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 
---------------------------------------------------------------------------- 
 Trading                         SFS 
                                -------------------------------------------- 
 Ticker                          AA4 
                                -------------------------------------------- 
                                  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 
                                -------------------------------------------- 
 Reporting Currency              Sterling 
                                -------------------------------------------- 
 Launch Date / Share Price       13 May 2015 / 100 pence* 
                                -------------------------------------------- 
 Share Price                     24.00 pence (as at 31 March 2021) 
                                  23.50 pence (as at 22July 2021) 
                                -------------------------------------------- 
 Market Capitalisation           GBP104 million (as at 31 March 2021) 
                                  GBP102.02 million (as at 22 July 
                                  2021) 
                                -------------------------------------------- 
 Target Dividend                 The original target of 2.0625 pence 
                                  per Share per quarter (8.25 pence 
                                  per annum) was suspended on 6 April 
                                  2020 
                                -------------------------------------------- 
 Dividend Payment Dates          January, April, July, October 
                                -------------------------------------------- 
 Year End                        31 March 
                                -------------------------------------------- 
 Stocks & Shares ISA             Eligible 
                                -------------------------------------------- 
 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 
                                -------------------------------------------- 
 Website                         www.aa4plus.com 
                                -------------------------------------------- 
 *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 
                                --------------  --------------  -------------- 
 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 
                                --------------  --------------  -------------- 
 Change in Portfolio Residual 
  Value(2)                       -20%            -16%            -1% 
                                --------------  --------------  -------------- 
 

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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