REG - Amedeo Air Four Plus - Half-year Report
23/12/2021 07:00
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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
(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 (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
END 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
Trading SFS
Ticker AA4
SEDOL BKY41C6
ISIN GG00BMZQ5R81(Effective from 8 December
2021)
LEI GG00BKY41C61(Prior to compulsory redemption on 8 December 2021)
21380056PDNOTWERG107
Reporting Currency Sterling
Launch Date / Share Price 13 May 2015 / 100 pence
Share Price 23.50 pence (as at 30 September 2021)
28.50 pence (as at 20 December 2021)
Market Capitalisation GBP104 million (as at 30 September 2021)
GBP98.98 million (as at 20 December 2021)
Dividend Payment Dates January, April, July, October
Year End 31 March
Stocks & Shares ISA Eligible
Aircraft Registration Numbers A6-EEY, A6-EOB, A6-EOM, A6-EOQ, A6-EOV,
A6-EOX, A6-EPO, A6-EPQ, HS-THF, HS-THG, HS-THH, HS-THJ
Website www.aa4plus.com (http://www.aa4plus.com)
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
£30,000,000 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 Manager's Report
On the invitation of the Directors of the Company, the following commentary has been provided by Amedeo
Limited as Asset 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 for shareholders of the Company but
is not attributable to the Company.
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 Date Original Lease Expiry Date Flight Hours Flight Cycles
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 17,707 2,799
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 16,110 2,543
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
£98.98 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 £98.5 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 £30m 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 Directors 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
INDEPENDENT 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 14,691,315 14,914,951
exchange gains
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)
2,833,059 (28,581,894)
Total comprehensive income/(loss) for the period
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 72.45
shares in issue 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
Notes 1 Apr 2021 to 1 Apr 2020 to
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 END 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 deficit Foreign currency translation reserve Total
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 deficit Foreign currency translation reserve Total
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 £1,242,165,257 (31
March 2021: £1,270,311,380) 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 £6.19 million (30
September 2020: £8.76 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
£102,023,313 (31 March 2021: £104,194,022) is below Net Asset value of
£314,539,775 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 £646,159 (30 September 2020: £547,014).
Refer to note 24 for information on geographical revenue.
5. OPERATING EXPENSES
1 April 2021 1 April 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 £61,500 (30 September 2020: £61,500) per annum with
the Chairman receiving an additional fee of £15,375 (30 September 2020:
£15,375) per annum and the Chairman of the audit committee an additional
£7,687 (30 September 2020: £7,687) per annum.
7. DIVIDENDS IN RESPECT OF SHARES
Dividends of £Nil have been paid in the period (30 September 2020: £Nil).
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 £2,785,303 (30
September 2020: loss of £9,330,235) 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 55,226,545 117,811,781
values
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
- 152,115,323
Adjustment due to impairment
Translation adjustment on foreign operations* - (763,551)
Accumulated depreciation and impairment as at period/year end 772,102,391 698,798,109
1,270,311,830 1,714,508,850
Carrying amount - opening balance
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 £1,242,165,257 (31 March 2021:
£1,270,311,830) 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 2021 to 1 April 2020 to
30 Sep 2021 30 Sep 2020
GBP GBP
Fair value gain on derivatives at fair value through profit and loss* (see 1,051,083 -
note 16)
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 2021 to 1 April 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 - 1,495,898
16)
20,197,298 24,948,329
*Included in Finance costs is interest on the amortised cost liability for the
period of £18,814,505 (30 September 2020: ₤23,348,848).
** This amount includes £1,017,914 interest paid (30 September 2020:
£219,141 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
30 Sep 2021 31 Mar 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 31 806,834,136 836,218,717
March 2021 )
Junior loans ($272,033,615 at 30 September 2021, $271,990,002 at 31 March 201,895,217 197,337,301
2021)
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 £800,056,056 (31 March 2021:
£743,558,620) have fixed interest rates over the term of the loans. Of this
total, loans with an outstanding balance of £333,329,849 (31 March 2021:
£362,258,686), 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
£208,672,647 (31 March 2021: £289,997,398) 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
£1,479,887,190 and the current aggregate carrying value is £1,008,353 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.
Issued 30 Sep 2021 31 March 2021
Number of Ordinary Number of 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
Issued 30 Sep 2021 31 March 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 £3,647,627 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
£1,051,083 (31 March 2021: increase of £7,844,744) 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, the 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 £54,875,741 (31 March
2021: £32,292,753) 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 £208,672,647 (31 March 2021:
£289,997,398) 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 £333,329,849 (31 March 2021:
£362,258,686) 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 £806,393 (31 March 2021: £2,527,456)
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 15,945,893
concern status)
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
- - 44,102,813 133,004 10,698,657
31 March 2021 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 £1,387,356 (30 September 2020:
£2,521,812) of fees with Amedeo, of which £ Nil (31 March 2021: £Nil) 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 £5,782 (30 September 2020: £5,519) of
fees with Amedeo Services. As at 30 September 2021 £Nil (31 March 2021:
£Nil) 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 £212,557 (30 September 2020: £238,034) of
costs with JTC Fund Solutions (Guernsey) Limited, of which £50,242 (31 March
2021: £49,264) 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 £Nil (2020:
£Nil).
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 £30 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 Director) Dorey Court
Laurence Barron Admiral Park
Steve Le Page (Audit Committee Chair) St Peter Port
Mary Gavigan Guernsey GY1 2HT
Contact details Telephone: +44 (0)1481 702400
Robin.Hallam@aa4plus.com (mailto:Robin.Hallam@aa4plus.com)
David.Gelber@aa4plus.com (mailto:David.Gelber@aa4plus.com)
Laurence.Barron@aa4plus.com (mailto:Laurence.Barron@aa4plus.com)
Steve.LePage@aa4plus.com (mailto:Steve.LePage@aa4plus.com)
Mary.Gavigan@aa4plus.com (mailto:Mary.Gavigan@aa4plus.com)
Asset Manager Liaison and Administration Oversight Agent
Amedeo Limited Amedeo Services (UK) Limited
The Oval 29-30 Cornhill
Shelbourne Road London
Ballsbridge England EC3V 3NF
Dublin 4
Ireland
Administrator and Secretary Corporate Broker
JTC Fund Solutions (Guernsey) Limited Liberum Capital Limited
Ground Floor Ropemaker Place
Dorey Court 25 Ropemaker Street
Admiral Park London, EC2Y 9LY
St Peter Port
Guernsey GY1 2HT
Telephone: +44 (0)1481 702400 Telephone: +44 (0)20 3100 2000
Registrar, Paying Agent and Transfer Agent UK Transfer Agent
JTC Registrars Limited JTC Registrars (UK) Limited
Ground Floor The Scalpel
Dorey Court 18th Floor
Admiral Park 52 Lime Street
St Peter Port London
Guernsey GY1 2HT England EC3M 7AF
Telephone: +44 (0)1481 702 400
KEY ADVISERS AND CONTACT INFORMATION (Continued)
Auditor Advocates to the Company (as to Guernsey
KPMG law)
1 Harbourmaster Place Carey Olsen
IFSC Carey House
Dublin 1 Les Banques
D01 F6F5 St Peter Port
Ireland Guernsey GY1 4BZ
Solicitors to the Company (as to English law) Solicitors to the Company (as 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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