# AMEDEO AIR FOUR PLUS LIMITED
Consolidated Annual Financial Report For the year ended 31 March
2024
# Contents
| Page | |
|------|-----------------------------------------------------|
| | STRATEGIC REPORT |
| 3 | •
Summary Information |
| 4 | •
Chairman's Statement |
| 5 | •
Asset Manager's Report |
| 8 | •
Environmental, Social and Governance Policy |
| 10 | •
Business Model |
| 14 | •
Board of Directors |
| 16 | •
Corporate Information |
| | CORPORATE GOVERNANCE |
| 23 | •
Directors' Report |
| 25 | •
Statement of Directors' Responsibilities |
| 26 | •
Remuneration Report |
| 27 | •
Corporate Governance Statement |
| 31 | •
Audit Committee Report |
| 34 | •
Independent Auditor's Report |
| | CONSOLIDATED FINANCIAL STATEMENTS |
| 39 | •
Consolidated Statement of Comprehensive Income |
| 40 | •
Consolidated Statement of Financial Position |
| 41 | •
Consolidated Statement of Cash Flows |
| 42 | •
Consolidated Statement of Changes in Equity |
| 43 | •
Notes to the Consolidated Financial Statements |
| 73 | KEY ADVISERS AND CONTACT INFORMATION |
| 74 | GLOSSARY |
# STRATEGIC REPORTS Summary Informaton
| Listing | | | Specialist Fund Segment of the London Stock Exchange's Main Market. | | |
|-------------------------------|-------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|--|--|
| Ticker | AA4 | | | | |
| Share Price | | 41.25 pence (as at 31 March 2024)
43.00 pence (as at 18 July 2024) | | | |
| Market Capitalisation | GBP 125 million (as at 31 March 2024)
GBP 131 million (as at 18 July 2024) | | | | |
| Dividends | Announcement Date | Dividend Declared | | | |
| | 4 April 2023 | 1.75 pence per ordinary share | | | |
| | 3 July 2023 | 1.75 pence per ordinary share | | | |
| | 3 October 2023 | 1.75 pence per ordinary share | | | |
| | 11 January 2024 | 2.00 pence per ordinary share | | | |
| Post-Year-End Dividends | 2 April 2024 | 2.00 pence per ordinary share | | | |
| | 2 July 2024 | 2.00 pence per ordinary share | | | |
| Dividend Payment Dates | January, April, July, October | | | | |
| Compulsory Redemption | Completion Date | Shares redeemed | Shares in issue | | |
| | 28 September 2020 | 214,083,243 | 428,166,757 | | |
| | 8 December 2021 | 86,828,274 | 347,313,483 | | |
| | 1 March 2023 | 43,414,122 | 303,899,361 | | |
| Incorporation and Domicile | Guernsey | | | | |
| 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 | | | |
| Asset Manager | Amedeo Limited | | | | |
| Corporate Broker | Panmure Liberum Limited | | | | |
| Administrator | JTC Fund Solutions (Guernsey) Limited | | | | |
| Auditor | KPMG Channel Islands Limited | | | | |
| SEDOL | BNDVLS5 | | | | |
| ISIN | GG00BNDVLS54 | | | | |
| LEI | 21380056PDNOTWERG107 | | | | |
| Stocks & Shares ISA | Eligible | | | | |
| Website | www.aa4plus.gg | | | | |
# Chairman's Statement
I am pleased to present our annual financial report for the year ending 31 March 2024.
The past year has seen rapid changes in the aviation industry with strong airline performances from our two lessees, Emirates and Thai Airways, as passenger traffic continues to improve. Boeing's travails are front page news, less so are the continuing labour and parts supply issues which are hindering efforts by equipment manufacturers to fill the supply gap left by COVID shutdowns. Whilst some airlines are still paying off government financial support from 2020, others are placing large orders for new generation aircraft.
Your Company continues to show strong financial performance with the cash flows from Emirates supporting the dividend payments to Shareholders. We have been advised by Amedeo Limited that our 4 aircraft leased to Thai Airways have an aggregate surplus value in excess of debt of at least US\$ 100m. Aggregate outstanding debt across these 4 aircraft is, as at 31 March 2024, US\$ 343,905,025. Whilst the lease rentals from Thai Airways do not provide dividend income to the Company, nevertheless, due to the lower interest rates achieved by the existence of highly favourable derivatives, they act to reduce outstanding debt.
The recent news that Emirates intends to upgrade all its A380 aircraft which do not currently have Premium Economy seats should be supportive of values, especially since doubts continue over the entry into service date of the largest available replacement, the Boeing 777X.
Emirates financial results were outstanding and the A380's biggest supporter, Sir Tim Clark is at the time of writing still at the helm.
However, as highlighted in the risk disclosure on page 16, the residual value of the Group's assets is key to their carrying values in these financial statements, and is also key to the value of the Group to shareholders. The only empirical evidence of value lies in the transactions by other investment funds that have reached maturity where sales have been concluded to Emirates. Recent news concerning the progress made by Boeing with the 777X, further increases the uncertainty surrounding the future of the A380 and so your Board remains of the view that these transactions are not persuasive.
Thai Airways has placed a large order for new Boeing aircraft and remains on track to emerge from rehabilitation in 2025 with reduced debt, increased capital and a slimmed down workforce.
To provide an update on our review of strategic options available to the Company, I hope investors will not mistake our comparative silence on this topic as lack of effort. A great deal of work is being done in assessing the best way forward, with a number of different industry participants and advisers including our Asset Manager, Amedeo Limited.
Whilst the Group's fleet is not the most complex, it is not the simplest, either. One of our aircraft types, the A380, is less liquid given the shallow operator base although the good news flow I refer to above should support stronger valuations. In addition, one of our lessees is still under bankruptcy protection, and this is discouraging to investors. Consequently, in weighing up the possible alternative ways forward – including running off the leases as is or selling the whole or a part of the portfolio now or over time – in terms of value to you, our Shareholders, is not straightforward. Your Board remains committed to identifying the best value for you overall, including assessing the return of cash to you, as we consider prudent, along the way. We intend to provide an update to Shareholders later this year.
Finally, I would like to take the opportunity to thank our two outgoing Directors, Laurence Barron and Mary Gavigan, for their diligence and commitment during their time in office. We welcome Eithne Manning whose deep leasing industry experience will be relevant in our ongoing review.
**Robin Hallam Chairman**
Date: 25 July 2024
# Asset Manager's Report
### AA4 PORTFOLIO UPDATE
As reported in Thai Airways' published Management Discussion and Analysis, the airline announced a US\$ 69m net profit for Q1'24. This comes after an impressive set of full year results where the airline announced US\$ 594m net profit for the period ended 31 December 2023.
The airline continues to expand its operations as well as its fleet as demand for travel continues to recover. The airline is looking to add three more A350s in 2024, as well as a B787-9. Thai Airways also entered into an agreement with Boeing for a firm order of 45 B787s, which will help the airline maintain an efficient fleet with new aircraft technology. The airline has the option to take the order size to 80 aircraft and deliveries are expected to take place starting between 2027 and 2033. Thai Airways will also retrofit the A320s it acquired through its merger with its subsidiary Thai Smile adding business class seats and an in-flight entertainment system.
Thai Airways is progressing well with its Rehabilitation Plan and continued to accomplish key milestones during Q1'24, such as i) improving its fleet efficiency and route networking, ii) selling non-core assets, and iii) improving the efficiency of its business structure by completing its merger and integration of the final four Thai Smile A320s in its fleet. Thai Airways expects to complete its capital restructuring by the end of 2024 and restore positive equity. The airline would then be able to resume trading its securities on the local stock market and subsequently complete its rehabilitation. On 24 May 2024 Thailand's Ministry of Finance announced its intention to invest another THB 12 billion (US\$ 330m) in Thai Airways by October 2024, with the aim of relisting the airline on the Stock Exchange of Thailand by mid-2025.
Emirates continues to perform well and expand its operations. For the financial year ended 31 March 2024, the airline recorded a new record profit of AED 17.2 billion (US\$ 4.7 billion) exceeding last year's AED 10.6 billion (US\$ 2.9 billion) result, which was also a record at the time. The airline boasted an impressive profit margin of 14.2%, the best performance in its history. Emirates did well to restart services on certain routes, reintroduce new routes, and also add more capacity to its existing network, which is a major reason for its strong performance. Emirates also inked codeshare and interline agreements with 11 new airline partners, further extending its network's reach. By 31 March 2024, the Emirates network comprised 151 destinations across six continents, including 10 cities served by its freighter fleet only.
Emirates brought its flagship A380 and popular premium economy product to even more cities, as 16 more aircraft rolled out of its cabin retrofit programme, fully refurbished. As of 31 March 2024, the Emirates A380 served 49 destinations, and customers can enjoy Emirates' Premium Economy experience to and from 15 cities around the world. During May 2024, Emirates announced that it will be refurbishing another 43 A380s and 28 Boeing 777 aircraft, expanding its retrofit programme to 191 aircraft. This means Emirates will refurbish 110 A380s, which is almost the entire fleet. At present Emirates has selected and the Company has formally consented for MSNs 187, 201, 206, 208, and 42334 to undergo the premium economy retrofit. Emirates has yet to confirm the schedule for retrofitting the selected aircraft.
It should be noted that Boeing completed its first certification test flight of the B777-9 on 12 July 2024 after receiving the jet's long-delayed type inspection authorization ("**TIA**") from the Federal Aviation Administration ("**FAA**"). The TIA signifies a technical review by the FAA that the aircraft design is sufficiently complete and is a gateway to the start of its flight-testing programme, which will comprise of three aircraft. If the aircraft perform as predicted, it will take about 18 months to complete. This is positive news for Boeing's much delayed B777X program and is also good news for Emirates' fleet plans as they are the largest customer with around 200 orders, which, based on this timing, may start in early 2026.
The Q2'24 asset utilisation report is available on the website via the following link:
### INDUSTRY UPDATE
In its latest recovery update, IATA announced that the recovery in air travel demand is continuing in 2024, based on May traffic results.
# Asset Manager's Report (continued)
Air passenger market overview – May 2024
| | | | Passenger Load | |
|---------------|--------------------------|-----------------|----------------|----------------|
| | Passenger Traffic (RPKs) | Capacity (ASKs) | Factor Level | Passenger Load |
| | (% change yoy) | (% change yoy) | (% -pt) | Factor Level |
| International | ▲14.6% | ▲14.1% | ▲0.3% | 82.8% |
| Domestic | ▲ 4.7% | ▲ 0.1% | ▲3.8% | 84.54% |
| Total | ▲10.7% | ▲ 8.5% | ▲1.7% | 83.4% |
Source: Air Passenger Market Analysis – May 2024
IATA's Director General, Willie Walsh, commented "Strong demand for travel continues with airlines posting a 10.7% yearon-year increase in travel for May. Airlines filled 83.4% of their seats, a record for the month. With May ticket sales for early peak-season travel up nearly 6%, the growth trend shows no signs of abating. Airlines are doing everything they can to ensure smooth journeys for all travellers over the peak northern summer period."
### **Global RPKs and ASKs (billions)**
Sources: IATA Economics, IATA Monthly Statistics, Air Passenger Market Analysis – May 2024
### EMIRATES
Financial Highlights1
| Income Statement | FY 22/23 | YoY Change |
|--------------------|-------------|------------|
| Revenue | US\$ 33.0bn | ▲13% |
| EBITDA | US\$ 10.2bn | ▲13% |
| Profit / (Loss) | US\$ 4.7bn | ▲63% |
| Cash Assets | US\$ 11.7bn | ▲15% |
| Passengers carried | 51.9m | ▲19% |
| Available seat km | 344.7bn | ▲21% |
Source: Emirates Group Annual Report 2023-2024 displayed on Emirates website
His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group, said "The Emirates Group has once again raised the bar to deliver a new record performance. Throughout the year, we saw high demand for air transport and travel related services around the world, and because we were able to move quickly to deliver
1 US\$ figures are converted at US\$ 1 = AED 3.67 as per Bloomberg FX.
# Asset Manager's Report (continued)
what customers want, we achieved tremendous results. We are reaping the benefit of years of non-stop investments in our products and services, in building strong partnerships, and in the capabilities of our talented people."
# Operational Highlights
Emirates restarted services to Tokyo Haneda, added capacity to 29 destinations, and launched new daily flights to Montréal, Canada. Emirates was able to increase capacity, by either adding more frequent services or by replacing the B777s with A380s, across 18 routes which included; Barcelona, Casablanca, Düsseldorf, Toronto, Vienna and Sydney. The A380 continued its upward trajectory as Emirates also redeployed or introduced this aircraft to seven more destinations this year, including Taiwan and Birmingham, leading to a surge of 34% in the number of A380 departures.
Emirates' order book stands at 310 aircraft, after it announced orders worth a combined US\$ 58 billion, for 110 additional Boeing 777s, 787s, and Airbus A350s at the 2023 Dubai Airshow. However, there are uncertainties as to when the Boeing deliveries will take place. On 7 May 2024, Emirates CEO and Chairman, His Highness Sheikh Ahmed Bin Saeed Al Maktoum, mentioned in an interview with CNBC that Emirates "are not happy really with what's going on" in regards to its Boeing order and that the airline "really wanted to see this aircraft entering the fleet when it had been promised". The Chairman did not indicate that Emirates would cancel the Boeing orders, or move them to its French rival, Airbus. When asked about the likelihood of such a move, he replied "...No, no — I won't be able to say exactly what we are planning…. but I think you see that we are refurbishing a big number of aircraft within the existing fleet... and there will be no shortage within Dubai capacity."
# THAI AIRWAYS INTERNATIONAL
Financial Highlights2
| Income Statement | Q1'24 | YoY Change |
|---------------------|-------------|------------|
| Revenue | US\$ 1.3bn | ▲18% |
| Expenses | US\$ 601m | ▲43% |
| Net Profit / (Loss) | US\$
69m | ▼79% |
| Cash Assets | US\$ 1.4bn | 0% |
| Passengers carried | 3.9m | ▲77% |
| Available seat km | 14.6bn | ▲22% |
Source: Thai Management Discussion and Analysis Q1/2024 displayed on Thai Airways website
# Rehabilitation Plan
On 26 May 2020, Thai Airways submitted to the Central Bankruptcy Court of Thailand a petition to file for rehabilitation in order to implement measures to cut costs and to stabilise revenues so that they could ensure the future of the airline. On 20 October 2022, the Court approved an amendment to the Rehabilitation Plan, which involved a capital restructuring. Under the capital restructuring, Thai Airways will issue new shares that will be allocated as repayment to its creditors as per the debtto-equity swap arrangement under the Rehabilitation Plan. On 24 May 2024 Thailand's Ministry of Finance announced its intention to invest another THB 12 billion (US\$ 330m) in Thai Airways by October 2024 with the aim to relist the airline on the Stock Exchange of Thailand by mid-2025.
#### Operational Highlights
After an impressive end to the 2023 financial year, Thai Airways continued its positive performance in Q1'24. The airline operated in line with its Rehabilitation Plan, whereby it progressed its operations and improved its fleet efficiency. Thai Airways took delivery of three A350-900s and increased flight frequencies to Hong Kong, Singapore, Taipei, Kathmandu, Manila, Phuket, Sydney, Tokyo (Narita), and resumed services to Perth, Australia, and Colombo, the capital of Sri Lanka, starting from 31 March 2024.
The airline also continued to sell its non-core assets by selling two A340-600 and a B747-400. Thai Airways completed the transfer of the final four A320-200s from Thai Smile in January 2024 and added domestic services to Chiang Rai, Khon Kaen, Ubon Ratchathani, Krabi, and Hat Yai. Thai Airways will retrofit the A320s with business class seats and in-flight entertainment systems.
In Q2'24, Thai Airways will further enhance its fleet and route network by taking delivery of three A350-900s and a B787-9 aircraft into the fleet and resuming flights to Milan and Oslo, while introducing new routes to Kochi, India, starting from 2 April 2024.
2 US\$ figures are converted at 1 THB = US\$ 0.027512 as of 29 March 2024 as per Bloomberg FX.
# Environmental Social and Governance Policy
#### **Introduction**
The Company recognises that Shareholders and other stakeholders have a growing interest in the ESG impacts resulting from its business. Here we set out our current policy and approach to ensuring that the Company's level of engagement on ESG matters is commensurate with the size, nature and complexity of its business.
This Company's current policy seeks to address today's ESG considerations noting that it was incorporated in 2015 with a business model designed to run for twelve years without interruption. Subsequent acquisitions of aircraft and the renegotiation of leases have pushed that end date out to 2036 for certain Assets.
The Company has adopted a policy to take account of ESG expectations where possible and applicable, although recognising that it is severely constrained by the nature of the Company's activities and the contracts that it has already entered into. The Group's choice of aircraft was 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 any future changes to the Group's existing contracts.
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 information published by the lessees on their websites (see below for appropriate links).
### **The Aviation Industry**
The increased focus on climate change and greenhouse gas emissions, inevitably means that further attention 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 their websites explain this:
Emirates:
Thai Airways: [https://www.thaiairways.com/en\\_GB/about\\_thai/company\\_profile/index.page](https://www.thaiairways.com/en_GB/about_thai/company_profile/index.page)
In October 2021, the IATA 77th Annual General Meeting approved a resolution for the global air transport industry to achieve net-zero carbon emissions by 2050. This commitment will align with the Paris Agreement goal for global warming not to exceed 1.5°C. The strategy is to abate as much CO2 as possible from in-sector solutions such as sustainable aviation fuels, new aircraft technology, more efficient operations and infrastructure, and the development of new zero-emissions energy sources such as electric and hydrogen power. Any emissions that cannot be eliminated at source will be eliminated through out-of-sector options such as carbon capture and storage and credible offsetting schemes.
The Group's choice of aircraft was among the most environmentally efficient jet aircraft in service at the time of acquisition and both of the Company's lessees support the airline industry's collective commitment to reach net-zero emissions by 2050 and are exploring opportunities to reach this goal such as using Sustainable Aviation Fuel ("**SAF**").
Emirates is working closely with the likes of Shell Aviation and Neste for SAF supply and on 22 November 2023 became the world's first airline to operate an A380 demonstration flight using 100% SAF in one of the four engines. The Auxiliary Power Unit ("**APU**") also ran on 100% SAF. Emirates previously had successfully completed a 100% SAF-powered demonstration flight using a Boeing 777-300ER.
Thai Airways is leading a similar initiative and in May 2023 signed a Memorandum of Understanding on the exchange of technical knowledge and expertise on the use of SAF with Bangchak Corporation PLC, one of Thailand's leaders in energy transition. In December 2023, Thai Airways partnered with PTT Oil and Retail Business Public Company Limited, in implementing SAF on a Phuket-Bangkok flight operation. The SAF-powered flight releases 80 percent less carbon dioxide than regular aviation fuel throughout its life cycle and is compatible with mixing with Jet A1 regular aviation fuel, with no engine conversion needed. The SAF-powered flight is a promising starting-point to Thai Airways' commitment to reach netzero emissions by 2050.
### **The Company**
The Company is a Guernsey company incorporated on 16 January 2015.
The Company is governed by its Board on behalf of its Shareholders. Up to 31 March 2024, the Board comprised of six Directors. Laurence Barron resigned from the Board of Directors effective 31 March 2024. Mary Gavigan resigned from
# Environmental Social and Governance Policy (continued)
the Board of Directors and Eithne Manning was appointed to the Board of Directors on 30 April 2024. As at the date of this report, four of the Directors are independent and all are non-executive (this figure includes Eithne Manning who was appointed subsequent to the conclusion of the financial year end). 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 to the Asset Manager;
- arranging meetings with major Shareholders to discuss proposed developments in relation to the Company and providing feedback to the Board to the Corporate Broker;
- company secretarial, administration and accounting services to the Secretary and Administrator; and
- share registration services to the Registrar.
The Company has no executive directors, or employees and for all purposes its business is 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, where good governance principles can be achieved, via a video link. Service providers to the Company are encouraged to take a similar approach.
Sometimes Directors are required to travel in the fulfilment of their duties but, where good governance allows, travel is kept to a minimum. 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 lessees.
The Company's own operations consequently have a limited physical footprint and therefore its direct environmental impact is low. In light of this, the Board has decided that it is not a good use of Shareholders' funds to use any form of carbon offsetting.
# **The Board of Directors**
The Board recognises the importance of gender diversity and ethnic inclusion. The Board takes such considerations into account when searching for new directors. The Company's vision for diversity is shared by its service providers.
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.
The Board has adopted a comply or explain approach to the AIC Code and any exceptions are reported in the Directors' Report section of these accounts.
The Board has considered and determined the following two additional policies:
- there are no relevant disclosures to be made regarding 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 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 that the Group has no influence whatsoever in the use of the relevant aircraft by each lessee; each such lease is for a fixed term 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 lease term, whilst ensuring each aircraft is maintained to the highest standard and remains as efficient as possible.
In the unlikely event that the Company has to scrap an aircraft at the end of the applicable lease, its intention is to ensure that as much of the aircraft as is economically possible is reused or recycled.
# 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. To date, the Company has redeemed a total of 344,325,639 shares, returning a total of £156,479,568 to investors.
As at 18 July 2024, the last practicable date prior to the publication of this report, the Company's total issued share capital was 303,899,361 Shares trading at 43.00 pence per Share giving the Company a market capitalisation of £131 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 investment 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, the aircraft leased to Etihad Airways were disposed of and the remaining aircraft are leased either to Emirates or Thai Airways.
Given the COVID-19 crisis and the devastating effect it has had upon the long-haul air travel industry, and that one of the Group's lessees, Thai Airways, is subject to a Rehabilitation Plan, the Board considers it unlikely that there will be any further expansion of the Company.
### **Investment Portfolio**
As at 31 March 2024, the Company had 12 wholly-owned aircraft owning subsidiaries and two Irish leasing subsidiaries, see note 8 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.
Until December 2019 the Group received income in accordance with its original leases from all of its lessees and quarterly income distributions were made to Shareholders in line with the Company's then target 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 was prudent in doing so. Whilst two dividends were declared and paid in October 2020 and January 2021, the Board took the decision to suspend quarterly dividends until the resumption of regular rental payments by Thai Airways and the agreements with the Company's lenders were complete.
On 1 December 2021, the Board announced its decision to recommence the payment of quarterly dividends from January 2022 and it has done so each quarter since then.
Details of dividends declared by the Board during the year under review are set out on page 23.
### **Return of Capital**
The Board may, as it deems appropriate at its absolute discretion, either return to Shareholders all or part of the net capital proceeds (subject to satisfaction of the Statutory Solvency Test), or re-invest the proceeds in accordance with the Company's investment policy, subject to Shareholder approval. The following table details the capital returned to Shareholders to date:
| Completion Date | Amout returned | Shares Redeemed | Redemption Price (per share) |
|-------------------|----------------|-----------------|------------------------------|
| 28 September 2020 | £98.5 million | 214,083,243 | 46 pence |
| 8 December 2021 | £30 million | 86,828,274 | 34.55 pence |
| 1 March 2023 | £28 million | 43,414,122 | 64.50 pence |
# Business Model (continued)
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 the 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.
The Board, having regard to section 172 of the UK's Companies Act 2006, recognises its duty to promote the success of the Company for the benefit of its members as a whole, with due regard to the interests of all stakeholders. The Board considers Shareholders as their primary stakeholders, whose interests are primarily aligned with the investment objectives of the Company.
In response to this understanding and in commitment to these principles, the Board decided to return £28 million in surplus cash to Shareholders through a partial compulsory redemption of Shares in March 2023. Following a comprehensive review of the Company's performance, the Board decided to increase the dividend payment per share from 1.25 pence per share to 1.5 pence per share in July 2022, a further increase to 1.75 pence per share in April 2023, with an additional increase to 2.00 pence per share in January 2024.
The Board's engagement with Shareholders is described in the section "Dialogue with Shareholders" on page 30. 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.
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 lessees, lenders, Shareholders and service providers.
The Company has continued to manage its relationship with the lessees in the knowledge that Thai Airways' past difficulties have arisen due to government action and not wilful default by that lessee. The cooperation between the Company and the lessee was key to overcoming such difficulties.
The Company engages third party professional service providers and, in addition to the regular reporting provided by these key service providers, the Board undertakes 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.
# Business Model (continued)
As described in the Company's viability statement on pages 21 to 22, the Board has assessed the Group's viability for a period of three years, however it also 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 on pages 8 to 9.
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. Link Market Services (Guernsey) Limited is the Company's Registrar, Transfer Agent and Payment Agent. Panmure Liberum Limited is the Company's Corporate Broker.
### **Asset Manager and Agency Services**
The Asset Manager has been appointed by the Company to provide asset management services to the Group. Full details of the Asset Manager's responsibilities are outlined in the Company's Prospectus.
The Asset Manager has further undertaken that it will dedicate such 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.
As of 15 December 2023, Amedeo Services (UK) Limited's role as Liaison and Administration Oversight Agent for the Company has concluded. The appointment was made in accordance with the Liaison and Administration Oversight Agreement, empowering Amedeo Services (UK) Limited to carry out various responsibilities. These included coordinating services from service providers under agreements such as the Asset Management Agreement, the Agency Agreement, and the Administration Agreement; facilitating communication between the Company and its service providers; monitoring payment timelines and currency exchanges related to asset acquisitions; overseeing the Company's budget and the payment of costs, fees, and expenses; and assisting the Administrator in monitoring bank account balances and providing necessary support for payments, transfers, and currency exchanges. The Board has assumed responsibility for these roles and has delegated functionality to ongoing service providers where appropriate.
Amedeo is a globally recognised aircraft asset manager and principal investor in leasing transactions to customer airlines around the world. The aircraft portfolio currently managed by the Amedeo group includes twenty aircraft under management. Amedeo states that "the value of assets under management is c. \$5 billion, which includes commercial airliners including A380, A350, A330 and Boeing 777". Amedeo is a member of the ISTAT.
# **Corporate Broker**
Panmure Liberum Limited was engaged by the Company on 15 March 2021 to act as 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
# Business Model (continued)
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 for further details.
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 half-yearly (subject to a limited review by auditors) and audited annual financial reports, subject to the direction and oversight of the Board.
# **Registrar**
Link Market Services (Guernsey) Limited has been appointed as registrar, transfer agent and paying agent by the Company. The Registrar performs the 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, 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 interests of the Company and its Shareholders as a whole.
A full list of the Group's service providers is set out on page 73.
# Board of Directors
Up to 31 March 2024 the Company had six Directors, five of whom are independent and all of whom are 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 the international law firm Hogan Lovells International 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 ISTAT and was ranked Band 1 for Asset Finance in Chambers UK 2015. Robin was appointed to the Board as Chairman on 29 April 2015.
# **David Gelber (SID) (Independent non-executive)**
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 PLC, an inter-dealer broker, as COO and oversaw two mergers and a number of acquisitions. Since retiring from ICAP he has held several non-executive directorships of both public and private companies. He is currently a non-executive director of Walker Crips PLC, a stock broker and wealth manager; and DDCAP Ltd, the leading arranger of Sharia Compliant financial transactions. He is a founding partner of Castellain Capital LLP, a successful fund management firm. David holds a BSc in Statistics and Law from the University of Jerusalem and an MSc in Computer Science from the University of London. David was appointed as Director and a member of the Audit Committee on 29 April 2015. On 9 August 2023 David resigned as a member of the Audit Committee.
### **Steve Le Page (Chairman of the Audit Committee) (Independent non-executive)**
Steve has served as a non-executive director on a number of boards since his retirement from his role as Senior Partner (equivalent to Executive Chairman) of PwC in the Channel Islands in 2013. Throughout his thirty year career with that firm he worked with many different types of financial organisation as both auditor and advisor, particularly with both listed and unlisted investment companies. He is currently the Audit Committee Chair of one other London listed fund. Steve is a Fellow of the Institute of Chartered Accountants in England and Wales and a Chartered Tax Advisor. He is a past president of the Guernsey Society of Chartered and Certified Accountants and a past Chairman of the Guernsey International Business Association. Steve was appointed as Director and chairman of the Audit Committee on 27 July 2021.
### **Tom Sharp (Non-executive)**
Tom is the Chief Investment Officer of Metage Capital Limited, a 6.85 per cent Shareholder in the Company and an experienced non-executive director of both public and private companies. He has worked at Metage since 2002 and his career has included working with firms listed on AIM and the main boards of the Hong Kong and Luxembourg Stock Exchanges. Tom has over twenty years of experience in investing in listed closed-end funds, an ability to build consensus with a range of stakeholders and in structuring and negotiating commercial transactions. He holds an M.A. Hons from Cambridge University and is a CFA Charterholder. Tom was appointed as a Director of the Company on 19 January 2023.
As the Metage shareholding is considered "significant", Tom is not independent under the criteria set out by the AIC Code.
### **Eithne Manning (Independent non-executive) (Appointed 30 April 2024)**
Eithne Manning is a qualified finance and tax professional with over 20 years of experience in aircraft leasing. Eithne held a variety of roles at SMBC Aviation Capital (SMBC), one of the world's largest aircraft leasing companies. During her time at SMBC, she served as Head of the Integration Management Office with responsibility for the integration of the \$6.7bn acquisition of Goshawk Aviation. Prior to that, she was appointed Interim Chief Financial Officer in 2021. She also served as Head of Funding, Finance and Tax and Senior Vice President, Aircraft Trading. Prior to joining SMBC Aviation Capital, Eithne held a variety of roles in structured finance and corporate banking.
Eithne holds a Bachelor of Commerce (Hons) and a Masters in Accounting (Hons), both from University College Dublin and is a Fellow of the Institute of Chartered Accountants in Ireland and the Irish Tax Institute. Eithne was awarded a Distinction in the Diploma in Corporate Governance at UCD Michael Smurfit Graduate Business School (2024). Eithne was appointed as Director of the Company and a member of the Audit Committee on 30 April 2024.
# Board of Directors (continued)
# **Laurence Barron (Independent non-executive) (resigned 31 March 2024)**
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. Laurence was appointed as Director on 2 June 2016. On 9 August 2023 Laurence resigned as a member of the Audit Committee. Subsequently, Laurence resigned as a Director of the Company, effective 31 March 2024.
### **Mary Gavigan (Independent non-executive) (Resigned 30 April 2024)**
Mary is a Fellow of the Institute of Chartered Accountants in England and Wales. She has specialised in the Financial Services sector for over 25 years acting as consultant and advisor with a focus on restructuring and business transformation. She has also held interim Chief Finance Officer roles during her career. Mary spent most of her career at KPMG London (from 1987 to 2007). Mary is also a Non-Executive director of a life insurer, a reinsurer and of an investment platform business. She chairs the Audit and Risk Committee at two of these firms. Mary's charity work includes being a member of Epilepsy Research UK. Mary holds a BBS and MA from Trinity College Dublin. Mary was appointed as Director and a member of the Audit Committee on 27 July 2021. Mary resigned as a Director of the Company, effective 30 April 2024.
# Corporate Information
#### **Principal and Emerging 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 at least annually.
The Directors wish to draw attention to the following emerging risk. Whilst this risk is not "emerging" in the respect that it is new in this period, it has been increasing in significance as the leases run off and has now, in the opinion of the Directors, reached such a level of significance that it should be brought to shareholders' attention.
#### **Description Impact Mitigation Current Assessment Residual values of the Assets held** Third party professional appraisers and the Asset Manager have provided a range of estimated residual values for the Assets held at their respective lease ends, which demonstrates the estimation uncertainty inherent in their determination. In particular, transaction volumes for A380s are low, and completed transactions are not persuasive in determining estimated residual values. Residual values are used in the calculation of both impairment charges (if any) and depreciation, and thus both these Income statement items and the carrying value of the Assets may be mis-stated. Ultimately, the Group may not receive enough proceeds from the disposal of the Assets to repay any debt outstanding at that time and provide a further return to investors. Any related retention of cash reserves to meet such debt may reduce the Group's ability to pay An average of the residual values provided by the three third party professional appraisers is used in the calculation of depreciation and impairment charges in order to provide a best estimate of the value the Group may ultimately receive. Cash reserves are kept to ensure the estimated outstanding debt at lease end can be repaid and may be increased as the end of the leases is approached, if necessary. Increasing: whilst the circumstances surrounding the estimation of residual values have not altered significantly during the period, the significance of those estimates (in particular for the A380 Assets) to the users of these financial statements has increased because of the passage of time.
Set out below are those risks which are considered by the Board to be the material continuing risks relating to the Company and the Group.
dividends in the future.
| Description | Impact | Mitigation | Current Assessment |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Operational Risk | | | |
| There is a risk that the Group
will not achieve its objectives.
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 with the result that
the value of a Shareholder's
investment could decline
substantially or entirely. | The Board is ultimately responsible
for all operational aspects of
performance, including cash
management, asset management
and legal and regulatory
obligations.
The risk is mitigated by the
Company using well established,
reputable and experienced
service providers. These service
providers are given clear guidance
as to the Board's expectations of
them and as to what exactly has
been delegated to them. The
Board assesses service providers'
continued performance on an
annual basis. | Stable: The Board has
satisfied itself through
interaction with, and
monitoring of the
performance of,
service providers that
adequate controls are
working effectively with
no change during the
current year. |
destroyed.
| Description | Impact | Mitigation | Current Assessment |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Key Personnel Risk | | | |
| The ability of the Company
to achieve its 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 will
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 Board of the Company cannot
control this risk, but seeks to ensure
that more than one individual
is involved where practical and
discusses succession issues with
Amedeo Limited.
The service provision agreements
in place seek to ensure that
the level of service remains
continuous. | Stable: The Board
has satisfied itself
by monitoring the
performance of
Amedeo Limited that
appropriate personnel
and succession plans are
in place. |
| Investment Risk | | | |
| The Group have entered
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 such
leases, the cost of repair
and maintenance will fall
upon the Group. Repair and
maintenance issues may
adversely affect the price of
the Assets upon sale. | 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. | Amedeo Limited monitor the
maintenance of the Assets by
lessees and reports regularly to the
Board.
Maintenance reserves on the
Company's A350 Assets are held
in respect of some but not all
maintenance to mitigate the risk
that funding is not available.
No new investments are currently
envisaged. | Stable: No issues have
been identified in the
year and the Board
has concluded that
controls are working
effectively with no new
investments currently
envisaged. |
| Insurance Risks
The lease for each Asset
requires that the lessee insures
the Asset, however, inflation,
changes in ordinances,
environmental considerations
and other factors may make
the insurance cover insufficient
to repair or replace the Assets
if they are damaged or | If any 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 lease for each Asset requires
that the lessee insures the Asset.
The level and effectiveness of
insurance is monitored by the
Asset Manager, with any concerns
reported to the Board. | Stable: No insurance
issues have been
identified in the year
and the Board has
concluded that controls
are working effectively
with no change during
the current year. |
the relevant Asset directly which will cause additional expenses to be incurred.
| Description | Impact | Mitigation | Current Assessment |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Return of Assets at End of Leases | | | |
| At the end of each of the
leases, the relevant Asset
must, subject to certain
conditions, be redelivered in
accordance with the relevant
terms of the lease. A risk
remains for redelivery of an
Asset in a condition other
than contracted condition. | This would impact 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. | Decreasing: The lessee
airlines are reputable
and performing well
financially, reducing
the likelihood of them
wishing to return
the aircraft in non
contractual condition. |
| Airline Industry Related Risks | | | |
| The airline industry is
particularly sensitive to
changes in economic
conditions. Unfavourable
economic conditions can also
impact the ability of airlines
to raise fares to counteract
increases 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
issues (including employee
strikes), security concerns
and the threat of terrorism,
airport capacity constraints,
air traffic control inefficiencies,
changes in or additional | Any of these risks could
materially affect the ability
of the lessees to comply
with payment obligations.
Furthermore, the general
downturn in the airline
industry in 2020 has had
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 Group'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.
The Asset Manager regularly
reports its views on these aspects
to the Board. | Decreasing: The lessee
airlines are reputable
and performing well
financially, and air traffic
volume appears to
be returning to pre
Pandemic level. |
governmental regulations relating to air travel and acts of God (including adverse weather, natural disasters and
pandemics).
| Description | Impact | Mitigation | Current Assessment |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Book value of Assets | | | |
| The Group's net asset value
for accounting purposes is
calculated in accordance with
IFRS and will not reflect the
actual realisable value of the
Assets at any particular point
of time since the Assets are
held at amortised cost.
The "highest and best use"
value has been used for
accounting purposes given
that the aircraft are held for
use in a leasing business.
Valuations, including
valuations provided by
any IEV, and in particular
valuations of assets for which
market quotations are
not readily available, are
inherently uncertain.
See also the Emerging Risk
disclosure above. | Valuations may fluctuate
over short periods of time
and may be based on
estimates. Realisable values
will be subject to investor
demand and market
conditions at a point in time.
There can be no guarantee
that the Assets, valuations
for which are subject to
significant volatility and
uncertainty, and depend
on various factors beyond
the control of the Group,
Amedeo Limited and the
IEV, could ultimately be
realised at the Group's
valuation.
See also the Emerging Risk
disclosure above. | The Asset Manager and
subsequently the Board will
consider valuations provided
annually by IEVs and shall, if
there are indicators that would
suggest a diminution in book
value of one or more of the
Assets, as may be determined in
consultation with the Administrator
and the Asset Manager based
on the impairment test, make
appropriate adjustments (for
accounting purposes) to the net
asset value and net asset value
per Share of the Group.
The Group has a robust process to
ensure that valuations accurately
reflect the requirements of IFRS.
IEVs will be engaged on an
annual basis to report on fair value
for accounting purposes only. | Stable: Controls are
working effectively with
no change during the
current year. |
| | | | |
| Borrowings and Financing Risk
There is a risk that the Group
is exposed to fluctuations in
market interest rates and
foreign exchange rates. | Significant change to
financing costs could affect
the Group's ability to meet
its financial obligations
and impact its financial
performance. | This risk has been 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 the lease rentals.
In the case of the four Thai
Airways aircraft, the renegotiated
fixed lease rentals which began
on 1 January 2023 are closely
matched to the floating rate
loan repayments, which are also
hedged to minimise interest rate
exposure.
The Asset Manager provides the | Stable: The
establishment of a
fixed rental period
beginning on 1 January
2023 for the Thai
aircraft removed
much of the risk of
mismatch between
lease rentals revenues
and debt service. There
have been no further
developments in this
respect this year. |
| | | Board with a quarterly report on
the performance of the lessees
and of the Assets. | |
| | | The expense budget is also
reviewed at least quarterly to
ensure that adequate reserves are
maintained to meet operational
expenses. | |
| Description | Impact | Mitigation | Current Assessment |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
| Lessee Risk | | | |
| 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 lessees are not able to
meet their obligations to
the Group, the Company's
own cash flows and financial
results could be adversely
affected.
There is a risk that airlines | In certain cases, the Group requires
lessees to pay maintenance
reserve payments in respect
of certain future maintenance
expenses in order to ensure that
there is adequate funding for
some maintenance costs. | Stable: Controls are
working effectively with
no change during the
current year. |
| | may not properly maintain
aircraft which may lead
to an impairment of the
aircraft's value. | The Group closely monitors each
airline's usage of aircraft and
their compliance with agreed
maintenance schedules. | |
| | | The credit quality and risk of lease
default is also managed through
routine credit reviews of the
lessees and monitoring of lease
compliance by the Asset Manager. | |
| Legal and Compliance Risks | | | |
| The Group is required to
comply with the Law, the
obligations of a listing on
the SFS, the DGTRs and other
relevant regulations. A risk
exists for failure to comply
with applicable laws and
regulations, or to respond in
a timely manner to changes | Non-compliance could
lead to criminal or civil
proceedings, financial
penalties, reputational
damage, and operational
disruption. | 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. | Stable: Controls are
working effectively with
no change during the
current year. |
| to the Law, the obligations of
a listing on the SFS, the DGTRs
or other relevant regulations. | | The Board also receives periodic
updates from the Company's 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. | |
### **Risk monitoring**
The Board maintains a risk matrix for the Company which is reviewed by the Board as it 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. The Board has not identified any emerging risks relevant to the Company.
# **Internal Control and Financial Reporting**
The Board is responsible for establishing and maintaining the Group's system of risk management and internal controls, which are delegated to the applicable service providers as appropriate and are reviewed fully for effectiveness on an annual basis.
Internal controls are designed to meet the Group's needs 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, including periodic Board meetings, 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 receives at its regular meetings, for its consideration on at least a quarterly basis, updates from its service providers covering the period in review;
- the Board clearly defines the duties and responsibilities of its 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 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;
- cash transactions are approved by the Board or their delegates;
- the Board reviews financial information produced by the Administrator on a regular basis; and
- 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 on page 23. The financial position of the Group is set out on page 40. In addition, note 22 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 prepared these Consolidated Financial Statements for the year ended 31 March 2024 on the going concern basis.
In their consideration of the appropriateness of the going concern basis, the Directors have taken account of the fact that the Group has always received the lease payments due from Emirates Airlines, the Group's principal lessee, in full and on time. In addition, the Company's other lessee, Thai Airways, has met its obligations under restructured and extended leases since 2021. Cash flow modelling carried out has indicated that future lease receipts will enable the Group to meet its obligations as they fall due for at least the next fifteen months from the date of signing these Consolidated Financial Statements.
The lessee Thai Airways stopped paying the amounts due under the leases and also entered into a bankruptcy protection process under Thai Law during 2020, but during 2021 re-commenced paying PBH rentals, and fixed rentals from 1 January 2023, in accordance with restructured and extended leases. The Company also successfully restructured the associated debt. Accordingly, it is the current opinion of the Board that these lease operations will be self-financing for the foreseeable future.
On the basis of (i) the Group's current liquid assets, (ii) cash-flow projections, and (iii) the continued improvement of the landscape for travel, the Directors believe that the going concern basis of accounting is appropriate.
# **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 they are reported elsewhere in the consolidated annual financial report.
The Directors regularly consider the viability of the Group and are required by the Law to do so on every occasion that any distribution is to be declared, currently every quarter. In this context, and for their viability assessment, the Directors consider future cash flows for at least the next three years. A three year period has been selected as it allows for reasonable estimation of future costs, including interest, and of aircraft values for comparison to outstanding debt at the end of the viability period.
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. Based on the assessment of Principal Risks and Uncertainties at pages 16 to 20 the risks relevant to the Group are considered to be stable. Mitigation measures and controls currently in place are deemed to be operating effectively to the extent that these matters are not considered to pose any doubt in relation to the Group's viability.
The Directors have considered a detailed cash flow forecast for the running costs of the Group, which is updated regularly, on the assumption that lessees continue to fulfil their current lease obligations. This assumption is considered to be reasonable in the light of the recent performance of the lessees and the improving outlook for long haul air travel. The Directors have also considered current cash-flow projections under various adverse scenarios. 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 future cash receipts will be sufficient to cover all forecast operating costs of the Group for the three year period up to at least March 2027, as well as the repayment of loans which mature in 2026, and that therefore the Group will be able to meet its obligations as they fall due during that period.
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 2024.
# **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 Consolidated 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 on pages 3 to 24, the Audit Committee Report and the notes to the Consolidated Financial Statements contained on pages 43 to 72 and are incorporated herein by reference.
All payments due from lessees were made in accordance with the terms of the respective leases, as amended.
### **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 (during the year and up to the date of this report) are shown on pages 14 to 15. Laurence Barron resigned from the Board of Directors effective 31 March 2024. Mary Gavigan resigned, and Eithne Manning was appointed, on 30 April 2024. Further details of the Directors' responsibilities are given on page 25.
### **Management of Conflicts of Interest**
The Company has established guidelines to ensure management of conflicts of interest. The Board has also communicated its expectations to the Company's service providers and each Director.
The Board considers conflicts of interest at each Board meeting by reviewing a schedule of each Directors other directorships and other interests held. Each Director and service provider 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 on pages 39 to 42.
The Company declared and paid the following dividends during the financial year:
| Announcement Date | Payment Date | Dividend per Share (pence) |
|-------------------|-----------------|----------------------------|
| 4 April 2023 | 28 April 2023 | 1.75 |
| 3 July 2023 | 31 July 2023 | 1.75 |
| 3 October 2023 | 31 October 2023 | 1.75 |
| 11 January 2024 | 31 January 2024 | 2.00 |
The Company declared and paid the following dividends subsequent to the financial year:
| Announcement Date | Payment Date | Dividend per Share (pence) |
|-------------------|--------------------------|----------------------------|
| 2 April 2024 | 30 April 2024 | 2.00 |
| 2 July 2024 | Anticipated 31 July 2024 | 2.00 |
# **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 26 to this consolidated annual financial report.
# Directors' Report (continued)
#### **Substantial Shareholdings**
As of 18 July 2024 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:
| | % of Total Voting | Number of |
|--------------------------------------|-------------------|------------|
| Holder | Rights | Shares* |
| Weiss Asset Management L.P. | 8.99 | 27,306,302 |
| Royal London Asset Management | 8.85 | 26,887,306 |
| Mirabella Financial Services LLP | 8.60 | 26,141,168 |
| Metage Capital Management Limited | 6.85 | 20,814,876 |
| Newton Investment Management Limited | 6.13 | 18,624,604 |
| Elliot Investment Management L.P. | 6.05 | 18,375,000 |
\*Number of shares as notified directly to the Board or as communicated by Shareholders via TR1 notifications adjusted for any compulsory redemptions in the interim period from the date of notification to the date of this report.
### **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 they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
#### **Auditor**
KPMG Channel Islands has expressed its willingness to continue in office as auditor and the Audit Committee has recommended their reappointment. A resolution proposing the reappointment of KPMG Channel Islands Limited will be submitted at the forthcoming AGM to be held pursuant to section 199 of the Law.
The strategic report on pages 3 to 24 was approved by the Board on 25 July 2024 and is signed on their behalf by:
**Robin Hallam Chairman**
# Statement of Directors' Responsibilities
**T**he Directors are responsible for preparing the consolidated annual financial report in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law they are required to prepare the financial statements in accordance with IFRS as issued by the IASB and applicable law.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of its profit or loss for that period. In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable, relevant and reliable;
- state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
- assess the Group and the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
- use the going concern basis of accounting unless they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping proper 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 its financial statements comply with the Companies (Guernsey) Law, 2008. They are responsible for such internal controls as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the Assets of the Group and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors who hold office at the date of approval of this Director's Report confirm that so far as they are aware, there is no relevant audit information of which the Group's auditor is unaware, and that each Director has taken all the steps they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Group's auditor is aware of that information.
# **Responsibility statement of the Directors in respect of the Consolidated Annual Financial Report** We confirm that to the best of our knowledge:
- the Consolidated Financial Statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the Assets, liabilities, financial position and profit or loss of the Group;
- the consolidated annual financial report includes a fair review of the development and performance of the business and the position of the Shareholder, together with a description of the principal risks and uncertainties that they face; and
- We consider 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 position and performance, business model and strategy.
Signed on behalf of the Board on 25 July 2024
**Robin Hallam Chairman**
# 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 £400,000 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**
The Board carries out a review of non-executive director fees annually. It benchmarks fees against available public market data and following review of that information considered that it was appropriate to recommend a cost of living adjustment in relation to non-executive director fees. For the year ended 31 March 2024 that adjustment amounted to 7.08%.
Fees paid to the non-executive Directors in the financial years ended 31 March 2024 and 2023 were as follows:
| | | 2024 fees | | 2023 fees |
|-------------------------------------------------|----------------|------------------------------|----------------|------------------------------|
| | | Additional
directors fees | | Additional
directors fees |
| | Regular | in relation to | Regular | in relation to |
| Director | directors fees | 2024 | directors fees | 2023 |
| Robin Hallam (Chairman) | £69,600 | £17,100 | £65,000 | £16,000 |
| David Gelber | £69,600 | N/A | £65,000 | N/A |
| Laurence Barron* | £69,600 | N/A | £65,000 | N/A |
| Mary Gavigan** | £69,600 | N/A | £65,000 | N/A |
| Steve Le Page (Chairman of the Audit Committee) | £69,600 | £8,600 | £65,000 | £8,000 |
| Tom Sharp | £10,700 | N/A | £2,083*** | N/A |
\* Laurence Barron resigned as a director of the Company with effect from 31 March 2024.
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 7.
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, including persons closely associated with them, are shown below:
| | Number of Shares
held as at
31 March 2024 | Number of Shares
held as at the date
of this report |
|------------------|-------------------------------------------------|-----------------------------------------------------------|
| Robin Hallam | 82,250 | 82,250 |
| David Gelber | 171,017 | 171,017 |
| Laurence Barron* | — | — |
| Mary Gavigan** | 108,736 | 108,736 |
| Steve Le Page | 87,500 | 87,500 |
| Tom Sharp*** | — | — |
\* Laurence Barron resigned as director of the Company with effect from 31 March 2024.
\*\* Mary Gavigan resigned as a director of the Company with effect from 30 April 2024.
\*\*\* Tom Sharp 2023 fees for part year (appointment date 19 January 2023).
\*\* Mary Gavigan resigned as a director of the Company with effect from 30 April 2024.
\*\*\* Tom Sharp is the Chief Investment Officer of Metage Capital Limited, the discretionary fund manager to Metage Funds Limited, a 6.85% Shareholder in the Company.
# 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 principles and provisions 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.
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.
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. Since the Board is comprised entirely of non-executive Directors, it has chosen not to form any committees other than an Audit Committee and a Dividend Committee, and the responsibilities of all other committees envisaged by the AIC Code are fulfilled directly by the Board.
#### **Board Composition**
Up to 31 March 2024, the Board comprised of six Directors, their biographies appear on pages 14 to 15 demonstrating the wide range of skills and experience they each bring to the Board. Laurence Barron resigned from the Board of Directors effective 31 March 2024. Mary Gavigan resigned from the Board of Directors and Eithne Manning was appointed to the Board of Directors effective 30 April 2024. All the Directors are non-executive and, for the purpose of provision 13 of the AIC Code, four of the Directors are considered to be independent, with the Chairman being independent from appointment. As part of their examination of the independence of the Board, the Board has concluded that those four Directors remain independent under the principles of the AIC Code. See the section on tenure below.
Robin Hallam is the Chairman.
David Gelber is the SID. As the appointed SID, Mr Gelber provides a sounding board to the Chairman and serves as an intermediary for Shareholders. Mr Gelber also leads on the evaluation of the performance of the Chairman.
None of the Directors hold employment in any other public companies 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 AGMs 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 AGM Robin Hallam will retire and, being eligible, offer himself for re-election. The Board has considered the independence of the Chairman, Robin Hallam, who will have served on the Board for approximately nine and a half years by the time of the 2024 AGM. Despite the fact that his tenure in the role slightly exceeds to recommendation in the Code, the Board has concluded that he continues to demonstrate independence of thought and action in his role, and that his intimate knowledge of the aviation industry and the Group are a considerable advantage. They therefore recommend his reappointment. The Board will annually reassess his independence and will also consider the independence of any Director who has been appointed to the Board for a continuous period of nine years.
# Corporate Governance Statement (continued)
#### **Board Evaluation**
In February 2024 the Board completed a self-evaluation and concluded that its performance was still adequate and professional and that no corporate governance concerns existed. This conclusion was in line with that of the most recent external performance evaluation in December 2020. The Board will consider appointing external facilitators again in future years.
### **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 published 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 nine Board meetings and four Audit Committee meetings in order to carry out their duties. Director's attendance at these meetings was as follows:
| Director | Board | Ad Hoc Board | Audit Committee | Dividend Committee |
|-----------------|--------|--------------|-----------------|--------------------|
| Robin Hallam | 4 of 4 | 3 of 5 | N/A* | 2 of 4 |
| David Gelber | 4 of 4 | 3 of 5 | 1 of 4** | 1 of 4 |
| Laurence Barron | 4 of 4 | 4 of 5 | 1 of 4*** | 1 of 4 |
| Mary Gavigan | 4 of 4 | 4 of 5 | 4 of 4 | 2 of 4 |
| Steve Le Page | 4 of 4 | 5 of 5 | 4 of 4 | 4 of 4 |
| Tom Sharp | 4 of 4 | 4 of 5 | N/A**** | 2 of 4 |
\* Robin Hallam is not as a member of the Audit Committee.
A time commitment of approximately 30 days has been set for Board duties in the Directors' letters of appointment, although the Board recognises 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 Board, the Company has no requirement for these committees and instead, the full Board performs these functions.
\*\* David Gelber resigned as a member of the Audit Committee on 9 August 2024.
\*\*\* Laurence Barron resigned as a member of the Audit Committee on 9 August 2024.
\*\*\*\* Tom Sharp is not a member of the Audit Committee.
# Corporate Governance Statement (continued)
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 Mary Gavigan and Steve Le Page. On 9 August 2023, Laurence Barron and David Gelber resigned as members from the Audit Committee. Eithne Manning was appointed as a member of the Audit Committee effective 30 April 2024. The Audit Committee has regard to the Guidance on Audit Committees published by the Financial Reporting Council 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 the Board and the Group's service providers, quality control procedures, effectiveness of audit process and added value beyond assurance.
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 resolution proposing the reappointment of KPMG Channel Islands Limited will be submitted at the forthcoming AGM to be held pursuant to section 199 of the Law. 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 reappointment of KPMG Channel Islands Limited as the Company's external auditor be proposed to Shareholders at the 2024 AGM. 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 of KPMG as auditor) 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 halfyearly 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 consolidated annual financial report for the year ended 31 March 2023, the consolidated half-yearly financial report for the period ended 30 September 2023 and the audit plan for the year ended 31 March 2024. The report from the Chairman of the Audit Committee is on pages 31 to 33.
# **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 on page 10; subject to no other Director having raised an objection to the declaration of such a dividend.
# Corporate Governance Statement (continued)
#### **Bribery**
The Directors have undertaken to operate the business in an honest and ethical manner and accordingly take a zerotolerance 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. 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.
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 AGM.
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 raised with it. The Company provides regular updates to Shareholders through factsheets, webinars and annual and half-yearly financial reports.
The Directors contact details are given on page 73 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**
Steve Le Page – Chairman of the Audit Committee
Laurence Barron – Non-executive Director (Resigned from the Audit Committee on 9 August 2023 and resigned as Non-executive Director on 31 March 2024)
Mary Gavigan – Non-executive Director (Resigned as Non-executive Director and Member from the Audit Committee on 30 April 2024)
David Gelber - Non-executive Director (Resigned from the Audit Committee on 9 August 2023)
Eithne Manning – Non-executive Director (Appointed as Non-executive Director and Member of the Audit Committee on 30 April 2024)
### **Key Duties**
The Audit Committee's key duties are set out in the Committee's terms of reference which are available on the Company's website; https://www.aa4plus.gg.
### **Audit Committee Meetings**
During the reporting period, the Audit Committee met four times. 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.
### **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 the disclosures in the Consolidated Financial Statements. In carrying out this review the members of the Committee take into account their knowledge of the reporting requirements applicable, the activities of the Company and as a consequence their expectations of the form and content of the financial reports.
The Corporate Reporting Review Team of the Financial Reporting Council have recently concluded a review of the Company's financial report for the year ended 31 March 2023. I am pleased to say that they raised no significant issues, although they suggested certain disclosure improvements which have been reflected in this annual report.
The significant issues considered by the Audit Committee in relation to this consolidated annual financial report and how these were addressed were as follows:
The Assets of the Group comprise six A380-800 aircraft, two B777-300ER aircraft and four A350-900 aircraft. An annual review is required of the residual value of the Assets as per IAS 16 Property, Plant and Equipment.
### **Significant issues for the year How the Audit Committee addressed these significant issues**
**Residual value of aircraft Assets** The Group believes that the use of forecast base values excluding inflation is a reasonable approximation for residual value as required per IAS 16 Property, Plant and Equipment. On this basis, updated investment valuations were commissioned and received from third party professional appraisers for all of the Assets at the year-end and analysed by Amedeo and the Directors. The Audit Committee believes that those valuations are appropriate for the purposes of calculating depreciation.
> The residual value excluding inflation used in the calculation of depreciation is based on the average future maintenance adjusted base values from three independent appraisers. In the case of the A380 aircraft, the valuations have been maintenance adjusted to the minimum return conditions plus end of lease monetary compensation payable by the lessee (as per the lease contracts). In the case of the B777 and A350 aircraft, the valuations have been maintenance adjusted to the return conditions contracted under the lease.
> With respect to the A380s, the aircraft type faces a unique situation in terms of its limited operator base which creates greater uncertainty around its ultimate residual value. 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 from the appraisers' reports. An average of the three independent appraisers is therefore used to determine the appropriate residual value.
# Audit Committee Report (continued)
IAS 36 Impairment of Assets requires that a review for impairment be carried out by the Group when there is an indication of the impairment of an asset and if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review will compare the carrying amount of the asset with its recoverable amount which is the higher of its current market value and its value-in-use.
#### **Significant issues for the year How the Audit Committee addressed these significant issues**
**Consideration of any triggers for impairment** During 2020/21 and 2021/22, the impact of the COVID 19 pandemic and associated travel restrictions on residual values of the Group's Assets and on the airline industry generally led to significant provisions for impairment being made in the Consolidated Financial Statements.
> Whilst, as referred to above, the current situation of the industry and of the lessees is much improved, it was felt, in line with IAS36, to be appropriate to perform another impairment test this year. This process utilised the same methodology as last year and the Board has concluded that no further provisions for impairment are required this year.
# **Going Concern and Viability**
The Audit Committee receives regular reports from the Asset Manager which comment on the situation of both lessees. Also, as mentioned above, both lessees are performing their obligations under the existing lease contracts in a timely and complete manner.
However, Thai Airways remains in bankruptcy protection and consequently the market has not yet restored its previous credit rating. The Directors have established a precautionary credit loss provision against certain receivables from that lessee.
As set out in the going concern note 2(i) and in the viability statement on pages 21 to 22, the Audit Committee and the Board are comfortable that the Group is both a going concern and viable.
# **Internal Controls**
The Audit Committee has made due enquiry about the internal controls of the Group's service providers, particularly those relevant to financial reporting. The Audit Committee is satisfied with the controls currently implemented, but will continue to review them regularly. The Audit Committee has also asked to be 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 a detailed audit plan, identifying the external auditor's assessment of the key financial reporting risks. For the year, the primary risks identified were in respect of the carrying value of the aircraft assets 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 start and at the conclusion of the audit. In addition, the Audit Committee sought feedback from service providers on the effectiveness of the audit process.
For the year, the Audit Committee was 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 its findings with the external auditor and will consider if future external audits could be improved.
The Audit Committee holds meetings with the external auditor, and the Audit Committee Chair speaks regularly to the lead partner, to provide additional opportunity for open dialogue and for feedback from the auditor. If felt necessary, Audit Committee members would meet with the external auditor without the Administrator or Asset Manager being present. Matters discussed include the residual valuation of aircraft, appropriateness of any impairment provisions, the auditor's assessment of business risks and management activity thereon, the transparency and openness of interactions with the service providers, the independence of their audit and how they have exercised professional scepticism.
# Audit Committee Report (continued)
#### **Appointment and Independence**
The Audit Committee considers the reappointment of the external auditor, including the rotation of the audit partner, each year and also evaluates their independence on an on-going basis.
The Audit Committee has recommended to the Board the re-appointment of KPMG Channel Island Limited as the Group's external auditor be proposed for the year ending 31 March 2025. A resolution proposing the reappointment of KPMG Channel Islands Limited will be submitted at the forthcoming AGM to be held pursuant to section 199 of the Law.
The Audit Committee will, if appropriate, consider arranging for the external audit contract to be tendered in 2028 (being ten years from KPMG's initial appointment) with the aim of ensuring a high quality and effective audit.
### **Conclusion**
The above report outlines the work of the Audit Committee generally, and in specific respect of these Consolidated Financial Statements. The conclusion of the Audit Committee is that these Consolidated Financial Statements, taken as a whole, are fair, balanced and understandable, and provide the information necessary for Shareholders to assess the Group's performance, business model and strategy. Furthermore, the Audit Committee believes that they show a true and fair view of the performance of the Company for the year ended 31 March 2024 and of its financial position at that date.
**Steve Le Page**
Chairman of the Audit Committee
#### **Our opinion is unmodified**
We have audited the Consolidated financial statements of Amedeo Air Four Plus Limited (the "Company") and its subsidiaries (together, the "Group"), which comprise the consolidated statement of financial position as at 31 March 2024, the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising material accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements:
- give a true and fair view of the financial position of the Group as at 31 March 2024, and of the Group's financial performance and cash flows for the year then ended;
- are prepared in accordance with International Financial Reporting Standards; and
- comply with 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 are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company and Group in accordance with, UK ethical requirements including the FRC Ethical Standard as required by the Crown Dependencies' Audit Rules and Guidance. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
### **Key audit matters: our assessment of the risks of material misstatement**
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the Consolidated 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 Consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit matter was as follows (unchanged from 2023):
Carrying value of Aircraft (the "Assets")
£1,013,468,395; (2023: £1,161,509,286)
Refer to the Audit Committee Report on page 31, note 2 (l) accounting policy and note 8 disclosures.
#### **Basis:**
IAS 36 'Impairment of assets' requires that assets are assessed for impairment on at least an annual basis including management's estimate of the recoverable amount.
The standard requires that for all assets in scope at the end of the reporting period, an entity assess whether there is any indication that an asset may be impaired and, where such indications exist, the recoverable amount of the asset is estimated.
The Board, together with the Asset Manager, performed an impairment assessment (the "Impairment Assessment") in the current year.
The Impairment Assessment was performed in a manner consistent with that laid out in notes 2(l) and 8 to the Consolidated financial statements.
#### **Risk:**
The determination of the carrying value of the Group's Assets is a significant area of our audit, given that it represents a significant portion of the total assets of the Group.
The valuation risk of the Group's Assets incorporates a risk of error due to the significance of subjective estimates and complexity involved in the determination of their carrying value.
We determined that the carrying value of the Group's Assets has a high degree of estimation uncertainty, giving rise to a potential range of reasonable outcomes greater than our materiality for the Consolidated Financial Statements as a whole. The Consolidated Financial Statements disclose in note 3 the sensitivities estimated by the Company.
#### **The risk Our response**
Our audit procedures included but were not limited to:
#### **Internal Controls:**
We assessed the design and implementation of key controls over the Assets' valuation.
### **Challenging managements' assumptions and inputs:**
We assessed the consistency of the method applied in the Impairment Assessment with the approach outlined in the Group's accounting policy and the requirements of IFRS.
We assessed the reasonableness of the discount rate applied in the Impairment Assessment against the nature of the Assets held by the Group, the lease agreements in place, and observable market data where available.
We assessed the reasonableness of the current market values, residual values and future lease rentals included in the Impairment Assessment by: obtaining and reviewing the reports of the three independent professional appraisers engaged by the Asset Manager (the "Appraisers"); assessing their competence, capability, and objectivity; by performing inquiries with them and the Asset Manager to understand key judgements; and by benchmarking the current market values and residual values to independently obtained market data.
We compared the current market values, residual values and future lease rentals included in the Impairment Assessment to the reports prepared by the Appraisers.
We compared the cash flows included in the Impairment Assessment to lease agreements between the Group and its lessees.
Based on the findings of the procedures outlined above, we recalculated the carrying value of the Group's Assets and compared this to the carrying value used in the Group's Impairment Assessment.
#### **Assessing disclosures:**
We also considered the Group's disclosures (see notes 2(l) and 8) in relation to the use of judgements and estimates regarding the determination of the carrying value of the Assets and the Group's measurement policies adopted in note 2 (l) and disclosures in note 8 for compliance with IFRS.
### **Our application of materiality and an overview of the scope of our audit**
Materiality for the Consolidated financial statements as a whole was set at £6,790,000, determined with reference to a benchmark of group total assets of £1,252,283,406, of which it represents approximately 0.5% (2023: 0.5%).
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the Consolidated financial statements as a whole. Performance materiality for the Group was set at 75% (2023: 65%) of materiality for the Consolidated financial statements as a whole, which equates to £5,090,000. We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk.
We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding £339,500, in addition to other identified misstatements that warranted reporting on qualitative grounds.
Our audit of the Group was undertaken to the materiality level specified above, which has informed our identification of significant risks of material misstatement and the associated audit procedures performed in those areas as detailed above.
The group team performed the audit of the Group as if it was a single aggregated set of financial information. The audit was performed using the materiality level set out above and covered 100% of total group revenue, total group profit before tax, and total group assets and liabilities.
# **Going Concern**
The directors have prepared the Consolidated financial statements on the going concern basis as they do not intend to liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group and the Company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the Consolidated financial statements (the "going concern period").
In our evaluation of the directors' conclusions, we considered the inherent risks to the Group and the Company's business model and analysed how those risks might affect the Group and the Company's financial resources or ability to continue operations over the going concern period. The risks that we considered most likely to affect the Group and the Company's financial resources or ability to continue operations over this period were the availability of capital and the lessees' ability to make contractual lease payments in order for the Group to meet operating costs and other financial commitments.
We considered whether these risks could plausibly affect the liquidity in the going concern period by comparing severe, but plausible downside scenarios that could arise from these risks individually and collectively against the level of available financial resources indicated by the Company's financial forecasts.
We considered whether the going concern disclosure in note 2 (i) to the financial statements gives a full and accurate description of the directors' assessment of going concern.
Our conclusions based on this work:
- we consider that the directors' use of the going concern basis of accounting in the preparation of the consolidated financial statements is appropriate;
- we have not identified, and concur with the directors' assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Company's ability to continue as a going concern for the going concern period; and
- we found the going concern disclosure in the notes to the consolidated financial statements to be acceptable.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group and the Company will continue in operation
#### **FRAUD AND BREACHES OF LAWS AND REGULATIONS – ABILITY TO DETECT**
**Identifying and responding to risks of material misstatement due to fraud**
To identify risks of material misstatement due to fraud ("fraud risks") we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
- enquiring of management as to the Group's policies and procedures to prevent and detect fraud as well as enquiring whether management have knowledge of any actual, suspected or alleged fraud;
- reading minutes of meetings of those charged with governance; and
- using analytical procedures to identify any unusual or unexpected relationships.
As required by auditing standards, we perform procedures to address the risk of management override of controls, in particular the risk that management may be in a position to make inappropriate accounting entries. On this audit we do not believe there is a fraud risk related to revenue recognition because the Group's revenue streams are simple in nature with respect to accounting policy choice, and are easily verifiable to external data sources or agreements with little or no requirement for estimation from management. We did not identify any additional fraud risks.
We performed procedures including:
- Identifying journal entries and other adjustments to test based on risk criteria and comparing any identified entries to supporting documentation; and
- incorporating an element of unpredictability in our audit procedures.
# **Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations**
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the Consolidated financial statements from our sector experience and through discussion with management (as required by auditing standards), and from inspection of the Group's regulatory and legal correspondence, if any, and discussed with management the policies and procedures regarding compliance with laws and regulations. As the Group is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity's procedures for complying with regulatory requirements.
The Group is subject to laws and regulations that directly affect the Consolidated financial statements including financial reporting legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
The Group is subject to other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the Consolidated financial statements, for instance through the imposition of fines or litigation or impacts on the Group and the Company's ability to operate. We identified financial services regulation as being the area most likely to have such an effect, recognising the regulated nature of the Group's activities and its legal form. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of management and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
# **Context of the ability of the audit to detect fraud or breaches of law or regulation**
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the Consolidated 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 is from the events and transactions reflected in the Consolidated 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 fraud, as this may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
#### **OTHER INFORMATION**
The directors are responsible for the other information. The other information comprises the information included in the annual financial report but does not include the Consolidated financial statements and our auditor's report thereon. Our
opinion on the Consolidated financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the Consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
### **WE HAVE NOTHING TO REPORT ON OTHER MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION**
We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:
- the Company has not kept proper accounting records; or
- the Consolidated financial statements are not in agreement with the accounting records; or
- 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
#### **RESPECTIVE RESPONSIBILITIES**
### **Directors responsibilities**
As explained more fully in their statement set out on page 25, the directors are responsible for: the preparation of the Consolidated 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 Consolidated financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and 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 the Company 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 Consolidated financial statements as a whole are free from material misstatement, whether due to fraud 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 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 Consolidated financial statements.
A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.
# **THE PURPOSE OF THIS REPORT AND RESTRICTIONS ON ITS USE BY PERSONS OTHER THAN THE COMPANY'S MEMBERS, AS A BODY**
This 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.
**David Alexander** 25 July 2024
for and on behalf of KPMG Channel Islands Limited Chartered Accountants and Recognised Auditors Guernsey
# Consolidated Statement of Comprehensive Income
for the year ended 31 March 2024
| | | 1 Apr 2023 to | 1 Apr 2022 to |
|--------------------------------------------------------------------------|-------|--------------------|--------------------|
| | Notes | 31 Mar 2024
GBP | 31 Mar 2023
GBP |
| INCOME | | | |
| US Dollar based rental income | 4 | 147,962,497 | 173,474,478 |
| British Pound based rental income | 4 | 34,687,668 | 34,624,652 |
| | | 182,650,165 | 208,099,130 |
| EXPENSES | | | |
| Operating expenses | 6 | (4,804,831) | (4,908,896) |
| Depreciation and amortisation of aircraft | 8 | (122,220,935) | (129,682,968) |
| Expected credit write back/(loss) | 13 | 252,268 | (1,842,796) |
| | | (126,773,498) | (136,434,660) |
| Net profit for the year before finance income, finance costs and foreign | | | |
| exchange gains | | 55,876,667 | 71,664,470 |
| | | | |
| FINANCE INCOME
Finance income | 9 | 7,236,249 | 26,310,651 |
| | | 7,236,249 | 26,310,651 |
| | | | |
| FINANCE COSTS | | | |
| Finance costs | 10 | (37,029,199) | (40,071,942) |
| | | (37,029,199) | (40,071,942) |
| Foreign exchange gains | | 92,614 | 939,728 |
| Income for the year before tax | | 26,176,331 | 58,842,907 |
| Income tax expense | 25 | (27,330) | (31,668) |
| Income for the year after tax | | 26,149,001 | 58,811,239 |
| OTHER COMPREHENSIVE INCOME | | | |
| Items that may be reclassified subsequently to profit or loss | | | |
| Translation adjustment on foreign operations | | (6,604,965) | 15,855,281 |
| Total comprehensive gain for the year | | 19,544,036 | 74,666,520 |
| | | Pence | Pence |
| Earnings per share for the year – basic and diluted | 12 | 8.60 | 17.11 |
In arriving at the results for the financial year, all amounts above relate to continuing operations.
# Consolidated Statement of Financial Position
as at 31 March 2024
| Notes
GBP
NON-CURRENT ASSETS
Aircraft
8
1,013,468,395
Trade and other receivables
14
18,493,966
Derivatives at fair value through profit and loss
21
42,155,539
Deferred tax
25
26,868
Accrued income
13
31,273,765
1,105,418,533
CURRENT ASSETS
Accrued income
13
3,664,154
Short‑term investments
15
10,950,127
Trade and other receivables
14
1,414,879
Cash and cash equivalents
16
130,835,713
146,864,873
TOTAL ASSETS
1,252,283,406
CURRENT LIABILITIES
Payables
18
200,941
Deferred income
13
5,466,248
Maintenance provisions
17
63,667,826
Borrowings
19
111,211,850
180,546,865
NON-CURRENT LIABILITIES
Maintenance provisions
17
11,681,677
Borrowings
19
708,707,791
Deferred income
13
12,509,514
732,898,982
TOTAL LIABILITIES
913,445,847
338,837,559
TOTAL NET ASSETS
EQUITY
Share capital
20
492,981,504 | GBP
1,161,509,286 | | |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|------------|--------------------------------------|
| | | | |
| | | | |
| | | | |
| | 17,972,187 | | |
| | 44,599,777 | | |
| | 54,210 | | |
| | 34,858,268 | | |
| | 1,258,993,728 | | |
| | | | |
| | 3,704,760 | | |
| | 10,719,241 | | |
| | 111,110 | | |
| | 116,607,126 | | |
| | 131,142,237 | | |
| | 1,390,135,965 | | |
| | | | |
| | | | |
| | 215,370 | | |
| | 5,628,215 | | |
| | 45,539,816
109,878,152 | | |
| | 161,261,553 | | |
| | | | |
| | 24,699,887 | | |
| | 845,529,430 | | |
| | 17,318,868 | | |
| | 887,548,185 | | |
| | 1,048,809,738 | | |
| | 341,326,227 | | |
| | | | |
| | 492,981,504 | | |
| | 46,475,886 | 39,870,921 | Foreign currency translation reserve |
| Retained deficit
(194,014,866) | (198,131,163) | | |
| 338,837,559 | 341,326,227 | | |
| | | | |
| Pence | Pence | | |
| Net Asset Value Per Share based on 303,899,361 (2023: 303,899,361) | | | |
| shares in issue
111.50 | 112.32 | | |
The USD/GBP exchange rate was 1.2623 as at 31 March 2024 (2023: 1.2337).
The Consolidated Financial Statements were approved by the Board of Directors and authorised for issue on 25 July 2024 and are signed on its behalf by:
#### **Robin Hallam, Chairman**
# Consolidated Statement of Cash Flows
for the year ended 31 March 2024
| | | 1 Apr 2023 to | 1 Apr 2022 to |
|------------------------------------------------|-------|---------------|---------------|
| | | 31 Mar 2024 | 31 Mar 2023 |
| | Notes | GBP | GBP |
| OPERATING ACTIVITIES | | | |
| Income for the year after tax | | 26,149,001 | 58,811,239 |
| Increase in accrued income | | (2,590,996) | (24,336,592) |
| Decrease in deferred income | | (570,889) | (1,530,627) |
| Interest income | | (6,114,897) | (3,344,526) |
| Depreciation and amortisation of aircraft | 8 | 122,220,935 | 129,682,968 |
| Gain on derivatives | 9 | (897,326) | (1,393,953) |
| Expected credit (write back)/loss | | (252,268) | 1,842,796 |
| Taxation expense | 25 | 27,330 | 31,668 |
| Loan interest payable | 10 | 33,213,552 | 38,449,531 |
| Fair value adjustments on financial assets | 9/10 | 2,256,461 | (21,290,765) |
| Increase in payables | | 12,914 | 91,643 |
| Maintenance reserves received | | 6,731,902 | 8,311,349 |
| (Increase)/decrease in receivables | | (172,619) | 915,694 |
| Foreign exchange movement | | (92,614) | (939,728) |
| Amortisation of debt arrangement costs | 10 | 1,559,186 | 1,622,411 |
| NET CASH FROM OPERATING ACTIVITIES | | 181,479,672 | 186,923,108 |
| | | | |
| INVESTING ACTIVITIES | | | |
| Investment in short‑term deposits | 15 | (10,950,127) | (10,719,241) |
| Withdrawal from short‑term deposits | 15 | 10,719,241 | 20,770,215 |
| Interest received | 9 | 6,114,897 | 3,344,526 |
| NET CASH FROM INVESTING ACTIVITIES | | 5,884,011 | 13,395,500 |
| | | | |
| FINANCING ACTIVITIES | | | |
| Dividends paid | 11 | (22,032,704) | (19,102,241) |
| Share redemption paid | 20 | — | (28,002,108) |
| Repayments of capital on senior loans | 24 | (110,751,708) | (103,301,759) |
| Payments of interest on senior loans | 24 | (26,732,378) | (31,068,163) |
| Payments of interest on junior loans | 24 | (11,356,947) | (11,849,067) |
| Security trustee and agency fees | 10 | (211,963) | (219,593) |
| Gain received on derivatives | | 969,109 | 1,585,327 |
| NET CASH USED IN FINANCING ACTIVITIES | | (170,116,591) | (191,957,604) |
| | | | |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | | 116,607,126 | 101,644,952 |
| Increase in cash and cash equivalents | | 17,247,092 | 8,361,004 |
| Effects of foreign exchange rates | | (3,018,505) | 6,601,170 |
| CASH AND CASH EQUIVALENTS AT END OF YEAR | 16 | 130,835,713 | 116,607,126 |
# Consolidated Statement of Changes in Equity
for the year ended 31 March 2024
| | | Share
capital | Retained
deficit | Foreign
currency
translation
reserve | Total |
|---------------------------------------------------|-------|------------------|---------------------|-----------------------------------------------|--------------|
| | Notes | GBP | GBP | GBP | GBP |
| Balance as at 1 April 2023 | | 492,981,504 | (198,131,163) | 46,475,886 | 341,326,227 |
| Income for the year | | — | 26,149,001 | — | 26,149,001 |
| Other comprehensive loss for the year | | — | — | (6,604,965) | (6,604,965) |
| Total comprehensive gain for the year | | — | 26,149,001 | (6,604,965) | 19,544,036 |
| Transactions with owners of the
Company: | | | | | |
| Dividends paid | 11 | — | (22,032,704) | — | (22,032,704) |
| Total transactions with owners of the
Company: | | — | (22,032,704) | — | (22,032,704) |
| Balance as at 31 March 2024 | | 492,981,504 | (194,014,866) | 39,870,921 | 338,837,559 |
| | | Share | Retained | Foreign
currency
translation | |
| | | capital | deficit | reserve | Total |
| | Notes | GBP | GBP | GBP | GBP |
| Balance as at 1 April 2022 | | 520,983,612 | (237,840,161) | 30,620,605 | 313,764,056 |
| Income for the year | | — | 58,811,239 | — | 58,811,239 |
| Other comprehensive gain for the
year | | — | — | 15,855,281 | 15,855,281 |
| Total comprehensive gain for the year | | — | 58,811,239 | 15,855,281 | 74,666,520 |
| Transactions with owners of the
Company: | | | | | |
| Share redemption | 20 | (28,002,108) | — | — | (28,002,108) |
| Dividends paid | 11 | — | (19,102,241) | — | (19,102,241) |
| Total transactions with owners of the
Company: | | (28,002,108) | (19,102,241) | — | (47,104,349) |
| Balance as at 31 March 2023 | | 492,981,504 | (198,131,163) | 46,475,886 | 341,326,227 |
# Notes to the Consolidated Financial Statements
for the year ended 31 March 2024
# **1. GENERAL INFORMATION**
The consolidated financial information incorporates the results of Amedeo Air Four Plus Limited (the "Company") and its Guernsey Subsidiaries, 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 and AA4P Xi Limited, and its Irish Subsidiaries, AA4P Leasing Ireland Limited and AA4P Leasing Ireland 2 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, four Airbus A350-900 and has sold two Airbus A380 aircraft. Eight of the remaining aircraft are leased to Emirates and four aircraft are leased to Thai Airways. All aircraft are leased for a period of 12 years from each respective delivery date, except the four aircraft leased to Thai Airways, where the lease agreements were extended by 72 months. 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 are furthermore fixed, some loan repayments making use of interest rate swaps, at the outset of the Group's acquisition of an aircraft and are very similar in amount and timing except for the repayment of bullet and balloon repayments of principal due on the final maturity of a loan. Interest rate caps were entered into with effective date 1 January 2023 as part of the loan restructuring with the lenders of the Thai aircraft.
# **2. ACCOUNTING POLICIES**
The material accounting policies adopted by the Group are as follows:
### **(a) Basis of preparation**
The Consolidated Financial Statements have been prepared in accordance with IFRS, which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"). The Consolidated Financial Statements give a true and fair view and comply with the Law.
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.
### **Changes in accounting policies and disclosure**
The following Standard's 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 consolidated financial periods except where stated otherwise.
# **New and amended IFRS Standards that are effective for the current period**
Amendments to IAS 1 'Presentation of financial statements' and IAS 8 'Accounting policies, changes in accounting estimates and error' on the definition of material. The effective date is for annual periods beginning on or after 1 January 2023. 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.
for the year ended 31 March 2024
# **2. ACCOUNTING POLICIES (continued)**
# **(a) Basis of preparation (continued)**
Definition of Accounting Estimates (Amendments to IAS 8) – The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The amendments clarify that a change in accounting estimate that results from new information or new developments is not the correction of an error. Effective for annual periods beginning on or after 1 January 2023. Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8 – The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and changes in accounting policies.
# **New and Revised Standards in issue but not yet effective**
Classification of Liabilities as Current or Non-current – Deferral of Effective Date (Amendment to IAS 1) – The amendment defers the effective date of the January 2020 amendments so that entities would be required to apply the amendment for annual periods beginning on or after 1 January 2024.
Amendment to IFRS 16 – Leases on sale and leaseback. These amendments include requirements for sale and leaseback transactions in IFRS 16 to explain how an entity accounts for a sale and leaseback after the date of the transaction. Sale and leaseback transactions where some or all the lease payments are variable lease payments that do not depend on an index or rate are most likely to be impacted. Annual periods beginning on or after 1 January 2024.
Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants – Amendments to IAS 1. IAS 1.76ZA has been added to require an entity to provide disclosure when a liability arising from a loan agreement is classified as non-current and the entity's right to defer settlement is contingent on compliance with future covenants within twelve months. This disclosure must include information about the covenants and the related liabilities as well as any facts and circumstances that indicate the entity may have difficulty complying with the covenants. Effective for annual periods beginning on or after 1 January 2024.
IFRS S1, 'General requirements for disclosure of sustainability' – related financial information. This standard includes the core framework for the disclosure of material information about sustainability-related risks and opportunities across an entity's value chain. Effective for reporting periods beginning on or after 1 January 2024, subject to endorsement of the standard in the Company's jurisdiction, which is to be confirmed.
IFRS S2, 'Climate-related disclosures' – This is the first thematic standard issued that sets out requirements for entities to disclose information about climate-related risks and opportunities. Effective for reporting periods beginning on or after 1 January 2024, subject to endorsement of the standard in the Company's jurisdiction, which is to be confirmed.
The Board have assessed the new but not yet effective standards applicable to the Company and have concluded that they will not have a material impact to the Company.
### **(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.
for the year ended 31 March 2024
# **2. ACCOUNTING POLICIES (continued)**
# **(c) Taxation (continued)**
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 a 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 the deferred tax 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.
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, 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 Pound Sterling ("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 other comprehensive income 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 that may subsequently be reclassified to profit or loss. The cumulative gains and losses arising from the translation of the financial statements of foreign subsidiaries are held in equity as a foreign currency translation reserve and 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 maturity of three months or less and highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value.
for the year ended 31 March 2024
# **2. ACCOUNTING POLICIES (continued)**
# **(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 27.
# **(i) Going concern**
The Directors have prepared these Consolidated Financial Statements for the year ended 31 March 2024 on the going concern basis.
In their consideration of the appropriateness of the going concern basis, the Directors have taken account of the fact that the Group has always received the lease payments due from Emirates Airlines, the Group's principal lessee, in full and on time. Cash flow modelling carried out has indicated that future lease receipts will enable the Group to meet its obligations as they fall due for at least the next fifteen months from the date of signing these Consolidated Financial Statements.
One of the lessees, Thai Airways, stopped paying the amounts due under the leases and also entered into a bankruptcy protection process under Thai Law during 2020, but during 2021 re-commenced paying PBH rentals, and fixed rentals from 1 January 2023, in accordance with restructured and extended leases, although it still remains in bankruptcy protection. The Company also successfully restructured the associated debt. Accordingly, it is the current opinion of the Board that these lease operations will be self-financing for the foreseeable future.
On the basis of (i) the Group's current liquid assets, (ii) cash-flow projections, and (iii) the current improving landscape for travel, the Directors believe that the going concern basis of accounting is appropriate.
#### **(j) Rental income**
In line with note 3 the leases relating to the Assets have been classified as operating leases. The Assets are shown as non-current assets in the Consolidated Statement of Financial Position.
Rental income including fixed lease payments, advance lease payments and one-off end of life lease payments (as detailed in note 4) from operating leases is 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. Accrued and deferred income represents the difference between actual operating lease payments received (including some received in full upfront) and the amount to be accounted for in the accounting records on a straight-line basis over the operating lease terms.
In accordance with the restructured and extended leases agreed between the Company and Thai Airways, effective from 15 December 2021, variable lease payments in the form of power by the hour ("PBH") rentals were introduced from the effective date of the amended lease agreements up until 31 December 2022. This is followed by fixed lease payments from 1 January 2023 up until the original expiry dates of the amended lease agreements. For the extension period of 72 months from the original expiry dates an amount agreed between the Company and Thai Airways will be paid, which has been determined by taking the average base lease rate from three appraisers (refer to note 3 under Key Sources of Estimation Uncertainty).
The Thai Airways variable lease payments have been recognised as rental income as received. The Thai Airways fixed lease payments, including the lease payments from the 72 months extension period are recognised on a straightline basis over the term of the restructured and extended lease agreements. This has resulted in the accumulation of accrued income over the variable lease payment period as income has been recognised but not yet received. From the commencement of the fixed lease payment period on 1 January 2023 onwards, the accrued income balance will be released over the remaining life of the Thai Airways lease agreements.
for the year ended 31 March 2024
# **2. ACCOUNTING POLICIES (continued)**
# **(j) Rental income (continued)**
In accordance with the lease agreements for two of the aircraft leased to Emirates, a one-off end of lease payment is receivable. The income from these one-off end of life lease payments is accrued on a straight-line basis over the life of the leases and is included in non-current receivables as it is due to be received in 2028.
Advanced lease payments were received at the start of some of the lease agreements. Advanced lease payments are recognised as deferred income initially and released through the Statement of Comprehensive Income on a straight-line basis over the relevant lease term.
Further details are provided in note 3 for Critical Accounting Judgements relating to the operating leases, notes 4 and 5 for income from operating leases, note 13 for accrued and deferred income from operating leases, and note 14 for trade receivables relating to one-off end of life lease payments from operating leases.
# **(k) Maintenance provision 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 until such time as any retention is virtually certain. Maintenance provisions not expected to be utilised within one year are classified as non-current liabilities and maintenance provisions expected to be utilised within one year are classified as current liabilities.
The Group generally reimburses the lessee or subsequent lessee out of payments received by the Group when the Group is satisfied that the qualifying major maintenance event has been performed. Upon expiry of a lease, any shortfall or surplus that is identified in the maintenance provision liability for an aircraft as compared to the expected future reimbursement obligations to the lessee will be charged or released to the profit or loss. Upon the sale of an aircraft, the maintenance reserve liability for that aircraft which is not transferred to the buyer will be released to the profit or loss. Upon redelivery of the A380 aircraft leased to Emirates at the end of the lease, if the aircraft does not meet the economic basis upon which the return condition is set out, monetary compensation may be receivable. Where the aircraft has been brought into the set out return conditions, this will not be due. These amounts from Emirates would be incremental and separate from the fixed amounts due should the lessor choose to return aircraft in anything other than full-life economic conditions. Further details are given in note 17.
#### **(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 the cost to calculate the carrying amount of the Asset.
#### **(a) Depreciation**
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 asset is expected to have a significant portion of its useful economic life remaining at the end of the lease. 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.
for the year ended 31 March 2024
# **2. ACCOUNTING POLICIES (continued)**
# **(l) Property, plant and equipment – Aircraft (continued)**
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 for the aircraft leased to Emirates and eighteen years for the aircraft leased to Thai Airways, using the straight line method. Residual values have been arrived at by taking the average amount as per the independent external valuers and after taking into account disposition fees. The Directors consider that the use of forecast base values, excluding inflation, is a reasonable approximation for 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 it will be in at the end of the lease.
Depreciation starts when the Asset is available for use.
### **(b) Impairment**
At each financial year end 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 of the asset 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 and interest rate caps in the Group are measured at Fair Value through Profit or Loss ("FVTPL") as they are managed on a fair value basis in accordance with a documented investment strategy and accordingly they 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.
for the year ended 31 March 2024
# **2. ACCOUNTING POLICIES (continued)**
# **(m) Financial assets and financial liabilities (continued)**
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 categories:
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 a 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 FVTPL are recognised in the Consolidated Statement of Comprehensive Income as applicable.
Financial assets and financial liabilities at FVTPL 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.
### **(c) Impairment**
The Group recognises loss allowances for ECL 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 (which includes accrued income as per note 13) 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.
When estimating any ECL arising on short-term investments, the impairment methodology applied depends on whether there has been a significant increase in credit risk.
for the year ended 31 March 2024
# **2. ACCOUNTING POLICIES (continued)**
**(m) Financial assets and financial liabilities (continued)**
### **(c) Impairment (continued)**
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 and contract assets, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the 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 classified as FVTPL 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 rate method, with the interest expense recognised on an effective interest rate basis.
The effective interest rate 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 loan.
In accordance with IFRS 9, when a debt instrument is restructured or refinanced and the terms have been substantially modified, the transaction is accounted for as an extinguishment of the old debt instrument, and the recognition of a new instrument at fair value. The difference between the fair value of the debt and the old debt at amortised cost is recognised as a gain or loss in the Consolidated Statement of Comprehensive Income. Costs or fees incurred as part of the modification are recognised as part of the gain or loss on extinguishment.
If the exchange or modification is not accounted for as an extinguishment (i.e. because the modification is nonsubstantial), then the amortised cost of the liability is recalculated by discounting the revised estimated future cash flows at the instrument's original effective interest rate. The adjustment to the new amortised costs is recognised as a catch up gain or loss in the Consolidated Statement of Comprehensive Income. Costs or fees incurred as part of the modification are added to the liability and amortised over the term of the modified liability.
The Group derecognises financial liabilities when, and only when, the Group has transferred substantially all risks and rewards of its obligations.
for the year ended 31 March 2024
# **2. ACCOUNTING POLICIES (continued)**
# **(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. As detailed in note 8 there was a change in the estimated residual value for all aircraft, which resulted in a net decrease (2023: increase) in the annual depreciation charge for the year.
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 (2023: twelve) (see note 5). 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. Additionally, the ownership of the Assets is not automatically transferred to the lessee after termination of the lease, and should the lessee purchase the asset, a fair market price will be determined. Finally, the Assets are not specialised in nature resulting in only the lessor being able to use the Assets.
# **KEY SOURCES OF ESTIMATION UNCERTAINTY**
# **Residual value of Aircraft used in depreciation calculation**
As described in note 2(l)a, 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 the disposal of the Asset, after deducting the estimated costs of such disposal, if it were of the age and condition expected at the end of the lease.
After consulting with the Asset Manager, the Directors have concluded that the forecast maintenance adjusted base values excluding inflationary effects (determined annually from three independent expert aircraft valuers) is a reasonable approximation of the residual value. In the case of the A380 aircraft, the valuations have been maintenance adjusted to the Minimum Return Conditions ("MRC") in the lease contract plus the associated end of lease monetary compensation payable by the lessee.
for the year ended 31 March 2024
# **3. SIGNIFICANT JUDGEMENTS AND ESTIMATES (continued)**
# **Residual value of Aircraft used in depreciation calculation (continued)**
In estimating residual value at the 31 March 2024 audited annual year end (and 31 March 2023 year-end) for the A350 and Boeing 777-300ER aircraft, the valuations have been maintenance adjusted to the return conditions contracted under the respective lease agreements. Directors have made reference to values using forecasted base values (excluding inflationary effects) for the aircraft obtained from three independent expert aircraft appraisers. 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. Maintenance adjusted value refers to the adjustment made to the base value of the Assets, to reflect the actual contracted maintenance condition at the end of the lease. It accounts for the impact of maintenance actions on the overall value of the Assets.
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 Group conducted a review on the aircraft held at 31 March 2024, which resulted in an increase in the residual values of the aircraft at the end of the lease. The adjustment, due to an increase in estimated residual values led to a decrease in depreciation charged in the year of £2,511,269 (31 March 2023: increase of £1,484,408) and will have the same impact the on estimated depreciation in future years, as in the current year, if there are no further revisions in residual values. The effect of these changes on depreciation are included in the reconciliation of accumulated depreciation and amortisation table in note 8, where the depreciation before and after the residual value adjustment is noted.
The estimation of residual value remains subject to uncertainty. If a reasonable possible change in residual value in USD terms, had for instance increased by 20%, the depreciation charge would decrease which would result in increase in net profit/(loss) before exchange gains for the period and increase in closing Shareholders' equity by approximately £16.54 million (31 March 2023: Increased by £13.87 million). If the residual value had decreased by 20%, the depreciation and impairment charge would increase, which would result in decrease in net profit/(loss) before exchange gains for the period and decrease in closing Shareholders' equity by approximately £34.90 million (31 March 2023: Decreased by £52.07 million).
### **Impairment**
Factors that are considered important which could trigger an impairment review include, but are not limited to, a 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 and 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 (i.e. the income streams associated with the lease and the expected future maintenance adjusted base value of the aircraft at the end of the lease) 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 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 transactions can be identified, an appropriate valuation model is used. Such a valuation reflects the highest and best use, given the fact that the aircraft are held for use in a leasing business.
for the year ended 31 March 2024
# **3. SIGNIFICANT JUDGEMENTS AND ESTIMATES (continued)**
# **Impairment (continued)**
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:
- changing technologies, market innovation and changes to key production programs, as well as the timing of new aircraft model launches;
- information regarding Airbus cancellation of the A380 programme and further updates on the market for A380 aircraft, creating uncertainty as to the liquidity of the future market for sale or re-lease; and
- the Group's market capitalisation as at 31 March 2024 is lower than the Group's Net Assets in the Statement of Financial Position at the same date.
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 all of the A380 and 777-300ER aircraft the 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 to issues of counterparty credit risk have been reflected in the discount rate used to calculate the net present value of the future cash flows. In the current year for the A350 aircrafts, fair value less cost to sell was above the value-in-use and was therefore used as the recoverable amount. 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 Directors, on the advice of the Asset Manager, considered the following factors in the determination of the most appropriate discounting rate to derive the value in use, ranging from 7.25% to 8.25% (2023: 7.25% to 8.25%):
- 1. the discount rate should be a rate commensurate with that a normal market participant would consider to be the risk inherent in the Assets;
- 2. the risk profile of the A380 aircraft compared to the B777 and A350 aircraft; and
- 3. the consideration of the credit risk profile for Emirates and Thai Airways.
The Group applies 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 Assets.
The future sales value of the aircraft have been estimated with reference to the average of future maintenance adjusted base value assuming Minimum Return Conditions ("MRC") plus associated end of lease compensation amount for the A380 aircraft and future maintenance adjusted base values for the B777 and A350 aircraft, from three independent appraisers.
Based on the impairment review performed, no impairment loss was recognised in the current year (31 March 2023: £nil). The carrying value of the aircraft in total is £1,013,468,395 at year end (31 March 2023: £1,161,509,286), as reflected in note 8.
for the year ended 31 March 2024
# **3. SIGNIFICANT JUDGEMENTS AND ESTIMATES (continued)**
# **Impairment (continued)**
Adding 0.5% to the original discount rate used for the value in use test, for all classes of aircraft, would result in a £nil (2023: £7.75 million) impairment charge on the aircraft, driven by the differential between Net Book Value ("NBV") and the value-in-use.
Subtracting 0.5% from the original discount rates used for the value-in-use test, for all classes of aircraft, would result in a £nil (2023: £nil) impairment charge on the aircraft, driven by the differential between NBV and the value-in-use.
The Directors have also considered the fact that market capitalisation at year end of £125,358,486 (2023: £131,284,524) is below Net Asset value of £338,837,559 (2023: £341,326,227) and have concluded that no further aircraft impairment charge is necessary due to the fact that the impairment assessment was performed using the inputs from competent aircraft appraisers. In addition, market capitalisation also reflects the psychology of market participants which is not relevant for aircraft impairment assessment at year end.
### **Rental income for the extended lease period of the A350-900 aircraft**
In 2021, the lease agreements were extended by 72 months. During the extended lease term commencing between July 2029 and January 2030, an amount to be agreed in writing, between the Lessee and the Lessor, will be paid. Accrued income was calculated using a lease rate for the extended period determined by taking the average base lease rate from three appraisers. Discussions relating to the calculation of the rent payable during the extended lease term shall commence at least 90 days prior to the start of the extended lease term.
# **Expected credit losses with respect to trade receivables and the accrued income relating to the aircraft leased to Thai Airways**
As at 31 March 2024 the Group re-assessed the credit risk of the trade receivables and accrued income relating to the aircraft leased to Thai Airways and therefore re-assessed the expected lifetime losses on the accrued income at year end (see note 13). For the estimation of the ECL at year end, the Group considered both quantitative (credit rating information) and qualitative (news flow and direct experience) information and analysis, based on the Group's historical experience and an informed credit assessment and including forward-looking information.
Following Thai Airways' entry into rehabilitation in May 2020, TRIS Rating (Thai Rating and Information Services), downgraded the company rating for Thai Airways and its rating for senior unsecured debentures to "D" or "Default", indicating an approximately 14% chance of default. TRIS has not provided an updated rating since May 2020, as the airline is still under rehabilitation process. Prior to the COVID pandemic, Thai Airways' TRIS rating was BBB, indicating little or no default. Recent news flow from Thai Airways indicates that its position has improved, and that as a result it may come out of bankruptcy protection sooner than originally envisaged. However, the Directors do not believe that Thai Airways' credit has as yet returned to pre-COVID levels, although payments under the restructured leases have been received on time and when due. Accordingly, they have determined that an amount of £1,506,727 (31 March 2023: £1,801,002), 7% (31 March 2023: 7%) of the amount receivable, best represents the ECL on the balance of the accrued income relating to the aircraft leased to Thai Airways amounting to £21,524,669 (31 March 2023: £25,728,593).
The remaining trade receivables as at 31 March 2024 were considered fully recoverable, with any impairment losses on such assets not considered significant.
for the year ended 31 March 2024
# **4. RENTAL INCOME**
| | 1 Apr 2023 to | 1 Apr 2022 to |
|----------------------------------------------------|---------------|---------------|
| | 31 Mar 2024 | 31 Mar 2023 |
| | GBP | GBP |
| US Dollar based rent income | 144,832,469 | 147,542,334 |
| Revenue earned but not yet received | 2,480,256 | 24,229,465 |
| Revenue received but not yet earned | (3,796,987) | (2,924,392) |
| | 143,515,738 | 168,847,407 |
| Amortisation of advanced rental income (US Dollar) | 4,446,759 | 4,627,071 |
| | 147,962,497 | 173,474,478 |
| British Pound based rent income | 34,655,812 | 34,689,577 |
| Revenue earned but not yet received | 110,739 | 107,127 |
| Revenue received but not yet earned | (78,883) | (172,052) |
| | 34,687,668 | 34,624,652 |
| Total rental income | 182,650,165 | 208,099,130 |
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 exchange rates at each respective quarter end. The average USD/GBP exchange rate was 1.2571 at 31 March 2024 (1.2058 at 31 March 2023).
An adjustment has been made to spread the actual total income receivable over the term of the leases. In addition, advance rentals received have also been spread over the full term of the leases.
The PBH rent for the year ended 31 March 2024 is £Nil (31 March 2023: £19,773,851). PBH rent was due until December 2022.
# **5. OPERATING LEASES**
The amounts of lease receipts at the reporting date under non-cancellable operating leases are detailed below:
| | 31 March 2024 | | 31 March 2023 | |
|----------------|-----------------|---------------|-----------------|---------------|
| | | British Pound | | British Pound |
| | US Dollar based | based rent | US Dollar based | based rent |
| | rent income | income | rent income | income |
| | GBP | GBP | GBP | GBP |
| Year 1 | 144,025,274 | 34,668,972 | 147,248,394 | 34,668,972 |
| Year 2 | 143,856,853 | 34,668,972 | 147,365,278 | 34,668,972 |
| Year 3 | 133,092,415 | 29,837,026 | 147,192,951 | 34,668,972 |
| Year 4 | 103,193,730 | 18,572,577 | 136,178,881 | 29,837,026 |
| Year 5 | 69,066,503 | 1,119,225 | 105,586,834 | 18,572,577 |
| Year 6 onwards | 175,249,338 | — | 249,577,299 | 1,119,225 |
| | 768,484,113 | 118,866,772 | 933,149,637 | 153,535,744 |
The twelve (2023: twelve) Assets all have an initial lease term of twelve years with lease end dates ranging from September 2026 to January 2036.
for the year ended 31 March 2024
# **6. OPERATING EXPENSES**
| | 1 April 2023 to | 1 April 2022 to |
|---------------------------------------|-----------------|-----------------|
| | 31 Mar 2024 | 31 Mar 2023 |
| | GBP | GBP |
| Corporate and Shareholder adviser fee | 80,000 | 95,000 |
| Asset management fee | 3,170,332 | 3,139,365 |
| Administration fees | 355,732 | 360,796 |
| Bank charges | 11,934 | 12,736 |
| Registrar's fee | 15,834 | 25,652 |
| Audit fee | 158,635 | 146,241 |
| Directors' remuneration | 384,400 | 351,083 |
| Directors' and Officers' insurance | 183,942 | 224,465 |
| Legal and professional expenses | 253,714 | 313,367 |
| Annual regulatory fees | 26,746 | 17,437 |
| Sundry costs | 129,700 | 174,026 |
| Cash management fee | 33,862 | 48,728 |
| | 4,804,831 | 4,908,896 |
### **7. DIRECTORS' REMUNERATION**
The independent directors' fees are £69,600 (31 March 2023: £65,000) per annum with the Chairman receiving an additional fee of £17,100 (31 March 2023: £16,000) per annum and the Chair of the Audit Committee an additional £8,600 (31 March 2023 £8,000) per annum.
Non-independent director's fees are £10,700 (31 March 2023: £10,000) per annum.
From 1 April 2024 the Chairman's additional fee will increase from £17,100 to £26,400 per annum.
From 1 May 2024 the non-independent director's fees will increase to be equal with the fee of the independent directors of £69,600 per annum.
for the year ended 31 March 2024
# **8. PROPERTY, PLANT AND EQUIPMENT – AIRCRAFT**
| | Aircraft | |
|--------------------------------------------------------------------------|---------------|-------------------------|
| | 31 Mar 2024 | Aircraft
31 Mar 2023 |
| | GBP | GBP |
| COST | | |
| Aircraft purchases – opening balance | 1,927,735,270 | 1,927,735,270 |
| Acquisition costs – opening balance | 8,364,798 | 8,364,798 |
| Translation adjustment on foreign operations-opening balance | 263,806,090 | 129,681,811 |
| Cost at beginning of year | 2,199,906,158 | 2,065,781,879 |
| Disposals | — | — |
| Translation adjustment on foreign operations-current year | (49,860,427) | 134,124,279 |
| Cost as at year end | 2,150,045,731 | 2,199,906,158 |
| | 31 Mar 2024 | 31 Mar 2023 |
| | GBP | GBP |
| ACCUMULATED DEPRECIATION, IMPAIRMENT AND AMORTISATION | | |
| Opening balance | 987,261,695 | 857,509,081 |
| Translation adjustment on foreign operations-opening balance | 51,135,177 | (1,436,953) |
| Accumulated depreciation and impairment at beginning of year | 1,038,396,872 | 856,072,128 |
| Depreciation for the current year based on previous year residual values | 123,975,685 | 127,442,041 |
| Amortisation of acquisition costs on aircraft | 756,519 | 756,519 |
| Adjustment due to change of residual value | (2,511,269) | 1,484,408 |
| Net depreciation charge on all aircraft for the year | 122,220,935 | 129,682,968 |
| Translation adjustment on foreign operations | (24,057,646) | 52,572,130 |
| Accumulated depreciation as at year end | 1,136,560,161 | 1,038,327,226 |
| Adjustment due to impairment | — | — |
| Translation adjustment on foreign operations* | 17,175 | 69,646 |
| Accumulated depreciation and impairment as at year end | 1,136,577,336 | 1,038,396,872 |
| Carrying amount – opening balance | 1,161,509,286 | 1,209,709,751 |
| Carrying amount as at year end | 1,013,468,395 | 1,161,509,286 |
\* Translation adjustment on foreign operations
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 2024 (and 31 March 2023) 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 amortising loan, some with a balloon capital payment on maturity, and junior bullet loan (see note 19). The Company used the equity proceeds in addition to the finance agreements to finance the acquisition of the aircraft.
The Group's aircraft with carrying values of £1,013,468,395 (31 March 2023: £1,161,509,286) are pledged as security for the Group's borrowings (see note 19).
# **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.
For the change in estimated residual value of aircraft and impairment, refer to note 3.
for the year ended 31 March 2024
# **9. FINANCE INCOME**
| | 1 April 2023 to | 1 April 2022 to |
|-----------------------------------------------------------------------|-----------------|-----------------|
| | 31 Mar 2024 | 31 Mar 2023 |
| | GBP | GBP |
| Fair value gain on derivatives at fair value through profit and loss* | — | 21,290,765 |
| Bank interest received | 6,114,897 | 3,344,526 |
| Unwinding of receivables for time value of money | 224,026 | 281,407 |
| Realised gain on derivatives | 897,326 | 1,393,953 |
| | 7,236,249 | 26,310,651 |
\* This is the movement in the fair value of the derivatives for the period.
The drivers for the change in the fair values of the interest rate swaps and interest caps for the period are primarily as a result of the movement in the GBP/USD exchange rate as these derivatives are in USD, and the movement in interest rates, as well as due to the passage of time, as the notional amounts amortise in line with the underlying liabilities. The Group seeks to match its interest rate exposure, as the prevailing principal of any borrowing amortises, by closing out interest rate swaps and interest rate caps on an ongoing basis whenever the notional mismatch becomes significant. See note 21 for further details of the derivatives held by the Group.
# **10. FINANCE COSTS**
| | 1 April 2023 to | 1 April 2022 to |
|-------------------------------------------------------------------------|-----------------|-----------------|
| | 31 Mar 2024 | 31 Mar 2023 |
| | GBP | GBP |
| Amortisation of debt arrangements costs | 1,559,186* | 1,622,411* |
| Interest payable on loan** | 33,001,589* | 38,229,938* |
| Security trustee and agency fees | 211,963 | 219,593 |
| Fair value loss on derivatives at fair value through profit and loss*** | 2,256,461 | — |
| | 37,029,199 | 40,071,942 |
\*Included in Finance costs is interest on the amortised cost liability for the year of £34,560,775 (31 March 2023: £39,852,349).
The drivers for the change in the fair values of the interest rate swaps and interest caps for the period are primarily as a result of the movement in the GBP/USD exchange rate, as these derivatives are in USD, and the movement in interest rates, as well as due to the passage of time as the notional amounts amortise in line with the underlying liabilities. The Group seeks to match its interest rate exposure, as the prevailing principal of any borrowing amortises, by closing out interest rate swaps and interest rate caps on an ongoing basis whenever the notional mismatch becomes significant. See note 21 for further details of the derivatives held by the Group
# **11. DIVIDENDS IN RESPECT OF SHARES**
| | | 1 Apr 2023 to
31 Mar 2024 | | 1 Apr 2022 to
31 Mar 2023 |
|-----------------|------------|------------------------------|------------|------------------------------|
| | | Pence per | | Pence per |
| | GBP | Share | GBP | Share |
| First dividend | 5,318,239 | 1.750 | 4,341,419 | 1.250 |
| Second dividend | 5,318,239 | 1.750 | 4,341,418 | 1.250 |
| Third dividend | 5,318,239 | 1.750 | 5,209,702 | 1.500 |
| Fourth dividend | 6,077,987 | 2.000 | 5,209,702 | 1.500 |
| | 22,032,704 | 7.250 | 19,102,241 | 5.500 |
Refer to note 28 for dividends declared and paid after year end.
\*\*This amount includes £8,334,479 interest income (31 March 2023: £2,672,256 interest income) from the interest rate swaps detailed in note 21.
\*\*\*This is the movement in the fair value of the derivatives for the period.
for the year ended 31 March 2024
# **12. EARNINGS PER SHARE**
Earnings per Share ("EPS") is 8.60 pence (2023: 17.11 pence) based on the profit for the year of £26,149,001 (2023: profit of £58,811,239) and 303,899,361 shares (2023: 343,626,256 shares) being the weighted average number of Shares in issue during the year.
There are no dilutive instruments and therefore the basic and diluted Profit /Loss per Share are identical.
### **13. 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. Refer to note 2(j) for more detail. The Directors considered the recoverability and concluded that an ECL should be recognised on the accrued income for the aircraft leased to Thai Airways. The accrued and deferred income consists of the following:
| | 31 March 2024 | 31 March 2023 |
|-----------------------|---------------|---------------|
| | GBP | GBP |
| Non-current | | |
| Accrued income | 32,780,492 | 36,659,270 |
| Expected credit loss* | (1,506,727) | (1,801,002) |
| | 31,273,765 | 34,858,268 |
| Deferred income | (12,509,514) | (17,318,868) |
| Current | | |
| Accrued income | 3,664,154 | 3,704,760 |
| Deferred income | (5,466,248) | (5,628,215) |
\* As at 31 March 2024 the Group assessed the credit risk of the accrued income relating to the aircraft leased to Thai Airways and therefore reassessed the expected lifetime losses on the accrued income at year end. Details of this reassessment are given in note 3. As explained in that note, the Directors have determined that an amount of £1,506,727 (31 March 2023: £1,801,002), 7% of the amount receivable, best represents the ECL on the balance of the accrued income relating to the aircraft leased to Thai Airways amounting to £21,524,669 (31 March 2023: £25,728,593). The remaining accrued income is considered fully receivable, with any identified impairment losses on such assets not considered significant.
for the year ended 31 March 2024
# **14. TRADE AND OTHER RECEIVABLES**
| | 31 Mar 2024 | 31 Mar 2023 |
|------------------------------------------|-------------|-------------|
| | GBP | GBP |
| Non-current | | |
| Trade receivables – end of lease payment | 15,145,981 | 13,466,085 |
| Trade receivables* | 3,347,985 | 4,506,102 |
| | 18,493,966 | 17,972,187 |
| Current | | |
| Prepayments | 132,639 | 111,110 |
| VAT receivable | 557 | — |
| Sundry debtor | 240 | — |
| Trade receivables* | 1,281,443 | — |
| | 1,414,879 | 111,110 |
The above carrying value of receivables is deemed to be materially equivalent to fair value.
Per the lease agreements for two of the aircraft leased to Emirates, an one-off end of lease payment is receivable. This is accrued for over the life of the lease and included in non-current trade receivables as it is due to be received in 2028.
The remaining trade receivables at 31 March 2024 are considered fully receivable, with any identified impairment losses on such assets not considered significant. Information about the Group's exposure to credit risk and impairment loss for trade receivables is included in note 22.
# **15. SHORT-TERM INVESTMENTS**
| | Fixed Rate | Maturity | 31 Mar 2024 | 31 Mar 2023 |
|------------------------------------|------------|-------------|-------------|-------------|
| Bank | % | date | GBP | GBP |
| Cooperatieve Rabobank U.A | 5.37 | 30 Oct 2023 | — | 2,320,925 |
| Nordea Bank AB | 5.14 | 31 Jan 2024 | — | 1,752,937 |
| Canadian Imperial Bank of Commerce | 5.12 | 10 Jul 2023 | — | 2,377,743 |
| Toronto Dominion Bank | 5.10 | 14 Aug 2023 | — | 2,283,452 |
| Canadian Imperial Bank of Commerce | 4.00 | 21 Aug 2023 | — | 1,984,184 |
| Canadian Imperial Bank of Commerce | 5.35 | 10 Jul 2024 | 2,403,784 | — |
| Credit Agricole CIB | 5.27 | 01 Aug 2024 | 598,768 | — |
| Lloyds Bank PLC | 5.98 | 03 Aug 2024 | 206,150 | — |
| Canadian Imperial Bank of Commerce | 5.85 | 23 Aug 2024 | 2,052,972 | — |
| Lloyds Bank PLC | 5.80 | 06 Nov 2024 | 3,977,702 | — |
| Nordea Bank AB | 5.07 | 31 Jan 2025 | 1,710,751 | — |
| | | | 10,950,127 | 10,719,241 |
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. Impairment losses on these investments are not considered significant as they are held with reputable international banking institutions. Also refer to note 22.
Refer to note 9 for the income arising from these instruments.
\* This amount is lease rental by Thai Airways not previously written off, discounted for the time value of money at year end in accordance with the Thai Airways rehabilitation plan. The Thai Airways Rehabilitation plan was approved in June 2021, detailing the capital restructuring of Thai Airways. The plan included rental that will be repaid to the lessor by Thai Airways between 2024 and 2027. These are included in the current and non-current trade receivables at £4,629,428 (31 March 2023: non-current trade receivables: £4,506,102).
for the year ended 31 March 2024
# **16. CASH AND CASH EQUIVALENTS**
| | 31 March 2024 | 31 March 2023 |
|-------------------------------------------|---------------|---------------|
| | GBP | GBP |
| Bank balances | 45,010,539 | 46,367,423 |
| Notice accounts – Maintenance provisions* | 75,349,503 | 70,239,703 |
| Notice accounts – Other | 10,475,671 | — |
| | 130,835,713 | 116,607,126 |
\* These notice accounts are secured cash deposits in respect of the maintenance provisions.
Below is a breakdown of the amounts included in cash and cash equivalents as well as short-term investments as at 31 March and the anticipated utilisation of these amounts.
| | 31 March 2024 | 31 March 2023 |
|---------------------------------------|---------------|---------------|
| | GBP | GBP |
| Maintenance provisions (note 17) | 75,349,503 | 70,239,703 |
| Reserved for debt service obligations | 8,698,704 | 9,848,789 |
| Junior loan bullet balloon reserves | 31,020,665 | 30,078,369 |
| Dividend payment after year end | 6,077,987 | 5,318,239 |
| Operational cash | 20,638,981 | 11,841,267 |
| | 141,785,840 | 127,326,367 |
### **17. MAINTENANCE PROVISIONS**
| | 31 March 2024 | 31 March 2023 |
|----------------------------------------------|---------------|---------------|
| | GBP | GBP |
| Balance at 1 April | 70,239,703 | 58,355,513 |
| Billings | 6,731,902 | 8,311,349 |
| Translation adjustment on foreign operations | (1,622,102) | 3,572,841 |
| Balance at 31 March | 75,349,503 | 70,239,703 |
The maintenance provision are held in relation to funds received as 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 provisions 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 provisions.
The table below details the expected utilisation of maintenance reserves.
| | 1-3 | 3-12 | 1-2 | 2-5 | Over 5 | |
|---------------|------------|------------|------------|-------|------------|------------|
| | Months | Months | Years | Years | Years | Total |
| | GBP | GBP | GBP | GBP | GBP | GBP |
| 31 March 2024 | 48,244,125 | 15,423,701 | — | — | 11,681,677 | 75,349,503 |
| 31 March 2023 | — | 45,539,816 | 12,747,306 | — | 11,952,581 | 70,239,703 |
for the year ended 31 March 2024
# **18. PAYABLES**
| | 31 Mar 2024 | 31 Mar 2023 |
|-----------------------------|-------------|-------------|
| | GBP | GBP |
| Accrued administration fees | 43,946 | 30,213 |
| Accrued audit fee | 134,786 | 114,516 |
| Taxation payable | 6,933 | 6,053 |
| Accrued registrar fee | 656 | 656 |
| Other accrued expenses | 14,620 | 63,932 |
| | 200,941 | 215,370 |
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.
# **19. BORROWINGS**
| | 31 Mar 2024 | 31 Mar 2023 |
|-------------------------------------------------------------------------------|-------------|-------------|
| Borrowings | GBP | GBP |
| Bank loans | 826,181,831 | 963,403,658 |
| Unamortised arrangement fees | (6,262,190) | (7,996,076) |
| | 819,919,641 | 955,407,582 |
| Consisting of: | | |
| Senior loans (\$763,019,996 at 31 March 2024, \$906,747,175 at 31 March 2023) | 604,463,243 | 734,981,904 |
| Junior loans (\$271,972,766 at 31 March 2024, \$271,939,153 at 31 March 2023) | 215,456,398 | 220,425,678 |
| | 819,919,641 | 955,407,582 |
| Borrowings | | |
| Non-current portion | 708,707,791 | 845,529,430 |
| Current portion (senior loans only) | 111,211,850 | 109,878,152 |
| | 819,919,641 | 955,407,582 |
Loans with an outstanding balance of £636,277,548 (31 March 2023: £745,306,038) have fixed interest rates over the term of the loans. Of this total, loans with an outstanding balance of £279,571,582 (31 March 2023: £320,851,054), 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 £183,642,092 (31 March 2023: £210,101,543) at year end are variable rate (SOFR) with an interest rate cap and each senior loan has a balloon capital payment on maturity.
In August 2020, the IASB published Interest Rate Benchmark Reform – Phase 2, Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16. With publication of the phase two amendments, the IASB has completed its work in response to Interbank offered rate ("IBOR") reform. The amendments provide temporary reliefs which address the financial reporting effects when IBOR is replaced with an alternative nearly risk-free interest rate ("RFR"). The alternative reference rate for US dollar LIBOR is the Secured Overnight Financing Rate ("SOFR"). The amendments include a practical expedient to require contractual changes, or changes to cash flows that are directly required by the reform, to be treated as changes to a floating interest rate, equivalent to a movement in a market rate of interest. Inherent in allowing the use of this practical expedient is the requirement that the transition from an IBOR benchmark rate to an RFR takes place on an economically equivalent basis with no value transfer having occurred. The Group expects to be able to utilize the practical expedient in future reporting periods, and the impact of LIBOR reform is therefore not expected to be material. There has been no significant change in the Company's existing agreements since the previous annual reporting date. The majority of the Company's existing agreements include clauses that deals with the cessation of the existing IBOR. The Company, has engaged legal counsel, who along with the Asset Manager, are liaising with the lenders to document the appropriate terms for the transition away from LIBOR for its remaining deals.
for the year ended 31 March 2024
### **19. BORROWINGS (continued)**
All loans are taken in USD. The Group uses a combination of fixed and variable debt instruments. Maturity dates are set at 12 years from delivery date or otherwise to match the corresponding lease end date. The weighted average rate for the Company's Senior loans is 3.8% and 5.2% for the Company's Junior Loans (31 March 2023: 3.8% and 5.2%).
The original aggregate face value of the Company's loans was £1,579,643,669 (31 March 2023: £1,616,276,242) and the current aggregate carrying value is £819,919,641 (31 March 2023: £955,407,577). The Board estimates the fair value of these loans was approximately £779,969,687 (31 March 2023: £895,329,037) at year end. This fair value reflects the carrying value of the loans with variable interest rates and a discounted value for the fixed rate loans assuming they were refinanced at their original margin in excess of the year end risk free rate. The loans are considered to be Level 2 in the Fair Value Hierarchy.
The transaction costs of arranging the loans have been deducted from the carrying amount of the loans and will be amortised using EIR (Effective Interest Rate) over their respective lives.
### **20. SHARE CAPITAL**
The share capital of the Company is represented by an unlimited number of redeemable ordinary shares of no par value.
| | 31 March 2024 | 31 March 2023 |
|---------------------------------------|---------------|---------------|
| | Ordinary | Ordinary |
| Issued | Shares | Shares |
| Opening balance | 303,899,361 | 347,313,483 |
| Shares issued | — | — |
| Shares redeemed | — | (43,414,122) |
| Total number of shares as at year end | 303,899,361 | 303,899,361 |
| | 31 March 2024 | 31 March 2023 |
| | Ordinary | Ordinary |
| | Shares | Shares |
| Issued | GBP | GBP |
| Ordinary Shares | | |
| Opening balance | 492,981,504 | 520,983,612 |
| Shares issued | — | — |
| Shares redeemed | — | (28,002,108) |
| Total share capital | 492,981,504 | 492,981,504 |
| | | |
As announced on 22 February 2023, the Board resolved to redeem one ordinary share for every eight existing ordinary shares of Shareholders on the register of members as at close of business on 28 February 2023 (the "Redemption Record Date"). Accordingly, 43,414,122 ordinary shares were redeemed in exchange for proceeds totalling £28,002,108 and have been cancelled.
The redemption proceeds due on the redemptions of these ordinary shares were paid on 14 March 2023.
The Company's total issued Share capital at 31 March 2024 was 303,899,361 Shares (2023: 303,899,361 Shares), none of which were held in treasury.
Therefore the total number of voting rights in issue at 31 March 2024 was 303,899,361 (2023: 303,899,361).
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.
for the year ended 31 March 2024
# **21. FINANCIAL INSTRUMENTS**
The Group's main financial instruments comprise:
- (a) cash and cash equivalents that arise directly from the Group's operations;
- (b) short-term investments;
- (c) accrued income;
- (d) trade receivables;
- (e) interest rate swaps and interest rate caps;
- (f) debt secured on non-current assets; and
- (g) Payables.
The following table details the categories of financial assets and liabilities held by the Group at the reporting date:
| | 31 Mar 2024 | 31 Mar 2023 |
|---------------------------------------------------|-------------|-------------|
| | GBP | GBP |
| Financial Assets | | |
| Cash and cash equivalents | 130,835,713 | 116,607,126 |
| Short-term investments | 10,950,127 | 10,719,241 |
| Derivatives at fair value through profit and loss | 42,155,539 | 44,599,777 |
| Accrued income* | 34,937,919 | 38,563,028 |
| Trade receivables** | 19,776,206 | 17,972,187 |
| | 238,655,504 | 228,461,359 |
\* This amount is net of provision for impairment.
\*\* This amount includes rent due but not yet received and is included within Receivables on the Statement of Financial Position.
| | 31 Mar 2024
GBP | 31 Mar 2023
GBP |
|-------------------------------------------------------|--------------------|--------------------|
| Financial Liabilities | | |
| Payables | 200,941 | 215,370 |
| Debt payable (excluding unamortised arrangement fees) | 826,181,831 | 963,403,658 |
| | 826,382,772 | 963,619,028 |
# **Fair value of financial instruments**
The Company applies 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 which these 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 and interest rate caps are considered to be Level 2 in the Fair Value Hierarchy. The fair value of interest rate swaps and interest rate caps are derived based on the valuation, as provided by the respective bank with which the swap or cap is held, which are based on mark-to-market values. The following tables show the Company's financial assets as at 31 March 2024 and 31 March 2023 based on the hierarchy set out in IFRS:
for the year ended 31 March 2024
# **21. FINANCIAL INSTRUMENTS (continued)**
# **Fair value of financial instruments (continued)**
| Quoted Prices in | | | |
|------------------|-------------------|--------------|------------|
| active markets | Significant other | Significant | |
| for identical | observable | unobservable | |
| assets | inputs | inputs | |
| (Level 1) | (Level 2) | (Level 3) | Total |
| 2024 | 2024 | 2024 | 2024 |
| GBP | GBP | GBP | GBP |
| | | | |
| | | | |
| — | 26,221,004 | — | 26,221,004 |
| — | 15,934,535 | — | 15,934,535 |
| — | 42,155,539 | — | 42,155,539 |
| Quoted Prices in | | | |
| active markets | Significant other | Significant | |
| for identical | observable | unobservable | |
| assets | inputs | inputs | |
| (Level 1) | (Level 2) | (Level 3) | Total |
| 2023 | 2023 | 2023 | 2023 |
| GBP | GBP | GBP | GBP |
| | | | |
| | | | |
| — | 27,744,434 | — | 27,744,434 |
| | | | 16,855,343 |
| — | 16,855,343 | | |
| | | | — |
# **Derivative financial instruments**
The following table shows the Company's derivative position as at 31 March 2024 with a comparative table as at 31 March 2023:
| | 31 March 2024 | 31 March 2023 |
|-----------------------------------------------------------------------------|---------------|---------------|
| Derivatives at fair value through profit and loss – USD Interest Rate Swaps | 26,221,004 | 27,744,434 |
| Notional amount (GBP) | 248,559,029 | 292,742,637 |
| Derivatives at fair value through profit and loss – USD Interest Rate Caps | 15,934,535 | 16,855,343 |
| Notional amount (GBP) | 196,842,275 | 223,777,285 |
The maturity dates for the interest rate swaps range from 13 April 2028 to 26 January 2036 (31 March 2023: 13 April 2028 to 26 January 2036).
The effective date of the interest rate caps is 1 January 2023. The maturity dates range from 13 July 2029 to 22 September 2029 (31 March 2023: 3 July 2029 to 22 September 2029).
The decrease in the fair value of the Interest Rate Swaps and Caps for the year of £2,256,461 (31 March 2023: increase of £21,290,765) is reflected in Finance Cost in note 10. The notional amount amortises in line with the underlying liability.
for the year ended 31 March 2024
# **22. 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 the return to Shareholders through the optimisation of debt and equity balances.
The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 19, equity attributable to equity holders, comprising issued capital, foreign currency translation reserve and retained deficit.
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.
See note 20 for details of the capital activity undertaken by the Company during the year.
# **(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 £183,642,092 (31 March 2023: £210,101,543) at year end which have balloon capital payments on maturity (refer to note 19). 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 stated above, 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). The loan interest and capital repayments of debt are likewise denominated in 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. The repayment of bullet and balloon repayments of principal due on the final maturity of a loan are to be paid out of the proceeds of the sale, re-lease, refinancing or other disposition of the relevant aircraft. On this basis, the foreign currency risk associated with the USD-denominated loans is considered to be substantially mitigated.
The carrying amounts of the Group's foreign currency denominated monetary assets and liabilities at the reporting date are as follows:
| | 31 Mar 2024 | 31 Mar 2023 |
|-----------------------------------------|-------------|-------------|
| | GBP | GBP |
| Cash and cash equivalents (USD) – Asset | 2,974,100 | 2,563,640 |
| Cash and cash equivalents (GBP) – Asset | 380,615 | 308,624 |
The USD/GBP exchange rate was 1.2623 at 31 March 2024 (1.2337 at 31 March 2023) and the average USD/GBP exchange rate was 1.2571 at 31 March 2024 (1.2058 at 31 March 2023). These significant changes in exchange rates have resulted in large movements in the reported amounts of USD denominated assets and liabilities of the Group which has selected GBP as its reporting currency. As noted above, many underlying assets and liabilities are denominated in the same currency, so the net impact is naturally mitigated, although gross carrying amounts have increased. However, there is some residual impact on the reported net asset value of the Group arising from translation of the results and financial position of the subsidiaries. This residual impact is reflected in the Consolidated Statement of Comprehensive Income on page 39 as "Translation adjustment on foreign operations". As a result of the weakening (2023: strengthening) of USD against GBP a loss (2023: gain) has been recorded in this year, but this will of course change as exchange rates change in the future. For example, if the USD were to weaken against GBP by 15% the Translation adjustment on foreign operations, reflected within the foreign currency translation reserve, would reduce by approximately £34.6 million.
for the year ended 31 March 2024
# **22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)**
# **(b) Foreign currency risk (continued)**
The following table details the Group's sensitivity to a 15% (31 March 2023: 15%) appreciation in GBP against the USD. 15% (31 March 2023: 15%) 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 15% (31 March 2023: 15%) change in foreign currency rates. A positive number below indicates an increase in profit and other equity where GBP strengthens 15% (31 March 2023: 15%) against the USD. For a 15% weakening of the GBP against the USD, there would be a comparable, but opposite impact on the profit and other equity.
| | 31 Mar 2024 | 31 Mar 2023 |
|------------------------------------------------|-------------|-------------|
| | GBP | GBP |
| Consolidated Statement of Comprehensive Income | 437,572 | 374,643 |
| Change in value of net assets | 437,572 | 374,643 |
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 USD. 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 is mostly mitigated by transacting with counterparties that are regulated entities subject to prudential supervision, or with high credit ratings assigned by international credit rating agencies. In the case of Thai Airways, a provision for ECL has been made and the remaining net balance is considered to be fully recoverable.
The Group's financial assets exposed to credit risk are as follows:
| | 31 Mar 2024 | 31 Mar 2023 |
|---------------------------------------------------|-------------|-------------|
| | GBP | GBP |
| Cash and cash equivalents | 130,835,713 | 116,607,126 |
| Short-term investments | 10,950,127 | 10,719,241 |
| Derivatives at fair value through profit and loss | 42,155,539 | 44,599,777 |
| Accrued income* | 34,937,919 | 38,563,028 |
| Trade receivables** | 19,776,206 | 17,972,187 |
| | 238,655,504 | 228,461,359 |
\* This amount is net of provision for impairment.
Surplus cash in the Group is held with Westpac, RBSI and Bank of Ireland, which have credit ratings given by Moody's of P-1, P-1 and P-1 (31 March 2023: P-1, P-1 and P-1) respectively.
Short-term investments relate to deposits held with Nordea Bank, Credit Agricole CIB, Lloyds Bank PLC and Canadian Imperial which all have the same credit rating given by Moody's of P-1 (31 March 2023: P-1).
The derivative assets are held at fair value and are held with the same security and trustee agent as the related borrowings. The derivatives are held with First Abu Dhabi Bank, Wespac Institutional Bank, Natixis, and Deutsche Bank Group, which have credit ratings given by Moody's of P-1, P-1, P-1 and A1 respectively.
The Group has considered the effects of the ECL on cash and cash equivalents and short-term investments and is satisfied that no ECL is required as it is not considered material.
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.
\*\* This amount represents rent due but not yet received and is included within Receivables on the Statement of Financial Position.
for the year ended 31 March 2024
# **22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)**
# **(c) Credit Risk (continued)**
At the inception of each lease, the Company selected lessees 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, particularly once financial results have been published. Additionally, the Asset Manager monitors any news related to the lessees that would impact operations and financial position.
The lessees may default on their lease payments. This would lead the fixed rents received under the leases to be insufficient to meet the loan interest and regular capital repayments of debt scheduled during the life of each loan and may not provide any 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.
Refer to note 2 (i) Going Concern for further details on the current status of the Group's lessees.
The Group has chosen to apply the simplified approach to measuring ECL which uses a lifetime expected loss allowance for all trade receivables and contract assets (including accrued income). As at 31 March 2024 the expected lifetime losses on the rent receivables and accrued income was reassessed by the Group. Apart from the accrued income relating to the aircraft leased to Thai Airways, the remaining trade receivables and other receivables and accrued income at amortised cost at year end are considered receivable, with any identified impairment losses on such assets not considered significant. The credit risk for Emirates has been assessed as low and no impairment has been identified.
The Group has considered the effects of the ECL on cash and cash equivalents and short-term investments and is satisfied that no ECL 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 the capital repayments of senior debt, as well as the 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.
Consideration will be given to any future use of accumulated rental income, if the Board considers that the Company, or any subsidiary will not be able to repay any balloon or bullet repayments of debt falling due through the sale, refinancing or other disposition of an Asset.
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:
| | 0-3 | 3-12 | 1-2 | 2-5 | Over 5 | |
|-----------------------|------------|-------------|-------------|-------------|-------------|---------------------------|
| | Months | Months | Years | Years | Years | Total |
| 31 March 2024 | GBP | GBP | GBP | GBP | GBP | GBP |
| Financial Liabilities | | | | | | |
| Payables | 200,941 | — | — | — | — | 200,941 |
| Borrowings | 34,815,092 | 104,905,835 | 139,784,648 | 487,483,577 | 192,639,722 | 959,628,874 |
| | 35,016,033 | 104,905,835 | 139,784,648 | 487,483,577 | 192,639,722 | 959,829,815 |
| | | | | | | |
| | 0-3 | 3-12 | 1-2 | 2-5 | Over 5 | |
| | Months | Months | Years | Years | Years | Total |
| 31 March 2023 | GBP | GBP | GBP | GBP | GBP | GBP |
| Financial Liabilities | | | | | | |
| Payables | 215,370 | — | — | — | — | 215,370 |
| Borrowings | 35,791,953 | 107,203,206 | 143,275,586 | 435,139,019 | | 318,413,535 1,039,823,299 |
for the year ended 31 March 2024
# **22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)**
# **(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 £183,642,092 (31 March 2023: £210,101,543) as at period end entered into are variable rate, with an interest rate cap.
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 £279,571,582 (31 March 2023: £320,851,054) 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:
| | Variable | Fixed | Non-interest | |
|------------------------------------------------|-------------|---------------|--------------|-------------|
| | interest | interest | Bearing | Total |
| 31 March 2024 | GBP | GBP | GBP | GBP |
| Financial Assets | | | | |
| Short-term investment | — | 10,950,127 | — | 10,950,127 |
| Cash and cash equivalents and receivables | 130,835,713 | — | 19,908,845 | 150,744,558 |
| Total Financial Assets | 130,835,713 | 10,950,127 | 19,908,845 | 161,694,685 |
| Financial Liabilities | | | | |
| Accrued expenses and reserves | — | — | 200,941 | 200,941 |
| Borrowings | 463,213,674 | 356,705,967 | — | 819,919,641 |
| Total Financial Liabilities | 463,213,674 | 356,705,967 | 200,941 | 820,120,582 |
| Effect of derivatives held for risk management | 445,405,304 | | | |
| Total interest sensitivity gap | 113,027,343 | (345,755,840) | | |
| | Variable | Fixed | Non-interest | |
| | interest | interest | Bearing | Total |
| 31 March 2023 | GBP | | | |
| | | GBP | GBP | GBP |
| Financial Assets | | | | |
| Short-term investment | — | 10,719,241 | — | 10,719,241 |
| Cash and cash equivalents and receivables | 116,607,126 | — | 18,083,297 | 134,690,423 |
| Total Financial Assets | 116,607,126 | 10,719,241 | 18,083,297 | 145,409,664 |
| Financial Liabilities | | | | |
| Accrued expenses and reserves | — | — | 215,370 | 215,370 |
| Borrowings | 530,952,597 | 424,454,985 | — | 955,407,582 |
| Total Financial Liabilities | 530,952,597 | 424,454,985 | 215,370 | 955,622,952 |
| Effect of derivatives held for risk management | 516,519,922 | — | | |
If a reasonable possible change in interest rates had been 100 basis points (2023: 100 basis points) higher/lower throughout the period and all other variables were held constant, the Group's net assets attributable to Shareholders as at 31 March 2024 would have been £1,295,440 (31 March 2023: £1,021,745) greater/lower due to an increase/ decrease in the amount of interest receivable on the bank balances.
for the year ended 31 March 2024
# **22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)**
# **(e) Interest Rate Risk (continued)**
#### **Interest rate benchmark reform**
A fundamental reform of the major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as 'IBOR reform'). The Group has exposure to IBORs on its financial instruments that either have been or will be reformed as part of these market-wide initiatives. The Group considers that a contract is not yet transitioned to an alternative benchmark rate when interest under the contract is indexed to a benchmark rate that is still subject to IBOR reform, even if it includes a fallback clause that deals with the cessation of the existing IBOR.
The Group's remaining IBOR exposures at the reporting date are loans indexed to US dollar LIBOR. The alternative reference rate for USD LIBOR is the Secured Overnight Financing Rate (SOFR). In July 2023, the Financial Conduct Authority announced that Overnight and 12-month US dollar LIBOR settings have permanently ceased. 1-, 3- and 6-month US dollar LIBOR settings will continue to be published using a synthetic methodology until September 2024.
The Group is in the process of implementing appropriate fallback clauses for all US dollar LIBOR- indexed exposures. These clauses automatically switch the instrument from USD LIBOR to SOFR when US dollar LIBOR either ceases to be provided or is no longer representative.
There has been no significant change in the Company's existing agreements since the previous annual reporting date. Majority of the Company's existing agreements include clauses that deals with the cessation of the existing IBOR. The Company, has engaged legal counsel who along with the Asset Manager are liaising with the lenders to document the appropriate terms for the transition away from LIBOR for its remaining deals.
### **23. ULTIMATE CONTROLLING PARTY**
In the opinion of the Directors, the Company has no ultimate controlling party as the Company does not have any Shareholder that holds greater than 10% of the issued share capital of the Company.
# **24. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES**
| | Borrowings |
|------------------------------------------------|---------------|
| 31 March 2024 | GBP |
| Balance at 1 April 2023 | 955,407,582 |
| Repayments of capital on senior loans | (110,751,708) |
| Repayments of capital on junior loans | — |
| Payments of interest on senior loans | (26,732,378) |
| Payments of interest on junior loans | (11,356,947) |
| Add back: payments of interest on senior loans | 26,732,378 |
| Add back: payments of interest on junior loans | 11,356,947 |
| Movement in interest accruals | (5,087,736) |
| Amortisation of debt arrangements costs | 1,559,186 |
| Translation adjustment on foreign operations | (21,207,683) |
| Balance at 31 March 2024 | 819,919,641 |
for the year ended 31 March 2024
# **24. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES (continued)**
| | Borrowings |
|------------------------------------------------|---------------|
| 31 March 2023 | GBP |
| Balance at 1 April 2022 | 994,628,598 |
| Repayments of capital on senior loans | (103,301,759) |
| Repayments of capital on junior loans | — |
| Payments of interest on senior loans | (31,068,163) |
| Payments of interest on junior loans | (11,849,067) |
| Add back: payments of interest on senior loans | 31,068,163 |
| Add back: payments of interest on junior loans | 11,849,067 |
| Movement in interest accruals | (4,687,292) |
| Amortisation of debt arrangements costs | 1,622,411 |
| Translation adjustment on foreign operations | 67,145,624 |
| Balance at 31 March 2023 | 955,407,582 |
# **25. TAX**
Irish tax is charged at 12.5% on the profits of 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 their net lease rental income earned (after tax deductible expenditure) will be taxable as trading income at 12.5% under Irish tax regulations.
# **26. RELATED PARTY TRANSACTIONS AND SIGNIFICANT CONTRACTS**
### **Significant contracts**
Amedeo Limited ("Amedeo") is the Group's Asset Manager.
During the year, the Group incurred £3,158,178 (31 March 2023: £3,127,511) of fees with Amedeo, of which £9,609 (31 March 2023: £Nil) was outstanding to this related party at 31 March 2024. This fee is included under "Asset management fee" in note 6.
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") was 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). The agreement was terminated on 15 December 2023.
During the year, the Group incurred £12,154 (31 March 2023: £11,854) of fees with Amedeo Services. As at 31 March 2024 £Nil (31 March 2023: £Nil) was outstanding. This fee is included under "Asset management fee" in note 6.
# **Related parties**
The Board are considered to be key management personnel. Refer to the Board of Directors on pages 14 to 15. Refer to note 7 where Directors' remuneration has been disclosed.
for the year ended 31 March 2024
### **27. 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 and is given for information only.
### **Geographical analysis**
| | Middle East | Asia Pacific | Total |
|---------------------------|-------------|--------------|---------------|
| 31 March 2024 | GBP | GBP | GBP |
| Rental income | 155,863,057 | 26,787,108 | 182,650,165 |
| Net book value – aircraft | 680,350,044 | 333,118,351 | 1,013,468,395 |
| | | | |
| | | | |
| | Middle East | Asia Pacific | Total |
| 31 March 2023 | GBP | GBP | GBP |
| Rental income | 160,709,205 | 47,389,925 | 208,099,130 |
Revenue from the Group's country of domicile, Guernsey, was £Nil (2023: £Nil).
#### **28. SUBSEQUENT EVENTS**
On 2 April 2024 the Board announced an interim dividend of 2.00 pence per ordinary share. The dividend was paid on 30 April 2024 to Shareholders on the register as at the close of business on 12 April 2024.
On 30 April 2024 the Board of the Company announced that Mary Gavigan has resigned from her position as an independent non-executive director of the Company with immediate effect. Eithne Manning was appointed as an independent non-executive director of the Company and member of the Company's audit committee with immediate effect.
On 2 July 2024 the Board announced an interim dividend of 2.00 pence per ordinary share. The dividend will be paid on 31 July 2024 to Shareholders on the register as at the close of business on 12 July 2024.
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**
Robin Hallam (Chairman)
David Gelber (Senior Independent Director)
Steve Le Page Tom Sharp
Eithne Manning (appointed 30 April 2024) Laurence Barron (resigned 31 March 2024) Mary Gavigan (resigned 30 April 2024)
Contact details
Robin.Hallam@aa4plus.gg
David.Gelber@aa4plus.gg
Steve.Lepage@aa4plus.gg
Tom.Sharp@aa4plus.gg
Eithne.Manning@aa4plus.gg
#### **Asset Manager**
Amedeo Limited
Pembroke House, 28-32 Pembroke Street
Dublin 2 Ireland
#### **Administrator and Secretary**
JTC Fund Solutions (Guernsey) Limited
Ground Floor Dorey Court Admiral Park St Peter Port
Guernsey GY1 2HT
Telephone: +44 (0)1481 702400
#### **Auditor**
KPMG Channel Islands Limited
Glategny Court Glategny Esplanade
St Peter Port Guernsey GY1 1WR
#### **Solicitors to the Company (as to English law)**
Herbert Smith Freehills LLP
Exchange House Primrose Street London England
EC2A 2EG
#### **Registered Office of the Company**
Ground Floor Dorey Court Admiral Park St Peter Port Guernsey GY1 2HT
Telephone: +44 (0)1481 702400
# **Registrar, Paying Agent and Transfer Agent**
Link Market Services Limited
Link Group 10th Floor Central Square 29 Wellington Street Leeds, LS1 4DL
#### **Corporate Broker**
Panmure Liberum Limited Ropemaker Place 25 Ropemaker Street London, EC2Y 9LY
Telephone: +44 (0)20 3100 2000
#### **Advocates to the Company**
**(as to Guernsey law)**
Carey Olsen Carey House Les Banques St Peter Port Guernsey GY1 4BZ
# **Solicitors to the Company (as to asset acquisition,**
**financing and leasing documentation)**
Clifford Chance LLP 10 Upper Bank Street
London England E14 5JJ
Norton Rose Fulbright LLP 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
AGM Annual General Meeting of the Shareholders of the Company
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 Board Board of directors of the Company Company Amedeo Air Four Plus Limited Corporate Adviser Panmure Liberum Limited
DGTRs The FCA's Disclosure Guidance and Transparency Rules
ECL Expected Credit Losses
ESG Environmental, social and governance
Etihad Etihad Airways PJSC
FCA Financial Conduct Authority FVTPL Fair Value through Profit or Loss
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/Independent External Valuers
IFRS International Financial Reporting Standards
Interline a relationship between airlines which allows one airline to sell services that are provided
by another airline to a customer. Airlines use interline to sell itineraries that they would
otherwise not be able to serve alone
ISTAT International Society of Transport Aircraft Trading Law The Companies (Guernsey) Law, 2008, as amended
PBH Power by The Hour
Registrar Link Market Services Limited
Rehabilitation Plan As fully defined and explained at subsection "Rehabilitation Plan" of the Asset Mangers
Report as found at page 7
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