TIDMAA4
RNS Number : 5520W
Amedeo Air Four Plus Limited
23 December 2021
23 December 2021
AMEDEO AIR FOUR PLUS LIMITED (the "Company")
Legal Entity Identifier: 21380056PDNOTWERG107
HALF-YEARLY FINANCIAL REPORT
The Board of the Company is pleased to announce its results for
the period from 1 April 2021 to 30 September 2021.
To view the Company's half-yearly financial report please follow
the link below:
http://www.rns-pdf.londonstockexchange.com/rns/5520W_1-2021-12-22.pdf
The half-yearly financial report will also shortly be available
on the Company's website http://www.aa4plus.com .
In addition, to comply with DTR 6.3.5(1) please find below the
full text of the half yearly financial report.
For further information, please contact:
JTC Fund Solutions (Guernsey) Limited
+44 (0) 1481 702 400
Liberum Capital Limited
Chris Clarke / Darren Vickers / Owen Matthews
+44 (0) 20 3100 2000
OF ANNOUNCEMENT
E&OE - in transmission
Amedeo Air Four Plus Limited
Consolidated
Half-yearly Financial
Report (un-audited)
From 1 April 2021 to 30 September 2021
STRATEGIC REPORT Summary Information
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Trading SFS
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Ticker AA4
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SEDOL BKY41C6
ISIN GG00BMZQ5R81(Effective from 8 December
LEI 2021) GG00BKY41C61(Prior to compulsory
redemption on 8 December 2021)
21380056PDNOTWERG107
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Reporting Currency Sterling
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Launch Date / Share Price 13 May 2015 / 100 pence
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Share Price 23.50 pence (as at 30 September 2021)
28.50 pence (as at 20 December 2021)
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Market Capitalisation GBP104 million (as at 30 September
2021)
GBP98.98 million (as at 20 December
2021)
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Dividend Payment Dates January, April, July, October
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Year End 31 March
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Stocks & Shares ISA Eligible
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Aircraft Registration Numbers A6-EEY, A6-EOB, A6-EOM, A6-EOQ, A6-EOV,
A6-EOX, A6-EPO, A6-EPQ, HS-THF, HS-THG,
HS-THH, HS-THJ
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Website www.aa4plus.com
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CHAIRMAN'S STATEMENT
30/09/2021
Summary of performance
I am pleased to present our half year results for the period
ending 30 September 2021, with the key numbers shown below:
Financial Year Half-Year 2021-22 Half-Year 2020-21 Half-Year 2019-20
Total Rental Income (GBP) 95,433,962 103,952,131 132,294,877
------------------ ------------------ ------------------
Net Book Value Per Share
(Pence) 72.45 117.96 112.76
------------------ ------------------ ------------------
Distributions Made (GBP) 0 0 26,492,812
------------------ ------------------ ------------------
Outstanding Shares 434,141,757 428,166,757 642,250,000
------------------ ------------------ ------------------
Outstanding Debt (GBP) 1,008,729,353 1,140,567,856 1,608,023,563
------------------ ------------------ ------------------
Subsequent to the period end, two significant events
occurred:
-- On 1 December we announced the return to shareholders of
GBP30,000,000 by way of a compulsory redemption of one share for
every five held (subject to rounding down of individual
shareholdings). This redemption completed on 8 December.
-- On 15 December Thai Airways formally completed restructured
leases for four aircraft leased to them by subsidiaries of the
Company. Full details of this event are given in the Company's
announcement made on 16 December.
Your Board is pleased that it has been able to begin returning
funds to investors, as we are extremely grateful for your patience
and understanding during a very difficult last eighteen months or
so. We are also pleased that with completion of the revised leases
with Thai Airways, the last legal hurdle to the retention of
significant value for investors has been cleared. Recent financings
of similar Airbus A350-900 aircraft for credits such as Delta,
Finnair and Air France show that this modern, fuel efficient
aircraft will be in demand.
In the announcement of the compulsory redemption on 1 December
your Board also committed to restart regular quarterly dividends to
shareholders in January 2022. A further announcement on dividends
will be made as early as possible in January 2022.
Share price performance
Throughout the period from 1 April 2021 until 30 November 2021,
the Company's share price remained reasonably constant around 24 to
25 pence. After the announcements in December referred to above the
price picked up to 28 to 29 pence.
At this level it is of course still far below "pre-pandemic"
levels, and also below the book value indicated above. Inevitably,
value has been lost due to circumstances beyond the Board's control
- the long term impact of the pandemic on international flying and
in particular on Thai Airways, the collapse of second hand values
for A380s - but your Board is focussed on preserving value for
shareholders and returning that value to them as quickly as we
prudently can.
You will see from our Asset Manager's report that international
flying continues to lag behind domestic flying in its recovery from
the coronavirus. This is nothing to do with the aircraft and
airlines themselves, but the restrictions on cross border flying
which are political hurdles. This has especially hindered
international travel in the Asia Pacific region, but the strong
pick up in domestic travel in the USA, China and EU shows that the
flying customer has not lost his or her desire to travel. Despite
the recent emergence of a new variant of the virus, airlines are
increasingly confident that international demand will return,
including the premium and business traffic that generates profit.
We share that confidence. As an example, Emirates has announced a
recruitment drive for 6000 staff and now has around 55 A380
aircraft in the air.
Thailand restarted international tourism with effect from
November 1st, albeit from a very low and restrictive base, and our
aircraft are being brought back into use and generating modest
revenue for us on a by the hour basis.
Other matters
Since this time last year, we have created a new Audit Committee
which is now led by our new directors. Steve le Page is chair of
the committee and he is joined by Mary Gavigan. Both of them have
extensive audit and financial restructuring experience and are
already bringing that experience to bear for the benefit of our
shareholders.
Robin Hallam
Chairman
Date: 22 December 2021
Asset M a nager's Report
O n the invitation of the Directors of the Company, the
following c o m mentary has been provided by A medeo Limited as A
ss et Manager of the Company and is provided without any warranty
as to its accuracy and without any liability incurred on the part
of the Company, its Directors and officers and service providers.
The commentary is not intended to constitute, and should not be
construed as, investment advice. Potential investors in the Company
should seek their own independent financial advice and may not rely
on this communication in evaluating the merits of an investment in
the Company. The commentary is provided as a source
of information f or shareholders of the Company but is not attributable to the C o mpany.
AA4P PORTFOLIO UPDATE
In May 2020 Thai Airways entered into Thai bankruptcy
proceedings, ceased payment of rent under its leases and commenced
a rehabilitation plan process, which included a company-wide
restructuring and fleet rationalisation, subject, amongst other
things, to Thai court approval. On 30 December 2020 the Company's
subsidiaries entered into Letters of Intent ("LOIs") on commercial
terms whereby the Company's leases would be restructured with Thai
Airways. The Company's lenders consented to the LOIs and granted
forbearance not to enforce repossession while the Company kept its
interest payments current. On 29 and 30 July 2021 the Company
finalised debt restructuring with the lenders, to accommodate the
new lease terms as was envisaged in the LOIs, subject to completing
the lease restructurings with Thai Airways prior to 31 December
2021. On 14 December 2021 the lease amendments were approved by the
Thai Airways Plan Administrator and on 15 December 2021, the lease
restructurings were executed.
Under the terms of the LOIs and now the restructured leases,
Thai Airways pays rent on a power by the hour basis ("PBH") until
December 2022. The MSN 123, 130, and 142 aircraft have been
operated in commercial service, and MSN 177 is being inducted back
into operations in December 2021. Consequently, the Company has
been receiving some PBH rent, defraying its current interest
payments to the lenders. MSN 142 is currently undergoing scheduled
maintenance and MSN 177 will be inducted for its C-Check in Q1
2022, with MSNs 120 and 130 already having completed this process.
From January 2023 the leases will switch to fixed monthly payments
and the Company and its lenders have entered into hedging
arrangements for the debt service.
Under the terms of the restructured debt, any surplus rent in
excess of the interest payments during the PBH period and the debt
service during the fixed period to 2029, and agreed cost
contribution to the Company, will be applied towards principal
amortisation.
We view the completion of this restructuring and the new lease
terms as highly attractive to the market in short supply of product
and will look and report to the Board opportunities to create
equity value for the shareholders in the short to medium term.
Emirates released its half year financial results for the
2021/22 financial period, highlighting a loss of AED 5.8 billion
(US$ 1.6 billion), compared to last year's loss of AED 12.6 billion
(US$ 3.4 billion). However, the carrier also ended the first six
months with strong revenues due to a much-improved passenger
network, as well as cash reserves of AED 14.2 billion (USD 3.9
billion(1) ) that will further help its recovery. Emirates
currently carries out passenger and cargo operations to over 120
cities, representing 90% of its pre-pandemic network, and plans to
restore 70% of its capacity (seats available on a route) by the end
of the year. The airline also announced that is on track to return
more than 50 A380 aircraft to service aircraft by the end of the
year. Considering the airline is also introducing "premium economy"
to its A380 fleet, which will include three aircraft of the
Company, these developments are considered as quite positive.
(1) US$ Figures are converted at US$ 1 = AED 3.67
AMEDEO'S ASSET INSPECTION REPORT TO AA4P
The utilisation figures below represent the total for each
aircraft from first flight to 30 November 2021
Lessee Model MSN REG Delivery Original Flight Flight Cycles
Date Lease Expiry Hours
Date
Emirates A380-861 157 A6-EEY 04/09/2014 04/09/2026 23,633 3,761
------------ ------ ------- ----------- -------------- -------- --------------
A380-861 164 A6-EOB 03/11/2014 03/11/2026 23,475 3,774
--------------------------- ------ ------- ----------- -------------- -------- --------------
A380-861 187 A6-EOM 03/08/2015 03/08/2027 25,397 2,391
--------------------------- ------ ------- ----------- -------------- -------- --------------
A380-861 201 A6-EOQ 27/11/2015 27/11/2027 17,70 7 2,79 9
--------------------------- ------ ------- ----------- -------------- -------- --------------
A380-861 206 A6-EOV 19/02/2016 19/02/2028 20,569 3,338
--------------------------- ------ ------- ----------- -------------- -------- --------------
A380-861 208 A6-EOX 13/04/2016 13/04/2028 16,1 10 2,54 3
--------------------------- ------ ------- ----------- -------------- -------- --------------
B777-300ER 42334 A6-EPO 28/07/2016 28/07/2028 20,306 5,036
--------------------------- ------ ------- ----------- -------------- -------- --------------
B777-300ER 42336 A6-EPQ 19/08/2016 19/08/2028 19,788 4,572
--------------------------- ------ ------- ----------- -------------- -------- --------------
Thai Airways A350-900 123 HS-THF 13/07/2017 13/07/2029 13,421 2,308
------------ ------ ------- ----------- -------------- -------- --------------
A350-900 130 HS-THG 31/08/2017 31/08/2029 12,734 2,065
--------------------------- ------ ------- ----------- -------------- -------- --------------
A350-900 142 HS-THH 22/09/2017 22/09/2029 12,602 2,074
--------------------------- ------ ------- ----------- -------------- -------- --------------
A350-900 177 HS-THJ 26/01/2018 26/01/2030 10,745 1,764
--------------------------- ------ ------- ----------- -------------- -------- --------------
Recent Technical Activity:
Ø No significant technical events have been reported by Emirates
for this period.
Ø No significant technical events have been reported by Thai
Airways for this period.
Ø Emirates' aircraft have been grounded from the end of March
2020, with the exception of the B777-300ER aircraft and A380's MSN
187 & 206.
Ø The MSN 123, 130, and 142 aircraft have been operated in
commercial service, and MSN 177 is scheduled to re-enter commercial
service in December 2021. MSN 142 is currently undergoing scheduled
maintenance and MSN 177 will be inducted for its C-Check in Q1
2022, with MSNs 120 and 130 already having completed this
process.
Ø Emirates fleet last operated as per the dates listed
below:
o MSN 157: 24 July 2021 (Positioning Flight from DXB - DWC)
o MSN 164: 15 October 2021 (Positioning Flight from DWC - DXB)
o MSN 187: In service (last revenue flight on 29 November 2021)
o MSN 201: 18 August 2020 (Positioning Flight from DWC - DWC)
o MSN 206: In service (Last revenue flight on 30 November 2021)
o MSN 208: 26 August 2020 (Positioning Flight from DWC - DWC)
o MSN 42334: In service (Last revenue flight on 30 November 2021)
o MSN 42336: In service (Last revenue flight on 30 November 2021)
Ø Thai Airways fleet last operated as per the dates listed
below:
o MSN 123: In service (Last revenue flight on 30 November 2021)
o MSN 130: In service (Last revenue flight on 30 November 2021)
o MSN 142: In service (Last revenue flight on 20 September 2021)
o MSN 177: 14 February 2021
Industry Update
The International Air Transport Association (IATA) announced
that the recovery in air travel continued in October 2021 with
broad-based improvements in both domestic and international
markets. It also warned that the imposition of travel bans by
governments, in light of the Omicron variant, could threaten the
sector's recovery.
Total demand for air travel in October 2021 (measured in revenue
passenger kilometers or RPKs) was down 49.4% compared to October
2019. This was improved over the 53.3% fall recorded in September
2021, compared to two years earlier. Domestic markets were down
21.6% compared to October 2019, bettering the 24.2% decline
recorded in September versus September 2019. International
passenger demand in October was 65.5% below October 2019, compared
to a 69.0% decline for September versus the 2019 period, with all
regions showing improvement.
IATA's Director General, Willie Walsh, claims "October's traffic
performance reinforces that people will travel when they are
permitted to. Unfortunately, government responses to the emergence
of the Omicron variant are putting at risk the global connectivity
it has taken so long to rebuild". Willie Walsh believes the
emergence of the Omicron variant panicked many governments into
once again restricting or entirely removing the freedom to
travel-even though WHO clearly advised that 'blanket travel bans
will not prevent the international spread, and they place a heavy
burden on lives and livelihoods.'
IATA released October 2021 data for global air cargo markets
showing that demand continued to be well above pre-crisis levels
and that the capacity constraints have eased slightly. Global
demand, measured in cargo tonne-kilometers (CTKs*), was up 9.4%
compared to October 2019 (10.4% for international operations).
Capacity constraints have eased slightly but remain 7.2% below
pre-COVID-19 levels (October 2019) (-8.0% for international
operations). Willie Walsh stated that "October data reflected an
overall positive outlook for air cargo. Supply chain congestion
continued to push manufacturers towards the speed of air cargo.
Demand was up 9.4% in October compared to pre-crisis levels. And
capacity constraints were slowly resolving as more passenger travel
meant more belly capacity for air cargo. The impact of government
reactions to the Omicron variant is a concern. If it dampens travel
demand, capacity issues will become more acute."
EMIRATES GROUP
Half Year 2021/22 Financial Results(2) :
The airline reported a loss of AED 5.8 billion (US$ 1.6
billion), compared to last year's loss of AED 12.6 billion (US$ 3.4
billion). Emirates revenue, including other operating income, of
AED 21.7 billion (US$ 5.9 billion) was up 86% compared with the AED
11.7 billion (US$ 3.2 billion) recorded during the same period last
year. The strong revenue recovery reflects the quick return of
passenger demand wherever flight and travel restrictions were eased
around the world. Emirates operating costs increased by 22% against
an overall capacity growth of 66%. Driven by the significant
increase in operations during the six months, Emirates' EBITDA
recovered to AED 5.0 billion (US$ 1.4 billion) compared to AED 290
million (US$ 79 million) for the same period last year. Emirates
reported cash assets of AED 14.2 billion (US$ 3.9 billion), which
included a capital injection of AED 2.5 billion (US$ 681 million)
by the Government of Dubai to support the airline on its
recovery.
Operations:
Emirates currently flies to over 120 cities, representing 90% of
its pre-pandemic network, and plans to restore 70% of its capacity
by the end of the year with the addition of more than 280,000 seats
across its global network. Emirates carried 6.09 million passengers
during the first 6 months of the 2021/22 financial period. This was
a significant improvement compared to the 1.45 million recorded for
HY 2020/21. Emirates also reported improved passenger load factors
of 47.9% (Up 9.3%) and increased capacity (measured in available
tonnes kilometres) to 16.3 billion, which is a 66% improvement from
HY 2020/21. Cargo operations continued to impress, as the carrier
recorded 1.1 million tonnes handled, which brings the airline back
to 90% of pre-pandemic levels by volume handled.
By 30 September, the airline was operating passenger and cargo
services to 139 airports, utilising its entire Boeing 777 fleet and
37 A380s. The airline is also targeting to return to service around
50 A380 aircraft by the end of the year.
In line with the continued easing of travel restrictions around
the globe, Emirates has announced that its flagship A380 aircraft
will soon be deployed to an expanded list of destinations starting
in October and November. By the end of November, the number of
cities that the aircraft will serve will be scaled up to 27,
representing a more than 65% increase from its current 16. Emirates
will re-instate its signature A380 services to popular leisure and
business destinations such as Amsterdam, Barcelona, Dusseldorf,
Hamburg, Johannesburg, Madrid, Milan, Riyadh (subject to government
approvals), Sao Paulo and Zurich. Emirates will also introduce a
new route to its A380 network that was previously not served by the
world's largest commercial aircraft. Emirates also introduced a new
route to its A380 network, as services to Istanbul were launched on
1 October. As the world's largest operator of the
(2) US$ Figures are converted at US$ 1 = AED 3.67
A380 aircraft, the airline's total fleet of A380s will reach 118
by year-end. Emirates also announced that it will retrofit 105 of
its modern wide-body aircraft with its Premium Economy product, in
addition to other cabin enhancements. The 18-month retrofit
programme, scheduled to begin at the end of 2022, and will see 52
Emirates A380s and 53 Boeing 777s fitted with a new cabin class. As
previously announced, MSN 201, 206, and 208 have currently been
selected for the cabin upgrade.
In addition to signifying the airline's continued commitment to
and confidence in the A380, Emirates is scaling up of operations
across its global network to meet the surge in customer demand to
Dubai as well as other destinations that allow quarantine-free
entry for specific nationalities and vaccination status. Dubai
safely welcomed over 4 million overnight leisure and business
visitors since it reopened in July 2020 and with Expo 2020
underway, the city is preparing to welcome visitors for the world's
largest gathering and most highly anticipated event. From December,
Emirates will restart flights to London Gatwick Airport (LGW) with
a daily Boeing 777 service, increasing the number of weekly flights
to the UK to 84 by the end of December. Adnan Kazim, Emirates'
Chief Commercial Officer, observed a surge in demand after the UK
simplified travel and was prepared to accept international
vaccination certificates from 55 countries starting on 4 October.
On the day of the Biden Administration's decision to lift travel
restrictions to the US, Emirates announced plans to increase
frequencies to six of its current 12 US destinations starting from
October. This will result in 78 weekly flights.
THAI AIRWAYS INTERNATIONAL
Q3'2021 Financial Results(3) :
As at 30 September 2021, total revenues of Thai was THB 78,567m
(c.US$ 2.33bn), an increase of 76% compared to the THB 44,534m (c.
US$ 1.32bn) recorded for the same period the previous year. Total
expenses were of THB 22,650m (c. US$ 671.51m), THB 56,792m (c. US$
1.68bn) or 71% lower than last year, mainly due to operating
expenses that varied with traffic production, traffic demand and a
decrease in staff expenses after downsizing its workforce.
Moreover, the airline recorded an operating profit of THB
55,916m (c. US$ 1.66bn), an improvement from the loss of THB
34,909m (c. US$ 1.03bn) recorded for the same period the previous
year. Thai reported a total net profit of THB 51,115m (US$ 1.52bn),
which is a significant improvement from the loss of THB 49,560m (c.
US$ 1.47bn) recorded for the first 9 months of the 2020/21
financial year.
As of September 30 2021, total assets tallied THB 163,703m (c.
US$ 4.85bn), lower by THB 45,594m (c. US$ 1.35bn) or 22% from as at
December 31 2020. Total liabilities as of September 30 2021 were
THB 240,196m (c. US$ 7.12bn), decreased by THB 97,766m or (c. US$
2.90bn) or 29% from as of December 31 2020.
Operations:
As detailed in the AA4P Portfolio Update section above, the
Company is pleased to announce that the lease restructurings with
Thai Airways have now been duly finalised and executed. The MSN
123, 130, and 142 aircraft have been operated in commercial
service, and MSN 177 is being inducted back into operations in
December 2021.
It has been a slow recovery process for Thai, particularly due
to the lingering cases of COVID Thailand has faced, as well as the
general downturn in the market. However, the carrier looks set to
take a more aggressive approach, over the next couple months. On
the 1 November 2021, Piyasvasti Amranand, who is part of the
restructuring committee at Thai, announced that the carrier will
sell aircraft and cut nearly a third of its workforce as part of a
plan to slim down the fleet and cut costs. Piyasvasti said that
after the sale Thai Airways will have 58 aircraft across 4 types,
and that the carrier will reduce the number of workers from 21,300
to 14,500 by December 2022. Piyasvasti also added that to further
help cashflows, the airline will conclude a credit agreement valued
at around $750 million with financial institutions by next year and
is in talks with the government for an additional $750 million.
(3) US$ Figures are converted at US$ 1 = THB 33.73
The Government of Thailand is also doing its part in improving
tourism and travel to Thailand. Earlier in July, the Phuket Sandbox
program was initiated, effectively turning Thailand's largest
island into a quarantine zone for overseas tourists. Initially,
there were much stricter quarantine and testing rules for the
program, however since July the Government of Thailand has lowered
restrictions for the tourism program with new rules in place as of
1 November. Currently, fully vaccinated travellers who have stayed
a minimum of 21 days in one of 63 approved "low risk" countries and
territories-- including the United States, the United Kingdom,
Australia, India and Canada -- can avoid a lengthy hotel quarantine
for the first time in more than 18 months. The incoming travellers
who meet the updated requirements will only need to stay one night
in a government-approved hotel while they await the results of a
COVID-19 test that will be administered upon arrival. Tourists who
aren't fully vaccinated with an approved vaccine must quarantine in
a pre-booked, government-approved hotel for 10 days upon arrival.
Fully vaccinated travellers arriving from countries not on the list
of 63 countries are eligible to enter through the "sandbox" scheme
that requires them to stay in a government-approved hotel or resort
in one of 17 "blue" destinations, including Phuket, Bangkok, Chiang
Mai and Koh Samui, for 7 nights before they will be allowed to
travel freely in the country.
BOARD OF DIRECTORS
As at 30 September 2021, the Company had five directors, all of
whom are independent and non-executive. Robin, David and Laurence
held office throughout the period under review. Steve and Mary were
appointed as directors of the Company with effect from 27 July
2021.
Robin Hallam (Chairman) (Independent non-executive)
Until 31 December 2015, Robin Hallam was a partner and co-head
of Asset Finance at international law firm Hogan Lovells
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 International Society of Transport
Aircraft Trading ("ISTAT") and was ranked Band 1 for Asset Finance
in Chambers UK 2015.
David Gelber (SID) (Independent non-executive)
David Gelber began his career with Citibank in London in 1974.
Over the course of the next twenty years he held a variety of
trading roles in foreign exchange, fixed income and derivatives at
Citibank, Chemical Bank and HSBC where he was Chief Operating
Officer of HSBC Global Markets. In 1994 he joined ICAP, an
inter-dealer broker, as COO and oversaw two mergers and a number of
acquisitions. He is currently a non-executive director of Walker
Crips PLC, a stock broker and wealth manager; and a non-executive
director of IPGL, a holding company with investments in numerous
companies on several of which he serves as a director (DDCAP an
arranger of Sharia Compliant transactions, Tellimer Ltd an online
research platform for frontier markets, Veridium ID a biometric
identification provider, Opportunity Network a B2B CEO platform and
Aviva Singapore Life Ltd, a entity recently formed from a merger of
Singapore Life with the local operations of Aviva PL). David holds
a BSc in Statistics and Law from the University of Jerusalem and an
MSc in Computer Science from the University of London.
Laurence Barron (Independent non-executive)
Having begun his career as a commercial lawyer in Paris and then
in Tokyo, where he first became involved in aircraft financing
transactions, Laurence joined Airbus in 1982 as an in-house lawyer
specialising in aircraft finance. He subsequently moved to the
business side when, in 1984, he was appointed Sales Finance
Director North America, becoming Head of Sales Finance in 1985, and
then, in 1987, Vice President of Customer Finance. In 1994, he was
asked to set up the Asset Management Organisation within Airbus and
that year became Vice President and Head of Asset Management.
Airbus Asset Management has full responsibility for all used
aircraft transactions at Airbus and acts as an in-house leasing
company for the used Airbus aircraft owned or controlled by the
Airbus group of companies. In 2001 he was promoted to Senior Vice
President of Airbus before assuming the role of President of Airbus
China in 2004, with responsibility for Airbus' overall activities
in the People's Republic of China. In January 2013, Laurence was
appointed Chairman of EADS China, now rebranded Airbus China.
Laurence retired from salaried Airbus employment at the end of
April 2016 and was non-executive Chairman of Airbus China until the
end of 2017. He holds an LLB from Bristol University Law
Faculty.
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 four London
listed funds. Mr Le Page 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. On appointment as a director, Steve was also
appointed as chairman of the Audit Committee.
Mary Gavigan (Independent non-executive)
Mary is a Fellow of the Institute of Chartered Accountants in
England & 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. She is a Non-Executive Director
of STM Life Assurance PCC PLC and its sister company London &
Colonial Assurance PCC PLC where she is Chair of the Audit
Committee as well as a member of the Risk Management Committee.
Mary is also a Non-Executive Director of the National Deposit
Friendly Society Ltd where she is Chair of its Audit Committee and
of its Remuneration Committee. Mary's charity work includes being a
Trustee of Epilepsy Research UK. Mary holds a BBS and MA from
Trinity College Dublin. On appointment as a director, Mary also
became a member of the Audit Committee.
John Le Prevost resigned as director of the Company, for
personal reasons, with effect from 21 June 2021.
CORPORATE INFORMATION
The Company is a Guernsey company incorporated on 16 January
2015. The Company operates under the Law and the DGTRs of the UK's
FCA.
All of the Company's Shares have since 13 May 2015 been admitted
to trading on the SFS.
The initial and six subsequent share raisings resulted in the
issue and admission to trading on the SFS of 642,250,000 Shares
issued at an average offer price of 102 pence. On 28 September 2020
the Company compulsorily redeemed 214,083,243 Shares on a one for
three shares held basis as at 25 September 2020 paying a redemption
price of 46 pence per Share redeemed. A further compulsory
redemption of 86,828,274 shares occurred on 8 December 2021 on a
one for five shares held basis as at 7 December 2021 for a
redemption price of 34.55 pence per share redeemed.
As at 20 December 2021, the last practicable date prior to the
publication of this report, the Company's total issued share
capital was 347,313,483 Shares trading at 28.50 pence per Share
giving the Company a market capitalisation of GBP98.98 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 all aircraft
leased to Etihad Airways were disposed of and now the remaining
aircraft are leased either to Emirates or Thai Airways.
Given the current COVID-19 crisis and the devastating effect it
has had upon the long-haul air travel industry, plus the fact that
one of the Group's lessees, Thai Airways, is now under a
rehabilitation plan, the Board considers it unlikely that in the
near term there will be any further expansion of the Company but
rather all effort is concentrated on managing the current economic
challenges to ensure the Company's long term survival.
Investment Portfolio
As at the financial reporting date of 30 September 2021 the
Company had twelve wholly-owned aircraft owning subsidiaries and
two Irish leasing subsidiaries, see note 1 for further details.
Distribution Policy
The Company aims to provide shareholders with a total return
comprising income from distributions through the period of the
Group's ownership of the Assets and a capital distribution upon the
sale, or other disposition of the Assets.
Up until December 2019 the Group regularly received income in
the form of lease payments and income distributions were made to
shareholders quarterly in accordance with the Company's then target
of a distribution to shareholders of 2.0625 pence per Share per
quarter.
However, on 6 April 2020, as a result of the impact of COVID-19
on the airline industry, the Company announced that the Board had
resolved to temporarily suspend the payment of any kind of
distribution to shareholders, as the Board's priority lay in
preserving the long-term financial stability of the Company for the
benefit of its shareholders and creditors. The Board considered
that maintaining the Company's liquidity was vital and prudent in
doing so.
Whilst two dividends were declared and paid in October 2020 and
January 2021, the Board took the decision to suspend quarterly
dividends until the rehabilitation of Thai Airways and the
agreement with the Company's lenders were complete. On 1 December
2021 the Board announced its decision that the Company recommences
the payment of quarterly dividends in January 2022.
Return of Capital
Following the sale of an Asset the Board may, as it deems
appropriate at its absolute discretion, either return to
shareholders all or part of the net capital proceeds of such sale
(subject to satisfaction of the Statutory Solvency Test), or
re-invest the proceeds in accordance with the Company's investment
policy, subject to shareholder approval.
Following the sale in February 2020 of the two aircraft leased
to Etihad Airways, on 23 September 2020 the Company announced the
return to shareholders of GBP98.5 million of the resultant proceeds
by means of a compulsory redemption of one share for every three
shares held as at 25 September 2020 for a payment of 46 pence per
each share redeemed. Accordingly, 214,083,243 Shares were redeemed
and cancelled. A further GBP30m was returned to shareholders by a
compulsory redemption of 86,828,274 shares on 8 December 2021 on a
one for five shares held basis as at 7 December 2021 for a
redemption price of 34.55 pence per share redeemed.
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.
INTERIM MANAGEMENT REPORT
A description of important events that have occurred during the
period under review, their impact on the financial statements and a
description of the principal risks and uncertainties facing the
Group, together with an indication of important events that have
occurred since the end of the period under review and which are
likely to affect the Group's future development are included in the
Chairman's Statement, the Asset Manager's Report, this Interim
Management Report and the Notes to the condensed consolidated
financial statements contained on pages 22 to 52 and are
incorporated herein by reference.
There were no other events or changes in the related parties and
transactions with those parties during the period under review
which had or could have had a material impact on the financial
position and performance of the Group, other than those disclosed
in this condensed consolidated half-yearly financial report.
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Group are
unchanged from those disclosed in the Group's annual financial
report for the year ended 31 March 2021.
Going Concern
The Group's principal activities are set out within the
Corporate Information on pages 13 to 14. The financial position of
the Group is set out on page 19. In addition, note 17 to the
condensed consolidated financial statements includes the Group's
objectives, policies and processes for managing its capital, its
financial risk management objectives and its exposures to credit
risk and liquidity risk.
The Directors have considered whether the Company will remain a
going concern for the next 15 months from the period ended 30
September 2021.
Government restrictions on travel as a result of the pandemic
still remain, however the forecast for travel is improving and the
vaccine and booster roll outs are becoming more widespread across
the globe. Emirates continues to expand its network as restrictions
are lifted and has released its half year report for 2021/22, which
indicates an improvement in operations as well as a healthy cash
reserve to assist in the road to recovery. The announcement, at the
Dubai Air Show in November, that Emirates will retrofit Premium
Economy seats to fifty-three 777's and fifty-two A380s has been
viewed positively by the Board, as margins on premium economy are
very close to those of business class for many carriers. Similarly,
the situation in Thailand is improving as the government reduces
travel and quarantine restrictions, which should be beneficial for
the important tourism sector of the Thai economy.
The Board will continue to monitor actively the financial impact
on the Company and its Group resulting from the evolving position
with its aircraft lessees and lenders whilst bearing in mind its
fiduciary obligations and the requirements of Guernsey law which
determine the ability of the Company to make dividends and other
distributions.
While the Group is reporting a loss (before foreign exchange
gains) in the current period, it is in a net current asset position
and continues to generate strong positive operating cash flows.
The Board has reviewed plausible downside scenarios (such as
receiving no further power-by-the hour rental income from Thai) and
implemented sufficient measures, such as the temporary suspension
of dividends, in order to best position itself to settle its future
debt obligations in the short term to medium term. Additionally,
the Group has arranged with its lenders an optimal solution that
will facilitate servicing of the loans in line with the rent
received under the recently agreed lease amendments. The solution
will allow for the Group to address its expenses and its loan
obligations with the income generated.
Whilst progress has been made, the Directors remain uncertain as
to the ability of one of its lessees to maintain its liquidity in
order to comply with its' rehabilitation plan. As a result, fixed
rental receivables might not be sufficient to meet interest
payments and also principal repayments once they become due.
However, 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 nevertheless believe that the
going concern basis of accounting is appropriate although
potentially material uncertainties outside of the Board's control
remain.
Responsibility Statement
The D irectors confirm that to the best of their knowledge:
(a) the condensed set of consolidated financial statements,
prepared in accordance with International Accounting Standard 34
Interim Financial Reporting, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Group; and
(b) this interim management report (including the information
incorporated by reference) includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties that the Group faces.
Signed on behalf of the Board of directors of the Company on 22
December 2021.
Steve Le Page
Director
INDEPENT REVIEW REPORT TO SHAREHOLDERS OF THE COMPANY
Introduction
We have reviewed the accompanying condensed consolidated
statement of financial position of Amedeo Air Four Plus Limited
("the Group") as at 30 September 2021, the condensed consolidated
statement of comprehensive income, condensed consolidated statement
of financial position, condensed consolidated statement of cash
flows, condensed consolidated statement of changes in equity for
the six month period then ended, and notes, to the interim
financial information ("the condensed consolidated interim
financial information"). Management is responsible for the
preparation and presentation of the condensed consolidated interim
financial information in accordance with IAS 34, 'Interim Financial
Reporting'. Our responsibility is to express a conclusion on the
condensed consolidated interim financial information based on our
review.
Material uncertainty related to going concern
We draw attention to Note 2 ('Going Concern') in the condensed
consolidated interim financial information, which indicates
material uncertainties in relation to one of its lessees
maintaining its liquidity in order to comply with the
rehabilitation plan agreed with its creditors and the fixed rents
receivable under the leases being sufficient to meet the loan
interest payments and principal payments once they come due. These
events or conditions indicate that a material uncertainty exists
that may cast significant doubt on the Group's ability to continue
as a going concern and, therefore, it may be unable to realise its
assets and discharge its liabilities in the normal course of
business. Our report is not modified in respect of this matter.
Scope of review
We conducted our review in accordance with the International
Standard on Review Engagements 2410, "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity". A
review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the accompanying condensed consolidated
interim financial information as at and for the six month period
ended 30 September 2021 is not prepared, in all material respects,
in accordance with IAS 34, 'Interim Financial Reporting' and the
AIM Rules.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Group in accordance with the
terms of our engagement letter. Our review has been undertaken so
that we might state to the Group those matters we are required to
state to it in this 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 Group for our review work, for this
report, or for the conclusions we have reached.
22 December 2021
KPMG
1 Harbourmaster Place
IFSC
Dublin 1
Ireland
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period from 1 April 2021 to 30 September 2021
1 Apr 2021 to 1 Apr 2020 to
30 Sep 2021 30 Sep 2020
Notes GBP GBP
INCOME
US Dollar based rent income 4 78,079,704 86,639,389
British Pound based rent
income 4 17,354,258 17,312,742
95,433,962 103,952,131
EXPENSES
Operating expenses 5 (2,965,559) (4,734,513)
Depreciation and amortisation
of aircraft 9 (55,605,841) (61,333,394)
Expected credit loss 12 (22,171,247) (22,969,273)
(80,742,647) (89,037,180)
Net profit for the period before
finance income, finance costs
and foreign exchange gains 14,691,315 14,914,951
FINANCE INCOME
Finance income 10 1,156,972 268,220
FINANCE COSTS
Finance costs 11 (18,910,287) (24,948,329)
.
Foreign exchange gains 211,900 463,367
Loss before tax (2,850,100) (9,301,791)
Income tax credit/(expense) 21 64,797 (28,444)
Loss for the period after
tax (2,785,303) (9,330,235)
-------------- --------------
OTHER COMPREHENSIVE LOSS
Items that may be reclassified
subsequently to profit or
loss
Translation adjustment on
foreign operations 2f 5,618,362 (19,251,659)
-------------- --------------
Total comprehensive income/(loss)
for the period 2,833,059 (28,581,894)
============== ==============
Pence Pence
Loss per share for the period
- basic and diluted 8 (0.65) (1.46)
-------------- --------------
In arriving at the results for the financial period, all amounts
above relate to continuing operations.
The notes on pages 22 to 52 form an integral part of these
condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2021
Notes 30 Sep 2021 31 Mar 2021
GBP GBP
NON-CURRENT ASSETS
Aircraft 9 1,242,165,257 1,270,311,830
Deferred tax asset 21 66,074 -
Derivatives at fair value through
profit and loss 16 4,102,422 -
-------------- --------------
1,246,333,753 1,270,311,830
CURRENT ASSETS
Accrued income 22 13,712,617 13,045,326
Short term investments 13 36,587,058 22,789,120
Trade and other receivables 12 14,149,803 12,830,033
Cash and cash equivalents 19 103,342,904 118,060,583
-------------- --------------
167,792,382 166,725,062
TOTAL ASSETS 1,414,126,135 1,437,036,892
============== ==============
CURRENT LIABILITIES
Payables 142,261 121,026
Deferred income 22 8,243,738 8,195,657
Maintenance provisions 20 72,991 -
Borrowings 14 77,457,339 97,081,633
85,916,329 105,398,316
NON-CURRENT LIABILITIES
Derivatives at fair value through
profit and loss 16 4,232,111 4,939,122
Maintenance provisions 20 56,121,298 54,934,474
Borrowings 14 931,272,014 936,474,385
Deferred income 22 22,057,017 23,596,288
-------------- --------------
1,013,682,440 1,019,944,269
TOTAL LIABILITIES 1,099,598,769 1,125,342,585
============== ==============
TOTAL NET ASSETS 314,527,366 311,694,307
-------------- --------------
EQUITY
Share capital 15 550,834,003 550,834,003
Foreign currency translation reserve 24,575,890 18,957,528
Retained deficit (260,882,527) (258,097,224)
-------------- --------------
314,527,366 311,694,307
============== ==============
Pence Pence
-------------- --------------
Net Asset Value Per Share based
on
434,141,757 (31 March 2021: 434,141,757
shares in issue 72.45 71.80
-------------- --------------
The financial statements were approved by the Board and
authorised for issue on 22 December 2021.
The notes on pages 22 to 52 form an integral part of these
condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the period from 1 April 2021 to 30 September 2021
1 Apr 2021 1 Apr 2020
to to
Notes 30 Sep 2021 30 Sep 2020
GBP GBP
OPERATING ACTIVITIES
Loss for the period after tax (2,785,303) (9,330,235)
Interest income (105,889) (268,220)
Depreciation and amortisation of aircraft 9 55,605,841 61,333,394
Expected credit loss 22,171,247 22,969,274
Taxation (credit)/expense (64,797) 28,444
Loan interest payable 11 18,137,803 22,603,932
Fair value adjustments on financial
assets (1,051,083) 1,495,898
Foreign exchange movement (211,900) (463,367)
Amortisation of debt arrangement costs 11 772,484 848,499
Increase in accrued income (1,267,223) (1,327,474)
Decrease in deferred income (1,935,802) (2,083,368)
Increase in payables 21,235 35,376
Increase in receivables (22,515,751) (22,983,874)
Maintenance reserves received - 2,987,102
Taxation paid - (3,347)
NET CASH FROM OPERATING ACTIVITIES 66,770,862 75,842,034
------------- -------------
INVESTING ACTIVITIES
Investment in short term deposits 13 (36,587,058) (3,921,920)
Withdrawal from short term deposits 13 22,789,120 -
Interest received 105,889 268,220
NET CASH USED IN INVESTING ACTIVITIES (13,692,049) (3,653,700)
------------- -------------
FINANCING ACTIVITIES
Repayments of capital on senior loans (47,459,584) (45,233,511)
Payments of interest on senior loans (13,324,600) (17,029,357)
Payments of interest on junior loans (5,138,465) (5,595,673)
Security trustee and agency fees 11 (95,782) (103,583)
Premium paid on derivatives acquired (3,647,627) -
NET CASH USED IN FINANCING ACTIVITIES (69,666,058) (67,962,124)
------------- -------------
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 118,060,583 247,911,207
(Decrease)/increase in cash and cash
equivalents (16,587,245) 4,226,210
Effects of foreign exchange rates 1,869,566 (7,245,540)
CASH AND CASH EQUIVALENTS AT OF
PERIOD 19 103,342,904 244,891,877
------------- -------------
The notes on pages 22 to 52 form an integral part of these
condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period from 1 April 2021 to 30 September 2021
Notes Share capital Retained Foreign Total
deficit currency
translation
reserve
GBP GBP GBP GBP
Balance as at 1
April 2021 550,834,003 (258,097,224) 18,957,528 311,694,307
Loss for the period - (2,785,303) - (2,785,303)
Other comprehensive
income for the
period - - 5,618,362 5,618,362
Total comprehensive
gain for the period - (2,785,303) 5,618,362 2,833,059
Transactions with
owners of the Company:
Balance as at 30
September 2021 550,834,003 (260,882,527) 24,575,890 314,527,366
-------------- -------------- ------------- -------------
Notes Share capital Retained Foreign Total
deficit currency
translation
reserve
GBP GBP GBP GBP
Balance as at 1
April 2020 647,638,697 (74,837,259) 59,338,134 632,139,572
Loss for the period - (9,330,235) - (9,330,235)
Other comprehensive
loss for the period - - (19,251,659) (19,251,659)
Total comprehensive
loss for the period - (9,330,235) (19,251,659) (28,581,894)
Transactions with
owners of the Company:
Share redemption (98,478,292) - - (98,478,292)
Balance as at 30
September 2020 549,160,405 (84,167,494) 40,086,475 505,079,386
-------------- -------------- ------------- -------------
The notes on pages 22 to 52 form an integral part of these
condensed consolidated financial statements.
Notes to the CONDENSED Consolidated Financial Statements
For the period ended 30 September 2021
1. GENERAL INFORMATION
The consolidated financial information incorporates the results
of Amedeo Air Four Plus Limited (the "Company"), AA4P Alpha
Limited, AA4P Beta Limited, AA4P Gamma Limited, AA4P Delta Limited,
AA4P Epsilon Limited, AA4P Zeta Limited, AA4P Eta Limited, AA4P
Theta Limited, AA4P Lambda Limited, AA4P Mu Limited, AA4P Nu
Limited, AA4P Leasing Ireland Limited, AA4P Leasing Ireland 2
Limited and AA4P Xi Limited (each a "Subsidiary" and together the
"Subsidiaries") (together the Company and the Subsidiaries are
known as the "Group").
The Company was incorporated in Guernsey on 16 January 2015 with
registered number 59675. Its share capital consists of one class of
redeemable ordinary shares ("Shares"). The Shares are admitted to
trading on the SFS of the London Stock Exchange's Main Market. The
Company and the Guernsey Subsidiaries are tax residents in
Guernsey. AA4P Leasing Ireland Limited and AA4P Leasing Ireland 2
Limited are Irish tax resident trading companies.
The Company's investment objective is to obtain income returns
and a capital return for its Shareholders by acquiring, leasing and
then selling aircraft.
Since the completion of its initial public offering on 13 May
2015, the Company has acquired eight Airbus A380, two Boeing
777-300ER and four Airbus A350-900 aircraft. During the 31 March
2020 financial year, two Airbus A380 aircraft were sold to Etihad
after which the related subsidiaries were liquidated. Eight of the
remaining aircraft are leased to Emirates and four are leased to
Thai Airways. In order to complete the purchase of these aircraft,
subsidiaries of the Company entered into debt financing
arrangements which together with the equity proceeds were used to
finance the acquisition of the aircraft.
Rental income received is used to pay loan interest and regular
capital repayments of debt. US Dollar lease rentals and loan
repayments, with the exception of the four Thai aircraft, are
furthermore fixed at the outset of the Group's acquisition of an
aircraft and are very similar in amount and timing save for the
repayment of bullet and balloon repayments of principal due on the
final maturity of a loan to be paid out.
2. ACCOUNTING POLICIES
The significant accounting policies adopted by the Group are as
follows:
(a) Basis of preparation
The consolidated interim financial statements have been prepared
in conformity with the International Accounting Standard 34 Interim
Financial Reporting and applicable Guernsey law. The financial
statements have been prepared on a historical cost basis under
International Financial Reporting Standards.
This report is to be read in conjunction with the annual report
for the year ended 31 March 2021 which is prepared in accordance
with International Financial Reporting Standards and any public
announcements made by the Company during the interim reporting
period. The report does not include all of the information required
for a complete set of financial statements prepared in accordance
with IFRS Standards. However, selected accounting policies and
explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the
Group's financial position and performance since the last annual
financial statements.
The comparative period for the Consolidated Statement of
Comprehensive Income, Consolidated Statement of Cash Flows,
Consolidated Statement of Changes in Equity and the related notes
was from 1 April 2020 to 30 September 2020. The accounting policies
adopted are consistent with those of the previous financial year,
except for the adoption of new and amended standards as set out
below.
Change in comparatives
The comparative figure for bank interest received has been
reclassified to be included in finance income in the Statement of
Comprehensive Income and the presentation was changed of certain
figures in the cash flow statement (changes in accrued income and
deferred income were separately presented) in order to conform to
the current period presentation. There is no material impact of
these amendments on the financial statements.
Changes in accounting policies and disclosure
The following Standards or Interpretations have been adopted in
the current period. Their adoption has not had a material impact on
the amounts reported in these consolidated financial statements and
is not expected to have any impact on future financial periods
except where stated otherwise.
New and amended IFRS Standards that are effective for the
current period
IFRS 9, IAS 39 and IFRS 7 - Financial Instruments
IFRS 9, IAS 39 and IFRS 7 'Financial Instruments'- Interest Rate
Benchmark Reform - Phase 1 deals with pre-replacement issues
(issues affecting financial reporting in the period before the
replacement of an existing interest rate benchmark), and was
effective for annual periods beginning on or after 1 January
2020.
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 IBOR reform. The amendments
provide temporary reliefs which address the financial reporting
effects when an interbank offered rate (IBOR) is replaced with an
alternative nearly risk-free interest rate (RFR). 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 is monitoring the developments and effect and is in
the process of considering the impact of the US Dollar LIBOR reform
on the debt and derivatives. As this LIBOR will be published until
June 2023, there is no impact on the current period. The effective
date is for annual periods beginning on or after 1 January 2021.
The standard does not have a material impact on the financial
statements or performance of the Group.
IFRS 16 - Leases
IFRS 16 'Leases' - COVID-19 related rent concessions. In March
2021, the IASB amended the conditions of the practical expedient in
IFRS 16 that provides relief to lessees from applying the IFRS 16
guidance on lease modifications to rent concessions arising as a
direct consequence of the coronavirus (COVID-19) pandemic. As a
practical expedient, a lessee may elect not to assess whether a
COVID-19 related rent concession from a lessor is a lease
modification. A lessee that makes this election accounts for any
change in lease payments resulting from the COVID-19 related rent
concession the same way it would account for the change under IFRS
16, if the change were not a lease modification.
Following the amendment, the practical expedient now applies to
rent concessions for which any reduction in lease payments affects
only payments originally due on or before 30 June 2022, provided
the other conditions for applying the practical expedient are met.
The standard does not have a material impact on the financial
statements or performance of the Group.
New and Revised Standards in issue but not yet effective
IAS 16 'Property, Plant and Equipment' - Proceeds before
Intended Use. The proposed amendment would prohibit an entity from
deducting from the cost of an item of property, plant and equipment
any proceeds from selling items produced while bringing that asset
to the location and condition necessary for it to be capable of
operating in the manner intended by management. The effective date
is for annual periods beginning on or after 1 January 2022. The
standard is not expected to have a material impact on the financial
statements or performance of the Group.
IAS 1 'Presentation of financial statements' Classification of
Liabilities as Current or Non-current. The IASB issued amendments
to paragraphs 69 to 76 of IAS 1 to specify the requirements for
classifying liabilities as current or non-current. The effective
date is for annual periods beginning on or after 1 January 2023.
The amendments to the standard are not expected to have a material
impact on the financial statements or performance of the Group.
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2. In February 2021, the IASB issued amendments
to IAS 1 and IFRS Practice Statement 2 Making Materiality
Judgements, in which it provides guidance and examples to help
entities apply materiality judgements to accounting policy
disclosures. The amendments aim to help entities provide accounting
policy disclosures that are more useful by: replacing the
requirement for entities to disclose their 'significant' accounting
policies with a requirement to disclose their 'material' accounting
policies; and adding guidance on how entities apply the concept of
materiality in making decisions about accounting policy
disclosures. The effective date is for annual periods beginning on
or after 1 January 2023. The Group is in the process of assessing
the amendments to the standard but it is not expected to have a
material impact on the financial statements or performance of the
Group.
Definition of Accounting Estimates - Amendments to IAS 8. In
February 2021, the IASB issued amendments to IAS 8, in which it
introduces a new definition of 'accounting estimates'. The
amendments clarify the distinction between changes in accounting
estimates and changes in accounting policies and the correction of
errors. Also, they clarify how entities use measurement techniques
and inputs to develop accounting estimates.
The amended standard clarifies that the effects on an accounting
estimate of a change in an input or a change in a measurement
technique are changes in accounting estimates if they do not result
from the correction of prior period errors. The previous definition
of a change in accounting estimate specified that changes in
accounting estimates may result from new information or new
developments. Therefore, such changes are not corrections of
errors. This aspect of the definition was retained by the IASB. The
effective date is for annual periods beginning on or after 1
January 2023. The standard is not expected to have a material
impact on the financial statements or performance of the Group as
the amendment is in line with current treatment by the Group.
IAS 37 - Onerous Contracts. In May 2020, the IASB issued
amendments to IAS 37 Provisions, Contingent Liabilities and
Contingent Assets to specify which costs an entity needs to include
when assessing whether a contract is onerous or loss-making. The
amendments apply a 'directly related cost approach'. The costs that
relate directly to a contract to provide goods or services include
both incremental costs (e.g., the costs of direct labour and
materials) and an allocation of costs directly related to contract
activities (e.g., depreciation of equipment used to fulfil the
contract as well as costs of contract management and supervision).
General and administrative costs do not relate directly to a
contract and are excluded unless they are explicitly chargeable to
the counterparty under the contract. The effective date is for
annual periods beginning on or after 1 January 2022. The standard
is not expected to have a material impact on the financial
statements or performance of the Group.
IFRS 17 Insurance Contracts. IFRS 17 applies to all types of
insurance contracts (i.e., life, non-life, direct insurance and
re-insurance), regardless of the type of entities that issue them,
as well as to certain guarantees and financial instruments with
discretionary participation features. A few scope exceptions will
apply. The overall objective of IFRS 17 is to provide an accounting
model for insurance contracts that is more useful and consistent
for insurers. The effective date is for annual periods beginning on
or after 1 January 2023. The standard is not expected to have a
material impact on the financial statements or performance of the
Group.
IAS 12 - Deferred Tax related to Assets and Liabilities arising
from a Single Transaction. In May 2021, the Board issued amendments
to IAS 12, which narrow the scope of the initial recognition
exception under IAS 12, so that it no longer applies to
transactions that give rise to equal taxable and deductible
temporary differences. The effective date is for annual periods
beginning on or after 1 January 2023. The standard is not expected
to have a material impact on the financial statements or
performance of the Group.
(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.
A deferred tax asset is recognised for unused tax losses, tax
credits and deductible temporary differences, to the extent that it
is probable that future taxable profits will be available against
which they can be utilised. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
The Company and the Guernsey Subsidiaries have been assessed for
tax at the Guernsey standard rate of 0%. Since AA4P Leasing Ireland
Limited and AA4P Leasing Ireland 2 Limited are Irish tax resident
trading companies, they will not be subject to Guernsey tax, but
their net lease rental income earned (after tax deductible
expenditure) will be taxable as trading income at 12.5% under Irish
tax regulations. Please refer to note 21 for more information.
(d) Share capital
Shares are classified as equity. Incremental costs directly
attributable to the issue of Shares are recognised as a deduction
from equity.
(e) Interest income and expenses
Interest income and expenses are accounted for on an effective
interest rate basis.
(f) Foreign currency translation
The currency of the primary economic environment in which the
Company operates (the functional currency) is Great British Pounds
("GBP") which is also the presentation currency. The Subsidiaries
of the Company all have the same functional currency being US
Dollar ("USD").
Transactions denominated in foreign currencies are translated
into GBP at the rate of exchange ruling at the date of the
transaction.
Retranslation of subsidiaries:
Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated into the functional
currency at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the
Consolidated Statement of Comprehensive Income.
On consolidation the financial statements of foreign
subsidiaries whose functional currency is not GBP are translated
into GBP as follows: statement of financial position items are
translated into GBP at the period end exchange rate; statement of
income items are translated into GBP at the exchange rates
applicable at the transaction dates or at the average exchange
rates at each respective quarter end, as long as this is not
rendered inappropriate as a basis for translation by major
fluctuations in the exchange rate during the period; unrealised
gains and losses arising from the translation of the financial
statements of foreign subsidiaries are recorded under "Translation
adjustment on foreign operations" in other comprehensive income to
be reclassified to income. The cumulative gains and losses arising
from the translation of the financial statements of foreign
subsidiaries are reclassified to profit and loss on disposal or
liquidation of foreign subsidiaries.
(g) Cash and cash equivalents
Cash at bank and short-term deposits which are held to maturity
are carried at cost. Cash and cash equivalents are defined as call
deposits, short term deposits with a term of no more than three
months from the start of the deposit and highly liquid investments
readily convertible to known amounts of cash and subject to
insignificant risk of changes in value.
(h) Segmental reporting
The Directors have overall responsibility for the Group's
activities, including investment activity and are therefore
considered the chief operating decision maker.
The Directors are of the opinion that the Group is engaged in a
single segment of business, being acquiring, leasing and selling
aircraft (together the "Assets" and each an "Asset"). The Directors
consider this appropriate due to the nature of the revenue earned
for the business as a whole from its aircraft, being lease income
from lessees predominantly as a result of passenger revenue earned
by the airlines. However the Directors have chosen to disclose
certain geographical information as per note 24.
(i) Going concern
The Directors have prepared these financial statements for the
period ended 30 September 2021 on the going concern basis. However,
the Directors have identified the matters referred to below which
may indicate the existence of one or more material uncertainties
that may cast doubt on the Group's ability to continue as a going
concern and that the Group may, as a consequence, be unable to
realise its assets and discharge its liabilities in the normal
course of business.
The Directors have considered whether the Company will remain a
going concern for the next 15 months from the period ended 30
September 2021.
While the Group is reporting a loss (before foreign exchange
gains) in the current period, it is in a net current asset position
and continues to generate strong positive operating cash flows.
The Board has reviewed plausible downside scenarios (such as
receiving no further power-by-the hour rental income from Thai) and
implemented sufficient measures, such as the temporary suspension
of dividends, in order to best position itself to settle its future
debt obligations in the short term to medium term. Additionally,
the Group has arranged with its lenders an optimal solution that
will facilitate servicing of the loans in line with the rent
received under the recently agreed lease amendments. The solution
will allow for the Group to address its expenses and its loan
obligations with the income generated.
Whilst progress has been made, the Directors remain uncertain as
to the ability of one of its lessees to maintain its liquidity in
order to comply with its' rehabilitation plan. As a result, fixed
rental receivables might not be sufficient to meet interest
payments and also principal repayments once they become due.
However, 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 nevertheless believe that the
going concern basis of accounting is appropriate although
potentially material uncertainties outside of the Board's control
remain.
The Board will continue to monitor actively the financial impact
on the Company and its Group resulting from the evolving position
with its aircraft lessees and lenders whilst bearing in mind its
fiduciary obligations and the requirements of Guernsey law which
determine the ability of the Company to make dividends and other
distributions.
The Group's aircraft with carrying values of GBP1,242,165,257
(31 March 2021: GBP1,270,311,380) are pledged as security for the
Group's borrowings (see note 14).
(j) Leasing and rental income
At inception or on modification of a contract that contains a
lease component, the Group allocates the consideration in the
contract to each lease component on the basis of their relative
standalone prices.
If an arrangement contains lease and non-lease components, then
the Group applies IFRS 15 to allocate the consideration in the
contract.
Rental income and advance lease payments from operating leases
are recognised on a straight-line basis over the term of the
relevant lease. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount of
the leased Asset and amortised on a straight-line basis over the
lease term. The four A350-900 aircraft have variable lease rentals,
the variable portion of which is treated as contingent rent.
Contingent rent is recognised in the period in which it is
earned.
The Deferred income represents the difference between actual
payments received in respect of the lease income (including some
received in full upfront) and the amount to be accounted for in the
accounting records on a straight line basis over the lease terms.
This liability will reduce over time as the leases continue and
approach the end of the lease terms.
Changes in lease payments that result from the terms included in
the original lease contract or in
applicable law or regulations are considered as part of the
original lease terms and conditions of the lease. If there is no
change in either the scope of or the consideration of the lease,
then the Company assumes that there is no lease modification.
Where an increase in scope occurs and the payment for this
increase in scope is commensurate, any modification will be
considered a new lease, and any remaining prepayments and accruals
are included in the accounting for the new lease. If the new lease
continues to be classified as operating, the future cash flows are
recognised on a straight line (or other systematic basis), adjusted
for any prepayments or accruals with the balance written down to
zero at the end of the lease. Where there is no lease modification,
the existing accounting policy is followed.
(k) Maintenance provision liabilities
In some of the Group's operating lease contracts, the lessee has
an obligation to make periodic payments which are calculated with
reference to utilisation of airframes, engines and other major
life-limited components during the lease. 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 and
sums received by the Group in this respect are included in cash and
cash equivalents but are not available to the Group for any other
purpose. Maintenance provisions not expected to be utilised within
one year are classified as non-current liabilities. Amounts not
refunded during the lease are recorded as lease revenue at lease
termination. Upon redelivery of the aircraft leased to Emirates at
the end of the lease, if the aircraft does not meet the return
condition set out, monetary compensation will be receivable and
accounted for as lease revenue. Where the aircraft has been
maintained and meets the return conditions, this will not be due.
Further details are given in note 20.
(l) Property, plant and equipment - Aircraft
In line with IAS 16 Property Plant and Equipment, each asset is
initially recorded at cost, being the fair value of the
consideration paid. The cost of the asset is made up of the
purchase price of the assets plus any costs directly attributable
to bringing it into working condition for its intended use. Costs
incurred by the lessee in maintaining, repairing or enhancing the
aircraft are not recognised as they do not form part of the costs
to the Group. Accumulated depreciation and any recognised
impairment losses are deducted from cost to calculate the carrying
amount of the asset.
(a) Depreciation
Depreciation is recognised so as to write off the cost of each
asset less the estimated residual value over the lease term of the
asset, using the straight line method. The depreciation method is
consistent with the depreciation method used as at 31 March 2021.
The Group will again be carrying out a full and thorough appraisal
of residual values come the next March financial year end.
Depreciation starts when the asset is available for use.
(b) Impairment
At each financial year end, 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.
(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 FVTPL as they are derivatives. The interest rate swaps
and interest rate caps do not meet the SPPI criterion (solely
payments of principal and interest) and accordingly it will be
mandatorily measured at FVTPL under IFRS 9. The Group does not
classify any derivatives as hedges in a hedging relationship.
(b) 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
Subsequent measurement of financial assets depends on the
Group's business model for managing the asset and the cash flow
characteristics of the asset. The Group classifies its financial
assets into the following measurement category:
Amortised cost: Assets that .are held for collection of
contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost.
Interest income from these financial assets is included in finance
income using the effective interest rate method. Any gain or loss
arising on derecognition is recognised directly in the Consolidated
Statement of Comprehensive Income and presented in other gains /
(losses), together with foreign exchange gains and losses.
Provision for impairment losses are presented as 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 expected credit losses
(ECLs) on financial assets measured at amortised cost. The Group
measures loss allowances at an amount equal to lifetime ECL. Loss
allowances for trade debtors and contract assets are always
measured at an amount equal to lifetime ECL. For all other
financial instruments, expected credit losses are measured at an
amount equal to the 12 month expected credit losses.
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition and when
estimating ECL, the Group considers reasonable and supportable
information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information
and analysis, based on the Group's historical experience and
informed credit assessment and including forward-looking
information.
The impairment methodology applied depends on whether there has
been a significant increase in credit risk.
As per IFRS 9, a receivable has a low credit risk if:
-- It has a low risk of default;
-- The borrower has a strong capacity to meet its contractual
cash flow obligations in the near term; and
-- Adverse changes in economic and business conditions in the
longer term might, but will not necessarily, reduce the ability of
the borrower to fulfil its obligations.
ECLs are a probability-weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the
entity in accordance with the contract and the cash flows that the
Group expects to receive). ECLs are discounted at the effective
interest rate of the financial asset. The gross carrying amount of
a financial asset is written off (either partially or in full) to
the extent that there is no realistic prospect of recovery.
For trade and other receivables, the Group applies the
simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition of the
receivables.
Refer to note 12 for provision for impairment with respect to
trade and other receivables.
(n) Non-derivative financial liabilities
Financial liabilities consist of payables, security deposits and
borrowings. The classification of financial liabilities at initial
recognition will be at amortised cost to the extent it is not
classified at FVTPL. All financial liabilities are initially
measured at fair value, net of transaction costs. All financial
liabilities are recorded on the date on which the Group becomes
party to the contractual requirements of the financial
liability.
Amortised cost: Interest expenses from financial liabilities is
included in finance costs using the effective interest rate method.
Any gain or loss arising on derecognition is recognised directly in
the Consolidated Statement of Comprehensive Income and presented in
other gains / (losses), together with foreign exchange gains and
losses.
The effective interest method is a method of calculating the
amortised cost of the financial liability and of allocating
interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash
payments through the expected life of the financial liability, to
the net carrying amount on initial recognition.
Associated costs are subsequently amortised on an effective
interest rate basis over the life of the loan and are shown net on
the face of the Consolidated Statement of Financial Position over
the life of the lease.
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 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 non-substantial),
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 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.
(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.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those described in the last annual
financial statements. As such only the significant judgements and
estimates are included that are significant to an understanding of
the changes in the Group's financial position and performance since
the last annual financial statements.
KEY SOURCES OF ESTIMATION UNCERTAINTY
Residual value of Aircraft used in depreciation calculation
As described in note 2(l), the Group depreciates the Assets on a
straight line basis over the term of the lease after taking into
consideration the estimated residual value. IAS 16 Property, Plant
and Equipment requires residual value to be determined as an
estimate of the amount that the Group would currently obtain from
disposal of the Asset, after deducting the estimated costs of
disposal, if it were of the age and condition expected at the end
of the lease.
The Directors are unable to make a direct market comparison in
making this estimation, as currently there are no aircraft of a
similar type of sufficient age and/or there is minimum to no public
secondary market trading data available. After consulting with the
Asset Manager, the Directors have concluded that a forecast market
value using Minimum Return Conditions ("MRC") values (determined
annually from three independent expert aircraft valuers) for the
A380 aircraft at the end of the lease (excluding inflationary
effects) best approximates residual value.
MRC refers to minimum return conditions per the lease contracts
whereby the aircraft is returned in the specified minimum life
condition and includes estimated monetary compensation from
Emirates for the return of the A380s in that specified condition
upon the end of the lease. No other conditions exist.
In estimating residual value for the A350's and Boeing 777-300ER
aircraft, the Directors have made reference to forecast market
values using base values (excluding inflationary effects) for the
aircraft obtained from three independent expert aircraft valuers.
Base value is the appraiser's opinion of the underlying economic
value of an aircraft, in an open, unrestricted, stable market
environment with a reasonable balance of supply and demand. Full
consideration is assumed of its "highest and best use" given the
fact that the aircraft are held for use in a leasing business. An
asset's base value is determined using the historical trend of
values and in the projection of value trends and presumes an
arm's-length, cash transaction between willing, able, and
knowledgeable parties, acting prudently, with an absence of duress
and with a reasonable period of time available for marketing. In
the appraisers' valuations, the base value of an aircraft excludes
reconfiguration costs and assumes the physical condition is average
for an asset of its type and age and that all maintenance
requirements and schedules have been met.
The estimation of residual value remains subject to uncertainty.
If a reasonable possible change in residual value in USD terms, had
for instance, decreased by 20% with effect from the beginning of
this period, the net loss before exchange gains for the period
would have increased and closing shareholders' equity would have
decreased by approximately GBP6.19 million (30 September 2020:
GBP8.76 million). An increase in residual value by 20% would have
had an equal but opposite effect. This reflects the range of
estimates of residual value that the Directors believe would be
reasonable at this time.
Impairment
Factors that are considered important which could trigger an
impairment review include, but are not limited to, significant
decline in the market value beyond that which would be expected
from the passage of time or normal use, significant changes in the
technology and regulatory environments, evidence from internal
reporting which indicates that the economic performance of the
asset is, or will be, worse than expected. The Board together with
the Asset Manager decided that it was prudent to conduct an
impairment test in the year ended 31 March 2021
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.
The Board has considered the book value of its Aircraft and
discussed whether in light of recent announcements since 1 April
2021, whether an impairment review needs to be carried out again at
this juncture. On the advice of its Asset Manager, the conclusion
reached was that whilst it would be wise not to lay too great a
reliance on the current carrying book value as a measure of net
asset value for investment purposes, there were still too few new
data points available on which a new appraisal post 31 March 2021
can be relied on at the 30 September 2021 period end. During the
six months that have passed since then, there have been no
significant developments within the market that would impact the
value of the company's assets, such as i) increased lockdown/travel
restrictions, ii) increased aircraft retirements or even iii)
introduction of new technology that would lead to increased
competition to the Company's assets. Similarly, there has been no
change to the status of the Company's lessees, which would
adversely impact operations or the income received by the Company.
These factors considered, there have been no specific triggering
events that would require further impairment review. The Group will
again be carrying out a full and thorough appraisal of residual
values come the next March financial year end.
The Directors have also considered that market capitalisation at
period end of GBP102,023,313 (31 March 2021: GBP104,194,022) is
below Net Asset value of GBP314,539,775 and have concluded that no
impairment charge is necessary due to the fact that impairment will
be performed at the next financial year end using the inputs from
competent aircraft appraisers. Market capitalisation also reflects
psychology of market participants which is not relevant for
aircraft impairment assessment at period end .
Modification of borrowings
During the period, amended loan agreements have been signed for
the loans held with the lenders of the Thai aircraft. Based on the
terms and conditions of the agreements, the effective date of the
loan amendments is 31 July 2021.
In addition to the quantitative tests as per IFRS 9, the Group
also considers the new agreed loan terms in its assessment of loan
modifications. No adjustment has been raised with respect to these
modifications in the current period as the Group considers the
impact not to be material as at period end.
The costs in relation to entering into the interest rate cap
agreements have been recognised separately as part of the cost of
the derivatives.
The loans with respect to the Thai aircraft are reflected at
amortised cost at the 30 September 2021 period end.
4. RENTAL INCOME
1 Apr 2021 1 Apr 2020
To To
30 Sep 2021 30 Sep 2020
GBP GBP
US Dollar based rent income 74,885,362 83,244,474
Revenue earned but not yet received 1,225,136 1,272,105
Revenue received but not yet earned (44,460) (84,231)
------------ ------------
76,066,038 84,432,348
Amortisation of advanced rental
income (US Dollar) 2,013,666 2,207,041
------------ ------------
78,079,704 86,639,389
British Pound based rent income 17,345,575 17,296,815
Revenue earned but not yet received 42,087 55,369
Revenue received but not yet earned (33,404) (39,442)
------------ ------------
17,354,258 17,312,742
Total rental income 95,433,962 103,952,131
------------ ------------
Rental income is derived from the leasing of the Assets. US
Dollar based rent represents rent received in USD and British Pound
based rent represents rent received in "GBP". Rental income
received in USD is earned by the subsidiaries and is consolidated
by translating it into the presentation currency (GBP) at the
average rate for the period.
An adjustment has been made to spread the actual total income
receivable over the term of the lease on an annual basis. In
addition, advance rentals received have also been spread over the
full term of the leases. The four A350-900 aircraft have variable
lease rentals, the variable portion of which is treated as
contingent rent. Contingent rent is recognised in the period in
which it is earned.
The contingent rent including PBH rent for the period ended 30
September 2021 is GBP646,159 (30 September 2020: GBP547,014).
Refer to note 24 for information on geographical revenue.
5. OPERATING EXPENSES
1 April
1 April 2021 2020
to to
30 Sep 2021 30 Sep 2020
GBP GBP
Corporate and shareholder adviser
fee 43,671 1,239,061
Asset management fee 1,393,138 2,527,331
Administration fees 212,557 238,034
Bank charges 3,850 3,568
Registrar's fee 6,349 8,020
Audit fee 70,349 53,322
Directors' remuneration 139,153 134,532
Director's' and Officers' insurance 138,524 44,227
Legal and professional expenses 897,219 371,656
Annual regulatory fees 7,632 9,154
Sundry costs 23,410 29,047
Cash management fee 29,707 76,561
2,965,559 4,734,513
============= ============
6. DIRECTORS' REMUNERATION
The directors' fees are GBP61,500 (30 September 2020: GBP61,500)
per annum with the Chairman receiving an additional fee of
GBP15,375 (30 September 2020: GBP15,375) per annum and the Chairman
of the audit committee an additional GBP7,687 (30 September 2020:
GBP7,687) per annum.
7. DIVIDS IN RESPECT OF SHARES
Dividends of GBPNil have been paid in the period (30 September
2020: GBPNil). On 1 December 2021 the Company announced its
intention to recommence the payment of Quarterly dividends in
January 2022.
8. LOSS PER SHARE
Loss per Share is based on the loss for the period of
GBP2,785,303 (30 September 2020: loss of GBP9,330,235) and
434,141,757 shares (30 September 2020: 639,910,292 shares) being
the weighted average number of Shares in issue during the
period.
There are no dilutive instruments and therefore basic and
diluted Loss per Share are identical.
9. PROPERTY, PLANT AND EQUIPMENT - AIRCRAFT
Aircraft Aircraft
30 Sep 2021 31 Mar 2021
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 33,009,871 249,104,624
-------------- --------------
Cost at beginning of period/year 1,969,109,939 2,185,204,692
Translation adjustment on foreign
operations-current year* 45,157,709 (216,094,753)
-------------- --------------
Cost as at period/year end 2,014,267,648 1,969,109,939
-------------- --------------
30 Sep 2021 31 Mar 2021
GBP GBP
ACCUMULATED DEPRECIATION, IMPAIRMENT AND AMORTISATION
Opening balance 698,798,109 470,695,842
-------------- --------------
Depreciation for the current period/year
based on previous year residual
values 55,226,545 117,811,781
Amortisation of acquisition costs
on aircraft 379,296 756,519
Adjustment due to change in estimate - 18,598,802
Net depreciation charge on all aircraft
for the period/year 55,605,841 137,167,102
Disposals - -
Translation adjustment on foreign
operations* 17,698,441 (60,416,607)
-------------- --------------
Accumulated depreciation as at period/year
end 772,102,391 547,446,337
-------------- --------------
Adjustment due to impairment - 152,115,323
Translation adjustment on foreign
operations* - (763,551)
Accumulated depreciation and impairment
as at period/year end 772,102,391 698,798,109
Carrying amount - opening balance 1,270,311,830 1,714,508,850
============== ==============
Carrying amount as at period/year
end 1,242,165,257 1,270,311,830
============== ==============
*Translation adjustment on foreign operations
The Group believes that the use of forecast market values
excluding inflation best approximates residual value as required
per IAS 16 Property, Plant and Equipment (refer to note 3). In 2019
the decision was made by the Board to re-designate the functional
currency of the subsidiaries to USD and to classify them as foreign
operations. Therefore the carrying values of the aircraft in the
subsidiaries in USD have been re-translated at the closing Sterling
/ US Dollar exchange rate at 30 September 2021 (and 31 March 2021)
for consolidation purposes through "Translation adjustment on
foreign operations".
Financing of aircraft
In order to complete purchases of the aircraft, subsidiaries of
the Company have entered into debt financing agreements with a
senior fully amortising loan and junior balloon loan (see note 14).
The Company used the equity proceeds (see note 15) in addition to
the finance agreements to finance the acquisition of the
aircraft.
The Group's aircraft with carrying values of GBP1,242,165,257
(31 March 2021: GBP1,270,311,830) are pledged as security for the
Group's borrowings (see note 14).
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.
Capital Commitments
The Group currently has no capital commitments as at period
end.
Impairment
Refer to note 3 for consideration by the Group with respect to
an impairment test for the period.
Change in estimate
The Group conducted a review on the aircraft held at 31 March
2021, which resulted in changes in the residual value of the
aircraft at the end of the lease. The effect of these changes on
depreciation are included in the 31 March 2021 reconciliation of
accumulated depreciation and amortisation table above where the
depreciation before and after the residual value adjustment is
noted.
10. FINANCE INCOME
1 April 1 April
2021 to 2020 to
30 Sep 2021 30 Sep 2020
GBP GBP
Fair value gain on derivatives at fair
value through profit and loss* (see
note 16) 1,051,083 -
Bank interest received 105,889 268,220
1,156,972 268,220
------------- -------------
* This is the movement in the fair value of the derivatives for
the period.
11. FINANCE COSTS
1 April 1 April
2021 to 2020 to
30 Sep 2021 30 Sep 2020
GBP GBP
Amortisation of debt arrangements costs 772,484* 848,499*
Interest payable on loan ** 18,042,021* 22,500,349*
Security trustee and agency fees 95,782 103,583
Fair value loss on derivatives at fair
value through profit and loss (see
note 16) - 1,495,898
20,197,298 24,948,329
------------- -------------
*Included in Finance costs is interest on the amortised cost
liability for the period of GBP18,814,505 (30 September 2020:
LIR23,348,848).
** This amount includes GBP1,017,914 interest paid (30 September
2020: GBP219,141 interest income) from the interest rate swaps.
12. TRADE AND OTHER RECEIVABLES
30 Sep 2021 31 Mar 2021
GBP GBP
Prepayments 267,522 125,832
Vat receivable - 6,800
------------- -------------
267,522 132,632
Trade receivables 64,211,100 40,718,920
Expected credit loss* (50,328,819) (28,021,519)
------------- -------------
13,882,281 12,697,401
14,149,803 12,830,033
============= =============
The above carrying value of receivables is deemed to be
materially equivalent to fair value, given that, apart from the
receivables from Thai Airways, the remaining trade receivables and
receivables are short term in nature.
* As at 30 September 2021 the expected lifetime losses on the
rent receivables has been reassessed by the Group. Despite the
formal completion of new lease arrangements with Thai Airways on 15
December 2021, the Group has continued to fully impair amounts
receivable under the previous lease arrangements due to the
non-payment of lease rentals by Thai Airways. The Group recognised
loss allowances for expected credit losses (see the Consolidated
Statement of Comprehensive Income), equal to the lease rentals due
under the previous arrangements. Management completed a high-level
analysis which considers both historical and forward-looking
qualitative and quantitative information, to assess the credit risk
of the receivables from Thai Airways. The security deposits payable
were utilised in full against the lease rentals due by Thai Airways
at the 31 March 2021 year end, with the remaining rental amounts
due recognised as receivable (discounted for the time value of
money) at the period end in accordance with the Thai rehabilitation
plan. The amounts receivable for prior periods were impaired in
full in the Statement of Comprehensive Income as they were
considered not recoverable. In all periods, the remaining trade
receivables and receivables at amortised cost at period end are
short-term (i.e. no longer than 12 months) and have been settled
after period end, 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 17 (c).
13. SHORT TERM INVESTMENTS
31 Mar
30 Sep 2021 2021
GBP GBP
Short term investments 36,587,058 22,789,120
36,587,058 22,789,120
============ ===========
The above investments represent certificates of deposit maturing
within 12 months and are held by HSBC Securities Services in London
under a custody agreement between Ravenscroft Cash Management
Limited 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 19
14. BORROWINGS
30 Sep 2021 31 Mar 2021
Borrowings GBP GBP
Bank loans 1,019,313,583 1,044,682,529
Unamortised arrangement fees (10,584,230) (11,126,511)
--------------- ----------------
1,008,729,353 1,033,556,018
=============== ================
Consisting of:
Senior loans ($1,087,128,313
at 30 September 2021, $1,152,560,258
at 31 March 2021 ) 806,834,136 836,218,717
Junior loans ($272,033,615
at 30 September 2021, $271,990,002
at 31 March 2021) 201,895,217 197,337,301
1,008,729,353 1,033,556,018
=============== ================
Borrowings
Non-current portion 931,272,014 936,474,385
Current portion (senior loans
only) 77,457,339 97,081,633
--------------- ----------------
1,008,729,353 1,033,556,018
Due to the non-payment of lease rentals by Thai Airways, the
Asset Manager arranged with the lenders with respect to the Thai
aircraft that debt service for the Group can be limited to interest
only on a three monthly basis. In the period July - August 2021 the
loan agreements were amended for the Group's change in repayment
schedules to the original loan agreements, as well as entry into
interest rate cap agreements for three of the Thai aircraft and an
interest rate swap with respect to one of the Thai aircraft (see
note 16). Also refer to note 3 for Modification of borrowings.
Loans with an outstanding balance of GBP800,056,056 (31 March
2021: GBP743,558,620) have fixed interest rates over the term of
the loans. Of this total, loans with an outstanding balance of
GBP333,329,849 (31 March 2021: GBP362,258,686), 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 GBP208,672,647 (31 March 2021:
GBP289,997,398) at period end are variable rate (LIBOR) with an
interest rate cap entered into during the current period (with no
associated hedge of the interest exposure in the the 2021 financial
year). The related lease rentals are also floating rate to match,
and each senior loan has a balloon capital payment on maturity. The
Group is monitoring the developments and effect and is in the
process of considering the impact of the US Dollar LIBOR reform on
the debt and derivatives. As this will be published until June
2023, there is no impact on the current period. Senior loans have
both interest and capital repayments whereas junior loans only have
interest repayments with the capital to be repaid on maturity.
All loans are taken in USD. The Company uses a combination of
fixed and variable debt loan instruments. Maturity dates are set at
12 years from delivery date or otherwise to match the corresponding
lease end date. Interest rates are approximately 5%. The aggregate
face value of the Company's loans is GBP1,479,887,190 and the
current aggregate carrying value is GBP1,008,353 at the period
end.
Transaction costs of arranging the loans have been deducted from
the carrying amount of the loans and will be amortised using EIR
over their respective lives.
15. SHARE CAPITAL
The Share Capital of the Company is represented by an unlimited
number of redeemable ordinary shares of no par value.
31 March
Issued 30 Sep 2021 2021
Number of Number of
Ordinary Ordinary
Shares Shares
Opening balance 434,141,757 642,250,000
Shares issued - 5,975,000
Shares redeemed - (214,083,243)
Total number of shares as at period
/year end 434,141,757 434,141,757
============ ==============
31 March
Issued 30 Sep 2021 2021
Ordinary Ordinary
Shares Shares
GBP GBP
Ordinary Shares
Opening balance 558,929,084 655,585,000
Shares issued - 1,822,376
Shares redeemed - (98,478,292)
Share issue costs-cumulative (7,946,303) (7,946,303)
Total share capital 550,982,781 550,982,781
============ =============
The' Company's total issued Share capital as at 30 September
2021 was 434,141,757 Shares (31 March 2021: 434,141,757 Shares),
none of which were held in treasury.
Therefore the total number of voting rights in issue was
434,141,757.
A further compulsory redemption of 86,828,274 shares occurred on
8 December 2021 on a one for five shares held basis as at 7
December 2021
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.
16. FINANCIAL INSTRUMENTS
The Group's main financial instruments comprise:
(a) Cash and cash equivalents that arise directly from the Group's operations; and
(b) Debt secured on non-current assets.
(c) Interest rate swaps and interest rate caps.
(d) Short term investments.
(e) Trade and other receivables
The Group's objective is to obtain income returns and a capital
return for its Shareholders by acquiring, leasing and then selling
aircraft.
The following table details the categories of financial assets
and liabilities held by the Group at the reporting date:
30 Sep 2021 31 Mar 2021
GBP GBP
Financial assets
Cash and cash equivalents 103,342,904 118,060,583
Short term investments 36,587,058 22,789,120
Derivatives at fair value through profit
and loss 4,102,422 -
Trade receivables* 13,882,281 12,697,401
------------ ------------
157,914,665 153,547,104
============ ============
*This amount represents rent due but not yet received and net of
expected credit losses (see note 12) and is included within
Receivables on the Statement of Financial Position.
30 Sep 2021 31 Mar 2021
GBP GBP
Financial liabilities
Payables and security deposits 142,261 121,026
Derivatives at fair value through profit
and loss 4,232,111 4,939,122
Debt payable (excluding unamortised arrangement
fees) 1,019,313,583 1,044,682,529
1,023,687,955 1,049,742,677
============== ==============
Derivative financial instruments
The following table shows the Group's derivative position as at
30 September 2021 with a comparative table as at 31 March 2021:
Financial liabilities
30 Sep 2021 31 March 2021
GBP GBP
Derivatives at fair value
through profit and loss
- USD Interest Rate Swaps 4,232,111 4,939,122
Notional amount (in GBP) 358,020,341 281,449,885
The maturity dates range from 13 April 2028 to 26 January 2036
(31 March 2021: 13 April 2028 to 21 August 2028). During the period
the Group entered into an additional Interest Rate Swap with the
lenders with respect to one of the Thai aircraft.
Financial assets
30 Sep 2021 31 March 2021
GBP GBP
Derivatives at fair value
through profit and loss
- USD Interest Rate Caps 4,102,422 -
Notional amount (in GBP)
- from 1 January 2023 211,484,873 -
As referred to in note 14 Borrowings, in respect of the other
Thai aircraft the Group entered into interest rate cap agreements
on 30 July 2021. The premium paid by the Group was GBP3,647,627 in
total during the current period, with the effective date of the
interest rate caps being 1 January 2023. The maturity dates range
from 13 July 2029 to 22 September 2029.
The increase in the fair value of the Derivatives for the period
of GBP1,051,083 (31 March 2021: increase of GBP7,844,744) is
reflected in Finance Income and Finance Costs in note 10 and 11.
The notional amount amortises in line with the underlying
liability.
17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
These half yearly financial statements do not include all
financial risk management information and disclosures required in
the annual financial statements; as such they should be read in
conjunction with the Group's annual financial statements as at 31
March 2021.
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
summed below:
(a) Capital management
The Group manages its capital to ensure its ability to continue
as a going concern while maximising return to Shareholders through
the optimisation of debt and equity balances.
The capital structure of the Group consists of debt, which
includes borrowings disclosed in note 14 and equity attributable to
equity holders, comprising issued capital, foreign currency
translation reserve and retained earnings.
The Group's Board of Directors reviews the capital structure on
a bi-annual basis. Equity includes all capital and reserves of the
Company that are managed as capital.
(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.
Rental income received in USD is used to pay loan interest and
regular capital repayments of debt (but excluding any bullet or
balloon repayment of principal), which are likewise denominated in
US Dollars. USD lease rentals and loan repayments are furthermore
fixed at the outset of the Company's life and are very similar in
amount and timing save for the repayment of bullet and balloon
repayments of principal due on the final maturity of a loan to be
paid out of the proceeds of the sale, re-lease, refinancing or
other disposition of the relevant aircraft.
The matching of lease rentals to settle these loan repayments
therefore mitigates risks caused by foreign exchange
fluctuations.
The USD/GBP exchange rate was 1.3474 at 30 September 2021
(1.3783 at 31 March 2021).
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
British Pound. 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 mitigated by transacting
with counterparties that are regulated entities subject to
prudential supervision, or with high credit ratings assigned by
international credit rating agencies.
The Group's financial assets exposed to credit risk are as
follows:
30 Sep 2021 31 Mar 2021
GBP GBP
Cash and cash equivalents 103,342,904 118,060,583
Short term investments 36,587,058 22,789,120
Derivatives at fair value
through profit and loss 4,102,242 -
Trade receivables 64,211,100 40,718,920
Expected credit loss (50,328,819) (28,021,519)
157,914,485 153,547,104
============= -------------
Surplus cash in the Group is held with Barclays, HSBC, Lloyds,
RBSI and Bank of Ireland, which have credit ratings given by
Moody's of P-1, P-1, P-1, P-1 and P-2 (31 March 2021: P-1, P-1,
P-1, P-1 and P-2) respectively. Surplus cash in the Subsidiaries is
held in accounts with RBSI and Westpac, which have credit ratings
given by Moody's of P-1 and P-1 (31 March 2021: P-1 and P-1)
respectively.
Short term investments relate to deposits held with Bank of
Novia Scotia, UBS, Lloyds, Credit Suisse, Santander UK, Standard
Chartered, HSBC, Cooperatieve Rabobank, BNP Paribas, Skandinaviska
Enskilda, Barclays and Canadian Imperial which all have the same
credit rating given by Moody's of P-1(31 March 2021: P-1).
The Derivative assets are at fair value and are held with the
same security and trustee agent as the related borrowings. The
security and trustee agent for the above derivates are Natixis and
the credit rating given by Moody's is P-1.
The Group has considered the effects of the expected credit loss
on cash and short term investments and is satisfied that no
expected credit loss 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.
The COVID-19 pandemic has resulted in widespread restrictions on
the ability of people to travel and so has had a material negative
effect on the airline sector, and by extension the aircraft leasing
sector. This may lead to the inability of airlines to pay rent as
they fall due.
At the inception of each lease, the Company selected a lessee
with a strong Statement of Financial Position and financial
outlook. The financial strength of Emirates and Thai Airways is
regularly reviewed by the Directors and the Asset Manager.
In the case of materialisation of the risk related to the lessee
counterparty creditworthiness, the fixed rents receivable under the
leases may not be sufficient to meet the loan interest and regular
capital repayments of debt scheduled during the life of each loan
and may not provide surplus income to pay for the Group's expenses.
For the entities that have leases with Thai Airways, t he company
has arranged with the lenders an optimal solution that will
facilitate servicing of the loan in line with the rent received
under the lease amendment documentation. The solution will allow
for the Company to address its expenses and its loan obligations
with the income generated. Refer to note 14 for more detail.
The Group's most significant counterparties are Emirates and
Thai Airways as lessees and providers of income. Both of the
Group's lessees do not currently have a credit rating.
Refer to note 2 (i) Going Concern for further details on the
current status of the Group's lessees and note 2 (k) for further
details on the maintenance reserves.
The Group has chosen to apply the simplified approach to
measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. As at 30 September 2021
the expected lifetime losses on the rent receivables has been
reassessed by the Group. Apart from the receivables from Thai
Airways, the remaining trade receivables and receivables at
amortised cost at period end have been settled after period end,
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 total amount of credit impaired receivables is GBP54,875,741
(31 March 2021: GBP32,292,753) and is the balance of lease rentals
due from Thai Airways.
(d) Liquidity Risk
Liquidity risk is the risk that the Group will encounter
difficulty in realising assets or otherwise raising funds to meet
financial commitments such as capital repayments of senior debt, as
well as junior debt at the end of the lease. The Group's main
financial commitments are its ongoing operating expenses and
repayments on loans.
Ultimate responsibility for liquidity risk management rests with
the Board of Directors.
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.
Refer to note 2 (i) Going Concern as well as note 14 for further
details on the current status of arrangements that are put in place
with lenders.
In addition to the bank loans, the Group may from time to time
use borrowings. To this end the Group may arrange an overdraft
facility for efficient cash management. The Directors intend to
restrict borrowings other than the bank loans to an amount not
exceeding 15 per cent. of the net asset value of the Group at the
time of drawdown. Borrowing facilities will only be drawn down with
the approval of the Directors on a case by case basis.
(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 GBP208,672,647 (31
March 2021: GBP289,997,398) as at period end entered into are
variable rate, with an interest rate cap entered into during the
current period (with no prior associated hedge of the interest
exposure in the 2021 financial year), although the related rentals
are also floating rate to match.
With the exception of the above-mentioned loans, the Group
mitigates interest rate risk by fixing the interest rate on the
bank loans (as well as in respect of loans with an outstanding
balance of GBP333,329,849 (31 March 2021: GBP362,258,686) as at
period end, which have an associated interest rate swap to fix the
loan interest).
If a reasonable possible change in interest rates had been 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 30 September 2021 would have been GBP806,393
(31 March 2021: GBP2,527,456) greater/lower due to an
increase/decrease in the amount of interest receivable on the bank
balances and short term investments.
18. ULTIMATE CONTROLLING PARTY
In the opinion of the Directors, the Company has no ultimate
controlling party as the Company does
not have any shareholder which holds greater than 10% of the
issued share capital of the Company.
19. CASH AND CASH EQUIVALENTS
30 Sep 2021 31 March 2021
GBP GBP
Bank balances 103,342,904 118,060,583
103,342,904 118,060,583
============ ==============
Below is a breakdown of the amounts included in cash and cash
equivalents as well as short term deposits as at 30 September
2021.
30 Sep 2021
GBP
Etihad proceeds (Distributed to shareholders on 8 December 2021) 30,000,000
Reserved for debt service obligations 37,789,781
Maintenance provisions (Refer to note 20) 56,194,289
Operational cash (held pending resolution of Thai leases to ensure Going concern status) 15,945,893
139,929,963
============
20. MAINTENANCE PROVISIONS
30 Sep 2021 31 March
2021
GBP GBP
Balance at 1 April 54,934,474 59,444,834
Increase for the period/year - 1,520,757
Translation adjustment on foreign
operations 1,259,815 (6,031,117)
Balance at period end 56,194,289 54,934,474
============ ============
The maintenance reserve liabilities are held in relation to
funds received at the period end for the timely and faithful
performance of the lessees' obligations under the lease agreements
for the four A350-900 aircraft. Amounts accumulated in the
maintenance reserve will be repaid only as re-imbursements for
actual maintenance expenses incurred by the lessee. The effect of
discounting the provisions is not considered material. Refer to
note 2(k) for accounting policies adopted on the maintenance
reserves.
The table below details the expected utilisation of maintenance
reserves.
1-3 3-12 1-2 2-5 Over 5 Total
Months Months Years Years Years
GBP GBP GBP GBP GBP GBP
30 Sep 2021 - 72,991 35,093,624 10,083,664 10,944,010 56,194,289
31 March
2021 - - 44,102,813 133,004 10,698,657 54,934,474
21. TAX
Irish tax is charged at 12.5% on each of the AA4P Leasing
Ireland Limited and AA4P Leasing Ireland 2 Limited subsidiaries.
The Company and the Guernsey Subsidiaries have been assessed for
tax at the Guernsey standard rate of 0%. Since AA4P Leasing Ireland
Limited and AA4P Leasing Ireland 2 Limited are Irish tax resident
trading companies, they will not be subject to Guernsey tax, but
their net lease rental income earned (after tax deductible
expenditure) will be taxable as trading income at 12.5% under Irish
tax regulations.
No deferred tax asset has been raised on the tax losses of AA4P
Leasing Ireland 2 Limited in the current period.
22. ACCRUED AND DEFERRED INCOME
The accrued and deferred income represents the difference
between actual payments received in respect of the lease income
(including some received in full upfront) and the amount to be
accounted for in the accounting records on a straight line basis
over the lease terms. The Directors have assessed the
recoverability of accrued income and concluded no impairment is
required. The accrued and deferred income consists of the
following:
30 Sep 2021 31 March 2021
GBP GBP
Accrued income 13,712,617 13,045,326
Deferred income (30,300,755) (31,791,945)
============= ==============
23. RELATED PARTY TRANSACTIONS AND SIGNIFICANT CONTRACTS
Significant contracts
Amedeo Limited ("Amedeo") is the Group's Asset Manager.
During the period, the Group incurred GBP1,387,356 (30 September
2020: GBP2,521,812) of fees with Amedeo, of which GBP Nil (31 March
2021: GBPNil) was outstanding to this related party at 30 September
2021. This fee is included under "Asset management fee" in note
5.
Following the disposal of the "IPO Assets" (being collectively
the first four assets purchased), the Company shall pay to Amedeo
disposition fees calculated as detailed in the prospectus, which
can be found on the Group's website. Fees range from 1.75% to 3% of
the sale value. The fee for the remaining eight aircraft is 3%.
Amedeo Services (UK) Limited ("Amedeo Services") is the Group's
Liaison and Administration Oversight Agent (the agent is appointed
to assist with the purchase of the aircraft, the arrangement of
suitable equity and debt finance and the negotiation and
documentation of the lease and financing contracts).
During the period, the Group incurred GBP5,782 (30 September
2020: GBP5,519) of fees with Amedeo Services. As at 30 September
2021 GBPNil (31 March 2021: GBPNil) was outstanding. This fee is
included under "Asset management fee" in note 5.
JTC Fund Solutions (Guernsey) Limited is the Company's
administrator. During the period the Group incurred GBP212,557 (30
September 2020: GBP238,034) of costs with JTC Fund Solutions
(Guernsey) Limited, of which GBP50,242 (31 March 2021: GBP49,264)
was outstanding as at 30 September 2021.
Related parties
The Board are considered to be key management personnel. Refer
to the Board of Directors on page 11. Refer to Note 6 where
Directors' remuneration has been disclosed.
24. 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 following geographical analysis of the Group is based
on the location of the lessee, and is given for information
only.
Geographical analysis
30 Sep 2021 Middle East Asia Pacific Total
GBP GBP GBP
Rental income 72,225,246 23,208,716 95,433,962
============ ============= ==============
Net book value - aircraft 895,271,920 346,893,337 1,242,165,257
============ ============= ==============
30 Sep 2020 Middle East Asia Pacific Total
GBP GBP GBP
Rental income 77,453,145 26,498,986 103,952,131
============ ============= ==============
Net book value - aircraft
at 31 March 2021 924,201,304 346,110,526 1,270,311,870
============ ============= ==============
Revenue from the Group's country of domicile, Guernsey, was
GBPNil (2020: GBPNil).
25. SUBSEQUENT EVENTS
On 16 December 2021 the Company announced that on 14 December
2021 the lease amendments were approved by the Thai Airways Plan
Administrator. On 15 December 2021, the lease restructurings were
executed. Under the terms of the restructured leases, Thai Airways
pays rent on a power by the hour basis ("PBH") until December 2022
and from January 2023 the leases will switch to fixed monthly
payments. The Company also announced that it and its lenders had
agreed new arrangements for debt service in line with the terms of
the new lease terms in July 2021. Under the terms of the
restructured debt, any surplus rent in excess of debt service, and
agreed cost contribution to the Company, will be applied towards
principal amortisation.
On 1 December 2021 the Company announced that it intends to
return to Shareholders an aggregate amount of GBP30 million on 8
December 2021 (the "Redemption Date") for shareholders on the
register of members as at close of business on 7 December 2021
("Record Date"), by way of a partial compulsory redemption (the
"Redemption") of the ordinary shares ("Shares") in the capital of
the Company. Pursuant to the Redemption, the Company will redeem
one Share for every five existing Shares of Shareholders on the
register of members as at close of business on the Record Date,
resulting in the redemption of 86,828,274 Shares in aggregate.
Consequently, the Redemption was effected at 34.55 pence per Share.
No fractions of Shares were redeemed and the number of Shares to be
redeemed for each Shareholder was rounded down to the nearest whole
number of Shares, as appropriate. All redemption proceeds were paid
in pounds sterling using the existing mandate record held on file
on or around 15 December 2021.
There were no other material subsequent events since the period
end and up to the date of approval of the consolidated financial
statements.
Key Advisers and Contact Information
----------------------------------------------------------------------------
Directors Registered Office of the Company
Robin Hallam (Chairman) Ground Floor
David Gelber (Senior Independent Dorey Court
Director) Admiral Park
Laurence Barron St Peter Port
Steve Le Page (Audit Committee Guernsey GY1 2HT
Chair)
Mary Gavigan Telephone: +44 (0)1481 702400
Contact details
Robin.Hallam@aa4plus.com
David.Gelber@aa4plus.com
Laurence.Barron@aa4plus.com
Steve.LePage@aa4plus.com
Mary.Gavigan@aa4plus.com
-------------------------------------
Asset Manager Liaison and Administration Oversight
Amedeo Limited Agent
The Oval Amedeo Services (UK) Limited
Shelbourne Road 29-30 Cornhill
Ballsbridge London
Dublin 4 England EC3V 3NF
Ireland
-------------------------------------
Administrator and Secretary Corporate Broker
JTC Fund Solutions (Guernsey) Liberum Capital Limited
Limited Ropemaker Place
Ground Floor 25 Ropemaker Street
Dorey Court London, EC2Y 9LY
Admiral Park
St Peter Port
Guernsey GY1 2HT
Telephone: +44 (0)20 3100 2000
Telephone: +44 (0)1481 702400
-------------------------------------
Registrar, Paying Agent and Transfer UK Transfer Agent
Agent JTC Registrars (UK) Limited
JTC Registrars Limited The Scalpel
Ground Floor 18th Floor
Dorey Court 52 Lime Street
Admiral Park London
St Peter Port England EC3M 7AF
Guernsey GY1 2HT
Telephone: +44 (0)1481 702 400
-------------------------------------
KEY ADVISERS AND CONTACT INFORMATION (Continued)
Auditor Advocates to the Company (as
KPMG to Guernsey
1 Harbourmaster Place law)
IFSC Carey Olsen
Dublin 1 Carey House
D01 F6F5 Les Banques
Ireland St Peter Port
Guernsey GY1 4BZ
Solicitors to the Company (as Solicitors to the Company (as
to English law) to asset acquisition, financing
and leasing documentation)
Clifford Chance LLP
10 Upper Bank Street
Herbert Smith Freehills LLP London
Exchange House England
Primrose Street E14 5JJ
London
England Norton Rose Fulbright LLP
EC2A 2EG 3 More London Riverside
London
England
SE1 2AQ
---------------------------------
GLOSSARY
DEFINED TERMS
The following list of defined terms is not intended to be an
exhaustive list of definitions, but provide a list of the defined
terms used in this report.
Administrator JTC Fund Solutions (Guernsey) Limited
AIC The Association of Investment Companies
-------------------------------------------------------
AIC Code The AIC Code of Corporate Governance
-------------------------------------------------------
Articles The Company's articles of incorporation
-------------------------------------------------------
ASKs Available seat kilometres
-------------------------------------------------------
Asset Manager Amedeo Limited
-------------------------------------------------------
Asset(s) Aircraft owned by the Group
-------------------------------------------------------
ATAG The Air Transport Group
-------------------------------------------------------
Board Board of directors of the Company
-------------------------------------------------------
Company Amedeo Air Four Plus Limited
-------------------------------------------------------
Corporate Adviser Liberum Capital Limited
-------------------------------------------------------
DGTRs The FCA's Disclosure Guidance and Transparency
Rules
-------------------------------------------------------
ESG Environmental, social and governance
-------------------------------------------------------
Etihad Etihad Airways PJSC
-------------------------------------------------------
FCA Financial Conduct Authority
-------------------------------------------------------
GFSC Guernsey Financial Services Commission
-------------------------------------------------------
Group The Company and its wholly owned subsidiaries
-------------------------------------------------------
IAS International Accounting Standard
-------------------------------------------------------
IATA International Air Transport Association
-------------------------------------------------------
IEV Independent Expert Valuers
-------------------------------------------------------
IFRS International Financial Reporting Standards
-------------------------------------------------------
ISTAT International Society of Transport Aircraft Trading
-------------------------------------------------------
Law The Companies (Guernsey) Law, 2008, as amended
-------------------------------------------------------
Registrar JTC Registrars Limited
-------------------------------------------------------
RPKs Revenue passenger kilometres
-------------------------------------------------------
Secretary JTC Fund Solutions (Guernsey) Limited
-------------------------------------------------------
SFS Specialist Fund Segment of the London Stock Exchange's
Main Market
-------------------------------------------------------
Shares Redeemable ordinary shares
-------------------------------------------------------
SID Senior Independent Director
-------------------------------------------------------
Thai Airways Thai Airways International Public Company Limited
-------------------------------------------------------
UK Code The UK Corporate Governance Code, 2018
-------------------------------------------------------
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END
IR BIBDDXBDDGBD
(END) Dow Jones Newswires
December 23, 2021 01:59 ET (06:59 GMT)
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