Company not to
dispose of the said shares for a period of 12 months (subject to
certain customary exceptions). Please refer to note 17 for more
details.
The Board will continue to monitor actively the financial impact
on the Company and its Group resultant from the evolving position
with its aircraft lessees and lenders whilst bearing in mind its
fiduciary obligations and the requirements of Guernsey law which
determine the ability of the Company to make dividends and other
distributions.
The Group's aircraft with carrying values of GBP1,270,311,830
(31 March 2020: GBP1,714,508,850) are pledged as security for the
Group's borrowings (see note 16).
Thai Airways
As noted in the annual report for the year ended 31 March 2020,
on 27 May 2020 the Central Bankruptcy Court of Thailand issued an
order to accept the rehabilitation petition for consideration and
set the date of 17 August for the first hearing on the
rehabilitation petition. Effectively, from 27 May 2020 an automatic
stay comes into effect which restricts Thai's right to pay and
incur debts and a moratorium affecting creditors' rights comes into
force. Thai Airways has not paid any lease payments to the
Company's subsidiaries since 22 May 2020.
From such time, Planners and counsel were appointed to the
carrier's restructuring case and a Rehabilitation Plan was
proposed. After many extensions to Court hearings, the Central
Bankruptcy Court of Thailand rendered its order to approve the Plan
on 15 June 2021 and appointed the Plan Administrators, who will
have rights, duties, and powers to manage and operate Thai Airways
in accordance with the conditions and terms stipulated in the Plan.
The Asset Manager is in negotiations to agree the binding lease
amendment documentation with the airline, on a power by the hour
basis (PBH) initially, before moving to a fixed rate lease for the
remaining term of the lease including an extension of the lease
from the original term. The Company is targeting Q3 2021 to
document and effect the restructuring of debt with its lenders.
Thailand was facing threats of new waves of COVID, which would
further impact the country's tourism industry as well as Thai
Airways' operations. The Civil Aviation Authority of Thailand
(CAAT) says in an 18 July statement that it will require local
airlines to suspend commercial passenger flights to and from "dark
red" zones (8) , classified as having the highest infection risk,
starting 21 July, in line with travel restrictions imposed on these
provinces. Exceptions will be made for regions with a
tourism-oriented "sandbox" initiative, as well as emergency or
technical landings, and other CAAT-authorised flights. Outside of
the "dark red" provinces, other flights are capped at 50% passenger
capacity to account for social distancing
These are positive development for Thai Airways, as the carrier
is gradually restarting its operations in line with the updates
from local authorities. Thai Airways has resumed key international
routes to Japan, South Korea, Australia and Europe. Flights to
London, Frankfurt, Paris, Zurich and Copenhagen, as part of the
Phuket Sandbox travel scheme, will continue to be operated directly
from Bangkok or via Phuket. From Phuket, flights to London and
Frankfurt will run weekly, while London, Frankfurt and Copenhagen
will be served twice weekly. In Southeast Asia, Thai Airways has
recommenced flights to Manila in the Philippines from Bangkok,
operating three times a week. Flights to North Asian destinations
has also restarted, including daily flights to Hong Kong,
twice-weekly flights to Haneda and Nagoya in Japan, four-times
weekly to Osaka and six-times weekly to Tokyo Narita. Flights to
Seoul in South Korea and Sydney in Australia will be operated on a
thrice-weekly and twice-weekly basis.
(8) Thirteen provinces have been classified as "dark red" zones
and these are Bangkok, Chachoengsao, Chonburi, Nakhon Pathom,
Nonthaburi, Narathiwat, Pathum Thani, Pattani, Phra Nakhon Si
Ayutthaya, Yala, Songkhla, Samut Prakan and Samut Sakhon.
Going Concern Assessment
While the Group has made a loss in the current period, it is in
a net current asset position and continues to generate strong
positive operating cash flows. The Group's cash levels rose
significantly due to the sale of two A380-800 aircraft on 25
February 2020 in the prior financial year. The sales included the
full repayment of the financing arrangements on both aircraft,
including applicable swap breakage and facility prepayment
costs.
The Board decided to return to Shareholders GBP98.5 million on
25 September 2020 by way of a redemption of one-third of the
ordinary shares in the capital of the Company (being the redemption
of approximately 214,083,243 Shares) at a redemption price of 46
pence per each redeemed share.
On 23 February 2021 the Company made a payment of GBP9.45
million and issued 5,975,000 new shares to Nimrod as a complete
settlement of contractual obligations to Nimrod.
During the current year, due to the non-payment of lease rentals
by Thai Airways, a provision has been raised for the impairment of
amounts due (see the Consolidated Statement of Comprehensive
Income). Management has completed a high-level analysis which
considers both historical and forward-looking qualitative and
quantitative information, to assess the credit risk of the
receivables from Thai Airways. The security deposits payable were
utilised in full against the lease rentals due by Thai Airways at
year end, with the remaining rental amounts due recognised as
receivable (discounted for the time value of money) at year end in
accordance with the Thai rehabilitation plan. The remaining amounts
receivable were impaired in full in the Statement of Comprehensive
Income as this is considered not recoverable.
The Company reviewed plausible downside scenarios (such as
receiving no power-by-the hour rental income from Thai) and
implemented sufficient measures, such as the temporary suspension
of dividends, in order to best position itself to settle its future
debt obligations in the short term to medium term. . Additionally,
the company is also arranging with the lenders an optimal solution
that will facilitate servicing of the loan in line with the rent
received under the lease amendment documentation.
The Board was also of the opinion that the Planning Committee's
initial timeline of having a plan agreed with all creditors and
implemented and working within Q1 2021, was optimistic. The Board
is therefore working on the basis that the timeline should be
realistically shifted further out and that the Group will receive
little or no income before Q3 2021 from the Thai leases.
Whilst progress has been made, the Directors are uncertain as to
the final outcome of these matters.
However, on the basis of (i) the Group's current liquid assets
and (ii) cash-flow projections, the Directors nevertheless believe
that the going concern basis of accounting is appropriate but there
are material uncertainties.
(j) Leasing and rental income
At inception or on modification of a contract that contains a
lease component, the Group allocates
the consideration in the contract to each lease component on the
basis of their relative standalone
prices.
If an arrangement contains lease and non-lease components, then
the Group applies IFRS 15 to allocate the consideration in the
contract.
The Group makes an overall assessment of whether the lease
transfers substantially all of the risks and rewards incidental to
ownership of the underlying asset. If this is the case, then the
lease is a finance lease; if not, then it is an operating lease. As
part of this assessment, the Group considers certain indicators
such as whether the lease is for the major part of the economic
life of the asset. The leases relating to the Assets have been
classified as operating leases as the terms of the leases do not
transfer substantially all the risks and rewards of ownership to
the lessee. The Assets are shown as non-current assets in the
Consolidated Statement of Financial Position. Further details of
the leases are given in note 12.
Rental income and advance lease payments from operating leases
are recognised on a straight-line basis over the term of the
relevant lease. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount of
the leased Asset and amortised on a straight-line basis over the
lease term. The four A350-900 aircraft have variable lease rentals,
the variable portion of which is treated as contingent rent.
Contingent rent is recognised in the period in which it is
earned.
The Deferred income represents the difference between actual
payments received in respect of the lease income (including some
received in full upfront) and the amount to be accounted for in the
accounting records on a straight line basis over the lease terms.
This liability will reduce over time as the leases continue and
approach the end of the lease terms.
Changes in lease payments that result from the terms included in
the original lease contract or in
applicable law or regulations are considered as part of the
original lease terms and conditions of the lease. If there is no
change in either the scope of or the consideration of the lease,
then the Company assumes that there is no lease modification.
Where an increase in scope occurs and the payment for this
increase in scope is commensurate, any modification will be
considered a new lease, and any remaining prepayments and accruals
are included in the accounting for the new lease. If the new lease
continues to be classified as operating, the future cash flows are
recognised on a straight line (or other systematic basis), adjusted
for any prepayments or accruals with the balance written down to
zero at the end of the lease. Where there is no lease modification,
the existing accounting policy is followed.
(k) Maintenance reserve and security deposits liabilities
In many aircraft operating lease contracts, the lessee has the
obligation to make periodic payments which are calculated with
reference to utilisation of airframes, engines and other major
life-limited components during the lease. In most lease contracts,
upon presentation by the lessee of the invoices evidencing the
completion of qualifying work on the aircraft, the Group reimburses
the lessee for the work, up to a maximum of the advances received
with respect to such work.
The Group records such amounts as maintenance provisions.
Maintenance provisions not expected to be utilised within one year
are classified as non-current liabilities. Amounts not refunded
during the lease are recorded as lease revenue at lease
termination. Upon redelivery of the aircraft leased to Emirates at
the end of the lease, if the aircraft does not meet the return
condition set out, monetary compensation will be receivable and
accounted for as lease revenue. Where the aircraft has been
maintained and meets the return conditions, this will not be due.
Further details are given in note 23.
Security deposits represent amounts paid by the lessee as
security in accordance with the lease agreements. The deposits are
repayable to the lessees on the expiration of the lease agreements
subject to satisfactory compliance of the lease agreements by the
lessees. During the current period, these security deposits were
utilised in full against the lease rentals owing by Thai Airways.
Further details are given in note 22.
(l) Property, plant and equipment - Aircraft
In line with IAS 16 Property Plant and Equipment, each Asset is
initially recorded at cost, being the fair value of the
consideration paid. The cost of the Asset is made up of the
purchase price of the Assets plus any costs directly attributable
to bringing it into working condition for its intended use. Costs
incurred by the lessee in maintaining, repairing or enhancing the
aircraft are not recognised as they do not form part of the costs
to the Group. Accumulated depreciation and any recognised
impairment losses are deducted from cost to calculate the carrying
amount of the Asset.
(a) Depreciation
Depreciation is recognised so as to write off the cost of each
Asset less the estimated residual value over the lease term of the
Asset of twelve years, using the straight line method. Residual
values have been arrived at by taking the average amount of three
independent external valuers and after taking into account
disposition fees. The Directors consider that the use of forecast
market values excluding inflation best approximates residual value
as required by IAS 16 Property, Plant and Equipment.
The depreciation method reflects the pattern of benefit
consumption. The residual value is reviewed annually in March and
is an estimate of the amount the entity would receive today if the
Asset were already of the age and condition they will be in at the
end of the lease. Due to a change in estimate of residual value for
all aircraft in the current year, there has been a GBP18,598,802
increase in the annual depreciation charge for the current year.
Further details of the change in estimate of residual values and
the impact on depreciation for the current year as a result are
given in note 9.
Depreciation starts when the Asset is available for use.
(b) Impairment
At each audited reporting date, the Group reviews the carrying
amounts of its Assets to determine whether there is any indication
that those Assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the Asset is estimated
to determine the extent of the impairment loss (if any). Further
details are given in note 3.
Recoverable amount is the higher of fair value less costs to
sell and the value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the Asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an Asset is estimated to be less
than its carrying amount, the carrying amount of the Asset is
reduced to its recoverable amount. An impairment loss is recognised
immediately in the Consolidated Statement of Comprehensive Income.
Where an impairment loss subsequently reverses, the carrying amount
of the Asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the Asset in prior years. A
reversal of an impairment loss is recognised immediately in
Consolidated Statement of Comprehensive Income.
(m) Financial assets and financial liabilities
(a) Classification
The Group classified its financial assets and financial
liabilities in the following measurement categories:
- those to be measured subsequently at fair value (either
through other comprehensive income ("OCI"), or through the
Consolidated statement of comprehensive income ), and
- those to be measured at amortised cost.
The classification depends on the Group's business model for
managing the financial assets and the contractual terms of the cash
flows.
For assets measured at fair value, gains and losses will be
recorded in the Consolidated statement of comprehensive income.
The interest rate swaps in the Group are measured at FVTPL as it
is managed on a fair value basis in accordance with a documented
investment strategy. The interest rate swaps do not meet the SPPI
criterion (solely payments of principal and interest) and
accordingly it will be mandatorily measured at FVTPL under IFRS 9.
The Group does not classify any derivatives as hedges in a hedging
relationship.
(b) Recognition/derecognition
A financial instrument is recognised when the Group becomes a
party to the contractual provisions of the instrument. Financial
liabilities are derecognised if the Group's obligations, specified
in the contract, expire or are discharged or cancelled.
Financial assets are derecognised if the Group's contractual
rights to the cash flows from the financial assets expire, are
extinguished, or if the Group transfers the financial assets to a
third party and transfers all the risks and rewards of ownership of
the Asset, or if the Group does not retain control of the Asset and
transfers substantially all the risk and rewards of ownership of
the Asset.
(c) Measurement
At initial recognition, the Group measures a financial asset at
its fair value plus, in the case of a financial asset not at FVTPL,
transaction costs that are directly attributable to the acquisition
of the financial asset. Transaction costs of financial assets
carried at FVTPL are expensed in the Consolidated statement of
comprehensive income.
Financial assets with embedded derivatives are considered in
their entirety when determining whether their cash flows are solely
payment of principal and interest.
Financial assets
Subsequent measurement of financial assets depends on the
Group's business model for managing the asset and the cash flow
characteristics of the asset. The Group classifies its financial
assets into the following measurement category:
Amortised cost: Assets that .are held for collection of
contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost.
Interest income from these financial assets is included in finance
income using the effective interest rate method. Any gain or loss
arising on derecognition is recognised directly in the Consolidated
Statement of Comprehensive Income and presented in other gains /
(losses), together with foreign exchange gains and losses.
Provision for impairment losses are presented as separate line item
in the Consolidated Statement of Comprehensive Income.
Financial assets currently measured at amortised cost are cash
and cash equivalents, receivables and short term investments. These
instruments meet the solely principal and interest criterion and
are held in a held-to-collect business model. Accordingly, they
will continue to be measured at amortised cost under IFRS 9.
Derivative instruments
Changes in the fair value of financial assets at FVPL are
recognised in the Consolidated statement of comprehensive income as
applicable.
Financial assets and financial liabilities at fair value through
profit or loss are initially recognised at fair value. Transaction
costs are expensed in the Consolidated Statement of Comprehensive
Income. Subsequent to initial recognition, all financial assets and
financial liabilities at fair value through profit or loss are
measured at fair value. Gains and losses arising from changes in
the fair value of the 'financial assets or financial liabilities at
fair value through profit or loss' category are presented in the
Consolidated Statement of Comprehensive Income in the period in
which they arise.
(d) Impairment
The Group recognises loss allowances for expected credit losses
(ECLs) on financial assets measured at amortised cost. The Group
measures loss allowances at an amount equal to lifetime ECL. Loss
allowances for trade debtors and contract assets are always
measured at an amount equal to lifetime ECL.
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition and when
estimating ECL, the Group considers reasonable and supportable
information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information
and analysis, based on the Group's historical experience and
informed credit assessment and including forward-looking
information.
The impairment methodology applied depends on whether there has
been a significant increase in credit risk.
As per IFRS 9, a receivable has a low credit risk if:
-- It has a low risk of default;
-- The borrower has a strong capacity to meet its contractual
cash flow obligations in the near term; and
-- Adverse changes in economic and business conditions in the
longer term might, but will not necessarily, reduce the ability of
the borrower to fulfil its obligations.
ECLs are a probability-weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the
entity in accordance with the contract and the cash flows that the
Group expects to receive). ECLs are discounted at the effective
interest rate of the financial asset. The gross carrying amount of
a financial asset is written off (either partially or in full) to
the extent that there is no realistic prospect of recovery.
For trade and other receivables, the Group applies the
simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition of the
receivables.
Refer to note 13 for provision for impairment with respect to
trade and other receivables.
(n) Non-derivative financial liabilities
Financial liabilities consist of payables, security deposits and
borrowings. The classification of financial liabilities at initial
recognition will be at amortised cost to the extent it is not
classified at FVTPL. All financial liabilities are initially
measured at fair value, net of transaction costs. All financial
liabilities are recorded on the date on which the Group becomes
party to the contractual requirements of the financial
liability.
Amortised cost: Interest expenses from financial liabilities is
included in finance costs using the effective interest rate method.
Any gain or loss arising on derecognition is recognised directly in
the Consolidated statement of comprehensive income and presented in
other gains / (losses), together with foreign exchange gains and
losses.
Financial liabilities are subsequently measured at amortised
cost using the effective interest method, with interest expense
recognised on an effective yield basis.
The effective interest method is a method of calculating the
amortised cost of the financial liability and of allocating
interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash
payments through the expected life of the financial liability, to
the net carrying amount on initial recognition.
Associated costs are subsequently amortised on an effective
interest rate basis over the life of the loan and are shown net on
the face of the Consolidated Statement of Financial Position over
the life of the lease.
The Group derecognises financial liabilities when, and only
when, the Group has transferred substantially all risks and rewards
of its obligations.
(o) Net Asset Value
In circumstances where the Directors are of the opinion that the
NAV or NAV per Share, as calculated under prevailing accounting
standards, is not appropriate or could give rise to a misleading
calculation, the Directors, in consultation with the Administrator
may determine, at their discretion, an alternative method for
calculating a more useful value of the Group and shares in the
capital of the Company, which they consider more accurately
reflects the value of the Group.
3. SIGNIFICANT JUDGEMENTS AND ESTIMATES
In the application of the Group's accounting policies, which are
described in note 2, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
Critical judgements in applying the Group's accounting
policies
The following are the critical judgements and estimates that the
Directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in the financial information.
CRITICAL ACCOUNTING JUDGEMENTS
Depreciation
The depreciation method reflects the pattern of benefit
consumption. The residual value is reviewed annually in March and
is an estimate of the amount the entity would receive today if the
Asset were already of the age and condition they will be in at the
end of the lease. Due to a change in estimate of residual value for
all aircraft in the current year, there has been a GBP18,598,802
increase in the annual depreciation charge for the current year.
Further details of the change in estimate of residual values and
the impact on depreciation for the current year as a result are
given in note 9.
Depreciation starts when the Asset is available for use.
Operating lease commitments - Group as lessor
The Group had entered into operating leases on twelve Assets as
at the year end (2020: twelve) (see note 12). The Group has
determined, based on an evaluation of the terms and conditions of
the arrangements, that it retains all the significant risks and
rewards of ownership of these Assets and accounts for the contracts
as operating leases.
The non- cancellable period of operating leases on the Assets
have been determined by the Group to be for 12 years.
KEY SOURCES OF ESTIMATION UNCERTAINTY
Residual value of Aircraft used in depreciation calculation
As described in note 2(l), the Group depreciates the Assets on a
straight line basis over the term of the lease after taking into
consideration the estimated residual value. IAS 16 Property, Plant
and Equipment requires residual value to be determined as an
estimate of the amount that the Group would currently obtain from
disposal of the Asset, after deducting the estimated costs of
disposal, if it were of the age and condition expected at the end
of the lease.
The Directors are unable to make a direct market comparison in
making this estimation, as currently there are no aircraft of a
similar type of sufficient age and/or there is minimum to no public
secondary market trading data available. After consulting with the
Asset Manager, the Directors have concluded that a forecast market
value at 31 March 2021 (and 31 March 2020) using Minimum Return
Conditions ("MRC") values (determined annually from three
independent expert aircraft valuers) for the A380 aircraft at the
end of the lease (excluding inflationary effects) best approximates
residual value. MRC refers to minimum return conditions per the
lease contracts whereby the aircraft is returned in the specified
minimum life condition and includes estimated monetary compensation
from Emirates for the return of the A380s in that specified
condition upon the end of the lease. No other conditions exist.
In estimating residual value at the 31 March 2021 audited annual
year end (and 31 March 2020 year-end) for the A350's and Boeing
777-300ER aircraft, the Directors have made reference to forecast
market values using base values (excluding inflationary effects)
for the aircraft obtained from three independent expert aircraft
valuers. Base value is the appraiser's opinion of the underlying
economic value of an aircraft, in an open, unrestricted, stable
market environment with a reasonable balance of supply and demand.
Full consideration is assumed of its "highest and best use" given
the fact that the aircraft are held for use in a leasing business.
An asset's base value is determined using the historical trend of
values and in the projection of value trends and presumes an
arm's-length, cash transaction between willing, able, and
knowledgeable parties, acting prudently, with an absence of duress
and with a reasonable period of time available for marketing. In
the appraisers' valuations, the base value of an aircraft excludes
reconfiguration costs and assumes the physical condition is average
for an asset of its type and age and that all maintenance
requirements and schedules have been met.
The estimation of residual value remains subject to uncertainty.
If a reasonable possible change in residual value in USD terms, had
for instance, decreased by 20% with effect from the beginning of
this period, the net loss for the period would have increased and
closing shareholders' equity would have decreased by approximately
GBP13.09 million (31 March 2020: GBP15.55 million).
An increase in residual value by 20% would have had an equal but
opposite effect. This reflects the range of estimates of residual
value that the Directors believe would be reasonable at this
time.
Impairment
Factors that are considered important which could trigger an
impairment review include, but are not limited to, significant
decline in the market value beyond that which would be expected
from the passage of time or normal use, significant changes in the
technology and regulatory environments, evidence from internal
reporting which indicates that the economic performance of the
asset is, or will be, worse than expected. The Directors considered
the issue at length and are of the opinion that an impairment
review be undertaken.
As described in note 2(l), an impairment loss exists when the
carrying value of an asset or cash generating unit exceeds its
recoverable amount, which is the higher of its fair value less
costs to sell and its value in use. The Directors review the
carrying amounts of the Assets at each audited reporting date and
monitor the Assets for any indications of impairment as required by
IAS 16 Property, Plant and Equipment and IAS 36 Impairment of
Assets.
In assessing value-in-use, the estimated future cash flows
expected to be generated by the asset (ie the income streams
associated with the lease and the expected future market value of
the aircraft at the end of the lease) are discounted to their
present value using a pretax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset and the credit risk profile of the
lessees.
In determining fair value less costs of disposal, recent market
transactions are taken into account, if available. If no such costs
can be identified, an appropriate valuation model is used. Such a
valuation reflects highest and best use given the fact that the
aircraft are held for use in a leasing business.
The Board together with the Asset Manager decided that it was
necessary to conduct an impairment test in the current year, as the
below items resulted in pricing changes for the current portfolio
of aircraft:
-- As further Airbus A380 and A350 aircraft reach comparable 12
year ages and exit their first lease agreements, further market
data is available to Amedeo and the asset valuers.
-- Lack of publicly available secondary market data for the B777-300ER aircraft.
-- Changing technologies, market innovation and changes to key
production programs as well as the success and / or failure as well
as the timing of new aircraft model launches.
-- Information regarding Airbus cancellation of the A380
programme in the prior year, and further updates on the market for
A380 aircraft, creating uncertainty as to the liquidity of the
future market for sale or re-lease.
-- The impact of COVID-19 on the business of airlines and
indirectly aircraft values as well on the credit risk profile of
the Group's lessees.
-- Latest information on the rehabilitation petition for Thai
Airways (see note 28 Subsequent events)
-- The Group's market capitalisation as at 31 March 2021 is
lower than the Group's Net Assets per the Statement of Financial
Position as at 31 March 2021 year end.
The assessment was performed by comparing the net book value of
each aircraft to the higher of its fair value less costs to sell
and its value in use. For the A380 and 777-300ER aircraft
value-in-use was used as the recoverable amounts. Rental cash flows
to the end of the contracts have been used in the calculation of
value-in-use as the cash flows are contractual. Any assumptions
with regards issues in counterparty credit risk has been reflected
in the discount rate used to calculate the net present value of
future cash flows. For the A350 aircraft, assumptions from a draft
Letter Of Intent has been incorporated into the assumptions in
relation to rental cash flow, however this remains to be confirmed
by definitive documentation. In the current year for the A350
aircraft, fair value less cost to sell was above the value in use,
and was therefore used as the recoverable amounts. The current
market value is determined by three independent professional
appraisers. The appraisers' valuations are based on several
assumptions regarding the technical and economic developments of
the aircraft type as well as future developments in the aviation
industry as a whole.
The Group adopted IFRS 13 in respect of disclosures about the
degree of reliability of fair value measurements. This requires the
Group to classify for disclosure purposes fair value measurements
using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements.
The fair value hierarchy has the following levels:
-- Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
-- Level 2 inputs are inputs other than quoted prices included
within Level 1 that are observable for the asset or liability,
either directly or indirectly; and
-- Level 3 inputs are unobservable inputs for the asset or liability.
The Group classifies its fair value measurements as level 3.
Factors that substantiate classification at level 3 include a lack
of conclusive comparable current market data for the A380 and A350
aircraft, the lack of publicly available secondary market data for
the B777-300ER aircraft, the nature of the operations of the Group
being aircraft leasing as opposed to an airline operating business,
as well as the impact of COVID-19 on the business of airlines and
aircraft values .
The Directors on the advice of the Asset Manager considered the
following in their determination of the most appropriate
discounting rate, ranging from 6.5% to 7.5%;
1. The discount rate should be a rate commensurate with what a
normal market participant would consider to be the risk inherent in
the assets.
2. The risk profile of the A380 aircraft vs the B777 and A350
aircraft
3. The consideration of the credit risk profile for Emirates and
Thai
The fair value and the future sales value of the aircraft have
been estimated with reference to the average of current Minimum
Return Conditions ("MRC") values for the A380 aircraft and future
base values for the B777 and A350 aircraft, from three independent
appraisers.
Based on the impairment review performed, an impairment loss of
GBP152,115,323 was recognised in the current year (31 March 2020:
GBP43,714,477), with the impairment test resulting in an updated
carrying value of the aircraft in total of GBP1,270,311,830 at year
end (31 March 2020: GBP1,714,508,850), as reflected in note 9.
The Directors have also considered that market capitalisation at
year end of GBP104,194,022 is below Net Asset value of
GBP311,694,307 and have concluded that no further aircraft
impairment charge is necessary due to the fact impairment was
performed using the inputs from competent aircraft appraisers and
market capitalisation also reflects psychology of market
participants which is not relevant for aircraft impairment
assessment at year end .
For the year ended 31 March 2021
4. RENTAL INCOME
1 Apr 2020 1 Apr 2019
To To
31 Mar 2021 31 Mar 2020
GBP GBP
US Dollar based rent income 161,184,363 202,244,408
Revenue earned but not yet received 1,717,063 5,744,702
Revenue received but not yet earned (330,649) (247,663)
--------------- ------------
162,570,777 207,741,447
Amortisation of advanced rental
income (US Dollar) 4,266,601 4,399,154
--------------- ------------
166,837,378 212,140,601
British Pound based rent income 34,596,573 43,670,083
Revenue earned but not yet received 91,134 833,949
Revenue received but not yet earned (150,525) (84,296)
--------------- ------------
34,537,182 44,419,736
Total rental income 201,374,560 256,560,337
--------------- ------------
Rental income is derived from the leasing of the Assets. US
Dollar based rent represents rent received in USD and British Pound
based rent represents rent received in "GBP". Rental income
received in USD is earned by the subsidiaries and is consolidated
by translating it into the presentation currency (GBP) at the
average rate for the year.
An adjustment has been made to spread the actual total income
receivable over the term of the lease on an annual basis. In
addition, advance rentals received have also been spread over the
full term of the leases. The four A350-900 aircraft have variable
lease rentals, the variable portion of which is treated as
contingent rent. Contingent rent is recognised in the period in
which it is earned.
The contingent rent including PBH rent for the year ended 31
March 2021 is GBP414,614 per annum (31 March 2020:
GBP6,503,869).
5. OPERATING EXPENSES
1 April
1 April 2020 2019
to to
31 Mar 2021 31 Mar 2020
GBP GBP
Corporate and shareholder adviser
fee 2,070,598 2,418,517
Asset management fee 4,431,409 3,397,029
Administration fees 460,961 481,765
Bank charges 12,982 10,297
Registrar's fee 18,656 19,367
Audit fee 76,473 62,949
Directors' remuneration 269,064 269,064
Directors' and Officers' insurance 85,320 39,585
Legal and professional expenses 1,011,871 155,468
Annual regulatory fees 23,492 28,418
Sundry costs 58,592 137,901
Nimrod agreement fee 11,272,375 -
Cash management fee 106,338 -
19,898,131 7,020,360
============= ==================
6. DIRECTORS' REMUNERATION
The directors' fees are GBP61,500 per annum with the Chairman
receiving an additional fee of GBP15,375 per annum and the Chair of
the audit an additional GBP7,688 per annum.
7. DIVIDS IN RESPECT OF SHARES
1 Apr 2020 1 Apr 2019
to to
31 Mar 2021 31 Mar 2020
GBP Pence per GBP Pence per
Share Share
First dividend 4,923,918 1.1500 13,246,406 2.0625
Second dividend 6,422,501 1.500 13,246,406 2.0625
Third dividend - - 13,246,405 2.0625
Fourth dividend - - 13,246,405 2.0625
----------- ------------ ----------- ------------
11,346,419 2.6500 52,985,622 8.2500
----------- ------------ ----------- ------------
Refer to note 17 for the return of capital of shareholders.
8. LOSS PER SHARE
Loss per Share ("EPS") is based on the loss for the year of
GBP172,062,324 (2020: loss of GBP33,488,435) and 534,917,899 shares
(2020: 642,250,000 shares) being the weighted average number of
Shares in issue during the year.
There are no dilutive instruments and therefore basic and
diluted Earnings per Share are identical.
9. PROPERTY, PLANT AND EQUIPMENT - AIRCRAFT
Aircraft Aircraft
31 Mar 2021 31 Mar 2020
GBP GBP
COST
Aircraft purchases - opening balance 1,927,735,270 2,414,868,310
Acquisition costs - opening balance 8,364,798 10,277,000
Translation adjustment on foreign
operations-opening balance 249,104,624 182,885,262
-------------- --------------
Cost at beginning of year 2,185,204,692 2,608,030,572
Disposals - (551,967,489)
Translation adjustment on foreign
operations-current year* (216,094,753) 129,141,609
-------------- --------------
Cost as at year end 1,969,109,939 2,185,204,692
-------------- --------------
31 Mar 2021 31 Mar 2020
GBP GBP
ACCUMULATED DEPRECIATION, IMPAIRMENT AND AMORTISATION
Opening balance 470,695,842 360,615,169
-------------- --------------
Depreciation for the current year
based on previous year residual
values 117,811,781 141,530,508
Amortisation of acquisition costs
on aircraft 756,519 918,342
Adjustment due to change in estimate 18,598,802 16,156,765
Net depreciation charge on all aircraft
for the year 137,167,102 158,605,615
Disposals - (113,627,384)
Translation adjustment on foreign
operations* (60,416,607) 21,922,424
-------------- --------------
Accumulated depreciation as at year
end 547,446,337 427,515,824
-------------- --------------
Adjustment due to impairment 152,115,323 43,714,477
Translation adjustment on foreign
operations* (763,551) (534,459)
Accumulated depreciation and impairment
as at year end 698,798,109 470,695,842
Carrying amount - opening balance 1,714,508,850 2,247,415,403
============== ==============
Carrying amount as at year end 1,270,311,830 1,714,508,850
============== ==============
*Translation adjustment on foreign operations
The Group believes that the use of forecast market values
excluding inflation best approximates residual value as required
per IAS 16 Property, Plant and Equipment (refer to note 3). In 2019
the decision was made by the Board to re-designate the functional
currency of the subsidiaries to USD and to classify them as foreign
operations. Therefore the carrying values of the aircraft in the
subsidiaries in USD have been re-translated at the closing Sterling
/ US Dollar exchange rate at 31 March 2021 (and 31 March 2020) for
consolidation purposes through "Translation adjustment on foreign
operations".
Financing of aircraft
In order to complete purchases of the aircraft, subsidiaries of
the Company have entered into debt financing agreements with a
senior fully amortising loan and junior balloon loan (see note 16).
The Company used the equity proceeds (see note 17) in addition to
the finance agreements to finance the acquisition of the aircraft.
Subject to the below, rentals under each lease are sufficient to
pay the senior loan payment (being capital and interest and junior
loan payments due (being interest only), also in USD.
Exceptions to the above include senior loans with an outstanding
balance (excluding interest and associated costs) of GBP289,893,510
(31 March 2020: GBP332,946,866) at year end, which have balloon
capital payments on maturity. Any junior loan principal and senior
loan capital due at maturity, is expected to be repaid at lease
expiry out of the proceeds of the sale, re-lease, refinancing or
other disposition of the relevant Asset.
The Group's aircraft with carrying values of GBP1,270,311,830
(31 March 2020: GBP1,714,508,850) are pledged as security for the
Group's borrowings (see note 16).
Sale of aircraft
The Group can sell the Assets during the term of the leases
(with the lease attached and in accordance with the terms of the
transfer provisions contained therein). Under IAS 16 the direct
costs
attributed in negotiating and arranging the operating leases
have been added to the carrying amount of the leased Asset and
recognised as an expense over the lease term.
In the prior year on 25th February 2020, the Group announced its
completion of the sale of two A380-800 aircraft. The sales included
the full repayment of the financing arrangements on both aircraft,
including applicable swap breakage and facility prepayment
costs.
Impairment
Refer to note 2l for details of the impairment test conducted by
the Group.
Change in estimate
The Group conducted a review on the aircraft held at 31 March
2021, which resulted in changes in the residual value of the
aircraft at the end of the lease. The Adjustment due to change in
estimate of of GBP18,598,802 (31 March 2020: GBP16,156,765) will
have the same impact on estimated depreciation in future years as
in the current year if there is no further revisions in residual
values. The effect of these changes on depreciation are included in
the reconciliation of accumulated depreciation and amortisation
table above where the depreciation before and after the residual
value adjustment is noted.
10. FINANCE INCOME
1 April 1 April
2020 to 2019 to
31 Mar 2021 31 Mar 2020
GBP GBP
Fair value gain on derivatives at fair
value through profit and loss* (see
note 18) 7,844,744 -
Bank interest received 388,810 538,269
8,233,554 538,269
------------- -------------
* This is the movement in the fair value of the derivatives for
the period.
11. FINANCE COSTS
1 April 1 April
2020 to 2019 to
31 Mar 2021 31 Mar 2020
GBP GBP
Amortisation of debt arrangements costs 1,640,301* 5,538,661*
Interest payable on loan ** 42,113,465* 65,013,562*
Security trustee and agency fees 200,044 275,973
Fair value loss on derivatives at fair
value through profit and loss (see
note 18) - 26,496,358
43,953,810 97,324,554
------------- -------------
*Included in Finance costs is interest on the amortised cost
liability for the year of GBP43,753,766 (31 March 2020:
LIR70,552,223).
** This amount includes GBP132,590 interest income (31 March
2020: GBP219,463 interest income) from the interest rate swaps.
12. OPERATING LEASES
The amounts of minimum lease receipts at the reporting date
under non-cancellable operating leases are detailed below:
31 March 2021 31 March 2020
US Dollar British Pound US Dollar British Pound
based rent based rent based rent based rent
income income income income
Months Years Months Years
GBP GBP GBP GBP
Year 1 151,088,737 34,668,972 172,440,208 34,668,972
Year 2 151,140,641 34,668,972 172,150,084 34,668,972
Year 3 151,140,641 34,668,972 172,150,084 34,668,972
Year 4 151,140,641 34,668,972 172,150,084 34,668,972
Year 5 151,140,641 34,668,972 172,150,084 34,668,972
Year 6 onwards 358,433,086 49,528,828 557,327,739 84,197,800
-------------- -------------- -------------- --------------
1,114,084,387 222,873,688 1,418,368,283 257,542,660
-------------- -------------- -------------- --------------
The twelve (2020: twelve) assets all have an initial lease term
of twelve years with lease end dates ranging from September 2026 to
January 2030.
13. TRADE AND OTHER RECEIVABLES
31 Mar 2021 31 Mar 2020
GBP GBP
Prepayments 125,832 140,087
Vat receivable 6,800 -
------------- ------------
132,632 140,087
Trade receivables 40,718,920 7,338,452
Expected credit loss* (28,021,519) -
------------- ------------
12,697,401 7,338,452
12,830,033 7,478,539
============= ============
The above carrying value of receivables is deemed to be
materially equivalent to fair value, given that they are short term
in nature.
*As at 31 March 2021 the expected lifetime losses on the rent
receivables has been reassessed by the Group. Due to non-payment of
lease rentals by Thai Airways for the period since May 2020 as
explained in note 2(i) Going Concern and note 19 (c) Financial risk
management objectives and policies - credit risk, the security
deposits payable were utilised in full against the lease rentals
due by Thai Airways at year end, with the remaining rental amounts
due recognised as receivable (discounted for the time value of
money) at year end in accordance with the Thai rehabilitation plan.
The remaining amounts receivable were impaired in full in the
Statement of Comprehensive Income as this is considered not
recoverable. Apart from the receivables from Thai Airways, the
remaining trade receivables and receivables at amortised cost at
year end are short-term (i.e. no longer than 12 months) and have
been settled after year end. Except for the trade receivables with
respect to Thai Airways, any identified impairment losses on such
assets are not significant. Information about Group's exposure to
credit risk and impairment loss for trade receivables is included
in Note 19 c.
14. SHORT TERM INVESTMENTS
Fixed Maturity 31 Mar
Rate date 31 Mar 2021 2020
Bank % GBP GBP
Bank of Nova Scotia 0.84 6 Jul 2020 - 1,001,614
UBS AG 0.935 20 Oct 2020 - 1,705,105
Lloyds Bank 0.95 13 Nov 2020 - 1,705,060
Credit Suisse 0.98 18 Nov 2020 - 1,705,324
Santander UK plc 1.83 25 Jan 2021 - 811,090
Standard Chartered
Bank 1.73 12 Feb 2021 - 809,583
HSBC Bank PLC 0.25 6 Aug 2021 1,700,248 -
UBS AG 0.09 6 Aug 2021 850,252 -
Credit Agricole CIB 0.18 27 Aug 2021 704,478 -
Standard Chartered
Bank 0.105 26 Oct 2021 150,092 -
BNP Paribas London
Branch 0.12 23 Nov 2021 1,004,560 -
Credit Suisse 0.14 30 Nov 2021 1,704,175 -
Toronto Dominion
Bank 0.09 6 Dec 2021 1,706,415 -
BNP Paribas London
Branch 0.09 7 Jan 2022 751,651 -
Societe Generale 0.01 14 Jan 2022 1,700,704 -
ING Bank 0.13 7 Feb 2022 901,320 -
Canadian Imperial
Bank of Commerce 0.04 6 Jul 2021 2,177,939 -
Lloyds Bank plc 0.22 14 Jul 2021 362,955 -
Societe Generale 0.21 27 Jul 2021 1,088,733 -
Standard Chartered
Bank 0.31 22 Nov 2021 1,453,457 -
Toronto Dominion
Bank 0.20 13 Dec 2021 2,176,697 -
Cooperatieve Rabobank
U.A 0.25 12 Nov 2021 2,178,965 -
Credit Agricole CIB 0.16 25 Aug 2021 2,176,479 -
22,789,120 7,737,776
============ ==========
The above investments represent certificates of deposits
maturing within 12 months and are held by HSBC Securities Services
in London under a custody agreement between Ravenscroft Cash
Management and HSBC Bank plc for Global Custody Services.
15. PAYABLES
31 Mar 2021 31 Mar 2020
GBP GBP
Accrued administration fees 49,264 44,117
Accrued audit fee 70,501 68,864
Accrued registrar fee 1,025 3,059
Other accrued expenses 236 262
Taxation payable - 66,571
121,026 182,873
============ ============
The above carrying value of payables is equivalent to the fair
value due to their short term maturity period and nature as
repayable on demand.
16. BORROWINGS
31 Mar 2021 31 Mar 2020
Borrowings GBP GBP
Bank loans 1,044,682,529 1,247,317,838
Unamortised arrangement fees (11,126,511) (14,073,073)
-------------- ----------------
1,033,556,018 1,233,244,765
============== ================
Consisting of:
Senior loans ($1,152,560,258
at 31 March 2021, $1,259,670,653
at 31 March 2020 ) 836,218,717 1,014,227,579
Junior loans ($271,990,002
at 31 March 2021, $272,019,345
at 31 March 2020) 197,337,301 219,017,186
1,033,556,018 1,233,244,765
============== ================
Borrowings
Non-current portion 936,474,385 1,129,651,234
Current portion (senior loans
only) 97,081,633 103,593,531
-------------- ----------------
1,033,556,018 1,233,244,765
The tables below detail the future contractual undiscounted cash
flows in respect of the senior and junior loans, including both the
principal and interest payments, and will not agree directly to the
amounts recognised in the Consolidated Statement of Financial
Position.
31 Mar 2021 31 Mar 2020
GBP GBP
Borrowings: Amount due for settlement
within 12 months 133,486,512 151,651,846
133,486,512 151,651,846
============ ============
Consisting of:
Senior loans covered by lease rental
receipts (capital
and interest) 123,098,931 140,139,040
Repayments of junior debt covered by
lease rental receipts (interest only) 10,387,581 11,512,806
------------ ----------------
133,486,512 151,651,846
============ ================
Borrowings: Amount due for settlement
after 12 months and before 60 months 538,338,246 608,416,635
538,338,246 608,416,635
============ ================
Consisting of:
Senior loans covered by lease rental
receipts (capital and interest) 496,894,822 562,396,143
Repayments of junior debt covered by
lease rental receipts (interest only) 41,443,424 46,020,492
------------ ----------------
538,338,246 608,416,635
============ ================
Borrowings: Amount due for settlement
after 60 months 549,348,769 701,713,951
549,348,769 701,713,951
========================== ============
Consisting of:
Senior loans covered by lease rental
receipts (capital and interest) and
uncovered senior loans (for balloon
payment at maturity) 336,111,962 453,577,466
Repayments of junior debt covered by
lease rental receipts (interest only)
and uncovered (capital repaid at maturity) 213,236,807 248,136,485
--------------------------
549,348,769 701,713,951
========================== ================
As explained in note 2(i), due to the non-payment of lease
rentals by Thai Airways during the current year, the Asset Manager
has arranged with the lenders with respect to the Thai aircraft
that debt service for the Group can be limited to interest only on
a three monthly basis and are seeking to extend that arrangement.
No breaches or defaults occurred in the current or prior
period.
Loans with an outstanding balance of GBP743,558,620 (31 March
2020: GBP904,088,779) have fixed interest rates over the term of
the loans. Of this total, loans with an outstanding balance of
GBP362,258,686 (31 March 2020: GBP317,722,925 ), although having
variable rate interest, also have associated interest rate
derivative contracts issued by the lenders in effect fixing the
loan interest over the terms of the loans. Loans with an
outstanding amount of GBP289,997,398 (31 March 2020:
GBP329,155,986) at year end are variable rate (LIBOR) with no
associated hedge of the interest exposure, although the related
lease rentals are also floating rate to match, and each senior loan
has a USD 15,000,000 balloon capital payment on maturity. The Group
is monitoring the developments and effect and is in the process of
considering the impact of the US Dollar LIBOR reform on the debt
and derivatives. As this will be published until June 2023, there
is no impact on the current year. Senior loans have both interest
and capital repayments whereas junior loans only have interest
repayments with the capital to be repaid on maturity.
All loans are taken in USD. The Company uses a combination of
fixed and variable debt loan instruments. Maturity dates are set at
12 years from delivery date. Interest rates are estimated at c. 5%.
The aggregate face value of the Company's loans is GBP1,446,709,715
and the current aggregate carrying value is GBP1,033,556,018.
Transaction costs of arranging the loans have been deducted from
the carrying amount of the loans and will be amortised using EIR
over their respective lives.
In the prior year, the Group announced its completion of the
sale of two A380-800 aircraft. The sales included the full
repayment of the financing arrangements on both aircraft, including
applicable swap breakage and facility prepayment costs.
17. SHARE CAPITAL
The Share Capital of the Company is represented by an unlimited
number of redeemable ordinary shares of no par value.
31 March
Issued 31 March 2021 2020
Ordinary Ordinary
Shares Shares
Opening balance 642,250,000 642,250,000
Shares issued 5,975,000 -
Shares redeemed (214,083,243) -
Total number of shares as at year
end 434,141,757 642,250,000
============== ============
31 March
Issued 31 March 2021 2020
Ordinary Ordinary
Shares Shares
GBP GBP
Ordinary Shares
Opening balance 655,585,000 655,585,000
Shares issued 1,822,376 -
Shares redeemed (98,478,292) -
Share issue costs-cumulative (7,946,303) (7,946,303)
Total share capital 550,982,781 647,638,697
============== ============
As announced on 23 September 2020, the Board of directors of the
Company resolved on that date to redeem one ordinary share for
every three existing ordinary shares of shareholders on the
register of members as at close of business on 25 September 2020
(the "Redemption Record Date"). Accordingly, 214,083,243 ordinary
shares were redeemed and have now been cancelled.
The redemption proceeds due on the redemptions of these ordinary
shares were paid on 9 October 2020.
On 18 February 2021 the Company announced that it had entered
into an agreement with Nimrod to terminate Nimrod's appointment as
sole corporate and shareholder advisor to the Company with effect
from 31 January 2021 and settle outstanding matters between them
(the Termination Agreement). On this day the Company recognised a
redemption payable for the shares to be issued, at the fair value
of the shares at that point in time. Under the Termination
Agreement, the Company made a payment of GBP9.45 million and on 23
February 2021, issued 5,975,000 new shares to Nimrod as a complete
settlement of contractual obligations to Nimrod. Nimrod has
undertaken to the Company not to dispose of the said shares for a
period of 12 months (subject to certain customary exceptions).
The Company's total issued Share capital at 31 March 2021 was
434,141,757 Shares (2020: 642,250,000 Shares), none of which were
held in treasury.
Therefore the total number of voting rights in issue was
434,141,757.
Members holding Shares are entitled to receive, and participate
in the following: any dividends out of income attributable to the
Shares; other distributions of the Company available for such
purposes and resolved to be distributed in respect of any
accounting period; or other income or right to participate
therein.
On winding up of the Company, shareholders are entitled to the
surplus assets attributable to the Share class remaining after
payment of all the creditors of the Company.
18. FINANCIAL INSTRUMENTS
The Group's main financial instruments comprise:
(a) Cash and cash equivalents that arise directly from the Group's operations; and
(b) Debt secured on non-current assets.
(c) Interest rate swaps.
(d) Security deposits.
(e) Short term investments.
The Group's objective is to obtain income returns and a capital
return for its Shareholders by acquiring, leasing and then selling
aircraft.
The following table details the categories of financial assets
and liabilities held by the Group at the reporting date:
31 Mar 2021 31 Mar 2020
GBP GBP
Financial assets
Cash and cash equivalents 118,060,583 247,911,207
Short term investments 22,789,120 7,737,776
Trade receivables* 12,697,401 7,338,452
------------ ------------
153,547,104 262,987,435
============ ============
*This amount represents rent due but not yet received and net of
provision for impairment (see note 13) and is included within
Receivables on the Statement of Financial Position.
Financial liabilities
Payables and security deposits 121,026 14,333,162
Derivatives at fair value through profit
and loss 4,939,122 12,783,866
Debt payable (excluding unamortised arrangement
fees) 1,044,682,529 1,247,317,838
1,049,742,677 1,274,434,866
============== ==============
Fair value of financial instruments
The Company has adopted IFRS 13, 'Fair value measurement' and
this standard requires the Company to price its financial assets
and liabilities using the price in the bid-ask spread that is most
representative of fair value for both financial assets and
financial liabilities. An active market is a market in which
transactions for the asset or liability take place with sufficient
frequency and volume to provide pricing information on an ongoing
basis.
The level of the fair value hierarchy of an instrument is
determined considering the inputs that are significant to the
entire measurement of such instrument and the level of the fair
value hierarchy within those inputs are categorised.
The hierarchy is broken down into three levels based on the
observability of inputs as follows:
Level 1: Quoted price (unadjusted) in an active market for an
identical instrument.
Level 2: Valuation techniques based on observable inputs, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices).
Level 3: Valuation techniques using significant unobservable
inputs.
The interest rate swaps are considered to be level 2 in the Fair
Value Hierarchy. The fair value of interest rate swaps are derived
based on the valuation as provided by the respective bank with
which the swap is held which are based on mark-to-market values.
The following tables show the Company's financial assets and
liabilities as at 31 March 2021 based on the hierarchy set out in
IFRS:
31 March 2021 Quoted Prices Significant
in active unobservable
markets for Significant inputs
identical other observable
assets inputs
(Level 1) (Level 2) (Level 3) Total
2021 2021 2021 2021
Liabilities GBP GBP GBP GBP
Derivatives at fair
value through profit
and loss
Interest rate swaps - (4,939,122) - (4,939,122)
=============== ================== ============== ==============
31 March 2020 Quoted Prices Significant
in active unobservable
markets for Significant inputs
identical other observable
assets inputs
(Level 1) (Level 2) (Level 3) Total
2020 2020 2020 2020
Liabilities GBP GBP GBP GBP
Derivatives at fair
value through profit
and loss
Interest rate swaps - (12,783,866) - (12,783,866)
=============== ================== ============== ===============
Derivative financial instruments
The following table shows the Company's derivative position as
at 31 March 2021 with a comparative table as at 31 March 2020:
31 March 2021 31 March 2020
Derivatives at fair value
through profit and loss
(GBP) 4,939,122 12,783,866
Notional amount (USD) 387,922,376 407,251,340
Notional amount (GBP) 281,449,885 327,899,630
The maturity dates range from 13 April 2028 to 21 August 2028
(31 March 2019: 13 April 2028 to 24 May 2029).
The increase in the fair value of the Interest Rate Swaps for
the year of GBP7,844,744 (31 March 2020: decrease of GBP26,496,358)
is reflected in Finance Income and Finance Costs in note 10 and 11.
The notional amount amortises in line with the underlying
liability.
19. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The main risks arising from the Group's financial instruments
are capital management risk, foreign currency risk, credit risk,
liquidity risk and interest rate risk. The Board regularly reviews
and agrees policies for managing each of these risks and these are
summarised below:
(a) Capital management
The Group manages its capital to ensure its ability to continue
as a going concern while maximising return to Shareholders through
the optimisation of debt and equity balances.
The capital structure of the Group consists of debt, which
includes borrowings disclosed in note 16, cash and cash equivalents
and equity attributable to equity holders, comprising issued
capital and retained earnings.
The Group's Board of Directors reviews the capital structure on
a bi-annual basis. Equity includes all capital and reserves of the
Company that are managed as capital.
On 6 April 2020 the Board announced that it was temporarily
suspending the declaration of dividends.
However, pursuant to the announcement released by the Company on
23 September 2020 and 14 January 2021, the directors of the Company
declared interim dividends of 1.15 pence and 1.50 pence per
Redeemable Ordinary Share in respect of the financial year ending
31 March 2021.
The Board decided to return to Shareholders GBP98.5 million on
25 September 2020 by way of a compulsory redemption of one-third of
the ordinary shares in the capital of the Company (being the
redemption of approximately 214,083,243 Shares) at a redemption
price of 46 pence per each redeemed share. Accordingly, 214,083,243
ordinary shares were redeemed and have now been cancelled.
On 18 February 2021 the Company announced that it had entered
into an agreement with Nimrod to terminate Nimrod's appointment as
sole corporate and shareholder advisor to the Company with effect
from 31 January 2021 and settle outstanding matters between them
(the Termination Agreement). Under the Termination Agreement, the
Company made a payment of GBP9.45 million and issued 5,975,000 new
shares to Nimrod as a complete settlement of contractual
obligations to Nimrod. Nimrod has undertaken to the Company not to
dispose of the said shares for a period of 12 months (subject to
certain customary exceptions).
(b) Foreign currency risk
The Group endeavoured to mitigate the risk of foreign currency
movements by matching its USD rentals with USD debt to the extent
necessary. The USD lease rentals should offset the USD payables on
amortising debt on the loans, apart from the loans with an
outstanding balance of GBP289,997,398 (31 March 2020:
GBP329,155,986) at year end which have balloon capital payments on
maturity (refer to note 16). The foreign exchange exposure in
relation to the bank loans (capital and interest) is thus largely
hedged (as an economic hedge), apart from the foreign exchange
exposure unhedged in respect of the balloon capital portion of the
loans with an outstanding balance of GBP289,997,398 (31 March 2020:
GBP329,155,986) as at year end and the principal bullet repayment
of the junior loans at maturity. However the potential future value
or the potential sale proceeds of the aircraft upon maturity of
these junior and senior loans, should reduce this foreign exchange
risk.
Rental income received in USD is used to pay loan interest and
regular capital repayments of debt (but excluding any bullet or
balloon repayment of principal), which are likewise denominated in
US Dollars. USD lease rentals and loan repayments are furthermore
fixed at the outset of the Company's life and are very similar in
amount and timing save for the repayment of bullet and balloon
repayments of principal due on the final maturity of a loan to be
paid out of the proceeds of the sale, re-lease, refinancing or
other disposition of the relevant aircraft.
The carrying amounts of the Group's foreign currency denominated
monetary assets and liabilities at the reporting date are as
follows:
31 Mar 2021 31 Mar 2020
GBP GBP
Cash and cash equivalents (USD) -
Asset 6,513,171 26,081,445
Cash and cash equivalents (GBP) -
Asset 9,064,679 153
Short term investments (USD) - Asset 1,329,668 1,620,673
The USD/GBP exchange rate was 1.3783 at 31 March 2021 (1.2420 at
31 March 2020).
The following table details the Group's sensitivity to a 25% (31
March 2020: 25%) appreciation in GBP against the US dollar. 25% (31
March 2020: 25%) represents the Directors' assessment of the
reasonably possible change in foreign exchange rates. The
sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the
year-end for a 25% (31 March 2020: 25%) change in foreign currency
rates. A positive number below indicates an increase in profit and
other equity where GBP strengthens 25% (31 March 2020: 25%) against
the USD. For a 25% weakening of the GBP against the USD, there
would be a comparable but opposite impact on the profit and other
equity;
31 Mar 2021 31 Mar 2020
GBP GBP
Consolidated statement
of comprehensive income 1,568,568 5,540,424
Change in value of assets 1,568,568 5,540,424
On the eventual sale of the Assets, the Group may be subject to
foreign currency risk if the sale was made in a currency other than
GBP. Transactions in similar assets are typically priced in
USD.
(c) Credit Risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group.
The credit risk on cash transactions are mitigated by
transacting with counterparties that are regulated entities subject
to prudential supervision, or with high credit ratings assigned by
international credit rating agencies.
The Group's financial assets exposed to credit risk are as
follows:
31 Mar 2021 31 Mar 2020
GBP GBP
Cash and cash equivalents 118,060,583 247,911,207
Short term investments 22,789,120 7,737,776
Trade receivables 40,718,920 7,338,452
Expected credit loss (28,021,519) -
153,547,104 262,987,435
============= ------------
Surplus cash in the Group is held with Barclays, HSBC, Lloyds,
RBSI and Bank of Ireland, which have credit ratings given by
Moody's of P-1, P-1, P-1, P-1 and P-2 (31 March 2020: A1, Aa2, Aa2,
A3 and A2) respectively. Surplus cash in the Subsidiaries is held
in accounts with RBSI and Westpac, which have credit ratings given
by Moody's of P-1 and P-1 (31 March 2020: A3 and Aa2)
respectively.
Short term investments relate to deposits held with Bank of
Novia Scotia, UBS, Lloyds, Credit Suisse, Santander UK, Standard
Chartered, HSBC, Cooperatieve Rabobank, BNP Paribas, Skandinaviska
Enskilda, Barclays and Canadian Imperial which all have the same
credit rating given by Moody's of P-1(31 March 2020: P-1).
The credit quality and risk of lease transactions with
counterparty airlines is evaluated upon conception of the
transaction. In addition, ongoing updates as to the operational and
financial stability of the airlines are provided by the Company's
Asset Manager in its quarterly reports to the Company.
The COVID-19 pandemic has resulted in widespread restrictions on
the ability of people to travel and such has had a material
negative effect on the airline sector, and by extension the
aircraft leasing sector. This may lead to the inability of airlines
to pay rent as they fall due.
At the inception of each lease, the Company selected a lessee
with a strong Statement of Financial Position and financial
outlook. The financial strength of Emirates and Thai Airways is
regularly reviewed by the Directors and the Asset Manager. Security
deposits and maintenance reserve liabilities are held in relation
to funds received at the year-end for the timely and faithful
performance of the lessees' obligations under the lease agreements
for the four A350-900 aircraft. However, the security deposits do
not cover the full value of the Group's obligations pursuant to the
loan agreements in the event of termination of the leases or
default by Emirates or Thai Airways. During the current period, the
security deposits were utilised in full against the lease rentals
due by Thai Airways (refer to note 22),
In the case of materialisation of the risk related to the lessee
counterparty creditworthiness and described in more detail in note
2(i) Going Concern, the fixed rents receivable under the leases may
not be sufficient to meet the loan interest and regular capital
repayments of debt scheduled during the life of each loan and may
not provide surplus income to pay for the Group's expenses.
The Group's most significant counterparties are Emirates and
Thai Airways as lessees and providers of income. Both of the
Group's lessees do not currently have a credit rating.
Refer to note 2(i) Going Concern for further details on the
current status of the Group's lessees and 2(i) for further details
on the maintenance reserves and security deposits.
The Group has chosen to apply the simplified approach to
measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. As at 31 March 2021 the
expected lifetime losses on the rent receivables has been
reassessed by the Group. Due to non-payment of lease rentals by
Thai Airways for the period since May 2020 as explained in note
2(i) Going Concern, the security deposits payable were utilised in
full against the lease rentals due by Thai Airways at year end,
with the remaining rental amounts due recognised as receivable
(discounted for the time value of money) at year end in accordance
with the Thai rehabilitation plan. The remaining amounts receivable
were impaired in full in the Statement of Comprehensive Income as
this is considered not recoverable. The credit risk for Emirates
has been assessed as low and no impairment has been identified.
Except for the trade receivables with respect to Thai Airways, any
identified impairment losses on such assets are not
significant.
The total amount of credit impaired receivables is GBP32,292,753
and is the balance of lease rentals due from Thai Airways.
The Group has considered the effects of the expected credit loss
on cash and is satisfied that no expected credit loss is required
as it is not considered material.
(d) Liquidity Risk
Liquidity risk is the risk that the Group will encounter
difficulty in realising assets or otherwise raising funds to meet
financial commitments such as capital repayments of senior debt, as
well as junior debt at the end of the lease. The Group's main
financial commitments are its ongoing operating expenses and
repayments on loans.
Ultimate responsibility for liquidity risk management rests with
the Board of Directors.
Pursuant to the announcement released by the Company on 23
September 2020 and 14 January 2021, the directors of the Company
declared interim dividends of 1.15 pence and 1.50 pence per
Redeemable Ordinary Share in respect of the financial year ending
31 March 2021. Consideration will given to any future use of
accumulated rental income, if the Board considers that the Company
will not be able to repay any balloon and bullet repayments of debt
falling due through the sale, refinancing or other disposition of
an Asset.
Refer to note 2(i) Going Concern for further details on the
current status of arrangements that are being put in place with
lenders.
As announced on 23 September 2020, the Board of Directors of the
Company resolved on that date to redeem one ordinary share for
every three existing ordinary shares of shareholders on the
register of members as at close of business on 25 September 2020
(the "Redemption Record Date"). Accordingly, 214,083,243 ordinary
shares were redeemed and have now been cancelled.
In addition to the bank loans, the Group may from time to time
use borrowings. To this end the Group may arrange an overdraft
facility for efficient cash management. The Directors intend to
restrict borrowings other than the bank loans to an amount not
exceeding 15 per cent. of the net asset value of the Group at the
time of drawdown. Borrowing facilities will only be drawn down with
the approval of the Directors on a case by case basis.
The table below details the residual contractual maturities of
financial liabilities. The amounts below are contractual
undiscounted cash flows, including both the principal and interest
payments, and will not agree directly to the amounts recognised in
the Statement of Financial Position:
1-3 3-12 1-2 2-5 Over 5 Total
31 March
2021 Months Months Years Years Years
GBP GBP GBP GBP GBP GBP
Financial
liabilities
Payables 121,026 - - - - 121,026
Security
deposit
liability - - - - - -
Derivatives
at fair
value through
profit and
loss - 2,273,332 2,629,017 1,254,890 (1,682,415) 4,474,824
Borrowings 33,391,205 100,095,307 133,819,517 404,518,729 549,348,769 1,221,173,527
----------- ------------ ------------ ------------ ------------ ----------------
33,512,231 102,368,639 136,448,534 405,773,619 547,666,354 1,225,769,377
=========== ============ ============ ============ ============ ================
1-3 3-12 1-2 2-5 Over 5 Total
31 March
2020 Months Months Years Years Years
GBP GBP GBP GBP GBP GBP
Financial
liabilities
Payables 182,873 - - - - 182,873
Security
deposit
liability - - - - 14,150,289 14,150,289
Financial
liabilities
at fair
value through
profit and
loss - - - - 12,783,866 12,783,866
Borrowings 37,889,209 113,762,637 151,885,014 456,531,621 701,713,951 1,461,782,432
----------- ------------ ------------ ------------ ------------ ----------------
38,072,082 113,762,637 151,885,014 456,531,621 728,648,106 1,488,899,460
=========== ============ ============ ============ ============ ================
(e) Interest Rate Risk
Interest rate risk arises from the possibility that changes in
interest rates will affect future cash flows. It is the risk that
fluctuations in market interest rates will result in a variation in
deposit interest earned on bank deposits held by the Group or on
debt repayments.
The loans with an outstanding balance of GBP289,997,398 (31
March 2020: GBP329,155,986) as at year end entered into in the
current year are variable rate (with no associated interest rate
swap contract issued by the lender to fix the loan interest over
the term of the loans) although the related rentals are also
floating rate to match.
With the exception of the above-mentioned loans, the Group
mitigates interest rate risk by fixing the interest rate on the
bank loans (as well as in respect of loans with an outstanding
balance of GBP362,258,686 (31 March 2020: GBP317,722,925) as at
year end, which have an associated interest rate swap to fix the
loan interest).
The following table details the Group's exposure to interest
rate risks:
31 March 2021 Variable Fixed Non-interest Total
interest interest Bearing
GBP GBP GBP GBP
Financial
Assets
Short term
investment - 22,789,120 - 22,789,120
Cash and cash
equivalents
and receivables 118,060,583 - 8,426,167 126,486,750
-------------- -------------- ------------- --------------
Total Financial
Assets 118,060,583 22,789,120 8,426,167 149,275,870
============== ============== ============= ==============
Financial
Liabilities
Accrued expenses
and reserves - - 121,026 121,026
Security deposit
liability - - - -
Borrowings 652,256,084 381,299,934 - 1,033,556,018
-------------- -------------- ------------- --------------
Total Financial
Liabilities 652,256,084 381,299,934 121,026 1,033,677,044
============== ============== ============= ==============
Effect of
derivatives
held for risk
management 281,449,885
Total interest
sensitivity
gap (252,745,616) (358,510,814)
============== ==============
31 March 2020 Variable Fixed Non-interest Total
interest interest Bearing
GBP GBP GBP GBP
Financial
Assets
Short term
investment - 7,737,776 - 7,737,776
Cash and cash
equivalents
and receivables 247,911,207 - 7,338,452 255,249,659
------------- -------------- ------------- --------------
Total Financial
Assets 247,911,207 7,737,776 7,338,452 262,987,435
============= ============== ============= ==============
Financial
Liabilities
Accrued expenses
and reserves - - 182,873 182,873
Security deposit
liability - - 14,150,289 14,150,289
Borrowings 646,878,911 586,365,354 - 1,233,244,765
------------- -------------- ------------- --------------
Total Financial
Liabilities 646,878,911 586,365,354 14,333,162 1,247,577,927
============= ============== ============= ==============
Effect of
derivatives
held for risk
management 327,899,630
Total interest
sensitivity
gap (71,068,074) (578,628,078)
============= ==============
If a reasonable possible change in interest rates had been 100
basis points (2020: 100 basis points) higher throughout the period
and all other variables were held constant, the Group's net assets
attributable to shareholders as at 31 March 2021 would have been
GBP2,527,456 (31 March 2020: GBP710,681) greater due to an increase
in the amount of interest receivable on the bank balances.
If a reasonable possible change in interest rates had been 100
basis points (2020: 100 basis points) lower throughout the period
and all other variables were held constant, the Group's net assets
attributable to shareholders as at 31 March 2021 would have been
GBP2,527,456 (31 March 2020: GBP710,681) lower due to a decrease in
the amount of interest receivable on the bank balances.
20. ULTIMATE CONTROLLING PARTY
In the opinion of the Directors, the Company has no ultimate
controlling party as the Company does
not have any shareholder which holds greater than 10% of the
issued share capital of the Company.
21. CASH AND CASH EQUIVALENTS
31 March 2021 31 March 2020
GBP GBP
Bank balances 118,060,583 247,911,207
118,060,583 247,911,207
============== ==============
Included in the cash and cash equivalents are secured cash
deposits of GBP54,934,474 (31 March 2020:
GBP73,595,123) in respect of maintenance reserves, and in the prior year security deposits..
22. SECURITY DEPOSITS
31 March 31 March
2021 2020
GBP GBP
Security deposit liability - 14,150,289
- 14,150,289
=========== ===========
The Security deposits are held in relation to funds received at
the year-end for the timely and faithful performance of the
lessees' (Thai) obligations under the lease agreements for the four
A350-900 aircraft. In the current period, security deposits were
utilised against the trade receivables for the Thai aircraft.
23. MAINTENANCE RESERVES
31 March 31 March
2021 2020
GBP GBP
Balance at 1 April 59,444,834 32,365,575
Increase for the year 1,520,757 24,892,062
Translation adjustment on
foreign operations (6,031,117) 2,187,197
Balance at 31 March 54,934,474 59,444,834
============ ===========
The maintenance reserve liabilities are held in relation to
funds received at the year-end for the timely and faithful
performance of the lessees' obligations under the lease agreements
for the four A350-900 aircraft. Amounts accumulated in the
maintenance reserve will be repaid only as re-imbursements for
actual maintenance expenses incurred by the lessee. Refer to note
2(k) for accounting policies adopted on the maintenance
reserves
The table below details the expected utilisation of maintenance
reserves.
1-3 3-12 1-2 2-5 Over 5 Total
Months Months Years Years Years
GBP GBP GBP GBP GBP GBP
31 March
2021 - - 44,102,813 133,004 10,698,657 54,934,474
31 March
2020 - - 47,711,960 144,523 11,588,351 59,444,834
======= ======= =========== ======== =========== =============
24. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
31 March 2021 Borrowings
GBP
Balance at 1 April 2020 1,233,244,765
Repayments of capital on senior loans (84,500,698)
Repayments of capital on junior loans -
Payments of interest on senior loans (32,706,583)
Payments of interest on junior loans (11,085,646)
Add back payments of interest on senior
loans 32,706,583
Add back payments of interest on junior
loans 11,085,646
Movement in interest accruals (1,678,764)
Amortisation of debt arrangements costs 1,640,301
Translation adjustment on foreign operations (115,149,586)
--------------
Balance at 31 March 2021 1,033,556,018
==============
31 March 2020 Borrowings
GBP
Balance at 1 April 2019 1,574,112,490
Repayments of capital on senior loans (374,788,685)
Repayments of capital on junior loans (34,666,245)
Payments of interest on senior loans (52,650,603)
Payments of interest on junior loans (12,958,096)
Add back payments of interest on senior
loans 52,650,603
Add back payments of interest on junior
loans 12,958,096
Movement in interest accruals (659,759)
Amortisation of debt arrangements costs 5,538,661
Translation adjustment on foreign operations 63,708,303
--------------
Balance at 31 March 2020 1,233,244,765
==============
25. TAX
31 March 2021 31 March 2020
USD USD
Profit/(Loss) before tax (192,178) 661,446
-------------- --------------
Irish tax at 12.5% - 82,681
============== ==============
GBP GBP
Tax expense (converted into GBP) - 60,984
============== ==============
Irish tax is charged at 12.5% on each of the AA4P Leasing
Ireland Limited and AA4P Leasing Ireland 2 Limited subsidiaries.
The Company and the Guernsey Subsidiaries have been assessed for
tax at the Guernsey standard rate of 0%. Since AA4P Leasing Ireland
Limited and AA4P Leasing Ireland 2 Limited are Irish tax resident
trading companies, they will not be subject to Guernsey tax, but
their net lease rental income earned (after tax deductible
expenditure) will be taxable as trading income at 12.5% under Irish
tax regulations.
26. ACCRUED AND DEFERRED INCOME
The accrued and deferred income represents the difference
between actual payments received in respect of the lease income
(including some received in full upfront) and the amount to be
accounted for in the accounting records on a straight line basis
over the lease terms. The Directors have assessed the
recoverability and concluded no impairment required. The accrued
and deferred income consists of the following:
31 March 2021 31 March 2020
GBP GBP
Accrued income 13,045,326 14,446,150
Deferred income (31,791,945) (40,136,323)
============== ==============
27. RELATED PARTY TRANSACTIONS AND SIGNIFICANT CONTRACTS
Significant contracts
Amedeo Limited ("Amedeo") is the Group's Asset Manager. In its
role as Group Asset Manager.
During the year, the Group incurred GBP4,420,130 (31 March 2020:
GBP3,397,029) of fees with Amedeo, of which GBP Nil (31 March 2020:
GBPNil) was outstanding to this related party at 31 March 2021.
This fee is included under "Asset management fee" in note 5.
Following the disposal of the "IPO Assets" (being collectively
the first four assets purchased), the Company shall pay to Amedeo
disposition fees calculated as detailed in the prospectus, which
can be found on the Group's website. Fees range from 1.75% to 3% of
the sale value. The fee for the remaining eight aircraft is 3%.
Amedeo Services (UK) Limited ("Amedeo Services") is the Group's
Liaison and Administration Oversight Agent (the agent is appointed
to assist with the purchase of the aircraft, the arrangement of
suitable equity and debt finance and the negotiation and
documentation of the lease and financing contracts).
During the year, the Group incurred GBP11,279 (31 March 2020:
GBP11,010) of fees with Amedeo Services. As at 31 March 2021 GBPNil
(31 March 2020: GBPNil) was outstanding. This fee is included under
"Asset management fee" in note 5.
Nimrod Capital LLP ("Nimrod") was the Company's Corporate and
Shareholder Adviser. During the year, the Group incurred
GBP2,070,598 (31 March 2020: GBP2,418,517) of fees with Nimrod.
These expenses related to corporate and shareholder advisory fees
as shown in note 5.
On 18 February 2021, the Company announced that it had entered
into an agreement with Nimrod to terminate Nimrod's appointment as
sole corporate and shareholder advisor to the Company with effect
from 31 January 2021 and settle outstanding matters between them
(the Termination Agreement). Under the Termination Agreement, the
Company made a payment of GBP9.45 million and issued 5,975,000 new
shares to Nimrod as a complete settlement of contractual
obligations to Nimrod. Nimrod has undertaken to the Company not to
dispose of the said shares for a period of 12 months (subject to
certain customary exceptions).
On 15 March 2021 the Company announced the appointment of
Liberum Capital Limited as Corporate Broker to the Company with
immediate effect.
JTC Registrars Limited ("JTCRL") is the Company's registrar,
transfer agent and paying agent. During the year the Group incurred
GBP18,656 (31 March 2020: GBP19,367) of costs with JTCRL, of which
GBP1,025 (31 March 2020: GBP3,059) was outstanding as at 31 March
2021.
Related parties
The Board are considered to be key management personnel. Refer
to the Board of Directors above. Refer to Note 6 where Directors'
remuneration has been disclosed.
28. SEGMENT INFORMATION
The Directors are of the opinion that the Group is engaged in a
single segment of business, being acquiring, leasing and selling
aircraft. The geographical analysis of the Group is based on the
location of the lessee.
Geographical analysis
31 March 2021 Middle East Asia Pacific Total
GBP GBP GBP
Rental income 150,799,216 50,757,344 201,374,560
============== ============= ==============
Net book value - aircraft 924,201,304 346,110,526 1,270,311,870
============== ============= ==============
31 March 2020 Middle East Asia Pacific Total
GBP GBP GBP
Rental income 198,732,556 57,827,781 256,560,337
============== ============= ==============
Net book value - aircraft 1,179,178,238 535,330,612 1,714,508,850
============== ============= ==============
Revenue from the Group's country of domicile, Guernsey, was
GBPNil (2020: GBPNil).
29. SUBSEQUENT EVENTS
The meeting to vote on the Rehabilitation Plan (and amendments
to it) occurred as scheduled on 19 May 2021 at 9am Bangkok time by
way of a virtual meeting. In accordance with the Thailand
Bankruptcy Act, the Rehabilitation Plan proposed by the Planning
Committee along with certain proposed amendments to the
Rehabilitation Plan tabled by the Planning Committee and certain
creditors, was approved by the creditors committee.
On 15 June 2021, the Court rendered its order to approve the
Plan and appointed the Plan Administrators, who will have rights,
duties, and powers to manage and operate Thai Airways in accordance
with the conditions and terms stipulated in the Plan. The Asset
Manager is in negotiations to agree the binding lease amendment
documentation with the airline, on a power by the hour basis
initially, before moving to a fixed rate lease for the remaining
term of the lease including an extension of the lease from the
original term. The process of rehabilitation of Thai Airways
continues and our assumption is that resolution will be achieved
during Q3 2021.
There is no further information after year end that impacts the
impairment raised for the amounts due from Thai Airways.
The Asset Manager awaits further news of the Planning
Committee's intentions.
On 21 June 2021, John Le Prevost resigned as a director of the
company.
There were no other material subsequent events since the year
end and up to the date of approval of the consolidated financial
statements.
Key Advisers and Contact Information
----------------------------------------------------------------------------
Directors Registered Office of the Company
Robin Hallam (Chairman) Ground Floor
David Gelber (Senior Independent Dorey Court
Director) Admiral Park
Laurence Barron St Peter Port
John Le Prevost (resigned effective Guernsey GY1 2HT
21 June 2021)
Telephone: +44 (0)1481 702400
Contact details
Robin.Hallam@aa4plus.com
David.Gelber@aa4plus.com
Laurence.Barron@aa4plus.com
-------------------------------------
Asset Manager Liaison and Administration Oversight
Amedeo Limited Agent
The Oval Amedeo Services (UK) Limited
Shelbourne Road 29-30 Cornhill
Ballsbridge London
Dublin 4 England EC3V 3NF
Ireland
-------------------------------------
Administrator and Secretary Corporate Broker
JTC Fund Solutions (Guernsey) Liberum Capital Limited
Limited Ropemaker Place
Ground Floor 25 Ropemaker Street
Dorey Court London, EC2Y 9LY
Admiral Park
St Peter Port
Guernsey GY1 2HT Telephone: +44 (0)20 3100 2000
Telephone: +44 (0)1481 702400
-------------------------------------
Registrar, Paying Agent and Transfer UK Transfer Agent
Agent JTC Registrars (UK) Limited
JTC Registrars Limited The Scalpel
Ground Floor 18th Floor
Dorey Court 52 Lime Street
Admiral Park London
St Peter Port England EC3M 7AF
Guernsey GY1 2HT
Telephone: +44 (0)1481 702 400
-------------------------------------
KEY ADVISERS AND CONTACT INFORMATION (Continued)
Auditor Advocates to the Company (as
KPMG to Guernsey
1 Harbourmaster Place law)
IFSC Carey Olsen
Dublin 1 Carey House
D01 F6F5 Les Banques
Ireland St Peter Port
Guernsey GY1 4BZ
Solicitors to the Company (as Solicitors to the Company (as
to English law) to asset acquisition, financing
and leasing documentation)
Clifford Chance LLP
10 Upper Bank Street
Herbert Smith Freehills LLP London
Exchange House England
Primrose Street E14 5JJ
London
England Norton Rose Fulbright LLP
EC2A 2EG 3 More London Riverside
London
England
SE1 2AQ
---------------------------------
GLOSSARY
DEFINED TERMS
The following list of defined terms is not intended to be an
exhaustive list of definitions, but provide a list of the defined
terms used in this report.
Administrator JTC Fund Solutions (Guernsey) Limited
AIC The Association of Investment Companies
-------------------------------------------------------
AIC Code The AIC Code of Corporate Governance
-------------------------------------------------------
Articles The Company's articles of incorporation
-------------------------------------------------------
ASKs Available seat kilometres
-------------------------------------------------------
Asset Manager Amedeo Limited
-------------------------------------------------------
Asset(s) Aircraft owned by the Group
-------------------------------------------------------
ATAG The Air Transport Group
-------------------------------------------------------
Board Board of directors of the Company
-------------------------------------------------------
Company Amedeo Air Four Plus Limited
-------------------------------------------------------
Corporate Adviser Liberum Capital Limited
-------------------------------------------------------
DGTRs The FCA's Disclosure Guidance and Transparency
Rules
-------------------------------------------------------
ESG Environmental, social and governance
-------------------------------------------------------
Etihad Etihad Airways PJSC
-------------------------------------------------------
FCA Financial Conduct Authority
-------------------------------------------------------
GFSC Guernsey Financial Services Commission
-------------------------------------------------------
Group The Company and its wholly owned subsidiaries
-------------------------------------------------------
IAS International Accounting Standard
-------------------------------------------------------
IATA International Air Transport Association
-------------------------------------------------------
IEV Independent Expert Valuers
-------------------------------------------------------
IFRS International Financial Reporting Standards
-------------------------------------------------------
ISTAT International Society of Transport Aircraft Trading
-------------------------------------------------------
Law The Companies (Guernsey) Law, 2008, as amended
-------------------------------------------------------
Registrar JTC Registrars Limited
-------------------------------------------------------
RPKs Revenue passenger kilometres
-------------------------------------------------------
Secretary JTC Fund Solutions (Guernsey) Limited
-------------------------------------------------------
SFS Specialist Fund Segment of the London Stock Exchange's
Main Market
-------------------------------------------------------
Shares Redeemable ordinary shares
-------------------------------------------------------
SID Senior Independent Director
-------------------------------------------------------
Thai Airways Thai Airways International Public Company Limited
-------------------------------------------------------
UK Code The UK Corporate Governance Code, 2018
-------------------------------------------------------
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END
FR FLFITDVIVFIL
(END) Dow Jones Newswires
July 26, 2021 02:00 ET (06:00 GMT)
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