REG - DP Aircraft I Ltd - Annual Report and Accounts
26/04/2024 07:00
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RNS Number : 1223M DP Aircraft I Limited 26 April 2024
26 April 2024
DP Aircraft I Limited (the 'Company')
Annual Report and Accounts
The Company is pleased to provide a copy of the Audited Consolidated Financial
Statements of the Company for the year ended 31 December 2023 (the "Annual
Report"), which is available from the Company's registered office and will
shortly be available to view or download from the Company's website
www.dpaircraft.com (http://www.dpaircraft.com)
For further information, please contact:
Aztec Financial Services (Guernsey)
Limited +44(0) 1481 748863
Sarah Felmingham / Chris Copperwaite
DP AIRCRAFT I LIMITED
ANNUAL REPORT AND AUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
CONTENTS
3 Fact Sheet
4 Summary
7 Highlights
9 Chairman's Statement
11 Asset Manager's Report
24 Directors
25 Directors' Report
35 Report of the Audit Committee
38 Statement of Principal Risks and Uncertainties
41 Statement of Directors' Responsibilities
43 Independent Auditor's Report to the Members of DP
Aircraft I Limited
49 Consolidated Statement of Comprehensive Income
50 Consolidated Statement of Financial Position
51 Consolidated Statement of Cash Flows
52 Consolidated Statement of Changes in Equity
53 Notes to the Consolidated Financial Statements
79 Company Information
81 Appendix 1 - Alternative Investment Fund Managers
Directive
FACT SHEET
Ticker DPA
Company Number 56941
ISIN Number GG00BBP6HP33
SEDOL Number BBP6HP3
Traded Specialist Fund Segment ('SFS') of the London Stock Exchange
SFS Admission Date 4-Oct-13
Share Price US$ 0.0625 as at 31 December 2023
Loss per Share US$ 0.01047 for the year ended 31 December 2023
Country of Incorporation Guernsey
Current Ordinary Shares in Issue 239,333,333
Administrator and Company Secretary Aztec Financial Services (Guernsey) Limited
Asset Manager DS Aviation GmbH & Co. KG
Independent Auditor KPMG Channel Islands Limited
Corporate Broker Investec Bank Plc
Aircraft Registration HS-TQD
HS-TQC
Aircraft Serial Number 35320
36110
Aircraft Type and Model B787-8
Lessees Thai Airways International Public Company Limited
('Thai Airways')
Website www.dpaircraft.com (http://www.dpaircraft.com)
SUMMARY
COMPANY OVERVIEW
DP Aircraft I Limited (the 'Company') was incorporated with limited liability
in Guernsey under the Companies (Guernsey) Law, 2008 on 5 July 2013 with
registered number 56941.
The Company was established to invest in aircraft. The Company is a holding
company, and made its investment in aircraft held through two wholly owned
subsidiary entities, DP Aircraft Guernsey III Limited and DP Aircraft Guernsey
IV Limited (collectively and hereinafter, the 'Borrowers'), each being a
Guernsey incorporated company limited by shares and one intermediate lessor
company, DP Aircraft UK Limited (the 'Lessor'), a UK incorporated private
limited company. The Company and its consolidated subsidiaries, DP Aircraft
Guernsey III Limited, DP Aircraft Guernsey IV Limited and DP Aircraft UK
Limited comprise the consolidated Group (the 'Group').
Pursuant to the Company's Prospectus dated 27 September 2013, the Company
offered 113,000,000 ordinary shares of no par value in the capital of the
Company at an issue price of US$ 1.00 per share by means of a Placing. The
Company's shares were admitted to trading on the Specialist Fund Segment
(previously the Specialist Fund Market) of the London Stock Exchange on 4
October 2013 and the Company was listed on the Channel Islands Securities
Exchange until 27 May 2015.
On 5 June 2015, the Company offered 96,333,333 ordinary shares (the 'New
Shares') of no-par value in the capital of the Company at an issue price of
US$ 1.0589 per share by means of a Placing. The Company's New Shares were
admitted to trading on the Specialist Fund Segment of the London Stock
Exchange on 12 June 2015.
On 13 July 2022 the Company raised gross proceeds of $750,000 through the
issue of 30,000,000 new ordinary shares in the capital of the Company at a
price of US$0.025 per new ordinary share. The new ordinary shares were
admitted to trading on the Specialist Fund Segment of the London Stock
Exchange on 15 July 2022.
In total there are 239,333,333 Ordinary Shares in issue with voting rights.
In addition to the equity raised above in 2013, 2015 and 2022, the Group also
utilised external debt to fund the initial acquisition of the aircraft.
Further details are given within this summary section.
INVESTMENT OBJECTIVE & POLICY
The Company and Group's investment objective is to obtain income and capital
returns for its shareholders by acquiring, leasing and then, when the Board
considers it appropriate, selling aircraft (the 'Asset' or 'Assets').
THE BOARD
The Board comprises of independent non- executive Directors (the 'Directors'
or the 'Board'). The Directors are responsible for managing the business
affairs of the Company and Group in accordance with the Articles of
Incorporation and have overall responsibility for the Company's and Group's
activities, including portfolio and risk management while the asset management
of the Group is undertaken by DS Aviation GmbH & Co. KG (the 'Asset
Manager'/ 'DS Aviation').
THE ASSET MANAGER
The Asset Manager has undertaken to provide the asset management services to
the Company and Group under the terms of an asset management agreement but
does not undertake any regulated activities for the purpose of the UK
Financial Services and Markets Act 2000.
SUMMARY (CONTINUED)
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)
The Group recognises the Paris Agreement on climate change. The Group operates
NTA ('New Technology Aircraft'); specifically Boeing 787-8's equipped with
Rolls Royce Trent-1000 engines which are 20% more fuel efficient on a
revenue-per-kilometre basis than similar comparable legacy aircraft. The
Board has taken steps to reduce its own travelling and maximises the use of
virtual meetings within the Board and with all its key service providers.
CORONAVIRUS ('COVID-19')
COVID-19 had a significant impact on the airline sector, and by extension the
aircraft leasing sector. More information is provided below and in the Asset
Manager's Report.
THAI AIRWAYS INTERNATIONAL PCL ('THAI AIRWAYS' / 'THAI')
The suspension of travel due to COVID-19 in 2020 resulted in Thai Airways
entering into business rehabilitation. The Central Bankruptcy Court approved
Thai's Business Rehabilitation plan on 15 June 2021. The rehabilitation
process is currently ongoing, please refer to the Asset Manager Report on
pages 11 to 23 for more details regarding the rehabilitation process.
The Group signed a Letter of Intent ('LOI') dated 1 March 2021 with Thai
Airways under which the parties agreed to amend the lease terms that existed
then. The actual lease agreement reflecting the terms set out in the LOI was
signed on 1 April 2022. The effective date for the lease modification was 15
June 2021.
The new lease terms provided for a power by the hour ('PBH') arrangement until
31 December 2022 (with rent payable by reference to actual monthly utilisation
of the Thai aircraft and engines), with scaled back monthly fixed lease
payments thereafter until October 2026 for aircraft MSN 36110 and December
2026 for aircraft MSN 35320 reflecting reduced market rates in the long-haul
market. The lease term can be extended for a further 3 years to October and
December 2029 respectively, with further scaled back monthly lease payments
starting from November 2026 and January 2027. The Extension Period is however
subject to agreement with the Group after consulting the Lenders. Given the
uncertainty around the lease extension, the lease terms are considered to be
the period up to October and December 2026.
A corresponding agreement was reached with the lenders as detailed below.
DEKABANK DEUTSCHE GIROZENTRALE AND TWO OTHER CONSORTIUM MEMBERS ('DekaBank')
On 6 May 2021, subsequent to the LOI being entered into by the Group and Thai
as described above, the Group and DekaBank amended and restated the existing
loan facility agreements in respect of the Thai aircraft to accommodate the
new lease terms, First Amendment and Restatement to the Loan Agreements.
Repayments of principal were deferred until after the end of the PBH
arrangement (31 December 2022), and a new repayment schedule was to be
renegotiated close to the end of the PBH arrangement.
On 7 February 2023, the Group and DekaBank entered into a Second Amendment and
Restatement to the Loan Agreement in which the parties agreed on the following
main terms:
· the total loan amount outstanding was split into two tranches:
o Facility A loan of US$ 61,144,842 made up of MSN 35320 loan of US$
31,099,453 and MSN 36110 loan of US$ 30,045,389. The Facility A loan amortizes
to a combined balloon of US$ 33,947,878 and represents the scheduled debt.
SUMMARY (CONTINUED)
DEKABANK DEUTSCHE GIROZENTRALE AND THREE OTHER CONSORTIUM MEMBERS ('DekaBank')
(CONTINUED)
o Facility B loan of US$ 35,504,024 (non-amortizing), made up of MSN 35320
loan of US$ 17,366,650 and MSN 36110 loan of US$ 18,137,374. The Facility B
loan will be settled as a balloon payment at the end of the loan term in 2026.
· USD 2.36m of surplus cash generated under the PBH period was used to
immediately repay debt on the amortizing Facility A loan in February 2023,
while an agreed cash reserve of US$ 500,000 per aircraft will be retained to
cover unforeseen costs going forward.
· the interest rate swap in place for the scheduled debt was dissolved
at no net gain or loss.
· the MSN 35320 and MSN 36110 Facility A loans bear fixed interest
rates of 6.61% and 6.89% respectively.
· the MSN 35320 and MSN 36110 Facility B loans bear fixed interest
rates of 5.26% and 5.42% respectively.
· from the monthly fixed lease rental of US$ 510,000 per aircraft
(which denotes the maximum amount the Company can earn in operations per
month), US$ 475,000 is legally restricted so that those funds are only payable
to the lenders, and US$ 35,000 per aircraft can be retained by the company to
contribute towards ongoing fixed costs of the Company.
Due to the limited liquidity position of the Group, restructuring fees
associated with the second amendment and restatement will be paid after the
eventual remarketing of the aircraft, subject to surplus sales proceeds being
realised.
IMPAIRMENT
In line with each reporting date and market capitalisation of US$ 15 million
at 31 December 2023, a detailed impairment assessment of the aircraft was
undertaken. Following this review an impairment of US$ nil (2022: US$ nil) was
booked against the aircraft. See note 3 for further details regarding the
impairment and comments under Highlights on page 7 regarding the difference
between net asset value and market capitalisation.
DISTRIBUTION POLICY
Under normal circumstances, the Group aimed to provide shareholders with an
attractive total return comprising income, from distributions through the
period of the Company's ownership of the Assets, and capital, upon any sale of
the Assets. The Company originally targeted a quarterly distribution in
February, May, August, and November of each year. The target distribution was
US$ 0.0225 per share per quarter. The dividends were targets only with no
assurance or guarantee of performance or profit forecast.
Due to the impact of COVID-19 on the aviation industry and therefore our
lessor, the Board suspended the payment of dividends from 3 April 2020 until
further notice. This suspension remains in place to date. Any lease rental
payments received by the Company in respect of the Thai aircraft are expected
to be applied exclusively towards the running costs of the Company and its
subsidiaries, and as a priority towards interest and principal repayments to
the DekaBank. Given this backdrop the Company feels that there is no
realistic prospect of the Company's shareholders receiving a dividend or other
distribution during the remaining lease period. The Board and its advisers
will continue to consult with shareholders and its advisors in the future with
a view to determining the best course of action to take for the future of the
Company.
HIGHLIGHTS
RESULTS FOR THE YEAR
Results for the year ended 31 December 2023 is a loss after tax of US$
2,505,687 (loss per share US$ 0.01). For the year ended 31 December 2022 there
was a profit after tax of US$ 7,660,823 (profit per share US$ 0.03).
The results for the year ended 31 December 2023 are mainly driven by rental
income earned of US$ 8,714,249 (2022: US$ 16,462,372) and finance costs
incurred of US$ 9,551,675 (2022: US$ 4,860,305). The increase of finance costs
is a result of an adjustment required by IFRS to reflect the modification to
the loan terms in February 2023. The adjustment for the modification to the
loans in February 2023 totalled US$ 5,042,029 and increased both finance costs
and the loans payable at the point of modification and resulted in an overall
loss for the period. This adjustment essentially recognises a loss now due to
the less favourable terms (primarily interest rate increases) under the
modified terms compared to the original terms. As a result of this adjustment,
interest will be recognised at the lower original effective interest rate as
opposed to the higher modified interest rate going forward. The decrease in
rent was due to the variable rent earned for the period ended 31 December
2022. For the period to 31 December 2023, the entity only earned fixed rental
income.
Refer to page 48 for full details of results for the period.
NET ASSET VALUE ('NAV')
The NAV for the reporting period was US$ 0.17645 per share at 31 December 2023
(2022: US$ 0.18692). NAV per share has decreased due to the loss made during
the year (see above). The NAV excluding the financial effects of the
straight-lining lease asset and the loan modification adjustment was US$
0.16018 per share at 31 December 2023 ( 2022: US$ 0.13662).
The straight-lining lease asset and the loan modification adjustment will
reduce to nil over time. The adjusted NAV and loan modification adjustment is
therefore presented to provide what the Directors consider to be a more
relevant assessment of the Group's net asset position.
As at 31 December 2023, As at 31 December 2022
US$ US$ per share US$ US$ per share
Note
NAV per the financial statements 42,230,434 0.17645 44,736,121 0.18692
Less: Straight-lining lease (10,038,709) (0.04194) (13,525,502) (0.05651)
asset 11
Add: Provision for straight lining lease asset 11 1,103,254 0.00461 1,486,453 0.00621
Add: Loan modification adjustment 6 5,042,029 0.02107 - -
(3,893,426) (0.01627) (12,039,049) (0.05030)
Adjusted NAV 38,337,008 0.16018 32,697,072 0.13662
As at 31 December 2023 the price per share was US$ 0.0625 which is
significantly lower than the NAV per share above, excluding the
straight-lining lease asset and the loan modification adjustment. The reason
for the difference is due to the market price per share reflecting other
factors such as market sentiment that cannot be accounted for in a set of
annual financial statements. The main asset in the Group, the aircraft, has
been assessed for impairment (see note 9) - with no resulting impairment for
the period. Other significant assets comprise cash and receivables whose
values are considered to be reflective of fair value due to their short-term
nature. Therefore, the low share price is not indicative of a need for further
impairment to the assets of the Group.
HIGHLIGHTS (CONTINUED)
DIVIDENDS
As previously outlined, as a result of the Coronavirus pandemic on global
aviation and particularly on its lessees; the Group suspended dividends on 3
April 2020 until further notice to help preserve liquidity. Further details on
the impact of the COVID-19 pandemic can be found within the Summary, the Asset
Manager's Report, and the Directors' Report. Furthermore, in accordance with
the second amended loan agreement with DekaBank, the Group will make no
dividend payments while loan deferrals remained outstanding under the amended
loan agreement.
OFFICIAL LISTING
The Company's shares were first admitted to trading on the Specialist Fund
Segment of the London Stock Exchange on 4 October 2013.
CHAIRMAN'S STATEMENT
I am pleased to present Shareholders with the Annual Report of the Group for
the year ended 31 December 2023.
The loss per share for the period was US$ 0.01047 compared to a profit per
share of US$ 0.03429 for the same period last year. The net asset value per
share at the period end was US$ 0.17645 compared to US$ 0.18692 at 31 December
2022. For the last six months of the year the Group made a profit of US$
1.567m.
IFRS requires rental income to be recognised on a straight-line basis over the
remaining lease period and consequently the accounting treatment has resulted
in some income being recognised earlier than would normally be the case. In
addition, IFRS requires a provision to be made against that lease income which
has been estimated based on recent credit reports on Thai. Please refer to
page 7 which explains the net impact of this on the profit for the period and
the NAV of US$ 0.17645 per share.
There has been a continued improvement in the global aviation market following
the challenges resulting from the effects of the Covid-19 (Covid) pandemic.
Recent sentiment on airline and related stocks has been more optimistic. The
Ukraine war has not had as a significant impact on the industry as was
expected. With Covid restrictions in China being lifted there is cause for
some optimism in tourism numbers from that market going forward.
It has been encouraging to see how the airline and the Thai tourist economy
has responded and rebounded from the crippling effect of the Covid years. Thai
has regained profitability and anticipates exiting administration - currently
anticipated in Q4 2024. They have also projected a potential listing return
during 2025.
Both our aircraft, HS-TQC and HS-TQD have mainly flown in the Asian region
during the year. This has also been true of the other four, Rolls Royce Trent
1000 powered 787-8 aircraft in the Thai fleet. Sector lengths flown through
the year have varied from just under two hours (Singapore and KL) to
approximately six hours (Japanese routes). Other larger aircraft in the Thai
fleet have also been serving Asian routes which at present represent the
largest passenger segment. Under the terms of industry lease arrangements
lessee's have the right to fly the routes which serve their needs. Shorter
sector lengths do not reduce the airlines responsibility to maintain the
aircraft nor in our case to return the aircraft at the lease term end in full
life condition. Our asset manager is responsible for liaison with Thai on all
operational matters and to regularly inspect our assets.
The vibrant uptick of the tourist economy has led to the airline placing both
near term orders for seven larger wide bodied aircraft (both Boeing and
Airbus) but also for bigger order sizes in the medium term. This larger
reported order of 45 Boeing 787-9's is good news as a reinforcement of Boeing
as a core fleet constituent but it has opted for GE engines rather than Rolls
Royce which power the current six 787-8's in their fleet (including both our
aircraft). The positioning of the smaller 787-8 within Thai's forward fleet
plans is not conclusively known and we, through our asset manager, will be
seeking to clarify greater detail in that regard.
Our aircraft are now operating on fixed monthly lease payments with Thai until
October/December 2026 respectively, reflecting the reduced lease rates
negotiated earlier. As previously noted, the lease term was extended by a
further 3 years to October/December 2029, with further scaled back monthly
lease payments starting from November 2026/January 2027, and the Group
retaining a right of early termination in October/December 2026 after
consultation with the Lenders.
CHAIRMAN'S STATEMENT (CONTINUED)
The current finance arrangements with our Lenders expire at the end of 2026.
In this respect the Group can therefore (i) negotiate to extend the loans with
the existing Lenders, (ii) refinance the loans with new lenders or (iii) sell
the aircraft to an investor within a time frame until the end of 2026. Any
option has to be agreed with the current Lending group and corresponding
discussions will start in October 2024. By April 2025, the Group and Lenders
have to inform Thai whether or not they will execute the early termination
option under the lease. By October 2025 the Group has to provide the Lenders
with information on the steps it is taking to refinance or to remarket the
aircraft followed by a Term sheet no later than August 2026. As an ongoing
obligation, the Group has to inform the Lenders in relation to any
negotiations and or consultation with Thai regarding any restructuring of the
Operating Lease Agreement.
Whilst there can be no absolute certainty the preferred option for the Group
is the sale of the aircraft with a lease attached which reflects improved
market terms and conditions. The current leases require the aircraft to be
returned in full life condition.
The Board and the Asset Manager remain fully committed to extract the best
value for shareholders in this process and are focussed on actions to improve
and preserve the value of the assets. The forthcoming months will allow us to
consider and review the various options and to recommend a preferred path.
Necessarily this will need to involve the proactive involvement of our
lenders, advisors and our valued lessee.
The Company believes the Boeing 787 remains an attractive asset and notes
recent transactions in the market though transparency around transaction
values is not currently available. Boeing 787 wide body production is still
behind historic levels and delayed deliveries for new aircraft are further
strengthening this demand.
The Board notes that whilst the 787 aircraft is now key to Thai, the Group's
aircraft type are the smaller 8 series and we note that all new wide bodied
aircraft Thai propose to add to their fleet are the larger 787-9 variant. The
priority of the Group will therefore be commencing discussions with Thai on
how our aircraft fit into the overall Thai fleet strategy and to what extent
existing arrangements can be enhanced for the mutual benefit of both parties.
As previously noted, there is no realistic prospect of the Company's
shareholders receiving a dividend or other distribution prior to the end of
the lease term. The key uncertainty remains the outlook for Thai, though the
position of Thai has improved considerably, the impact of inflation on the
travel industry and the knock on effect these factors may have on aircraft
values and lease rentals.
Notwithstanding there has been some unavoidable cost increases and
inflationary pressures, with respect to ongoing working capital requirements,
the Group has been able to reduce the net cash burn because some service
providers and the directors have deferred some amounts due.
In order to ensure the Group has sufficient funds to adequately finance the
period over which the Board would like to realise value for shareholders,
should an appropriate opportunity arise, a further fund raise up to $1 million
will be required in Q3 2024.
The Board and its advisers will continue consulting with investors on an
ongoing basis. I am especially grateful to the Board and our key service
providers for their continued significant support over the period and going
forward. Finally I would like to thank our Investors for their continued
support.
Jonathan Bridel
Chairman
25 April 2024
ASSET MANAGER'S REPORT
THE AIRLINE MARKET
Snapshot
"The airline industry has emerged from the shadows of the pandemic, showing
signs of robust recovery and resilience" says Jeremy Bowen, CEO at Cirium. 1
Global passenger traffic is expected to outperform pre-Covid levels in 2024
and airline revenues are expected to be about 7% higher than in 2019. 2
However, challenges such as rising inflation rates, geopolitical conflicts,
environmental pressure and supply chain issues will continue to impact the
aviation industry in 2024.
Source: IATA December 2023 3 (#_ftn3)
ASSET MANAGER'S REPORT (CONTINUED)
Source: IATA December 2023; April 2021 4 (#_ftn4)
Global
· Current Situation
o All regions benefitted from increasing passenger demand and the lifting of
Covid-19 restrictions 5
o Sluggish business travel recovery due to increasing cost management and
sustainability strategies but premium travel of leisure passengers
increased 6
o Aircraft deliveries in 2023 lower than in 2019 due to supply chain and
manufacturer issues still unsolved 7
o At the end of 2023, 13% of the global fleet was reported as stored
(including aircraft reserved for part-outs) compared to 19% at the beginning
of 2023 8
· Outlook
o 60 national elections to take place in 2024 with uncertain outcome on the
political direction 9
o Unknown impact of increasing geopolitical tensions, acts of war and
warlike operations
o The cargo market might profit from disruption of seaborne cargo and
increasing volumes but is expected to remain weak 10
o Boeing predicts that over 42,000 new aircraft (with an approximate value
of USD 8 trillion) will be needed over the next 20 years - an increase of 3.5%
compared to Boeing´s last year outlook 11
o DBRS Morningstar expects aircraft asset values and lease rates to be
strong in 2024 12
o Uncertainty regarding costs of sustainability strategies 13
ASSET MANAGER'S REPORT (CONTINUED)
Asia
· Current Situation
o Recovery lags behind other regions such as Europe and North America 14
o An increase of 131% in demand, measured in Revenue Passenger Kilometers
(RPK) and 106% in availability, measured in Available Seat Kilometers (ASK) on
full year international 2023 traffic 15
o Break-even load-factor expected for 2023 16
· Outlook
o Demand (ASK) expected to grow by over 13% in 2024 compared to 2023 17
o Recovery year 2024: passenger traffic expected to outperform
2019-levels 18
o AAPA´s (Association of Asia Pacific Airlines) Director general Subhas
Menon expects 2024 to be a successful year for Asian airlines 19
Outlook & Conclusion
The aviation industry has made good progress to completely return globally to
pre-Covid-19 levels, despite ongoing-challenges such as high inflation, supply
and maintenance facility bottlenecks as well as the rising number of
geopolitical conflicts and wars. The current aircraft shortage results mainly
from the still reduced delivery rates and the grounding of aircraft due to
various reasons such as issues with B737MAX aircraft and Pratt & Whitney
GTF engines. This situation might persist and lead to longer aircraft in
service lives and the reactivation of previously retired aircraft.
The Asia Pacific market represents about one third of global demand 20
although not having completely recovered from the pandemic, particularly
suffering from weak international markets to and from China. Other emerging
markets, such as India, offer a huge potential for growth. This in turn, might
intensify competition as new market entrants will try to benefit from such
momentum.
ASSET MANAGER'S REPORT (CONTINUED)
Considering the enormous number of new aircraft orders in 2023 shows that
airlines are confident in the rising numbers of travellers and a positive
trend of aviation transport. Increasing premium travel of leisure passengers
indicates the importance of the freedom to travel after the pandemic and the
importance of holiday trips. The current development emphasises the resilience
of the aviation industry, although this business sector will always remain
fragile to temporary downturns. One very important and significant challenge
for the aviation industry, not only from a financial perspective, is to reduce
its environmental impact and ultimately to reach zero CO(2) emissions.
Please note that all forecasts are predicated on historical facts and educated
projections. It ought to be regarded as a potential rule of thumb.
THE LESSEE - THAI AIRWAYS INTERNATIONAL PUBLIC COMPANY LIMITED
Snapshot
· Fleet of 69 aircraft in operation and 20 decommissioned aircraft in
storage 21
· Thai Airways is the market leader within Thailand´s carriers on
international routes (16% market share) while being the smallest on domestic
routes 22
· Launch of a daily flight to Istanbul (Turkey) in December 2023 23
· Yields in the third quarter 2023 were up more than 50% compared to
the same quarter 2019 24
· Stronger focus on sustainability through partnerships regarding SAF
(Sustainable Aviation Fuel) usage and commitment to use more eco-friendly
material (on-board amenity kits, new flight attendant uniforms, etc.) 25
· The largest number of tourist arrivals at Thai airports are from
Malaysia, China and South Korea 26
· Arrivals from China and Japan in 2023 had reached only 35% and 65%
respectively of 2019-levels, while inbound travel from Vietnam, Taiwan,
Indonesia, UAE and the Philippines (nearly) exceeded pre-pandemic levels 27
· Main threats result from lower economic growth in the Asia Pacific
region, a high level of inflation, volatility of oil prices and the entrance
of new market players 28
ASSET MANAGER'S REPORT (CONTINUED)
Restructuring and Rehabilitation Process since 18(th) May 2022
· Debt repayment according to the Business Rehabilitation Plan on
track 29
· Sale of six B747-400s, one A340-500, three additional unused
aircraft, five unused engines, two overseas properties and shares in a
pipeline Transportation company 30
· The integration of Thai Smile into Thai had been completed 31(st)
December 2023 and is expected to increase the carrier´s efficiency, flight
operations and fleet utilisation 31
· The carrier implemented a route expansion and fleet efficiency
improvement plan 32
· The Stock Exchange of Thailand (SET) approved to extend the time
limit to 7(th) March 2025 for Thai to eliminate the criteria for delisting
(negative equity) 33
· Thai Airways plans to exit rehabilitation by the end of 2024 34
ASSET MANAGER'S REPORT (CONTINUED)
Thai´s Financial & operational performance in brief (incl.
subsidiaries) 35
[billion THB*] 2023 2022 Change Link
Operating Revenues 161.07 105.04 + 53 %
- Passenger and Excess Baggage 132.74 74.04 + 79 %
- Freight and Mail 15.46 23.78 - 35 %
- Other Businesses 9.25 6.67 + 39% a)
- Other Income 3.62 + 562%
0.55
Operating Expenses 120.86 97.24 + 24 % b)
- Fuel and Oil 47.77 38.38 + 25 % c)
- Non-Fuel Operating Costs 73.09 58.87 + 24 % d)
Operating Result excl. One-Time Items 24.60 - 4.59
Net Result 28.10 - 0.27 e)
Capacity - ASK (million) 54,280 38,526 + 41 %
Demand - RPK (million) 43,268 26,163 + 65 %
Load Factor 79.7 % 67.9 % + 11.8 pp
Passengers (million) 13.76 9.01 + 53 %
Passenger Yield THB/RPK 3.06 2.82 + 9 %
Aircraft Utilisation [block hours] 12.2 10.4 + 17 %
Number of Aircraft 77 86 - 11 %
Increase in Cash & Cash Equivalents [bn THB] 18.40 29.03 f)
Current Ratio (consolidated) 2.51 2.04 g)
* Exchange rate THB:USD as at 31(st) December 2023: 1,00 THB : 0,03 USD 36
Remarks
a) Catering, ground services, cargo handling, etc.
b) Increase is in-line with increased operations
c) Average fuel price in 2023 decreased by 16% compared to 2022
d) Crew expenses, aircraft maintenance, lease of aircraft, etc
ASSET MANAGER'S REPORT (CONTINUED)
Thai´s Financial & operational performance in brief (incl.
subsidiaries) 37 (Continued)
Remarks (continued)
e) Affected by one-time expenses, particularly due to a gain on debt
restructuring (THB 3.96 billion), the sale of assets (THB 0.47 billion) and a
loss on foreign currency exchange (THB 1.07 billion)
f) Slower increase than last year but the amount of cash and cash
equivalents further increased
g) Improve in liquidity and the ability to pay debt services (Current
Ratio = Current Assets/Current Liabilities)
Fleet
Source: Cirium: "Thai Airways International Fleet Summary"; 2(nd) February
2024
· Currently about 70 aircraft in operation 38
· Pre-pandemic fleet comprised approximately 100 aircraft
· Targeted growth of about ten aircraft annually to 90 aircraft by the
end of 2025(( 39 ))
· Agreement to lease four A350-900s, three B787-9s and ten A321NEOs
from AerCap with delivery between 2024 and 2026(( 40 ))
· Signed leases for two used A330-300s with CDB Aviation(( 41 ))
· Agreement with Air Lease Corporation on leases for three B787-9s with
delivery in 2025(( 42 ))
· Firm order of 45 B787-9s equipped with GE Aerospace engines and
additional 35 B787-9s on option; deliveries are expected to start in 2027 and
Thai has the flexibility to change the order (partially) to B787-8s or
B787-10s(( 43 ))
· Potential aircraft type phase-out in the mid-term 44
§ A330 fleet as the only three aircraft in the current fleet (two used will
join shortly on a lease; lease term unknown) are about 15 years old
§ B777-200ER fleet (five aircraft) being 16 to 17 years of age
ASSET MANAGER'S REPORT (CONTINUED)
Outlook & Opportunities post-Covid-19 pandemic
· Additional destinations to be resumed in spring/summer 2024: Perth,
Colombo, Milan and Oslo and frequencies on popular routes will be increased
45
· Thai Airways plans to codeshare with low-cost airline Nok Air to
enlarge its domestic network once Nok Air opens a base at Bangkok Suvarnabhumi
Airport; expected for the second half of 2024 46
· Eight start-up airlines had been granted an AOC in 2023, including
cargo airlines, operators of less than 20-seat aircraft as well as competing
airlines such as Really Cool Airlines; however, it remains uncertain if all of
them will start operations 47
· Passenger numbers at Thailand´s Airports in 2023 only recovered to
about 75% of pre-pandemic levels leaving room for further growth 48
· The Airports of Thailand announced to invest THB 97 billion (approx.
USD 2.72 billion 49 ) in the expansion of six major international Thai
Airports, including Bangkok Suvarnabhumi, within the next six years 50
· The Thai Government decided on a permanent visa-exemption for Chinese
tourists 51
· Analysts are not aligned if Thailand´s passenger numbers will fully
recover in 2024 as this strongly depends on tourism, especially on Chinese
tourists' numbers which are currently impacted by a weak Chinese economy 52
Comments & conclusions
Thai Airways is dependent on the tourism sector, particularly on in-bound
tourism and contingent on any decision made by the Government to soften travel
restrictions. Consequently, the visa-exemption for Chinese travellers might be
welcome to support the airline´s growth of passengers, revenues´ and
operational income.
The airline`s move to fully integrate the subsidiary Thai Smile is expected to
offer a more consistent brand identity and to allow Thai Airways to switch
more easily narrow- and widebody aircraft on domestic and regional routes due
to seasonality and overall demand. Therefore, it makes sense that the Business
Class comfort of the former A320 Thai Smile Fleet will be enhanced to offer a
consistent product within its fleet. However, it will be interesting to see if
increased fleet flexibility and synergy effects will succeed to counterbalance
the parent company`s higher aircraft operating costs.
ASSET MANAGER'S REPORT (CONTINUED)
Outlook & Opportunities post-Covid-19 pandemic (Continued)
Comments & conclusions (Continued)
Thai´s order of B787s demonstrates that this aircraft type is of significance
in the carrier´s long term fleet strategy. The decision for engines from GE
is not a big surprise as Thai has publicly mentioned not to be happy with
Rolls-Royce´s pricing strategy 53 and Rolls-Royce engine shop capacity is
limited. It is not completely uncommon to operate one aircraft family with
engines from different manufacturers. Emirates´ operates its A380 fleet
with two different engine types and LATAM recently ordered B787s equipped with
GE engines despite operating its current B787s fleet with Rolls-Royce engines.
Taking into account that not all aircraft joining the fleet over the next ten
years are dedicated for growth but also for replacement of older aircraft puts
the growth rate into perspective. Nevertheless, Thai will need to demonstrate
that their aircraft orders are not bringing more seat capacity into the market
than the airline will be able to profitably utilise.
The 2023 financial results look promising, and Thai intends to exit
Rehabilitation earlier than originally forecasted. Though, the carrier will
have to prove profitability in the long-term allowing for potential new market
entrants and a flattening passenger growth after pre-pandemic levels have been
reached. The recovery in the Asia Pacific region could also attract new
airline launches aiming to benefit from a recovering market. Potentially, in
times of delivery and aircraft shortages, the winners will be those who
successfully manage to receive additional aircraft at the time of market need.
THE ASSETS
Update Boeing 787 54
· 313 Boeing 787s were ordered in 2023; including 14 of the B787-8
variant
· 73 B787s were delivered in 2023, including ten B787-8s
· The orderbook showed 797 backlogs of the Dreamliner, including 43 of
the B787-8 variant (as at 27(th) February 2024)
· Boeing intends to increase the monthly B787 production rate to ten
aircraft in 2025; the current rate was at five per month as at the end of
2023 55
· Seven B787 aircraft, all of them of the B787-8s variant, were
published for remarketing as at March 2024 56
ASSET MANAGER'S REPORT (CONTINUED)
THE ASSETS (Continued)
Update Boeing 787 57 (Continued)
Source: Cirium: "Fleet Analyzer"; 28(th) February 2024
· 27% of delivered and ordered B787s are powered by Rolls-Royce
compared to a market share of 33% in 2022 58
· Rolls-Royce is going to invest GBP 1 million in the improvement of
existing products, including the Trent 1000 engine (powering B787s) 59
· Latest transactions:
o November 2023: Credit Agricole closed a finance lease of one B787-9
operated by Vistara 60
o December 2023
§ First delivery of one B787-9 to a Chinese airline after two years 61
§ Order of five B787s powered with GE-engines by LATAM 62
§ Air Europe took delivery of one B787-9 leased from AerCap 63
o 2023: Lessor AerCap bought three B787-9s to be hold in their own
portfolio 64
o January 2024: Air Japan (Low-Cost-Carrier newly launched by ANA) received
its first B787-8 (formerly operated by ANA) 65
o February 2024
§ Royal Brunei ordered four B787-9s with deliveries starting in 2028 66
§ Thai Airways ordered 45 B787-9s plus 35 Dreamliner on option 67
§ Hawaiian´s first Dreamliner (B787-9) will be financed by the Lessor
Jackson Square Aviation 68
o One B787-9 had been delivered to Turkish Airlines by AerCap 69
o March 2024: Oman Air intends to sell its only two B787-8s and keep its
B787-9s a part of their restructuring 70
ASSET MANAGER'S REPORT (CONTINUED)
Assets & Operations
Overview
Both aircraft, HS-TQC and HS-TQD, are based at Bangkok International Airport
and operated by Thai Airways. HS-TQC is in regular commercial service.
The utilisation of TQC and TQD as well as their respective titled engines is
shown in the following tables:
AIRCRAFT OPERATIONS Thai Airways
HS-TQC HS-TQD
Cabin Layout 24 Business Class Seats
240 Economy Class Seats
LAST PHYSICAL INSPECTION
Date 21(st) December 2023 3(rd) February 2023
Place Bangkok Airport (BKK)
AIRFRAME STATUS (29(th) February 2024)
Total Flight Hours 24,313 22,166
Average Monthly Utilisation Since Delivery FH 217 200
Total Flight Cycles 5,702 5,144
Average Monthly Utilisation Since Delivery FC 51 46
Hours/Cycles Ratio Since Delivery 4.26 4.31
TITLED ENGINES HS-TQC HS-TQD
(29(th) February 2024)
ESN 10239 ESN 10243 ESN 10244 ESN 10248
Total Time [Flight Hours] 22,735 16,645 18,967 21,431
Total Flight Cycles 5,322 3,482 4,640 4,632
Location On-wing In-shop at SAESL for repair HS-TQE On-wing
Engine ESN 10243 was removed due to IPC Stage 8 blade damage found and
inducted into shop at the SAESL facility in Singapore on 31(st) January 2024.
Moreover, during replacing engine ESN 10240 with ESN 10243, it was
contractually agreed with Thai Airways that the AD (Airworthiness
Directives)-2019-0286 would be included in the work scope of the next shop
visit of ESN 10243.
On 27(th) October 2023, the C3-check of HS-TQC was completed at the
maintenance facilities at Don Muang Airport (Bangkok, Thailand). On 21(st)
December 2023, the annual inspection of HS-TQC has been performed at Bangkok
Suvarnabhumi Airport. The aircraft was undergoing an A-check at this time. No
major issues had been found. The aircraft is airworthy and currently in
regular commercial operation with Thai Airways. The C3-Check of HS-TQD was
completed on 15(th) March 2024 at the maintenance facilities at Don Muang
Airport (Bangkok, Thailand)
ASSET MANAGER'S REPORT (CONTINUED)
Snapshot: Destinations of HS-TQC and HS-TQD in December 2023
Destination Average Flight Time Frequency - TQC Frequency - TQD*
Bangalore, India 3:18 1 -
Chitose, Japan 6:32 1 1
Delhi, India 3:38 1 1
Denpasar, Indonesia 3:44 1 1
Dhaka, Bangladesh 2:06 3 1
Hanoi, Vietnam 1:46 3 2
Hyderabad, India 3:01 8 -
Islamabad, Pakistan 4:26 - 2
Istanbul, Turkey 9:18 2 -
Jakarta, Indonesia 2:53 8 3
Karachi, Pakistan 4:28 - 1
Kuala Lumpur, Malaysia 1:46 1 1
Lahore, Pakistan 4:06 2 1
Madras, India 2:56 - 1
Manila, Philippines 2:55 5 2
Mumbai, India 4:12 4 1
Rangoon, Myanmar 1:13 2 1
Saigon, Vietnam 1:30 - 1
Singapore, Singapore 2:00 7 2
*Less frequencies compared to HS-TQC due to the C3-Check starting 13 December
2023
Source: Flightaware
ASSET MANAGER'S REPORT (CONTINUED)
Asset Manager´s actions ensure asset value
Regular monitoring is the top priority for DS Aviation as DP Aircraft's Asset
Manager to make sure that the Lessee is keeping the aircraft in the best
condition per the manufacturer's and Lessor's requirements.
Therefore, both aircraft are inspected regularly by DS Aviation´s technical
staff or on-site representatives. As previously reported, HS-TQD was lastly
inspected in February 2023 at Bangkok International Airport. The next annual
inspection will be scheduled in due course. Aircraft HS-TQC was inspected
December 2023 at Bangkok International Airport by DS Aviation's on-site
representative.
Considering the past, it is essential to monitor the Lessee's activities
including both aircraft and its overall activities. Additionally, it is
important to ensure a prompt exchange of updated information. Because of this,
DS Aviation continues to have an "on-demand" contract with the on-site service
provider. Their expertise and workforce are available whenever the
circumstance calls for it, ensuring prompt and efficient support on the spot.
Comments and Conclusions
The challenges for the manufacturers and airlines to deal with bottlenecks and
quality issues remain. The procurement of metals and parts take up to five
times longer than in 2019. 71 Airbus´s supply chain management had been
increased by 150% and engineers sent out to critical supplier facilities. 72
Therefore, many airlines are not able to grow as quickly as intended. If a
carrier is in the favourable position to extend leases, reactivate stored
aircraft or push back the phase-out of older aircraft, it might overcome the
current bottlenecks. But this might cause new issues as airlines might then
not be able to meet given or self-proclaimed standards of sustainability.
The significance of sustainability is growing, not only in the population but
also in statutory provisions. And delaying the change to a more
environmentally friendly fleet might result in additional costs.
The latest B787 transactions show that this aircraft is still a liquid asset
and well accepted by airlines. On the engine side, Rolls-Royce pays for their
reliability issues, particularly with the Trent 1000 engines where the
manufacturer lost market shares. Both Thai and LATAM, operating their current
B787 fleet with Roll-Royce engines, decided on the GE engine option regarding
their latest orders. Rolls-Royce needs to make huge efforts to regain the
airlines´ trust and generate orders. Nevertheless, the Dreamliner B787 is of
the latest technology and seems to be well-positioned for the near and
mid-term future. However, it remains important to closely watch the market and
monitor the assets' condition.
DIRECTORS
Jonathan (Jon) Bridel, Non-Executive Chairman (59), appointed 10 July 2013
Jon is a Guernsey resident and is currently a non-executive director of Fair
Oaks Income Fund Limited. Jon was previously managing director of Royal Bank
of Canada's ('RBC') investment businesses in the Channel Islands and served as
a director on other RBC companies including RBC Regent Fund Managers Limited.
Prior to joining RBC, Jon served in a number of senior management positions in
banking, specialising in credit and corporate finance and private businesses
as Chief Financial Officer in London, Australia and Guernsey having previously
worked at Price Waterhouse Corporate Finance in London.
Jon graduated from the University of Durham with a degree of Master of
Business Administration, holds qualifications from the Institute of Chartered
Accountants in England and Wales (1987) where he is a Fellow, the Chartered
Institute of Marketing and the Australian Institute of Company Directors. Jon
is a Chartered
Marketer and a Member of the Chartered Institute of Marketing, a Chartered
Director and Fellow of the Institute of Directors and a Chartered Fellow of
the Chartered Institute for Securities and Investment.
Jeremy Thompson, Non-Executive Director (68), appointed 10 July 2013
Jeremy Thompson is a Guernsey resident. He acts as a non-executive director to
a number of businesses which include three private equity funds, an investment
manager serving the listed NextEnergy Solar Fund Limited and London listed
Riverstone Energy Limited. Prior to that he was CEO of four autonomous global
businesses within Cable & Wireless PLC and earlier held CEO roles within
the Dowty Group.
Jeremy currently serves as chairman of the States of Guernsey Renewable Energy
Team and is a commissioner of the Alderney Gambling Control Commission. He is
also an independent member of the Guernsey Tax Tribunal panel. Jeremy is an
engineering graduate of Brunel (B.Sc) and Cranfield (MBA) Universities and
attended the UK's senior defence course (Royal College of Defence Studies). He
holds the Institute of Directors (IoD) Certificate and Diploma in Company
Direction and is an associate of the Chartered Institute of Arbitration. He
completed an M.Sc in Corporate Governance in 2016 and qualified as a Chartered
Company Secretary in 2017.
Harald Brauns, Non-Executive Director (70), appointed 1 November 2019
Harald is a German banker with extensive experience in the specialised lending
sector. He joined NORD/LB Hannover, Germany in 1977 with a first engagement in
the shipping segment. In 1985 he started the aircraft finance activities for
the bank from scratch. As the Global Head of Aircraft Finance, he built
successively a team of more than 40 dedicated aviation experts located in
Hannover, New York and Singapore. Focused on an asset-based business model
with sophisticated solutions for selected clients, he and his team advanced to
global leaders in commercial aircraft finance with an exposure of well above
US$ 10 billion split over a portfolio of 650 aircraft assets. After more than
35 years in the aviation industry Harald retired in October 2019. He is
resident in Germany and was appointed as a director of the Company with effect
from 1 November 2019.
DIRECTORS' REPORT
The Directors present their Annual Report and Audited Consolidated Financial
Statements for DP Aircraft I Limited for the year ended 31 December 2023.
Principal Activity and Review of the Business
The Company's principal activity is to purchase, lease and then sell two
Boeing 787-8 Aircraft (the 'Assets'). The Company wholly owns two subsidiary
entities, DP Aircraft Guernsey III Limited and DP Aircraft Guernsey IV Limited
(collectively and hereinafter, the 'Borrowers'), each being a Guernsey
incorporated company limited by shares and one intermediate lessor company, DP
Aircraft UK Limited (the 'Lessor'), a UK incorporated private limited company.
The Company and its consolidated subsidiaries, DP Aircraft Guernsey III
Limited, DP Aircraft Guernsey IV Limited and DP Aircraft UK Limited comprise
the consolidated Group (the 'Group').
The investment objective of the Group is to obtain income and capital returns
for the Company's shareholders by acquiring, leasing and then, when the Board
considers it appropriate, selling the Assets. The Company has made its
investments in the Assets through its subsidiaries. The Ordinary Shares of
the Company are currently trading on the Specialist Fund Segment of the London
Stock Exchange.
Notwithstanding the requirement for the aircraft to be parked in the past due
to Trent 1000 issues there are no incidents to bring to the attention of
Shareholders concerning the operation of the Thai aircraft. Inspections have
revealed no matters of concern. The aircraft have been operational for all of
2023 year and are currently in regular commercial use with the exception of
regular mandated C checks where the aircraft are thoroughly checked. Such
checks are a functions of flight hours flown. It should be noted that the
Company receives full lease payments during such checks. Rolls Royce are
continuing to address the Trent 1000 engine warranty related issues which have
not impacted the Company. A more detailed review of the business and prospects
is contained in detail in the Asset Manager's Report on pages 11 to 23.
Results and Dividends
For the year ended 31 December 2023 the Group made a loss of US$ 2,505,687
(2022:US$ 7,660,823). The results for the year ended 31 December 2023 are
mainly driven by rental income earned of US$ 8,714,249 (2022: US$ 16,462,372)
and finance costs incurred of US$ 9,551,675 (2022: US$ 4,860,305). The
increase of finance costs is a result of an adjustment required by IFRS to
reflect the modification to the loan terms in February 2023. The modification
adjustment for the modification to the loans in February 2023 totalled US$
5,042,029 and increased both finance costs and the loans payable at the point
of modification and resulted in an overall loss for the period. This
adjustment essentially recognises a loss now due to the less favourable terms
(primarily interest rate increases) under the modified terms compared to the
original terms. As a result of this adjustment, interest will be recognised at
the lower original effective interest rate as opposed to the higher modified
interest rate going forward. The decrease in rent was due to the variable rent
period ending on 31 December 2022. For the period to 31 December 2023, the
entity only earned fixed rental income. As a result, the group reported loss
during the period ended 31 December 2023, see page 49 for full results for the
year.
Historically, under normal circumstances, the Company aimed to provide
Shareholders with an attractive total return comprising income, from
distributions through the period of the Company's ownership of the Assets, and
capital, upon any sale of the Assets. The Company targeted a quarterly
distribution in February, May, August and November of each year. The target
distribution was US$ 0.0225 per share per quarter.
DIRECTORS' REPORT (CONTINUED)
On 3 April 2020, the Company announced a suspension of dividends until further
notice due to the impact of Covid-19 in global aviation and especially with
long haul operations. The suspension is continuing and as noted in Summary
report on pages 4 to 6, there is no realistic prospect of the Company's
shareholders receiving a dividend or any other distribution.
Subsequent Events
Refer to note 23 for further details regarding Subsequent Events.
Directors
The Independent Directors of the Company, who served during the year and to
date, are as shown below:
· Jonathan Bridel;
· Jeremy Thompson; and
· Harald Brauns.
Directors' Interests
The Directors interests in the shares of the Company as at 31 December 2023
are set out below and there have been no changes in such interests up to the
current date:
Number of Number of
ordinary shares ordinary shares
31 December 2023 31 December 2022
Connected parties of Jon Bridel 90,000 90,000
Jeremy Thompson 15,000 15,000
Harald Brauns - -
Principal Risks and Uncertainties
The Statement of Principal Risks and Uncertainties are as described on pages
38 to 40.
Substantial Shareholdings
The Directors note the following substantial interests in the Company's share
capital as at 31 December 2023 (10% and more shareholding):
o M&G Investments 59,533,421 shares - 24.87 %
o Ironsides Partners 53,082,972 shares - 22.18 %
As at the date of this report there have been no significant changes in the
above list of substantial shareholdings.
The Board
The Board consists of three directors, all of whom are non-executive. Mr
Bridel and Mr Thompson satisfy all the criteria for assessing director
independence set out by the Association of Investment Companies ("AIC") and
adopted by the Board. Although they have served on the Board for over ten
years, it is the opinion of the other member of the Board that they both
continue to demonstrate objective and independent thought processes during
Board meetings and in their dealings with the Asset Manager, and therefore
consider them both to be independent, despite their long service.
Jeremy Thompson was appointed as Senior Independent Director (the 'SID') on 1
April 2016. During the year ended 31 December 2023 the Board had a breadth of
experience relevant to the Company and a balance of skills and experience.
DIRECTORS' REPORT (CONTINUED)
The Board recognises the importance of diversity and will evaluate applicants
to fill any vacant positions regardless of gender and without prejudice.
Applicants will be assessed on their broad range of skills, expertise and
industry knowledge, and business and other expertise. In view of the long-term
nature of the Company's investments, the Board believes that a stable board
composition is fundamental to run the Company. The Board has not stipulated a
maximum term of any directorship.
Board Independence and Disclosure
The Board is composed entirely of independent Directors, who meet as required
without the presence of the Asset Manager or service providers to scrutinise
the achievement of agreed goals, objectives and monitor performance. Through
the Audit Committee and the Management Engagement Committee they are able to
ascertain the integrity of financial information and confirm that all
financial controls and risk management systems are robust and analyse the
performance of the Asset Manager and other service providers on a regular
basis.
The Directors have challenged the Asset Manager throughout the year under
review and for the purposes of assessing compliance with the AIC Code, the
Board as a whole considers that each Director is independent of the Asset
Manager and free from any business or other relationship that could materially
interfere with the exercise of their independent judgment. If required, the
Board is able to access independent professional advice. Open communication
between the Asset Manager and the Board is facilitated by regular Board
meetings, to which the Asset Manager is invited to attend and update the Board
on the current status of the Company's aircraft, along with ad hoc meetings as
required.
The Board has been actively engaged in negotiating revised agreements with its
lending group and Thai. Jon Bridel and Jeremy Thompson have served for ten
years and together with Harald Brauns have acted independently and in the best
interests of the Company. The Board is now focused on using its experience to
work with the Asset Manager to maximise value for shareholders.
Directors
As the Company is not a FTSE 350 company, Directors were not subject to annual
election by the shareholders nor for the requirement for the external audit
contract to be put out to tender every 10 years. Historically, the Directors
had offered themselves by rotation for re-election at each annual general
meeting ('AGM'). Harald Braun was re-elected at the AGM on 19 September 2023.
Jeremy Thompson is offering himself for re-election at the forthcoming AGM.
The Directors are on a termination notice of three months.
Directors' Duties and Responsibilities
The Board of Directors has overall responsibility for the Company's affairs
and is responsible for the determination of the investment policy of the
Company, resolving conflicts and for monitoring the overall portfolio of
investments of the Company. To assist the Board in the day-to-day operations
of the Company, arrangements have been put in place for the performance of
certain of the day-to-day operations of the Company to third-party service
providers, such as the Asset Manager, Administrator and Company Secretary,
under the supervision of the Board. The Board receives full details of the
Company's assets, liabilities and other relevant information in advance of
Board meetings.
The Board undertakes an annual evaluation of its own performance and the
performance of its audit committee and individual Directors. This is to ensure
that they continue to act effectively and efficiently and to fulfil their
respective duties, and to identify any training requirements. The results of
the most recent evaluation have been reviewed by the Chairman and his fellow
Directors. No significant corporate governance issues arose from this review.
DIRECTORS' REPORT (CONTINUED)
Directors' Duties and Responsibilities (continued)
The Board also undertakes an annual review of the effectiveness of the
Company's system of internal controls and the safeguarding of shareholders'
investments and the Company's assets. A Management Engagement Committee,
chaired by Harald Brauns has been established to further this safeguarding. At
each quarterly meeting the Audit and Risk Committee reviews a risk matrix.
Issues identified as a result of this review are discussed and action plans
put in place as is necessary. There is nothing to highlight from the reviews
of these reports as at the date of this report.
Board Meetings
The Board meets at least four times a year to consider the business and
affairs of the Company for the previous quarter. Between these quarterly
meetings the Board keeps in regular contact by email and video calls as well
as meeting to consider specific matters of a transactional nature. There is
regular contact with the Secretary and administrator.
The Directors are kept fully informed of investment and financial controls and
other matters that are relevant to the business of the Company. The Directors
also have access, where necessary in the furtherance of their duties, to
professional advice at the expense of the Company.
The Board considers agenda items laid out in the Notice and Agenda which are
formally circulated to the Board in advance of any meeting as part of the
board papers. Such items include but are not limited to; investment
performance, share price performance, review of marketing and shareholder
communication. The Directors may request any agenda items to be added that
they consider appropriate for Board discussion. In addition, each Director is
required to inform the Board of any potential or actual conflict of interest
prior to Board discussion.
Board meetings are attended by representatives of the Asset Manager. The
Company's corporate brokers also attend to assist the Directors in
understanding the views of major shareholders about the Company.
Board Meeting attendance
The table below shows the attendance at Board meetings and Audit Committee
meetings during the year.
Director No of board meetings attended No of audit committee meetings attended
Jonathan Bridel 5 4
Jeremy Thompson 5 4
Harald Brauns 5 4
No. of meetings during the year 5 4
The Directors also attended committee meetings for the Management Engagement
Committee meeting in addition to the regular quarterly meetings as shown in
the above table and the Chairman attended further meetings with various
stakeholders and on management related matters.
DIRECTORS' REPORT (CONTINUED)
Directors' Remuneration
The remuneration of the non-executive Directors is reviewed on an annual basis
and compared with the level of remuneration for directorships of funds with
similar responsibilities and commitments.
Base annual fees are as follows:
Annual Fees Jan 23 to Dec 23 Oct 22 to Dec 22 Jan 22 to Sept 22
Jonathan Bridel £61,750 £61,750 £66,000
Jeremy Thompson £49,450 £49,450 £53,700
Harald Brauns £49,450 £49,450 £53,800
In 2021, in recognition of the extra services performed by the Directors and
the significant increase of committed time during 2021 due to the Group's
circumstances, the Board had earned extra fees of £65,000 which were not paid
in cash but deferred to be possibly settled by the issue of shares. This is
included in note 13 as part of the Directors fees payable. No additional fees
were earned by the Board during the 2023 financial period.
On 1 October 2022, the Director fees were reduced by 10% which was the portion
being deferred and possibly payable in shares.
During the current and prior year each Director received the following
remuneration in the form of Directors' fees from Group companies:
Year ended Year ended
31 December 2023 31 December 2022
£ US$ equivalent £ US$ equivalent
Jonathan Bridel (Chairman) 61,750 78,608 64,937 80,701
Jeremy Thompson (Audit Committee Chairman) 49,450 62,950 52,637 65,503
Harald Brauns (Management Engagement Committee Chairman) 49,450 62,950 48,229 60,064
160,650 204,508 165,803 206,268
Up to 30 September 2022, 10% of base fees and all extra fees were not paid by
way of cash payments but were deferred to be settled in the future or to be
paid by way of equity. There has been no settlement of director remuneration
via the issue of equity in the current year (2022: nil) and the deferred fees
remain outstanding as at 31 December 2023 (see note 13).
There are no executive director service contracts in issue.
DIRECTORS' REPORT (CONTINUED)
Remuneration Policy
All Directors of the Company are non-executive and therefore there are no
incentive or performance schemes. Each director's appointment is subject to an
appointment letter and article 24 of the Company's articles of association.
Base remuneration is paid monthly in arrears and reflects the experience,
responsibility, time, commitment and position on the main board as well as
responsibility for sitting on subsidiary boards when required. The Chairman,
Audit Chairman (SID) and other committee Chairman may receive additional
remuneration to reflect the increased level of responsibility and
accountability. The maximum amount of directors' fees payable by the Company
in any one year is currently set at £200,000 in accordance with article 24.
Remuneration may if deemed appropriate also be payable for special or extra
services if required in accordance with article 24. This is defined as work
undertaken in connection with a corporate transaction including a new
prospectus to acquire, finance and lease an aircraft and/or engines, managing
a default, refinancing, sale or re-lease of aircraft and for defending a
takeover bid. This may include reasonable travel time if applicable. The Board
may appoint an independent consultant to review fees if it is considered an
above inflation rise may be appropriate.
Internal Controls and Risk Management Review
The Board is responsible for the Company's system of internal control and for
reviewing its effectiveness. The Board confirms that there is an ongoing
process for identifying, evaluating and monitoring the significant risks faced
by the Company.
The Board carries out an annual review of internal controls including those of
the administrator. The internal control systems are designed to meet the
Company's particular needs and the risks to which it is exposed. Accordingly,
the internal control systems are designed to manage rather than eliminate the
risk of failure to achieve business objectives and by their nature can only
provide reasonable and not absolute assurance against misstatement and loss.
The Directors of the Company clearly define the duties and responsibilities of
their agents and advisors. The appointment of agents and advisers is conducted
by the Board after consideration of the quality of the parties involved and
the Board monitors their ongoing performance and contractual arrangements.
Each service provider is reviewed annually, and key risks and operating
matters are addressed as part of that review.
Dialogue with Shareholders
All holders of shares in the Company have the right to receive notice of, and
attend, all general meetings of the Company, during which the Directors are
available to discuss issues affecting the Company. The Directors are available
to enter into dialogue with shareholders and make themselves available for
such purpose when reasonably required. The Company believes such
communications to be important. Reports are provided to the Board of Directors
on shareholders' views about the Company and any issues or concerns they might
have.
Board Policy on Tenure and Independence
The Board has not yet formed a policy on tenure. However, it does consider the
independence of each director on an annual basis during the performance
evaluation process. All Directors are considered independent.
Auditor
In order to align the Company's auditing arrangements with the location of its
business, the Board have changed the KPMG entity which undertakes the
Company's audit during the year. As a consequence, KPMG Channel Islands
Limited has assumed the role of independent auditor for the year ended 31
December 2023 and has replaced KPMG Ireland.
KPMG Channel Islands Limited have indicated their willingness to continue in
office.
DIRECTORS' REPORT (CONTINUED)
Going Concern
The Directors believe that it is appropriate to prepare these consolidated
financial statements on a going concern basis as the current cash flow
forecasts demonstrate that the Group, with continued deferral of fees, as
outlined below, from some service providers, has sufficient cash to cover
operating costs for a period of at least twelve months from the signing of the
consolidated financial statements (the "going concern period").
Should a plausible downside scenario occur additional finance will be required
to provide sufficient funding to fund the Group's activities to cover any
negotiations with the lenders as further detailed below. In this respect the
Company believes it is therefore prudent to raise additional capital in Q3
2024. The Board will consult with its broker regarding a proposed capital
raise and its uptake. However, the outcome is currently uncertain.
The Board therefore concludes that to sufficiently cover off all going concern
scenarios, there is a material uncertainty, however it remains appropriate to
prepare the financial statements on a going concern basis.
In making this conclusion, the Board have taken into consideration:
· that Thai Airways have made monthly fixed lease rental payments on
time and in full from the start of the revised fixed rental period commencing
in January 2023. Further that Thai have reported a consistent return to
profitability and have projected that they will exit their formal
rehabilitation Period in Q4 2024;
· that given Thai Airways improved performance the Company will
continue to receive US$ 35,000 per aircraft per month as a contribution
towards its operating costs with the rest going towards the pay down of the
Group's outstanding loan arrangements;
· the continued deferral of some fees by the Board, the Asset Manager
and the Broker as noted in note 13;
· successfully raising up to US$ 1m in Q3 2024 to allow the Group to
trade beyond the going concern period to facilitate negotiating (i) an
extension to the current loan maturities beyond the expiring loan terms in Q4
2026 with the Lenders, and (ii) an enhancement of the terms and conditions of
the leases with Thai Airways, noting that negotiations with the lenders will
commence in late 2024;and
· as a matter of prudence, the Company will need to consider costs
associated with the winding up of the Group should it be required.
Viability Statement
As with previous reports the Directors regularly assess the viability of the
Group with respect to the impact of potential risks the Group faces and the
Group's current position.
In February 2023, the Group and DekaBank entered into Second Amendment and
Restatement to the Loan Agreements in which the parties agreed to new
repayment schedules for the loans in place. Under the revised repayment
schedules, monthly payments of fixed interest and principal will be limited to
net lease rental monies available for application towards the loans of
US$475,000 per loan and the final balloon repayments will be settled out of
proceeds from sale of the aircraft at the end of the lease term. These new
repayment terms are aligned with the lease agreements in place.
The PBH period on the Thai Airways leases expired on 31 December 2022 and now
the Group is receiving fixed monthly rental payments of US$510,000 per
aircraft. This is in line with the amended lease agreements finalised and
signed on 1 April 2022. US$35,000 per aircraft of the fixed monthly rental
payments will be retained by the Group to contribute to ongoing fixed costs,
the remainder will be used to cover principal and fixed interest payable on
the DekaBank loans per above.
DIRECTORS' REPORT (CONTINUED)
Viability Statement (continued)
Both aircraft have been operational for the 2023 year and are currently in
regular commercial use. With both aircraft operational, this not only means
the aircraft are earning revenue, but it also means that if Thai were to
default, the aircraft are in flightworthy condition.
Thai Airways, at the end of the lease term, have an obligation to return the
aircraft in full life condition. This is either by undertaking all the work
themselves to do this or provide the lessor with the equivalent cash to
undertake the work required. The viability and therefore continuation of the
Group looks positive save any major, likely force majeure, scenarios. The
Company is though dependent on contracted lease payments paid on time and in
full.
Mindful of the significant challenges which could still impact the airline
industry, Thai Airways in particular and the Company, the Company has extended
its viability period to June 2025 assuming Thai Airways continue to meet its
lease payment obligations and certain service providers (Asset Manager, Broker
and Directors) continue to defer some of their fees as agreed. The Board also
proposes an additional capital raise in 2024 as stated in going concern
section on page 31.
The Group is required to present a plan for refinancing or similar to the
lenders before the expiry of the current loan facilities in the last quarter
of 2026. The Directors are currently assessing this keeping in mind that they
have to act in the best interest of the Group.
Continuing and foremost amongst the near-term risks faced by the Group, is the
successful emergence from restructuring of Thai Airways and the recovery from
Covid related restrictions to Thai's tourist economy. So far, the news from
Thai Airways has been positive. The Directors note that whilst they believe
that Thai Airways is currently in a good position to exit rehabilitation,
there is no guarantee of this. The Directors continue to monitor the
developments of the rehabilitation process and the impact on the Group. The
Directors regularly consider and assess the viability of the Company and take
into account the Company's current position and the potential impact of the
principal risks outlined below. The Directors have considered the impact of
the Russian invasion of Ukraine on the Group and other emerging conflicts and
have concluded that to date there has been no material impact on the
operations of the Group save for indirect impacts such as rising fuel costs.
Of note is that the Company's aircraft currently operate in the Indo-Pacific
region where there are at present no overfly or other restrictions.
The Directors continue to consider that an investment in the Company should be
regarded as long term in nature and is suitable only for sophisticated
investors, investment professionals, high net worth bodies corporate,
unincorporated associations and partnerships and trustees of high value trusts
and private clients (all of whom will invest through brokers), in each case,
who can bear the economic risk of a substantial or entire loss of their
investment and who can accept that there may be limited liquidity in the
shares.
The Directors consider that the Notes to the Financial Statements are integral
to the support of the Viability Statement.
DIRECTORS' REPORT (CONTINUED)
Annual General Meeting
The next AGM of the Company will be held in Guernsey at a date that will be
communicated in the future at East Wing, Trafalgar Court, Les Banques,
St Peter Port, Guernsey. The meeting will be held to, inter alia; receive the
Annual Report and Audited Consolidated Financial Statements; elect and
re-elect Directors; propose the reappointment of the auditor; authorise the
Directors to determine the auditor's remuneration; approve the Directors'
remuneration policy; authorise the Company to issue and allot new shares and
approve a partial disapplication of the pre-emption rights to allow the
Company to issue new shares by way of tap issues. Shareholders are encouraged
to vote in advance by proxy. The formal notice of AGM will be issued to
shareholders in due course.
The Board continues to welcome engagement with its shareholders and those who
have questions relating directly to the business of the AGM can forward their
questions to the Company Secretary by email to DPA@aztecgroup.co.uk by no
later than one week before the AGM. A Q&A reflecting the questions
received and responses provided will be made available on the Company's
website at www.dpaircraft.com as soon as practicable following the AGM.
On 19 September 2023 at the Company's last AGM, the following percentages of
total votes cast were cast against resolutions:
o 32.16% against resolution 2, (to approve the re-election of Harald
Brauns);
o 36.65% against resolution 4, (to approve the Directors' remuneration
report);
o 73.21% against resolution 5, (to approve the Directors' remuneration
policy);
o 32.27% against resolution 7, (to authorise Directors to allot and issue up
to 10% of ordinary shares in issue); and
o 32.27% against resolution 8, (to authorise Directors to allot and issue a
further 10% of ordinary shares in issue).
The Company noted it would reflect and continue to consult with shareholders
in this respect.
The Company has subsequently discussed the matter with shareholders who wished
to engage further and following discussions with those shareholders, the
matters raised had been satisfactorily clarified and resolved.
The Board is thankful to all shareholders for their continuous support.
Corporate Governance
The Company is not required to comply with any particular corporate governance
codes in the UK or Guernsey, but the Directors take corporate governance
seriously and will have regard to relevant corporate governance standards in
determining the Company's governance policies including without limitation in
relation to corporate reporting, risk management and internal control
procedures.
The Directors intend to comply, and ensure that the Company complies, with any
obligations under the Companies (Guernsey) Law, 2008 and the Articles to treat
shareholders fairly as between themselves.
Directors' Share Dealings
The Board has agreed to adopt and implement the Market Abuse Regulation for
Directors' dealings. The Board will be responsible for taking all proper and
reasonable steps to ensure compliance with the Market Abuse Regulation.
DIRECTORS' REPORT (CONTINUED)
Board Committees
The Board of Directors has established an audit committee, which operates
under detailed terms of reference, copies of which are available on request
from the Company Secretary. Details of the Company Secretary are included
within the Company information on page 79.
The Board have established a Management Engagement Committee which reviewed
the performance of the Asset Manager and the key service providers at least
annually and this review includes a consideration of the service providers'
internal controls, risk management, operational management, information
technology and their effectiveness.
Alternative Investment Fund Managers Directive ('AIFMD')
In July 2013 the European Alternative Investment Fund Management Directive
('AIFMD') came into effect with transitional provisions until July 2014. The
Company has been determined to be a 'self-managed' Guernsey Alternative
Investment Fund ('AIF') and as such will be treated as a non-EU AIFM for the
purposes of the Directive. The Company has registered with the Financial
Conduct Authority (and notified the Guernsey Financial Services Commission)
under the AIFMD (Marketing) Rules, 2013.
For a non-EU AIFM that has over EUR 100 million (equivalent to US$ 107 million
at 31 December 2023) of net assets under management and also utilises
leverage, certain Annual Investor Disclosures are required.
For the purpose of AIFMD, the Company is a Self-Managed Alternative Investment
Fund Manager with assets above the EUR 100 million (equivalent to US$ 107
million at 31 December 2023), with leverage, threshold.
AIFMD does not prescribe use of any one particular accounting standard.
However, the financial statements must be audited by an auditor empowered by
law to audit the accounts in accordance with the EU Statutory Audit Directive.
The required disclosures for investors are contained within the Financial
Conduct Authority checklist and the Company's compliance therewith can be
found in Appendix 1 to these financial statements.
Environmental, social and governance (ESG)
The Group recognises the Paris Agreement on climate change. The Group operates
NTA ('New Technology Aircraft'); specifically Boeing 787-8's equipped with
Rolls Royce Trent-1000 engines which are 20% more fuel efficient on a
revenue-per-kilometre basis than similar comparable current technology legacy
aircraft. The Board continue to implement steps to reduce its own travelling
and maximises the use of virtual meetings within the Board and with all its
key service providers.
Jonathan Bridel
Jeremy Thompson
Director
Director
25 April
2024
25 April 2024
REPORT OF THE AUDIT COMMITTEE
On the following pages, we present the Audit Committee (the 'Committee')
Report for 2023, setting out the Committee's structure and composition,
principal duties and key activities during the year. The Committee has
reviewed the Company's financial reporting, the independence and effectiveness
of the independent auditor (the 'auditor') and the internal control and risk
management systems of service providers.
The Board is satisfied that for the period under review and thereafter the
Committee has recent and relevant commercial and financial knowledge
sufficient to satisfy the requirements of the Committee's remit.
Structure and Composition
The Committee is chaired by Mr Thompson and its other members are Mr Bridel
and Mr Brauns.
The Committee conducts formal meetings not less than three times a year. There
were four meetings during the period under review and multiple ad-hoc
meetings. All Directors were present and forming part of the quorum. The
auditor is invited to attend those meetings at which the annual and interim
reports are considered.
Principal Duties
The role of the Committee includes:
· Monitoring the integrity of the published financial statements of the
Group;
· Keeping under review the consistency and appropriateness of
accounting policies on a year to year basis;
· Satisfying itself that the annual financial statements, the interim
statement of financial results and any other major financial statements issued
by the Group follow International Financial Reporting Standards and give a
true and fair view of the Group and its subsidiaries' affairs; matters raised
by the external auditors about any aspect of the financial statements or of
the Group's internal control, are appropriately considered and, if necessary,
brought to the attention of the Board, for resolution;
· Monitoring and reviewing the quality and effectiveness of the auditor
and their independence;
· Considering and making recommendations to the Board on the
appointment, reappointment, replacement and remuneration of the Group's
auditor;
· Monitoring and reviewing the internal control and risk management
systems of the service providers; and
· Considering at least once a year whether there is a need for an
internal audit function.
The complete details of the Committee's formal duties and responsibilities are
set out in the Committee's terms of reference, a copy of which can be obtained
from the Secretary.
Independent Auditor
The Committee is also the forum through which the auditor reports to the Board
of Directors. The Committee reviews the scope and results of the audit, its
cost effectiveness and the independence and objectivity of the auditor, with
particular regard to the terms under which it is appointed to perform
non-audit services including fees. The Committee has established pre-approval
policies and procedures for the engagement of KPMG Channel Islands Limited
('KPMG') to provide non-audit services.
In order to align the Company's auditing arrangements with the location of its
business, the Board have changed the KPMG entity which undertakes the
Company's audit during the year. As a consequence, KPMG Channel Islands
Limited has assumed the role of independent auditor for the year ended 31
December 2023 and has replaced KPMG Ireland.
REPORT OF THE AUDIT COMMITTEE (CONTINUED)
Independent Auditor
The audit fees proposed by the auditor each year are reviewed by the Committee
taking into account the Group's structure, operations and other requirements
during the year and the Committee make appropriate recommendations to the
Board. The Committee considers KPMG Channel Islands Limited to be independent
of the Company. The Committee also met with the external auditors without the
Asset Manager or Administrator being present so as to provide a forum to raise
any matters of concern in confidence.
Evaluations or Assessments made during the year
The following sections discuss the assessments made by the Committee during
the year:
Significant Areas of Focus for the Financial Statements
The Committee's review of the interim and annual financial statements focused
on:
· Valuation of the Company's Assets (more detail in relation to the
approach is in note 3);
· Assessing straight lining lease asset for impairment;
· Considering the accounting treatment of the loan modification and its
associated adjustment;
· The financial statements giving a true and fair view and being
prepared in accordance with International Financial Reporting Standards and
the Companies (Guernsey) Law, 2008; and
· Going concern and the viability statement review.
Effectiveness of the Audit
The Committee had formal meetings with KPMG during the period under review:
· Before the start of the audit to discuss formal planning, discuss any
potential issues and agree the scope that will be covered; and
· After the audit work was concluded to discuss any significant matters
such as those stated above.
· The Board considered the effectiveness and independence of KPMG by
using a number of measures, including but not limited to:
· The audit plan presented to them before the start of the audit;
· The audit results report;
· Changes to audit personnel;
· The auditor's own internal procedures to identify threats to
independence; and
· Feedback from both the Asset Manager and Administrator.
Internal Audit
There is no internal audit function. As all of the Directors are non-executive
and all of the Company's administration functions have been delegated to
independent third parties, the Audit Committee considers that there is no need
for the Company to have an internal audit function. However, this matter is
reviewed periodically.
Conclusion and Recommendation
After reviewing various reports such as the operation and risk management
framework and performance reports from the Directors and the Asset Manager and
assessing the significant areas of focus for the financial statements listed
on pages 49 to 52, the Committee is satisfied that the financial statements
appropriately address the critical judgements and key estimates (both in
respect to the amounts reported and the disclosures).
REPORT OF THE AUDIT COMMITTEE (CONTINUED)
Conclusion and Recommendation (continued)
The Committee is also satisfied that the significant assumptions used for
assessing going concern and, determining the value of assets and liabilities
have been appropriately scrutinised, challenged and are sufficiently robust.
The independent auditor reported to the Committee that no material
misstatements were found in the course of its work. Furthermore, the
Administrator confirmed to the Committee that they were not aware of any
material misstatements including matters relating to presentation. The
Committee confirms that it is satisfied that the independent auditor has
fulfilled its responsibilities with diligence and professional scepticism.
Following the completion of the financial statements review process on the
effectiveness of the independent audit and the review of audit services, the
Committee will recommend that KPMG be reappointed at the next Annual General
Meeting.
For any questions on the activities of the Committee not addressed in the
foregoing, a member of the Committee will attend each Annual General Meeting
to respond to such questions.
By order of the Audit Committee
Jeremy Thompson
Audit Committee Chairman
25 April 2024
STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES
Geopolitical and economic risks
The Company leases aircraft to a customer in Thailand exposing it to (i)
Thailand's varying economic, social, legal and geopolitical risks, (ii)
instability of Thailand markets and (iii) the impact of global health
pandemics and other global market disruptions. Exposure to Thailand's
jurisdiction may adversely affect the Company's future performance, position
and growth potential if Thailand's economy does not perform well or if laws
and regulations that have an adverse impact on the aviation industry are
passed in Thailand. The adequacy and timeliness of the Company's response to
emerging risks in this jurisdiction is of critical importance to the
mitigation of their potential impact on the Company.
The Geopolitical risk surrounding the Russian invasion of Ukraine and ongoing
conflict in the Middle East and the subsequent consequences have the
potential to impact travel and/or travellers' willingness to travel which in
turn could affect the volume of traffic to and from Thailand. The Thai
government led by PM Thavisin and the return from exile of former PM Thaksin
provides an unknown backdrop in terms of political stability. However, it is
clear though that tourism is a major part of the Thai economy.
Exposure to the commercial airline industry
As a supplier to and partner of the airline industry, the Group is exposed to
the financial condition of the airline industry as it leases its aircraft to
commercial airline customers. The financial condition of the airline industry
is affected by, among other things, geopolitical events, outbreaks of
communicable pandemic diseases and natural disasters, fuel costs and the
demand for air travel. To the extent that any of these factors adversely
affect the airline industry they may result in (i) downward pressure on lease
rates and aircraft values, (ii) higher incidences of lessee defaults,
restructuring, and repossessions and (iii) inability to lease aircraft on
commercially acceptable terms.
Thai Airways
Thai went into debt rehabilitation on 27 May 2020, and the business
rehabilitation plan was approved on 15 June 2021, by the Central Bankruptcy
Court of Thailand. There is risk that the business rehabilitation plan does
not achieve the desired results, and this could have an adverse impact on the
entity's lease arrangements, with Thai Airways which is the core source of
income for the Group.
Thai is under the contractual obligation to return the aircraft in full life
condition. The additional requirement to cash collateralize the obligation by
payment of Maintenance Reserves was waived in the novated lease agreement.
This leaves the company with the risk that in case of a Thai default under the
lease the aircraft may not be returned in a full life status.
In addition, the continuing impact of COVID-19 and the conflict between Russia
and Ukraine has the potential to impact Thai's business rehabilitation plan
and adversely impact the Group. This is particularly relevant for the Group
given the aircraft leased to Thai Airways are the sole source of income for
the Group.
Asset risk
The Company's Assets as at year end comprise of two Boeing 787-8 aircraft. The
Group bears the risk of selling or re-leasing the aircraft in its fleet at the
end of their lease terms or if the lease is terminated. If demand for aircraft
decreases market lease rates may fall, and should such conditions continue for
an extended period, it could affect the market value of aircraft in the fleet
and may result in an impairment charge. The Directors have engaged an asset
manager with appropriate experience of the aviation industry to manage the
fleet and remarket or sell aircraft as required to reduce and address this
risk. Any lasting impact of the COVID-19 situation on both aircraft demand and
lease rates are at present unknown.
STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES (CONTINUED)
Asset risk (continued)
The Company's Assets as at year end comprise of two Boeing 787-8 aircraft. The
Group bears the risk of selling or re-leasing the aircraft in its fleet at the
end of their lease terms or if the lease is terminated. If demand for aircraft
decreases market lease rates may fall, and should such conditions continue for
an extended period, it could affect the market value of aircraft in the fleet
and may result in an impairment charge. The Directors have engaged an asset
manager with appropriate experience of the aviation industry to manage the
fleet and remarket or sell aircraft as required to reduce and address this
risk. Any lasting impact of the COVID-19 situation on both aircraft demand and
lease rates are at present unknown.
There is no guarantee that, upon expiry or cessation of the leases, the Assets
could be sold or re-leased for an amount that would enable shareholders to
realise a capital profit on their investment or to avoid a loss. Costs
regarding any future re-leasing of the assets would depend upon various
economic factors and would be determinable only upon an individual re-leasing
event. Potential reconfiguration costs could in certain circumstances be
substantial.
Key personnel risk
The ability of the Company to achieve its investment objective is
significantly dependent upon the advice of certain key personnel at its Asset
Manager DS Aviation GmbH & Co. KG; there is no guarantee that such
personnel will be available to provide services to the Company for the
scheduled term of the Leases or following the termination of the Lease.
However, Key Man clauses within the Asset Management agreement do provide a
base line level of protection against this risk.
Credit risk & Counterparty risk
Credit risk is the risk that a significant counterparty will default on its
contractual obligations. The Group's most significant counterparty is Thai
Airways as lessee and provider of income and DekaBank Deutsche Girozentrale
('DekaBank') as holder of the Group's cash and restricted cash. The lessee
does not maintain a credit rating. Thai Airways is currently in the early
stages of implementing a rehabilitation plan. The Moody's credit rating of
DekaBank is Aa2 (2022: Aa2).
There is no guarantee that the business rehabilitation process of Thai Airways
will continue to be successful even though developments to date have been
positive. Failure of any material part of the business rehabilitation plan may
have an adverse impact on Thai's ability to comply with its obligations under
the LOI entered into during March 2021 and the subsequent amended lease
agreement entered into in 2022.
Any failure by Thai Airways to pay any amounts when due could have an adverse
effect on the Group's ability to comply with its obligations under the
DekaBank loan agreements and could result in the lenders enforcing their
security and selling the relevant Assets on the market, potentially negatively
impacting the returns to investors. Thai Airways is however an international
full-service carrier and is important to Thailand's economy and as such it is
unlikely that the government will not provide it with the necessary support to
see it through its restructure. There is no guarantee and hence a significant
risk remains.
Refinancing risk
The Group is required to present a plan for refinancing or similar to the
lenders before the expiry of the current loan facilities in the last quarter
of 2026. There is a risk that the Group will not be able to replace the
DekaBank debt obligation with new debt before the expiry of the current loan
facilities. If not able to refinance, the Group would have to dispose the
aircraft to settle the loan and there is no guarantee that the Assets could be
sold for an amount that would enable shareholders to realise a capital profit
on their investment or to avoid a loss.
STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES (CONTINUED)
Liquidity risk
In order to finance the purchase of the Assets, the Group entered into loan
agreements. Pursuant to the loan agreements, the lenders are given first
ranking security over the Assets. Under the provisions of each of the loan
agreements, the Borrowers are required to comply with loan covenants and
undertakings. A failure to comply with such covenants or undertakings may
result in the relevant lenders recalling the relevant loan. In such
circumstances, the Group may be required to remarket the relevant Asset
(either sell or enter into a subsequent lease) to repay the outstanding
relevant loan and/or re-negotiate the loan terms with the relevant lender.
With respect to working capital, the Company intends to raise additional
finance in Q3 2024 as stated in the going concern section on page 31.
Cyber risk
The Group relies on its key third party service providers' cyber security
measures including firewalls, encryption protocols, employee training programs
and regular security assessments to safeguard the Group's data and records
from unauthorized access and harmful exploitations. The Management Engagement
Committee receives annual confirmation from all its third parties service
providers to ensure that controls over cyber security and IT infrastructure
are in place.
Boeing
The Company is exposed to Boeing being able to resolve any identified 787
related problems which the FAA or other regulatory bodies designate as
restricting commercial operations. At present no such restrictions exist. The
787 is considered a latest generation aircraft type which has pioneered areas
including the extensive use of carbon fibre in its fuselage and wing
construction.
Rolls Royce
The Company has exposure to Rolls Royce as suppliers of the Trent 1000 engines
in terms of ongoing support. Announcements by RR have implied that the
low-pressure turbine (LPT) and other known previous engine performance issues
have been resolved. The Trent 1000 is a highly fuel-efficient engine,
representing the latest engine technology. As such the Company is exposed to
any future as yet unknown performance issues. This situation is partially
mitigated by Thai using Rolls Royce Total Care and by the Asset Manager having
oversight of performance issues from both physical and desktop checks.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Statement of directors' responsibilities
The directors are responsible for preparing the Directors' Annual Report and
the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law they have elected to prepare the financial
statements in accordance with International Financial Reporting Standards as
issued by the IASB and applicable law.
The financial statements are required by law to give a true and fair view of
the state of affairs of the Group and of the profit or loss of the Group for
that period.
In preparing these financial statements, the directors are required to:
Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and of its profit or loss for that period. In preparing
these financial statements, the directors are required to:
§ select suitable accounting policies and then apply them consistently;
§ make judgements and estimates that are reasonable, relevant and reliable;
and prudent;
§ state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements;
§ assess the Group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and
§ use the going concern basis of accounting unless they either intend to
liquidate the Group or to cease operations or have no realistic alternative
but to do so.
The directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that its financial statements comply with the Companies
(Guernsey) Law, 2008. which disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that the financial
statements comply with the Companies (Guernsey) Law, 2008. They are
responsible for such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and have general responsibility
for taking such steps as are reasonably open to them to safeguard the assets
of the Group and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Group's website, and for
the preparation and dissemination of financial statements. Legislation in
Guernsey governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
STATEMENT OF DIRECTORS' RESPONSIBILITIES (CONTINUED)
Statement of directors' responsibilities (Continued)
The Directors who hold office at the date of approval of this Director's
Report confirm that so far as they are aware, there is no relevant audit
information of which the Group's auditor is unaware, and that each Director
has taken all the steps he ought to have taken as a director to make himself
aware of any relevant audit information and to establish that the Group's
auditor is aware of that information.
Responsibility statement of the directors in respect of the annual financial
report
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance
with the applicable set of accounting standards, give a true and fair view of
the assets, liabilities, financial position and profit or loss of the Group;
and
• the annual report includes a fair review of the
development and performance of the business and the position of the issuer,
together with a description of the principal risks and uncertainties that they
face.
Signed on behalf of the Board by
Jonathan Bridel
Jeremy Thompson
Director
Director
25 April
2024
25 April 2024
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DP AIRCRAFT I LIMITED
Our opinion is unmodified
We have audited the consolidated financial statements of DP Aircraft I
Limited (the "Company") and its subsidiaries (together, the "Group"), which
comprise the consolidated statement of financial position as at 31 December
2023, the consolidated statements of comprehensive income, changes in equity
and cash flows for the year then ended, and notes, comprising material
accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements:
· give a true and fair view of the financial position of the Group as
at 31 December 2023, and of the Group's financial performance and cash flows
for the year then ended;
· are prepared in accordance with International Financial Reporting
Standards ("IFRS"); and
· comply with the Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) ("ISAs (UK)") and applicable law. Our responsibilities are described
below. We have fulfilled our ethical responsibilities under, and are
independent of the Company and Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as required by the Crown
Dependencies' Audit Rules and Guidance. We believe that the audit evidence we
have obtained is a sufficient and appropriate basis for our opinion.
Material uncertainty relating to going concern
Going concern The risk Our response
We draw attention to note 2a to the consolidated financial statements which Disclosure quality Our audit procedures included but were not limited too:
indicates that the Group's current cash flow forecasts demonstrate that the
Group has sufficient cash to cover operating costs for a period of at least The consolidated financial statements explain how the Board has formed a
twelve months from the date of approval of the Group's consolidated financial judgement that it is appropriate to adopt the going concern basis of
statements. Should a plausible downside scenario occur, additional finance preparation for the Group. Review of the Group's going concern assessment:
will be required to provide sufficient funding to the Group's operating
activities. Therefore the Company will look to raise additional capital in Q3 We evaluated the Group's going concern assessment and performed inquiries of
2024 (the "capital raise").
the Board of Directors to understand the key judgements made.
That judgement is based on an evaluation of the inherent risks to the Group's
business model and how those risks might affect the Group's financial We assessed the Group's cash-flow forecast and agreed inputs to supporting
resources or ability to continue operations over a period of at least twelve documentation, as appropriate. We assessed the level of forecast expenses
These events and conditions, along with the other matters explained in note months from the date of approval of the Group's financial statements, in against expenses historically incurred. This cash flow forecast takes into
2a, constitute a material uncertainty that may cast significant doubt on the particular in relation to the extent of additional funding that may be consideration the deferral of Asset Manager fees, broker fees and Directors'
Group's ability to continue as a going concern. required in order to meet obligations as they fall due. fees. We have obtained confirmation to support the deferral of these fees.
The risk for our audit is whether such judgements amounted to a material Since the Group also relies on the timely receipt of lease rental income from
uncertainty that may cast significant doubt on the ability of the Group to Thai Airways, we held inquiries with the Asset Manager and the Board of
continue as a going concern. If so, that fact is required to be disclosed (as Directors to assess the likelihood that Thai Airways continues to meet the
has been done) and along with a description of the circumstances, is a key contractually agreed rental payments on time. We inspected correspondence
financial statement disclosure. received by the Group from Thai Airways. We agreed the payments made by Thai
Airways during the year and post year end to the Group's bank statements.
Assessing disclosures:
We considered whether adequate disclosures have been made in relation to
material uncertainties relating to going concern included in note 2a to the
consolidated financial statements, including the identified risks and
dependencies.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DP AIRCRAFT I LIMITED
(CONTINUED)
Key audit matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were
of most significance in the audit of the consolidated financial statements
and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by us, including those which had the
greatest effect on: the overall audit strategy; the allocation of resources in
the audit; and directing the efforts of the engagement team. Going concern is
a significant key audit matter and is described in the 'Material uncertainty
relating to going concern' section of our report. These matters were addressed
in the context of our audit of the consolidated financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. In arriving at our audit opinion above, the other
key audit matter was as follows (unchanged from 2022):
The risk Our response
Valuation of PPE - Aircraft & Related Components (the "Assets") Basis: Our audit procedures included but were not limited to:
$124.1 million (2022: $125.5 million) IAS 36 'Impairment of Assets' requires that assets are assessed for impairment Internal Controls:
on at least an annual basis including management's estimate of the recoverable
Refer to pages 38-39 of the Audit Committee, note 2c accounting policy and amount. We assessed the design and implementation of the key control over the Assets'
notes 3 and 9 disclosures
valuation.
The standard requires that for all assets in scope at the end of the reporting
period, an entity assess whether there is any indication that an asset may be Challenging management's method, assumptions and inputs:
impaired and, where such indications exist, the recoverable amount of the
asset is estimated. We assessed the consistency of the method applied in the Group's impairment
assessment with the approach outlined in the Group's accounting policy and the
Risk: requirements of IFRS.
The carrying value of the Assets, due to the estimation uncertainty involved, With regard to the reports of the two independent professional appraisers
and their magnitude in the context of the consolidated financial statements as engaged by the Group (the "Appraisers"), we
a whole, is considered to be the area which has the greatest effect on our
overall strategy and allocation of resources in planning and completing the · assessed the reasonableness of the current market values included in
audit. the impairment assessment by obtaining and inspecting the reports of the
Appraisers;
· assessed the Appraisers' competence, capabilities and objectivity;
· performed inquiries with the Appraisers and management to understand
key judgements made;
· compared the current market values included in the impairment
assessment to the reports prepared by the Appraisers.
We recalculated the carrying value of the Assets and compared to the
recoverable amount in the impairment assessment prepared by management.
Assessing Disclosures:
We also considered the Group's disclosures (see notes 3 and note 9) in
relation to the use of judgements and estimates regarding the determination of
the carrying value of the Assets and the Group's measurement policies adopted
in note 2c for compliance with IFRS.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DP AIRCRAFT I LIMITED
(CONTINUED)
Our application of materiality and an overview of the scope of our audit
Materiality for the consolidated financial statements as a whole was set at
$1,150,000, determined with reference to a benchmark of group total assets of
$150,864,020, of which it represents approximately 0.75% (2022: 0.75%).
In line with our audit methodology, our procedures on individual account
balances and disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that individually
immaterial misstatements in individual account balances add up to a material
amount across the consolidated financial statements as a whole. Performance
materiality for the Group was set at 75% (2022: 75%) of materiality for the
consolidated financial statements as a whole, which equates to $862,000. We
applied this percentage in our determination of performance materiality
because we did not identify any factors indicating an elevated level of risk.
We reported to the Audit Committee any corrected or uncorrected identified
misstatements exceeding $57,500, in addition to other identified misstatements
that warranted reporting on qualitative grounds.
Our audit of the Group was undertaken to the materiality level specified
above, which has informed our identification of significant risks of material
misstatement and the associated audit procedures performed in those areas as
detailed above.
The group team performed the audit of the Group as if it was a single
aggregated set of financial information. The audit was performed using the
materiality level set out above and covered 100% of total group revenue, total
group profit before tax, and total group assets and liabilities.
Going concern
The directors have prepared the consolidated financial statements on the going
concern basis as they do not intend to liquidate the Group or the Company or
to cease their operations, and as they have concluded that the Group and the
Company's financial position means that this is realistic. They have concluded
that there are material uncertainties that could have cast significant doubt
over their ability to continue as a going concern for at least a year from the
date of approval of the consolidated financial statements (the "going concern
period").
An explanation of how we evaluated management's assessment of going concern is
set out in the "Material uncertainty relating to going concern" section of our
report.
Our conclusions based on this work:
· we consider that the directors' use of the going concern basis of
accounting in the preparation of the consolidated financial statements is
appropriate; and
· we have nothing material to add or draw attention to in relation to
the directors' statement in note 2a to the consolidated financial statements
on the use of the going concern basis of accounting, and their identification
therein of a material uncertainty over the Group's ability to continue to use
that basis for the going concern period, and found the going concern
disclosure in note 2a to be acceptable.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the above conclusions are not
a guarantee that the Group and the Company will continue in operation.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DP AIRCRAFT I LIMITED
(CONTINUED)
Fraud and breaches of laws and regulations - ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud ("fraud risks") we
assessed events or conditions that could indicate an incentive or pressure to
commit fraud or provide an opportunity to commit fraud. Our risk assessment
procedures included:
· enquiring of management as to the Group's policies and procedures to
prevent and detect fraud as well as enquiring whether management have
knowledge of any actual, suspected or alleged fraud;
· reading minutes of meetings of those charged with governance; and
· using analytical procedures to identify any unusual or unexpected
relationships.
As required by auditing standards, we perform procedures to address the risk
of management override of controls, in particular the risk that management may
be in a position to make inappropriate accounting entries. On this audit we do
not believe there is a fraud risk related to revenue recognition because the
Group's revenue streams are simple in nature with respect to accounting policy
choice, and are easily verifiable to external data sources or agreements with
little or no requirement for estimation from management. We did not identify
any additional fraud risks.
We performed procedures including
· Identifying journal entries and other adjustments to test based on
risk criteria and comparing any identified entries to supporting
documentation; and
· incorporating an element of unpredictability in our audit procedures.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected
to have a material effect on the consolidated financial statements from our
sector experience and through discussion with management (as required by
auditing standards), and from inspection of the Group's regulatory and legal
correspondence, if any,
and discussed with management the policies and procedures regarding compliance
with laws and regulations. As the Group is regulated, our assessment of risks
involved gaining an understanding of the control environment including the
entity's procedures for complying with regulatory requirements.
The Group is subject to laws and regulations that directly affect the
consolidated financial statements including financial reporting legislation
and taxation legislation and we assessed the extent of compliance with these
laws and regulations as part of our procedures on the related financial
statement items.
The Group is subject to other laws and regulations where the consequences of
non-compliance could have a material effect on amounts or disclosures in the
consolidated financial statements, for instance through the imposition of
fines or litigation or impacts on the Group and the Company's ability to
operate. We identified financial services regulation as being the area most
likely to have such an effect, recognising the regulated nature of the Group's
activities and its legal form. Auditing standards limit the required audit
procedures to identify non-compliance with these laws and regulations to
enquiry of management and inspection of regulatory and legal correspondence,
if any. Therefore if a breach of operational regulations is not disclosed to
us or evident from relevant correspondence, an audit will not detect that
breach.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DP AIRCRAFT I LIMITED
(CONTINUED)
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk
that we may not have detected some material misstatements in the consolidated
financial statements, even though we have properly planned and performed our
audit in accordance with auditing standards. For example, the further removed
non-compliance with laws and regulations is from the events and transactions
reflected in the consolidated financial statements, the less likely the
inherently limited procedures required by auditing standards would identify
it.
In addition, as with any audit, there remains a higher risk of non-detection
of fraud, as this may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. Our audit procedures
are designed to detect material misstatement. We are not responsible for
preventing non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
Other information
The directors are responsible for the other information. The other
information comprises the information included in the Annual Report but does
not include the consolidated financial statements and our auditor's report
thereon. Our opinion on the consolidated financial statements does not cover
the other information and we do not express an audit opinion or any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
We have nothing to report on other matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies (Guernsey) Law, 2008 requires us to report to you if, in our
opinion:
· the Company has not kept proper accounting records; or
· the consolidated financial statements are not in agreement with the
accounting records; or
· we have not received all the information and explanations, which to
the best of our knowledge and belief are necessary for the purpose of our
audit.
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on pages 41 and 42,
the directors are responsible for: the preparation of the consolidated
financial statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to enable the
preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error; assessing the Group and Company's
ability to continue as a going concern, disclosing, as applicable, matters
related to going concern; and using the going concern basis of accounting
unless they either intend to liquidate the Group or the Company or to cease
operations, or have no realistic alternative but to do so.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DP AIRCRAFT I LIMITED
(CONTINUED)
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our opinion in an
auditor's report. Reasonable assurance is a high level of assurance, but does
not guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users
taken on the basis of the consolidated financial statements.
A fuller description of our responsibilities is provided on the FRC's website
at www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) .
The purpose of this report and restrictions on its use by persons other than the Company's members, as a body
This report is made solely to the Company's members, as a body, in accordance
with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has
been undertaken so that we might state to the Company's members those matters
we are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members, as
a body, for our audit work, for this report, or for the opinions we have
formed.
Fiona Babbe
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors
Guernsey
25 April 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2023
Year ended Year ended
31 Dec 2023 31 Dec 2022
Notes US$ US$
Income
Lease rental income 4 8,714,249 16,462,372
Expenses
Asset management fees 22 (450,890) (471,590)
General and administrative expenses 5 (1,129,640) (1,094,587)
Expected credit gain/(loss) on straight lining lease 11 383,199 (1,486,453)
asset
Expected credit loss write off 11 - (105,063)
Depreciation 9 (1,343,498) (958,760)
(2,540,829) (4,116,453)
Operating profit 6,173,420 12,345,919
Finance costs 6 (9,551,675) (4,860,305)
Other Income 8,138 1,552
Finance income 860,827 194,906
Net finance costs (8,682,710) (4,663,847)
(Loss)/profit before tax (2,509,290) 7,682,072
Taxation 7 3,603 (21,249)
(Loss)/profit for the year (2,505,687) 7,660,823
Total Comprehensive (Loss)/Income for the year (2,505,687) 7,660,823
(Loss)/Earnings per Share for the year - basic and diluted 8 (0.01047) 0.03429
All income is attributable to the Ordinary Shares of the Company.
The notes on pages 53 to 78 form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2023
31 Dec 2023 31 Dec 2022
Notes US$ US$
NON-CURRENT ASSETS
PPE- Aircraft & Related Components 9 124,122,582 125,466,080
Trade and other receivables 11 5,853,206 8,935,454
Restricted Cash 10 15,735,805 14,979,197
Total non-current assets 145,711,593 149,380,731
CURRENT ASSETS
Trade and other receivables 11 3,144,163 3,857,514
Restricted cash 10 1,093,759 4,175,280
Cash and cash equivalents - available for use 914,505 1,479,541
Total current assets 5,152,427 9,512,335
TOTAL ASSETS 150,864,020 158,893,066
EQUITY
Share Capital 15 211,279,828 211,279,828
Accumulated losses 16 (169,049,394) (166,543,707)
TOTAL EQUITY 42,230,434 44,736,121
NON-CURRENT LIABILITIES
Bank borrowings 14 85,027,721 80,779,172
Maintenance provision 12 14,829,296 14,829,296
Total non-current liabilities 99,857,017 95,608,468
CURRENT LIABILITIES
Bank borrowings 14 7,684,502 17,707,184
Trade and other payables 13 1,092,067 841,293
Total current liabilities 8,776,569 18,548,477
TOTAL LIABILITIES 108,633,586 114,156,945
TOTAL EQUITY AND LIABILITIES 150,864,020 158,893,066
The financial statements on pages 49 to 78 were approved by the Board of
Directors and were authorised for issue on 25 April 2024. They were signed on
its behalf by:
The notes on pages 53 to 78 form an integral part of these financial
statements.
Jonathan Bridel
Jeremy Thompson
Chairman
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2023
Year ended Year ended
Notes 31 Dec 2023 31 Dec 2022
US$ US$
(Loss)/profit for the year (2,505,687) 7,660,823
Adjusted for:
Depreciation and amortisation 9 1,343,498 958,760
Finance costs 6 9,551,675 4,860,305
Taxation 7 (3,603) 21,249
Movement in straight lining lease asset 11 3,486,794 (8,753,206)
Lease receivable written off 11 - 105,063
Movement in expected credit loss on straight lining lease assset 11 (383,199) 1,486,453
Tax-paid (11,086) -
Changes in:
Increase in maintenance reserves 12 - 368,614
Increase in trade and other payables 13 265,462 192,312
Decrease/(increase) in trade and other receivables 11 692,004 (607,766)
NET CASH FLOW FROM OPERATING ACTIVITIES 12,435,858 6,292,607
INVESTING ACTIVITIES
Restricted cash 2,324,913 (1,900,631)
NET CASH FLOW FROM / (USED IN) INVESTING ACTIVITIES 2,324,913 (1,900,631)
FINANCING ACTIVITIES
Share issue proceeds - 750,000
Share issue costs - (26,824)
Bank loan principal repaid 14 (9,556,363) -
Bank loan interest paid 14 (5,769,445) (4,814,822)
NET CASH FLOW USED IN FINANCING ACTIVITIES (15,325,808) (4,091,646)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,479,541 1,179,211
(Decrease)/increase in cash and cash equivalents (565,036) 300,330
CASH AND CASH EQUIVALENTS AT END OF YEAR 914,505 1,479,541
The notes on pages 53 to 78 form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2023
Accumulated Total
Share capital losses Equity
Note US$ US$ US$
As at 1 January 2023 15 211,279,828 (166,543,707) 44,736,121
Total comprehensive expenses for the year
Loss for the year - (2,505,687) (2,505,687)
Total comprehensive expense - (2,505,687) (2,505,687)
As at 31 December 2023 211,279,828 (169,049,394) 42,230,434
As at 1 January 2022 210,556,652 (174,204,530) 36,352,122
Total comprehensive income for the year
Profit for the year 7,660,823 7,660,823
Total comprehensive income - 7,660,823 7,660,823
Transactions with owners
Issue of ordinary shares 15 750,000 - 750,000
Share issue costs paid (26,824) - (26,824)
As at 31 December 2022 211,279,828 (166,543,707) 44,736,121
The notes on pages 53 to 78 form an integral part of these financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2023
1) GENERAL INFORMATION
The consolidated audited financial statements ('financial statements')
incorporate the results of DP Aircraft I Limited (the "Company") and that of
wholly owned subsidiary entities, DP Aircraft Guernsey III Limited, DP
Aircraft Guernsey IV Limited (collectively and hereinafter, the 'Borrowers'),
each being a Guernsey incorporated company limited by shares and one
intermediate lessor company, DP Aircraft UK Limited (the 'Lessor'), a UK
incorporated private limited company respectively. The Company and its
subsidiaries (the Borrowers and the Lessor) comprise together the "Group".
The Company was incorporated on 5 July 2013 with registered number 56941. The
Company is admitted to trading on the Specialist Fund Segment of the London
Stock Exchange.
The Company's investment objective is to obtain income and capital returns for
its shareholders by acquiring, leasing and then, when the Board considers it
appropriate, selling aircraft.
The financial statements were approved by the Board of Directors and
authorised for issue on 25 April 2024.
2) MATERIAL ACCOUNTING POLICY INFORMATION
a) Basis of preparation
These financial statements are prepared in accordance with International
Financial Reporting Standards, International Accounting Standards and
Interpretations ('IFRS') issued by the International Accounting Standards
Board ('IASB') and the Disclosure Guidance and Transparency Rules (the 'DTRs')
of the UK's Financial Conduct Authority (the 'FCA').
The preparation of financial statements in accordance with IFRS requires the
use of certain critical accounting estimates. It also requires the Directors
to exercise judgement in applying the Company's accounting policies. The areas
where significant judgements and estimates have been made in preparing the
financial statements and their effect are disclosed in note 3.
The financial statements are presented in United States Dollars (US$) which is
also the functional currency of the Company and its subsidiaries.
Material uncertainty relating to going concern
The Directors believe that it is appropriate to prepare these consolidated
financial statements on a going concern basis as the current cash flow
forecasts demonstrate that the Group, with continued deferral of fees, as
outlined below, from some service providers, has sufficient cash to cover
operating costs for a period of at least twelve months from the signing of the
consolidated financial statements (the "going concern period").
Should a plausible downside scenario occur additional finance will be required
to provide sufficient funding to fund the Group's activities to cover any
negotiations with the lenders as further detailed below. In this respect the
Company believes it is therefore prudent to raise additional capital in Q3
2024. The Board will consult with its broker regarding a proposed capital
raise and its uptake. However, the outcome is currently uncertain.
The Board therefore concludes that to sufficiently cover off all going concern
scenarios, there is a material uncertainty, however it remains appropriate to
prepare the financial statements on a going concern basis.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
2) MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED)
a) Basis of preparation (continued)
Material uncertainty relating to going concern (continued)
In making this conclusion, the Board have taken into consideration:
· that Thai Airways have made monthly fixed lease rental payments on
time and in full from the start of the revised fixed rental period commencing
in January 2023. Further that Thai Airways have reported a consistent return
to profitability and have projected that they will exit their formal
rehabilitation Period in Q4 2024;
· that given Thai Airways improved performance the Company will
continue to receive US$ 35,000 per aircraft per month as a contribution
towards its operating costs with the rest going towards the pay down of the
Group's outstanding loan arrangements;
· the continued deferral of some fees by the Board, the Asset Manager
and the Broker as noted in note 13;
· successfully raising up to US$ 1m in Q3 2024 to allow the Group to
trade beyond the going concern period to facilitate negotiating (i) an
extension to the current loan maturities beyond the expiring loan terms in Q4
2026 with the Lenders, and (ii) an enhancement of the terms and conditions of
the leases with Thai Airways, noting that negotiations with the lenders will
commence in late 2024; and
· as a matter of prudence, the Company will need to consider costs
associated with the winding up of the Group should it be required.
New standards, interpretation and amendments from 1 January 2023
The Group adopted Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2) from 1 January 2023. The amendments require the
disclosure of 'material' rather than 'significant' accounting policies.
Although the amendments did not result in any changes to the accounting
policies themselves, they impacted the accounting policy information disclosed
(in this note) in certain instances.
New and amended accounting standards and interpretations.
At the date of authorisation of these financial statements, the following
amendments to Standards and Interpretations were assessed to be relevant and
are all effective for annual periods beginning on or after 1 January 2024 and
thereafter:
- IAS 1 Amendments (Classification of Liabilities as Current or Non-Current)
- IAS 1 Amendments (Disclosure of Accounting Policies and IFRS Practice
Statement 2)
- IAS 1 Amendments (Non-current Liabilities with Covenants)
- IAS 8 Amendments (Definition of Accounting Estimates)
- IAS 12 Amendments (Deferred Tax and OECD Pillar 2 Taxes)
- IAS 12 Amendments (Deferred Tax related to Assets and Liabilities arising
from a Single Transaction)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
2) MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED)
a) Basis of preparation (continued)
New and amended accounting standards and interpretations (Continued)
The Group intends to adopt the Standards and Interpretations in the reporting
period when they become effective and the Board does not anticipate that the
adoption of these Standards and Interpretations in future periods will
materially impact the Group's financial results in the period of initial
application although there may be revised presentations to the Financial
Statements and additional disclosures.
b) Basis of consolidation
The financial statements incorporate the financial statements of the Company
and the subsidiary undertakings controlled by the Company made up to 31
December each year. Control is achieved where the Company has power over the
investee, exposure or rights to variable returns from its involvement with the
investee and the ability to use its power to affect the amount of the
investor's returns.
When control of a subsidiary undertaking is lost, the assets and liabilities
of that subsidiary are deconsolidated at the date of loss of control and a
resulting loss or gain on loss of control is reported in profit or loss.
The results of subsidiary undertakings acquired or disposed of during the year
are included in the consolidated statement of comprehensive income from the
effective date of acquisition or up to the effective date of disposal as
appropriate. All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
c) Property, Plant and Equipment (PPE) - Aircraft and Related
Components
Upon delivery, aircraft (the 'Assets') are initially recognised at cost plus
initial direct costs which may be capitalised under IAS 16. In accounting for
property, plant and equipment, the Group makes estimates about the expected
useful lives, the fair value of attached leases and the estimated residual
value of aircraft. In estimating useful lives, fair value of leases and
residual value of aircraft, the Group relies upon actual industry experience,
supported by estimates received from independent appraisers.
Items of PPE are measured at cost less accumulated depreciation and any
accumulated impairment losses. If significant parts of an item of PPE have
different useful lives, then they are accounted for as separate items of PPE.
d) Depreciation
Depreciation is calculated to write off the cost of items of PPE less their
residual values under the straight-line method over their estimated useful
lives and is generally recognised in profit or loss.
Depreciation methods, useful lives and residual values are reviewed at each
reporting date and adjusted if appropriate.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
2) MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED)
e) Lease
When an aircraft is acquired with a lease attached, an evaluation of whether
the lease is at fair value is undertaken. A lease premium is recognised when
it is determined that the acquired lease terms are above fair value. Lease
premiums are recognised as a component of aircraft and are amortised to profit
or loss on a straight-line basis over the term of the lease.
The two aircraft leased to Thai Airways International were acquired in 2015
and had a useful economic lease life of 12 years at acquisition. The useful
economic lease life since acquisition of 12 years is unchanged as at year end.
The Group's policy is to depreciate the Assets over their remaining lease life
(given the intention to sell the Assets at the end of each respective lease)
to an appraised residual value at the end of the lease. Residual values are
reviewed annually at the beginning of each year, and such estimates are
supported by future values determined by two external valuations and
discounted by the inflation rate incorporated into those valuations, see note
3 for further details.
f) Operating lease - Group as lessor
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of
time in exchange for consideration.
When the Group acts as a lessor, it determines at lease inception whether each
lease is a finance lease or an operating lease.
The Group makes an overall assessment of whether the lease transfers
substantially all of the risks and rewards incidental to ownership of the
underlying asset. If this is the case, then the lease is a finance lease; if
not, it is an operating lease.
g) Lease rental income
Leases relating to the Aircraft are classified as operating leases where the
terms of the lease do not transfer substantially all the risks and rewards of
ownership to the lessee. Fixed rental income from operating leases is
recognised on a straight-line basis over the term of the lease. Variable
rental income is accounted for on an accrual basis. Any modifications to
operating leases are accounted for as a new lease from the effective date of
the modification, considering any prepaid or accrued lease payments relating
to the original lease as part of the lease payments for the new lease.
Initial direct costs incurred in setting up a lease are capitalised to
Property, Plant and Equipment and amortised over the lease term.
h) Bank Borrowings and interest expense
Bank borrowings are recognised initially at fair value, net of transaction
costs incurred. Bank borrowings are subsequently measured at amortised cost;
any difference between the proceeds (net of transaction costs) and the
redemption value is recognised through profit or loss in the consolidated
statement of comprehensive income over the period of borrowing using the
effective interest rate method. Bank borrowings are classified as current
liabilities unless the Group has an unconditional right to defer settlement of
the liability for at least one year after the reporting date.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
2) MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED)
h) Bank Borrowings and interest expense (Continued)
Initial direct costs related to bank borrowings are capitalised, presented net
against the bank borrowings in the consolidated statement of financial
position and amortised to the consolidated statement of comprehensive income
over the period of the related loan as part of the effective interest rate.
Where loans are modified, the modification is assessed in line with IFRS 9 to
determine whether the modification is substantial. Where the modification is
substantial, the existing loan is derecognised and the
new loan is recognised at fair value. Where the modification is not
substantial, the existing loan is not derecognised. Any difference arising on
modification is recognised as a gain or loss within the consolidated statement
of comprehensive income regardless of whether the modification is substantial
or not.
Interest expense is calculated using the effective interest rate method. The
effective interest method is a method of calculating the amortised cost of a
financial liability and of allocating interest expense over the relevant
period.
The effective interest rate is the rate that exactly discounts estimated
future cash receipts or payments (including all fees or amounts paid or
received that form an integral part of the effective interest rate, including
transaction costs and other premiums or discounts) through the expected life
of the financial asset
or liability.
i) Restricted Cash
Restricted cash comprises cash held by the Group, but which is ring-fenced or
used as security for specific financing arrangements, and to which the Group
does not have unfettered access. Restricted cash includes monies received in
relation to maintenance provisions and security deposits.
j) Maintenance Reserves Provision
Maintenance reserves are lessee contributions to a retention account held by
the lessor which are calculated by reference to the budgeted cost of
maintenance and overhaul events (the 'supplemental rentals'). They are
intended to ensure that at all times the lessor holds sufficient funds to
cover the proportionate cost of maintenance and overhaul of the Asset relating
to the life used on the airframe, engines and parts since new or since the
last overhaul. During the term of the lease, all maintenance is required to be
carried out at the cost of the lessee, and maintenance provisions are required
to be released only upon receipt of satisfactory evidence that the relevant
qualifying maintenance or overhaul has been completed.
Maintenance reserves are recorded in the consolidated statement of financial
position during the term of the lease as a liability. Reimbursements will be
charged against this liability as qualifying maintenance work is performed.
Maintenance reserves are restricted and not distributable until, at the end of
the lease, the Group is released from the obligation to make any further
reimbursements in relation to the aircraft, and the remaining balance of
maintenance provisions, if any, is released through profit or loss as lease
related income. On termination of the lease maintenance reserves balance is
also released to profit or loss as lease related income.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
2) MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED)
k) Segmental reporting
The Directors are of the opinion that the Group is engaged in a single segment
of business, being acquiring, leasing and subsequent selling of aircraft. All
significant operating decisions are based upon analysis of the Group as one
segment. The financial results from this segment are equivalent to the
financial statements of the Group as a whole.
3) USE OF JUDGEMENTS AND ESTIMATES
The preparation of financial statements in conformity with IFRS requires that
the Directors make judgements and estimates about the future, that affect the
application of the Group's accounting policies and reported amounts of assets
and liabilities, income and expenses. Actual results may differ from these
estimates.
Information about assumptions and estimation uncertainty at 31 December 2023
that have a significant effect of resulting in a material adjustment to the
carrying amounts of assets and liabilities in the next financial year are:
Assumptions and estimation uncertainties in the
impairment testing of PPE and key assumptions underlying recoverable amounts
cost of
disposal.
Impairment of property, plant and equipment
An impairment is recognised if the carrying amount of an asset exceeds its
recoverable amount. Impairment losses are recognised in profit or loss.
At each reporting, the Group reviews the carrying amounts of its PPE to
determine whether there is any indication of impairment. If any such
indication exists, then the assets' recoverable amount is estimated. The
recoverable amount of an asset is the higher of the value in use and fair
value less cost to disposal. In considering the impairment of the Thai
aircraft, the Board concluded that the fair value less costs of disposal was
the recoverable amount. The fair value less costs of disposal used in the
assessment is based on the full-life market value of each aircraft as
determined by 2 independent appraisers given the aircraft have a lease with a
full-life return condition attached to them.
The Board considered all possible valuation ranges and concluded that the Thai
aircraft were not impaired as at 31 December 2023 given the fair value less
costs of disposal was greater than the book value of the aircraft. 2
independent appraisers determined that the full life market value of the
aircraft as at 31 December 2023 ranges from US$ 59.8m to US$ 74.5m. Note,
every appraiser has its own opinion of the market and how the market will
develop. On a specific aircraft type one appraiser might be more favourable
compared to another firm and vice versa. In addition, appraisers obtain their
market information from different sources and use different calculation
models. This has an influence on future and current market values hence the
wide range. In order to eliminate peaks in one or the other direction the
Board take the average of the 2 appraisers in determining market values for
the aircraft. This approach is consistent with the approach adopted by other
market participants (lessors, lenders, etc) and is consistent with prior
periods. Given the nature and life of the aircraft this approach is considered
to be reasonable. The average market value less selling costs for each
aircraft is more than each aircraft's carrying value. Therefore, no
impairment loss has been recognised during the financial year ended 31
December 2023 ( 2022: US$ nil).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
3) USE OF JUDGEMENTS AND ESTIMATES (CONTINUED)
Impairment of property, plant and equipment (Continued)
The Board also considered if there was any indication that the accumulated
impairment recognised in previous years on Thai aircraft of US$ 58,839,697 had
reversed partially or in full. The Board has concluded that based on the
possible ranges of the aircraft valuations, there was no reversal during the
year ended 31 December 2023.
The aircraft are currently in a half-life state which means the airframe,
engines, landing gear and other major time/cycle limited components are
halfway through their various overhaul and /or life cycles. Note that the
aircraft will be returned in a full-life condition on termination of the
leases hence full-life market value was used in the impairment assessment.
Depreciation of aircraft
As described in note 2, the Group depreciates the Assets on a straight-line
basis over the remaining lease life and taking into consideration the
estimated residual value at the end of the lease term. The Group engages
independent expert valuers (appraisers) each year to provide a valuation of
the Assets and take into account the average of the valuations provided.
Residual value estimates of the Aircraft were determined by the full life
inflated base values at the end of the leases from external valuations and
discounted by the inflation rate incorporated into those valuations.
The full life inflated base value is the appraiser's opinion of the underlying
economic value of the aircraft in an open, unrestricted, stable market
environment with a reasonable balance of supply and demand and assumes full
consideration of its 'highest and best use'. The full life inflated values
used within the financial statements match up the two lease termination dates
(October 2026 and December 2026) and have been discounted by the inflation
rate incorporated into the valuations. The residual value of the aircraft does
not represent the current fair value of the aircraft.
The residual value estimates at the end of each year are used to determine the
aircraft depreciation of future periods. The residual value estimates for
aircraft as at 31 December 2023 was US$ 122,852,389 (2022: US$ 120,247,838),
carrying value as at 31 December 2023 was US$ 124,122,582 (2022: US$
125,466,080).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
4) LEASE RENTAL INCOME
2023 2022
US$ US$
Variable rental (PBH rent) income - 7,709,166
Straight lining rental income 8,714,249 8,753,206
Total lease rental income 8,714,249 16,462,372
All lease rental income was derived from Thai Airways and the related two
Boeing 787-8 aircraft leased to them.
Until 31 December 2022 the lease terms provided for a power by the hour
('PBH') arrangement (i.e., rent was payable by reference to actual monthly
utilisation of the Thai aircraft). After 31 December 2022, lease payments are
fixed at US$ 510,000 per month until October and December 2026 respectively
for each lease.
The lease term may be extended by three years to October 2029 for aircraft MSN
36110 and December 2029 for aircraft MSN 35320 (the "Extension Period") with
further scaled back monthly lease payments starting from November 2026 and
January 2027 respectively. The Extension Period is however subject to
agreement with the Group after consulting the Lenders. The lease term has been
determined to be the period to October 2026 and December 2026 which is the
non-cancellable term of each aircraft lease.
The contracted cash lease rental payments to be received under non-cancellable
operating leases at the reporting date are:
Boeing 787-8 Boeing 787-8
Serial No: 35320 Serial No: 36110 Total
31 Dec 2023 US$ US$ US$
2024 6,120,000 6,120,000 12,240,000
2025 6,120,000 6,120,000 12,240,000
2026 5,758,065 5,067,097 10,825,162
17,998,065 17,307,097 35,305,162
31 Dec 2022 US$ US$ US$
2023 6,120,000 6,120,000 12,240,000
2024 6,120,000 6,120,000 12,240,000
2025 6,120,000 6,120,000 12,240,000
2026 5,758,065 5,067,097 10,825,162
24,118,065 23,427,097 47,545,162
US$ 10,038,709 (2022: US$ 13,525,502) of the future contracted lease rental
payments are recognised as a straight lining lease asset as at year end.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
5) GENERAL AND ADMINISTRATIVE EXPENSES
2023 2022
US$ US$
Administration fees 227,569 259,437
External accounting services 21,726 36,810
Aircraft agency fees 5,523 12,033
Aircraft valuation fees 13,266 9,092
Aircraft security trustee fees 25,079 12,000
Audit fees 123,398 69,895
Interim audit fees - 12,810
Company broker fees 167,899 167,902
Directors' fees and expenses 196,520 212,593
Insurance costs, including directors' insurance 89,249 100,873
Foreign exchange 26,095 4,974
IT and printing costs 19,036 22,378
Legal fees 8,194 3,157
Miscellaneous costs 12,911 8,399
Registrar fees 26,016 28,738
Other expenses 14,213 20,725
Total ongoing costs 976,694 981,816
Restructuring fees 152,946 112,771
Total general and administrative expenses 1,129,640 1,094,587
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
6) FINANCE COSTS
2023 2022
US$ US$
Loan interest 4,494,653 4,860,305
Loan Modification adjustment 5,042,029 -
Loan arrangement fee 14,993 -
Total finance costs 9,551,675 4,860,305
During the period there was a restructure of the loans advanced by DekaBank.
Management, in line with IFRS 9, assessed whether the modification was
substantial or not. The assessment was done on a quantitative basis and
compared the net present value of the modified cash flows per the amended loan
terms including any fees payable or receivable, discounted at the original
effective interest rate, against the carrying value of the loans prior to the
modification. A difference of 10% or more would have been considered
substantial as is advised in IFRS 9. Management concluded that the
modification was not substantial, and a modification adjustment, being the
difference between the net present value of the cash flows under the revised
terms discounted at the original agreement's effective interest rate and the
carrying value of the loans immediately prior to the modification, was made to
the existing loan in line with IFRS 9. This totalled US$ 5,042,029 and
increased both finance costs and the loans payable at the point of
modification. This adjustment essentially recognises a loss now due to the
less favourable terms (primarily interest rate increases) under the modified
terms compared to the original terms. As a result of this adjustment, interest
will be recognised at the lower original effective interest rate as opposed to
the higher modified interest rate going forward.
7) TAXATION
With the exception of DP Aircraft UK Limited, all companies within the Group
are exempt from taxation in Guernsey and are charged an annual exemption fee
of £1,600 each (2022: £1,200).
DP Aircraft UK Limited are subject to taxation at the applicable rate in the
United Kingdom. They recorded a tax benefit of US$3,603 during the year
compared to a tax expense of US$21,249 in 2022. The Directors do not expect
the taxation payable to be material to the Group.
A tax reconciliation has not been presented in these Financial Statements as
the effective tax rate is not material and the reconciliation is not relevant
to the understanding of the Company's results for the year end.
8) EARNINGS PER SHARE
2023 2022
US$ US$
(Loss)/Profit for the year (2,505,687) 7,660,823
Weighted average number of shares 239,333,333 223,388,128
(Loss)/Earnings per Share (0.01047) 0.03429
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
9) PROPERTY, PLANT & EQUIPMENT - AIRCRAFT & RELATED
COMPONENTS
Aircraft Lease Premium Total
US$ US$ US$
COST
As at 1 January 2023 and 31 December 2023 238,731,161 17,398,493 256,129,654
ACCUMULATED DEPRECIATION / AMORTISATION
As at 1 January 2023 54,425,384 8,200,047 62,625,431
Charge for the year 1,343,498 - 1,343,498
As at 31 December 2023 55,768,882 8,200,047 63,968,929
IMPAIRMENT
As at 1 January 2023 58,839,697 9,198,446 68,038,143
Charge for the year - - -
As at 31 December 2023 58,839,697 9,198,446 68,038,143
CARRYING AMOUNT
As at 31 December 2023 124,122,582 - 124,122,582
Aircraft Lease Premium Total
US$ US$ US$
COST
As at 1 January 2022 and 31 December 2022 238,731,161 17,398,493 256,129,654
ACCUMULATED DEPRECIATION / AMORTISATION
As at 1 January 2022 53,466,624 8,200,047 61,666,671
Charge for the year 958,760 - 958,760
As at 31 December 2022 54,425,384 8,200,047 62,625,431
IMPAIRMENT
As at 1 January 2022 58,839,697 9,198,446 68,038,143
Charge for the year - - -
As at 31 December 2022 58,839,697 9,198,446 68,038,143
CARRYING AMOUNT
As at 31 December 2022 125,466,080 - 125,466,080
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
9) PROPERTY, PLANT & EQUIPMENT - AIRCRAFT & RELATED
COMPONENTS (CONTINUED)
As at year end PPE is comprised of two aircraft leased to Thai Airways under
an operating lease. Under the terms of the leases that existed during the
year, the cost of repair and maintenance of the Assets is to be borne by Thai
Airways and Thai Airways has an obligation to return the Assets in a full life
condition. However, after expiry or termination of the leases with Thai, the
cost of repair and maintenance will fall upon the Group. Therefore, after
expiry or termination of the Thai leases, the Group may bear higher costs and
the terms of any subsequent leasing arrangements (including terms for repair,
maintenance and insurance costs relative to those agreed under the leases) may
be less favourable, which could reduce the overall distributions paid to the
shareholders.
Refer to note 3 for details regarding residual value estimates. The Group
depreciates the aircraft on a straight-line basis over the remaining lease
term. The lease term has been determined to end in 2026.
As detailed in note 3, as at 31 December 2023 there is no impairment to the
aircraft and there are no indications of reversal of prior year impairment
either. Refer to note 3 for further details.
The loans entered into by the Group to complete the purchase of the two Thai
aircraft are cross collateralised. Each of the loans are secured by way of
security taken over each of the two aircraft.
10) RESTRICTED CASH
2023 2022
Current assets US$ US$
Security deposit accounts 97 91
Lease rental accounts 1,093,662 4,175,189
1,093,759 4,175,280
Non-current assets
Maintenance reserves accounts 15,735,805 14,979,197
Total restricted cash 16,829,564 19,154,477
Maintenance reserves held at reporting date, are to be used solely to cover
costs related to the maintenance of the two aircraft. Effective 15 June 2021,
the Group no longer receives maintenance reserves contributions from the
lessee in line with the updated lease terms.
The majority of security deposits were transferred to Lease Rental Accounts
during the prior period and are being used to service loan payments due to
DekaBank in accordance with the DekaBank financing arrangements. Monies
received into the Lease Rental Accounts during the fixed rent period are to be
transferred into Borrower Rental Accounts and applied in a specific manner as
agreed between DekaBank and the Group. Access to the Lease Rental Accounts,
Security deposit accounts and Maintenance reserves accounts is physically
restricted by DekaBank therefore these monies are classified as restricted
cash.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
11) TRADE AND OTHER RECEIVABLES
2023 2022
US$ US$
Prepayments 61,914 82,333
Rent receivable - 671,585
Straight-lining lease asset 10,038,709 13,525,503
Total trade and other receivables 10,100,623 14,279,421
Less: Expected credit loss on straight lining lease asset (1,103,254) (1,486,453)
Net trade and other receivables 8,997,369 12,792,968
Current and non-current split as at year end is as follows:
2023 2022
Current assets US$ US$
Prepayments 61,914 82,333
Rent receivable - 671,586
Straight-lining lease asset 3,082,249 3,103,595
3,144,163 3,857,514
Non-current assets
Straight-lining lease asset 5,853,206 8,935,454
Trade and other receivables 8,997,369 12,792,968
The Group has assessed the straight-lining lease asset
for impairment. This balance represents the result of straight lining of
future fixed Thai lease payments over the lease term. The Group has performed
an assessment on the straight-lining lease asset taking into account current
and future information relating to the airline industry as well as the lessee
specifically and concluded that the expected credit loss provision as at 31
December 2023 is US$ 1,103,254 (2022: US$ 1,486,453). For the remaining
receivables, the Group has concluded that these are not material thus any
provision, if any, would also be immaterial and so no further assessment is
necessary.
Movements in the impairment provision for trade
receivables is as follows:
2023 2022
US$ US$
Opening provision 1,486,453 -
Expected credit loss on straight lining lease asset (383,199) 1,486,453
Expected credit loss on lease receivable - 105,063
Lease receivable written off - (105,063)
Closing provision 1,103,254 1,486,453
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
12) MAINTENANCE PROVISION
The maintenance reserves liability relates to funds received from Thai Airways
reserved for covering the cost of maintenance. Effective 15 June 2021, the
Group no longer receives maintenance reserves contributions from the lessee in
line with the updated lease terms.
13) TRADE AND OTHER PAYABLES
2023 2022
Current US$ US$
Accruals and other payables 255,581 221,749
Asset Manager fees payable (note 22) 283,011 218,033
Broker fees payable 321,809 167,902
Director fees payable (note 21) 225,105 212,360
Taxation payable 6,560 21,249
Total trade and other payables 1,092,066 841,293
All directors, brokers fees and most of the asset manager fees have been
classified as current liabilities under IFRS but these creditors have agreed
the amounts are not payable within twelve months unless there is an asset
sale.
14) BANK BORROWINGS
2023 2022
US$ US$
Current liabilities: Bank interest payable and Bank borrowings 17,707,184
(7,684,502)
Non-current liabilities: Bank borrowings (85,027,721) 80,779,172
Total liabilities (92,712,223) 98,486,356
The borrowings are repayable as follows:
Interest payable
183,992 181,493
Within one year 7,500,510 17,525,691
In two to five years 85,027,721 80,779,172
Total Bank borrowings 92,712,223 98,486,356
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
14) BANK BORROWINGS (CONTINUED)
The table below analyses the movements in the Group's bank borrowings:
2023 2022
US$ US$
Opening balance 98,304,863 98,304,863
Loan modification adjustment (note 6) 5,042,029 -
Repayment of loan (9,556,363) -
Amortisation payable (1,262,298) -
Principal Bank borrowings 92,528,231 98,304,863
Interest payable 183,992 181,493
Total Bank borrowings 92,712,223 98,486,356
The table below sets out an analysis of net debt and the movements in net debt
for the year ended 31 December 2023
Cash and cash equivalents Principal Interest Net Debt
US$ US$ US$ US$
At 1 January 2023 1,479,541 (98,304,863) (181,493) (97,006,815)
Cash flows (565,036) 9,556,363 5,769,445 14,760,772
Non cash: -
Modification adjustment - (5,042,029) - (5,042,029)
Amortisation adjustment - 1,262,298 (1,262,298) -
Interest charge - - (4,494,653) (4,494,653)
Loan arrangement fee - - (14,993) (14,993)
At 31 December 2023 914,505 (92,528,231) (183,992) (91,797,718)
Cash and cash equivalents Principal Interest Net Debt
US$ US$ US$ US$
At 1 January 2022 1,179,211 (98,304,863) (136,010) (97,261,662)
Cash flows 300,330 - 4,814,822 5,115,152
Non cash: -
Interest charge - - (4,860,305) (4,860,305)
At 31 December 2022 1,479,541 (98,304,863) (181,493) (97,006,815)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
14) BANK BORROWINGS (CONTINUED)
DekaBank
On 6 May 2021, subsequent to the LOI being entered into by the Group and Thai
as described in the summary in page 4, the Group and DekaBank amended and
restated the existing loan facility agreements in respect of the Thai aircraft
to accommodate the new lease terms, First Amendment and Restatement to the
Loan Agreements. Repayments of principal were deferred until after the end of
the PBH arrangement (31 December 2022), and a new repayment schedule was to be
renegotiated close to the end of the PBH arrangement.
On 7 February 2023, the Group and DekaBank entered into a Second Amendment and
Restatement to the Loan Agreement in which the parties agreed on the following
main terms:
· The total loan amount outstanding was split into two tranches:
o Facility A loan of US$ 61,144,842, made up of MSN 35320 loan of US$
31,099,453 and MSN 36110 loan of US$ 30,045,389. The Facility A loan amortizes
to a combined balloon of US$ 33,947,878 and represents the scheduled debt.
o Facility B loan of US$ 35,504,024 (non-amortizing), made up of MSN 35320
loan of US$ 17,366,650 and MSN 36110 loan of US$ 18,137,374. The Facility B
loan will be settled as a balloon payment at the end of the loan term in 2026.
· USD 2.36m of surplus cash generated under the PBH period was used to
immediately repay debt on the amortizing Facility A loan in February 2023,
while an agreed cash reserve of US$ 500,000 per aircraft will be retained to
cover unforeseen costs going forward.
· the interest rate swap in place for the scheduled debt was dissolved
at no net gain or loss.
· the MSN 35320 and MSN 36110 Facility A loans bear fixed interest
rates of 6.61% and 6.89% respectively.
· the MSN 35320 and MSN 36110 Facility B loans bear fixed interest
rates of 5.26% and 5.42% respectively.
· From the monthly fixed lease rental of US$ 510,000 per aircraft
(which denotes the maximum amount the Company can earn in operations per
month), US$ 475,000 is legally restricted so that those funds are only payable
to the lenders, while the remaining US$ 35,000 per aircraft can be retained by
the company to contribute towards ongoing fixed costs of the Company.
The MSN 35320 loan and the MSN 36110 loan have a final maturity date of 9
December 2026 and 29 October 2026 respectively.
Due to the limited liquidity position of the Group, restructuring fees
associated with the second amendment and restatement will be paid after the
eventual remarketing of the aircraft, subject to surplus sales proceeds being
realised.While there are covenants attached to the loans, there has been no
issues of non-compliance within the period.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
15) SHARE CAPITAL
Company's authorised share capital is unlimited.
Year ended 31 December 2023 Subordinated
Administrative Ordinary
Share Shares Total
Issued and fully paid (no par value shares): Number Number Number
Shares as at 1 January 2023 1 239,333,333 239,333,334
Shares as at 31 December 2023 1 239,333,333 239,333,334
US$ US$ US$
Share capital as at 1 January 2023 - 211,279,828 211,279,828
Share capital as at 31 December 2023 - 211,279,828 211,279,828
Year ended 31 December 2022 Subordinated
Administrative Ordinary
Share Shares Total
Issued and fully paid (no par value shares): Number Number Number
Shares as at 1 January 2022 1 209,333,333 209,333,334
Share issued during the year - 30,000,000 30,000,000
Shares as at 31 December 2022 1 239,333,333 239,333,334
US$ US$ US$
Share capital as at 1 January 2022 - 210,556,652 210,556,652
Proceeds from issue of shares 750,000 750,000
Issue cost paid - (26,824) (26,824)
Share capital as at 31 December 2022 - 211,279,828 211,279,828
Subject to the applicable company law and the Company's Articles of
Incorporation, the Company may issue an unlimited number of shares of par
value and/or no par value or a combination of both.
The Subordinated Administrative Share is held by DS Aviation GmbH & Co.
KG, (the Asset Manager).
Holders of Subordinated Administrative Shares are not entitled to participate
in any dividends and other distributions of the Company. On a winding up of
the Company the holders of the Subordinated Administrative Shares are entitled
to an amount out of the surplus assets available for distribution equal to the
amount paid up, or credited as paid up, on such shares after payment of an
amount equal to the amount paid up, or credited as paid up, on the Ordinary
Shares to the Shareholders. Holders of Subordinated Administrative Shares
shall not have the right to receive notice of and have no right to attend,
speak and vote at general meetings of the Company except if there are no
Ordinary Shares in existence.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
15) SHARE CAPITAL (CONTINUED)
The Directors are entitled to issue and allot C Shares. No C Shares have been
issued since the Company was incorporated.
On 13 July 2022 the Company raised gross proceeds of $750,000 through the
issue of 30,000,000 new ordinary shares in the capital of the Company at a
price of US$0.025 per new ordinary share.
16) ACCUMULATED LOSSES
The movements in the Group's accumulated losses are shown on page 52.
Accumulated losses comprise accumulated profits and losses over time.
17) DIVIDENDS
The dividends declared and paid during the year ended 31 December 2023 are US$
nil (2022: US$ nil).
On 3 April 2020, the Company announced a suspension of dividends until further
notice due to the impact of Covid-19 in global aviation and especially with
long haul operations. The suspension is continuing and as noted in Summary
report on pages 4 to 6, there is no realistic prospect of the Company's
shareholders receiving a dividend or other distribution.
18) INVESTMENT IN SUBSIDIARY UNDERTAKINGS
The Company's investments in subsidiaries, all of which have been included in
these consolidated financial statements, are as follows:
Proportion of
Date of Country of ownership interest
Name Incorporation Incorporation at 31 December 2023
DP Aircraft Guernsey III Limited 21 May 2015 Guernsey 100%
DP Aircraft Guernsey IV Limited 21 May 2015 Guernsey 100%
DP Aircraft UK Limited 14 April 2015 United Kingdom 100%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
19) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The following table details the categories of financial instruments held by
the Group at the reporting date:
2023 2022
US$ US$
Cash and cash equivalents 914,505 1,479,541
Restricted cash 16,829,564 19,154,477
Trade and other receivables (excluding prepayments and straight-lining lease -
asset)
671,586
Financial assets measured at amortised cost 17,744,069 21,305,604
Financial liabilities
Bank borrowings 92,712,223 98,486,356
Maintenance provision 14,829,296 14,829,296
Trade and other payables (excluding tax) 1,092,066 841,293
Financial liabilities measured at amortised cost 108,633,585 114,156,945
The primary risks arising from the Group's financial instruments are capital
management, credit risk, market risk and liquidity risk. The principal nature
of such risks is summarised below. The Group's main financial instruments as
at year end comprised of cash and cash equivalents, restricted cash,
maintenance reserves payable and bank loans.
Capital Management
The capital managed by the Group comprises the ordinary shares and the
subordinated administrative shares. The Company is not subject to externally
imposed capital requirements.
Until COVID-19 and the impact on the aircraft industry and the lessees, income
distributions were generally made quarterly, subject to compliance with
Applicable Law and regulations, in February, May, August and November of each
year. The Company aimed to make a distribution to investors of US$ 0.0225 per
share per quarter. As a result of the COVID-19 pandemic impact on global
aviation and especially its lessees, the Group has suspended dividends until
further notice to help preserve liquidity.
Credit risk
Credit risk is the risk that a significant counterparty will default on its
contractual obligations. The Group's main counterparty during the year was
Thai Airways as lessee and provider of income. The Group, through the Asset
Manager, mitigates credit risk related to Thai Airways through regular
monitoring of Thai's use of the aircraft, review of Thai's financial position,
performance, and prospects and through a general review of the performance of
the airline market.
The Group assesses the probability of Thai defaulting under different
scenarios and the losses that would be incurred under those different
scenarios. The probability of each default scenario occurring and the related
loss that would be incurred under that scenario is determined taking into
account Thai's historic financial position, performance and future prospects.
The general performance of the Thai economy and the overall airline industry
is also considered in the assessment.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
19) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
Credit risk (continued)
There are gross lease rentals receivable from Thai at 31 December 2023, US$
nil (2022: US$ 671,586). A full lifetime ECL was recognised for the lease
rentals receivable from Thai in the prior year however no ECL has been
recognised for the balance due as at year end (see note 11). Furthermore, the
Group has also recognised a gross straight lining lease asset as at 31
December 2023 of US$ 10,038,709 (2022: US$ 13,525,502). A provision is
recognised against this straight lining lease asset as at 31 December 2023 of
US$ 1,103,254 (2022: US$ 1,486,453). Refer to note 11 for further details.
Whilst the Board expect that the approved Thai rehabilitation plan will
succeed, the final outcome of these proceedings is unknown, refer to the Asset
Manager Report on pages 11 to 23 for more details regarding the rehabilitation
process. Failure of any material part of the rehabilitation plan may have an
adverse impact on its ability to comply with its obligations under the lease
(see note 4 for details re obligations of lessee).
Cash and restricted cash are all held at DekaBank. The credit rating of
DekaBank by Moody' is Aa2 (2022: Aa2). The lessees do not maintain a credit
rating.
The carrying amount of financial assets measured at amortised cost recorded in
the financial statements represents the Group's maximum exposure to credit
risk. The Group holds no collateral as security or any other credit
enhancements.
Market risk - interest rate risk
Interest rate risk arises on the Group's various interest-bearing assets and
liabilities from changes in the general economic conditions of the market from
time to time. The bank borrowings have the most significant interest impact on
the Group. As detailed in note 14, the Group's bank borrowings were amended
and restated. As part of the amendment and restatement, interest rates were
set at fixed rates. Therefore, the Group's interest rate exposure is currently
limited only to the restricted cash and bank balances which earn an immaterial
amount of interest. As a result, the Group has no material exposure to
interest rate risk subsequent to year end.
A 0.25% increase or decrease in interest rates on all interest-bearing
financial instruments would result in an increase or decrease in net finance
costs for the year of US$ 186,960 (2022: US$ 194,177).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
19) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
The following table details the Group's exposure to interest rate risk as at
year end:
Non-interest
Fixed rate Variable rate bearing
31 December 2023 instruments instruments instruments Total
US$ US$ US$ US$
Restricted cash - 16,829,564 - 16,829,564
Trade and other receivables (excluding prepayments and straight-lining lease - - - -
asset)
Cash and cash equivalents - 914,505 - 914,505
Total financial assets - 17,744,069 - 17,744,069
Trade and other payables - - (1,092,066) (1,092,066)
Maintenance reserves - - (14,829,296) (14,829,296)
Bank borrowings* (92,528,231) - (183,992) (92,712,222)
Total financial liabilities (92,528,231) - (16,105,354) (108,633,585)
Total interest rate sensitivity gap (92,528,231) 17,744,069
*Interest is charged on the deferred portion of the loan based on a variable
rate and a fixed rate for the loan portion not deferred.
Non-interest
Fixed rate Variable rate bearing
31 December 2022 instruments instruments instruments Total
US$ US$ US$ US$
Restricted cash - 19,154,477 - 19,154,477
Trade and other receivables (excluding prepayments and straight-lining lease - - 671,586 671,586
asset)
Cash and cash equivalents - 1,479,541 - 1,479,541
Total financial assets - 20,634,018 671,586 21,305,604
Trade and other payables - - (820,044) (820,044)
Maintenance reserves - - (14,829,296) (14,829,296)
Bank borrowings (62,800,839) (35,504,024) (181,493) (98,486,356)
Total financial liabilities (62,800,839) (35,504,024) (15,830,833) (114,135,696)
Total interest rate sensitivity gap (62,800,839) (14,870,006)
Market risk - foreign currency risk
The Group's exposure to foreign currency risk is not significant as its cash
flows are predominantly in US$ which is the functional currency of the company
and subsidiaries, and presentation currency of the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
19) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
its obligations in respect of its financial liabilities. The Group's main
financial commitments are the loans due to DekaBank as well as meeting its
ongoing operating expenses.
Liquidity risk management
In the event that the Leases are terminated as a result of a default by Thai
Airways, there is a risk that the Group will not be able to remarket the Thai
Assets successfully within the remarketing period specified in the loan
agreements and that the Group will not have sufficient liquidity to comply
with its obligations under the Loan Agreements. This may lead to a continued
suspension in distributions paid on the shares and/or a reduction in the value
of the shares and have an adverse effect on the Group and could ultimately
result in the Dekabank enforcing their security and selling the relevant Asset
or Assets on the market. There can be no guarantee that the Group will be able
to re-lease the Assets on terms equivalent to the existing leases, which may
have an adverse effect on the Group and its ability to meet its investment
objective and its dividend target. Accordingly, were any or all of the Assets
to be re-leased on less favourable terms, this may have an adverse effect on
the Group and its share price. The Group monitors the impact of its
obligations, including the Dekabank loan, on liquidity through cash flow
forecasts which are prepared on a monthly basis.
As detailed in note 14, the Group has successfully renegotiated an amendment
to the Dekabank loans and new terms were agreed. The new terms agreed change
the liquidity profile of the Group compared the analysis shown below. Under
the new terms, total loan repayments will be US$ 950,000 per month (US$
475,000 for each of the two loans), see note 14 for further details.
The following table details the contractual maturity analysis of the Group's
financial liabilities as at 31 December 2023. The amounts are contractual
undiscounted cash flows and therefore will not agree directly to the balances
in the consolidated statement of financial position as at 31 December 2023.
31 December 2023 Next 12 months 2-5 years After 5 years Total
US$ US$ US$ US$
Bank borrowings and interest (11,400,000) (91,301,902) - (102,701,902)
Maintenance provision - (14,829,296) - (14,829,296)
Trade and other payables (1,092,066) - - (1,092,066)
Total (12,492,066) (106,131,198) - (118,623,264)
31 December 2022 Next 12 months 2-5 years After 5 years Total
US$ US$ US$ US$
Bank borrowings and interest (20,172,088) (92,309,392) - (112,481,480)
Maintenance provision - (14,829,296) - (14,829,296)
Trade and other payables (841,293) - - (841,293)
Total (21,013,381) (107,138,688) - (128,152,069)
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 percent of the net asset value of the
Group at the time of drawdown.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
19) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
Liquidity risk (continued)
Liquidity risk management
Borrowing facilities will only be drawn down with the approval of the
Directors on a case-by- case basis. The Directors may also draw down on an
overdraft facility for extraordinary expenses determined by them, on the
advice of DS Aviation, to be necessary to safeguard the overall investment
objective. With the exception of the loans, the Directors have no intention,
as at the date of this report, to use such borrowings or overdraft facility
for structural investment purposes.
No right of redemption or repurchase
Shareholders have no right to have their shares redeemed or repurchased by the
Company at any time. Shareholders wishing to realise their investment in the
Company would be required to dispose of their shares on the stock market.
Accordingly, the ability of shareholders to realise the Net Asset Value of, or
any value in respect of, their shares is mainly dependent on the existence of
a liquid market in the shares and the market price of such shares.
Liquidity Proposal
Although the Company does not have a fixed life, the Articles require that the
Directors convene a Liquidity Proposal Meeting to be held no later than 30
June 2026 at which a Liquidity Proposal in the form of an ordinary resolution
will be put forward proposing that the Company should proceed to an orderly
wind-up at the end of the term of the leases. In the event the Liquidity
Proposal is not passed, the Directors will consider alternatives for the
Company and shall propose such alternatives at a general meeting of the
shareholders, including re-leasing the Assets, or selling the Assets and
reinvesting the capital received from the sale of the Assets in other
aircraft.
20) FAIR VALUE MEASUREMENT
The accounting policies and basis of measurement in respect of financial
instruments are detailed in note 2.
Financial assets and financial liabilities at amortised cost
The fair value of cash and cash equivalents, trade and other receivables
(excluding prepayment and straight lining lease asset), restricted cash and
interest payable approximate their carrying amounts due to the short-term
maturities of these instruments.
21) RELATED PARTY TRANSACTIONS
The Directors who served during the year received the following remuneration:
2023 2022
US$ US$
Jonathan Bridel (Chairman) 78,608 80,701
Jeremy Thompson (Chairman of the Audit Committee and Senior Independent 62,950 60,064
Director)
Harald Brauns (Chairman of the Management Engagement Committee) 62,950 65,503
Total 204,508 206,268
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
21) RELATED PARTY TRANSACTIONS (CONTINUED)
Up to 30 September 2022, 10% of base fees and all extra fees were not paid by
way of cash payments but were deferred to be settled in the future or to be
paid by way of equity. There has been no settlement of director remuneration
via the issue of equity in the current year (2022: US$ nil) and the deferred
fees remain outstanding as at 31 December 2023 (see note 13).
During the year, the total fees and expenses for Directors amounted to
£196,520 (2022: 212,593). Due to the deferral of fees, the outstanding
Directors' fees payable at year end was 225,105 (2022:212,360).
Base annual fees are as follows:
Annual Fees Jan 23 to Dec 23 Oct 22 to Dec 22 Jan 22 to Sept 22
Jonathan Bridel £61,750 £61,750 £66,000
Jeremy Thompson £49,450 £49,450 £53,700
Harald Brauns £49,450 £49,450 £53,800
*Note: Directors fees were agreed in GBP, the financial statements are
presented in USD
Director fees have been reduced by 10% which was the portion being deferred
and possibly payable in shares. The reduction in fees are effective 1 October
2022.
The Directors interests in the shares of the Company as at 31 December 2023
are set out below:
Number of Number of
ordinary shares ordinary shares
31 December 2023 31 December 2022
Connected parties of Jon Bridel 90,000 90,000
Jeremy Thompson 15,000 15,000
Harald Brauns - -
There has been no distribution of dividends to the directors during the year
ended 31 December 2023 (2022:US$ nil)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
22) MATERIAL CONTRACTS
Asset Management Agreement
The Asset Management Agreement dated 19 September 2013, between the Group and
DS Aviation was initially amended on 5 June 2015 to reflect the acquisition of
two new aircraft. A second amendment via a side letter, effective 1 January
2021, was made to the Asset Management Agreement on 7 May 2021.
Disposal fee
The initial amendment provides a calculation methodology for the disposal fee
which will only become payable when all four of the Assets (first two
currently under receivership and second two currently held by the Group) have
been sold after the expiry of the second Thai Airways lease in December 2026.
The fee will be calculated as a percentage of the aggregate net sale proceeds
of the four assets, such percentage rate depending upon the Initial Investor
Total Asset Return per share being the total amount distributed to an initial
investor by way of dividend, capital return or otherwise over the life of the
Company. If each of the Assets is sold subsequent to the expiry of their
respective leases, the percentage rate shall be:
· Nil if the Initial Investor Total Asset Return per Share is less than
205%;
· 1.5% if the Initial Total Asset Return per Share equals or exceeds
205% but is less than 255%;
· 2% if the Initial Total Asset Return per Share equals or exceeds 255%
but is less than 305%; or
· 3% if the Initial Total Asset Return per Share equals or exceeds
305%.
Management fees
In the event that any of the Assets are sold prior to the expiry of its lease
the percentage hurdles set out above will be adjusted on the following basis:
· An amount will be deducted in respect of each Asset sold prior to the
expiry of its lease, equal to the net present value of the aggregate amount of
dividends per Share that were targeted to be paid but were not paid as a
result of the early divestment of the relevant Asset; and
· A further amount will be deducted, in respect of each Asset sold
prior to the expiry of its lease, equal to the amount by which the proportion
of the non-dividend component of the relevant percentage hurdle attributable
to the relevant Asset would need to be reduced in order to meet its net
present value.
Per the second amendment, payment of any Disposal Fee per above (if any) in
connection with the sale of any of the Assets that were under receivership is
subordinated to the DekaBank loans and will only become payable after the
loans (including the deferred element) have been repaid or prepaid in full.
The disposal fee is a cash-settled payment to the Asset Manager. There is no
disposal fee expected to be payable as at 31 December 2023 (2022: US$ nil).
The Asset Manager is paid a monthly base fee of US$ 15,085 (US$ 16,666 up to
31 December 2020) per asset in respect of the two Assets that are currently
held by the Group, increasing by 2.5 per cent per annum from May 2021.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 31 December 2023
22) MATERIAL CONTRACTS (Continued)
Management fees (Continued)
As consideration for the Asset Manager agreeing to a reduction of the monthly
base fee in respect of the two Assets that are currently held by the Group,
the Company agreed that, when permissible as advised by the corporate broker,
the Asset Manager shall receive an allocation of shares in the Company
determined to be of a value equivalent to the reduction in the monthly base
fee with respect to the two Assets. The share allocation will be carried out
using a share price for the conversion which is fair and reasonable as advised
by corporate broker.
In the year ended 31 December 2023 Asset Management fees totalled US$ 450,890
(2022: US$ 471,590) of which US$ 283,011 was due as at 31 December 2023 (2022:
US$ 218,033). As discussed in note 13, the amount due are not payable within
twelve months unless there is an asset sale.
Administration Agreement
The Administrator of the Company is Aztec Financial Services (Guernsey)
Limited. Aztec Financial Services (Guernsey) Limited and Aztec Financial
Services (UK) Limited provide administration services to the Company's
underlying subsidiaries. These administrator companies are collectively known
as the "Administrators".
Total fees charged by the Administrators during the year were US$ 249,295
(2022:US$ 305,896) of which US$ 29,998 remained payable at 31 December 2023
(2022: US$ 57,711).
The Administrators have the right to be reimbursed from the Company for any
reasonable out of pocket expenses incurred in carrying out their
responsibilities.
Directors' fees
Details of the fees paid to the Directors are included in note 21.
23) SUBSEQUENT EVENTS
There are no relevant subsequent events to disclose in these annual financial
statements.
COMPANY INFORMATION
Directors Jonathan Bridel
Jeremy Thompson
Harald Brauns
Registered Office East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3PP, Channel Islands
Asset Manager DS Aviation GmbH & Co. KG
Stockholmer Allee 53
44269 Dortmund
Germany
Solicitors to the Company Norton Rose Fulbright LLP
(as to English law) 3 More London Riverside
London
SE1 2AQ, United Kingdom
Advocates to the Company Mourant
(as to Guernsey law) Royal Chambers
St Julian's Avenue
St Peter Port
Guernsey
GY1 1HP, Channel Islands
Auditor KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
St Peter Port
Guernsey
GY1 1WR, Channel Islands
Administrator and Company Secretary Aztec Financial Services (Guernsey) Limited
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey
GY1 3PP, Channel Islands
Corporate Broker Investec Bank plc
30 Gresham Street
London
EC2V 7QN, United Kingdom
THE FOLLOWING PAGES DO NOT FORM PART OF THE AUDITED FINANCIAL STATEMENTS
APPENDIX 1 - ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE
REGULATORY REFERENCE DOCUMENT NAME, PAGE AND REFERENCE
AIFMD Article 23(1)
(a) a description of the investment strategy and objectives of the AIF; Prospectus, page 34, Information on the Company.
if the AIF is a feeder AIF, information on where the master AIF Not applicable.
is established;
if the AIF is a fund of funds, information on where the Not applicable.
underlying funds are established;
a description of the types of assets in which the AIF may invest; Prospectus, page 34, Information on the Company.
the investment techniques that the AIF, or the AIFM on behalf of Prospectus, page 34, Information on the Company.
the AIF, may employ and all associated risks;
Prospectus, pages 17-27, risk factors.
any applicable investment restrictions; Prospectus, page 24, risk relating to an investment ins the shares
the circumstances in which the AIF may use leverage; Prospectus, page 18, Risk of Debt Financing.
the types and sources of leverage permitted and the associated Prospectus, page 18, Risk of Debt Financing.
risks;
any restrictions on the use of leverage and any collateral and Prospectus, page 18, Risk of Debt Financing.
asset reuse arrangements; and
the maximum level of leverage which the AIFM is entitled to Prospectus, page 18, Risk of Debt Financing.
employ on behalf of the AIF;
(b) a description of the procedures by which the AIF may change its investment Prospectus, page 34, Investment Policy.
strategy or investment policy, or both;
(c) a description of the main legal implications of the contractual Prospectus, page 66, Part IX, The Loans and the Loan Agreements.
relationship entered into for the purpose of investment, including information
on jurisdiction, the applicable law and the existence or absence of any legal Prospectus, page 130, Part IV, Definitions.
instruments providing for the recognition and enforcement of judgments in the
territory where the AIF is established;
(d) the identity of the AIFM, the AIF's depositary, the auditor and any other Prospectus, page 32, Directors and Advisers.
service providers and a description of their duties and the investors' rights;
(e) a description of how the AIFM complies with the AIFMD's requirements Prospectus, page 123, Representation and Warranties
relating to professional liability risk;
APPENDIX 1 - ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (CONTINUED)
REGULATORY REFERENCE DOCUMENT NAME, PAGE AND REFERENCE
AIFMD Article 23(1)
(f) a description of:
any AIFM management function delegated by the AIFM; Not applicable.
any safe-keeping function delegated by the depositary; Not applicable.
the identify of each delegate appointed; and Not applicable.
any conflicts of interest that may arise from such delegations; Not applicable.
(g) a description of the AIF's valuation procedure and of the pricing Prospectus, page 21, Valuation of the assets
methodology for valuing assets, including the methods used in valuing any
hard-to-value assets;
(h) a description of the AIF's liquidity risk management, including the Prospectus, page 38, Liquidity Reserve
redemption rights of investors in normal and exceptional circumstances, and
the existing redemption arrangements with investors;
(i) a description of all fees, charges and expenses, and the maximum Prospectus, pages 42-43, Fees and Expenses.
amounts directly or indirectly borne by investors;
(j) a description of how the AIFM ensures a fair treatment of investors; Prospectus, page 92, Share Capital
whenever an investor obtains preferential treatment or the right Prospectus, page 92, Share Capital
to obtain preferential treatment, a description of:
that preferential treatment; Prospectus, page 92, Share Capital
the type of investors who obtain such preferential treatment; and Prospectus, page 92, Share Capital
where relevant, their legal or economic links with the AIF or Not applicable.
AIFM;
(k) the latest annual report Contained in this document.
(l) the procedure and conditions for the issue and sale of units or Prospectus, page 92, Share Capital
shares;
(m) the latest net asset value of the AIF or the latest market price of the The Company's shares are traded on the London Stock Exchange so the latest
unit or share of the AIF; share price should be available on www.londonstockexchange.com
(http://www.londonstockexchange.com) .
APPENDIX 1 - ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (CONTINUED)
REGULATORY REFERENCE DOCUMENT NAME, PAGE AND REFERENCE
AIFMD Article 23(1)
(n) where available, the historical performance of the AIF; Not applicable.
(o) the identity of any prime broker; Prospectus, page 152 (o).
a description of any material arrangements of the AIF with its Prospectus, page 152 (o).
prime brokerage firm and the way any conflicts of interest are managed;
the provision in the contract with the depositary on the Prospectus, page 151 (a).
possibility of transfer and reuse of AIF assets; and
information about any transfer of liability to the prime Prospectus, page 152 (o).
brokerage firm that may exist; and
(p) a description of how and when the information required under Art. 23(4) Information may be disclosed in the Company's annual report or by the Company
and Art. 23(5) of the AIFMD will be disclosed. publishing the relevant information on the Company's website
(http://www.dpaircraft.com (http://www.dpaircraft.com) ) or by the Company
issuing an announcement via a Regulatory Information Service.
AIFMD Article 23(5)
(a) any changes to the maximum level of leverage which the AIFM may employ on Not applicable as no changes to the maximum level of leverage.
behalf of the AIF as well as any right of the reuse of collateral or any
guarantee granted under the leveraging arrangement;
(b) the total amount of leverage employed by that AIF. The leverage employed by AIF is US$ 92,707,280 as at 31 December 2023.
1 Cirium: "Celebrating the airline industry's operational performance and
2024 industry outlook"; 18(th) January 2024
2 IATA: "Global Outlook for Air Transport"; December 2023
3 IATA: "Industry Statistics: Fact Sheet December 2023"; December 2023
4 IATA: "Industry Statistics: Fact Sheet December 2023"; December 2023;
IATA: "Industry Statistics: Fact Sheet April 2021"; April 2021
5 PwC: "2024 Aviation Industry Review & Outlook"; 25(th) January 2024
6 Cirium: "Celebrating the airline industry's operational performance and
2024 industry outlook"; 18th January 2024 / PwC: "2024 Aviation Industry
Review & Outlook"; 25th January 2024
7 IATA: "Global Outlook for Air Transport"; December 2023
8 PwC: "2024 Aviation Industry Review & Outlook"; 25(th) January 2024
9 PwC: "2024 Aviation Industry Review & Outlook"; 25(th) January 2024
10 PwC: "2024 Aviation Industry Review & Outlook"; 25th January 2024
11 Boeing: "Boeing Forecasts Demand for 42,600 New Commercial Jets Over Next
20 Years"; 18th June 2023 / Cirium: ""Boeing raises 20-year aircraft demand
forecast"; 19th June 2023
12 DBRS Morningstar: "Aviation Secured, ABS, EETC 2024 Outlook Stable-Asset
Values, Lease Rates Strong; Event Risk, Financing Challenges Exist"; 12(th)
February 2024
13 Cirium: "ANALYSIS: What's lies ahead for commercial aviation this year?";
27(th) February 2024
14 PcW: "2024 Aviation Industry Review & Outlook"; 25(th) January 2024
15 Cirium: "APAC airlines see robust passenger demand in 2023: AAPA"; 31(st)
January 2024
16 PcW: "2024 Aviation Industry Review & Outlook"; 25(th) January 2024
17 IATA: ""Global Outlook for Air Transport"; December 2023
18 IATA: "Global Outlook for Air Transport"; December 2023
19 Cirium: "APAC airlines see robust passenger demand in 2023: AAPA"; 31st
January 2024
20 IATA: "Air Passenger Market Analysis December 2023"; 31(st) January 2024
21 Cirium: "Thai Airways International Fleet Summary"; 2(nd) February 2024
22 ISHKA: Thai Airways and Thai AirAsia seize demand recovery as rival Nok
Air lags behind"; 5(th) February 2024
23 Thai Airways International PCL: "Management´s Discussion and Analysis
for the three months ended March 31, 2023, for Thai Airways International
Public Company Limited and Its Subsidiaries"
24 ISHKA: Thai Airways and Thai AirAsia seize demand recovery as rival Nok
Air lags behind"; 5(th) February 2024
25 Thai Airways International PCL: "Management´s Discussion and Analysis
for the three months ended March 31, 2023, for Thai Airways International
Public Company Limited and Its Subsidiaries"
26 Thai Airways International PCL: "Management´s Discussion and Analysis
for the three months ended March 31, 2023, for Thai Airways International
Public Company Limited and Its Subsidiaries"
27 Cirium: "ANALYSIS: Can Thailand recoup lost ground after the pandemic?";
5(th) February 2023
28 Thai Airways International PCL: "Management´s Discussion and Analysis
for the three months ended March 31, 2023, for Thai Airways International
Public Company Limited and Its Subsidiaries"
29 Thai Airways International PCL: "The update on the 10(th) progress of the
implementation of the Business Rehabilitation Plan for the period from 15(th)
September 2023 to 14 December 2023 (2(nd) quarter of the 3(rd) year); 27(th)
December 2023
30 Thai Airways International PCL: "The update on the progress of the
implementation of the Business Rehabilitation Plan for the period from 15(th)
March 2023 to 14 June 2023 (4(th) quarter of the 2(nd) year); 27(th) June 2023
/ Thai Airways International PCL: "The update on the 9(th) progress of the
implementation of the Business Rehabilitation Plan for the period from 15(th)
June 2023 to 14 September 2023 (1(st) quarter of the 3(rd) year); 27(th)
September 2023
31 ISHKA: Thai Airways and Thai AirAsia seize demand recovery as rival Nok
Air lags behind"; 5(th) February 2024 / ch-Aviation: "Thai Smile ends flight
operations"; 4(th) January 2024
32 Thai Airways International PCL: "Management´s Discussion and Analysis
for year 2023 ended December 31, 2023, for Thai Airways International Public
Company Limited and Its Subsidiaries"
33 SET: "SET announces time extension for THAI to eliminate the ground for
delisting"; 8(th) March 2024
34 Thai Airways International PCL: "Management´s Discussion and Analysis
for the three months ended March 31, 2023, for Thai Airways International
Public Company Limited and Its Subsidiaries"
35 Thai Airways International PCL: "Management´s Discussion and Analysis
for year 2023 ended December 31, 2023, for Thai Airways International Public
Company Limited and Its Subsidiaries"
36 Bundesverband Deutscher Banken; 27(th) February 2024
37 Thai Airways International PCL: "Management´s Discussion and Analysis
for year 2023 ended December 31, 2023, for Thai Airways International Public
Company Limited and Its Subsidiaries"
38 Cirium: "Thai Airways International Fleet Summary"; 2(nd) February 2024
39 Cirium: "SNAPSHOT: Thai Airways poised for widebody fleet renewal";
16(th) February 2024
40 AerCap: "AerCap announces lease agreements with Thai Airways for four
Airbus A350-900 aircraft, three Boeing 787-9 aircraft and ten Airbus A321NEO
aircraft; 21(st) February 2024
41 Cirium: "Thai Airways to lease two A330-300s from CDB Aviation"; 3(rd)
January 2024
42 Cirium: "ALC places three new 787-9s with Thai Airways International";
27(th) February 2024
43 Thai Airways International PCL: "THAI Strengthens Fleet Efficiency by
Adding Boeing 787 Dreamliners Powered by GEnx Engines"; 20(th) February 2024
44 Cirium: "SNAPSHOT: Thai Airways poised for widebody fleet renewal";
16(th) February 2024
45 Thai Airways International PCL: "Management´s Discussion and Analysis
for year 2023 ended December 31, 2023, for Thai Airways International Public
Company Limited and Its Subsidiaries"
46 ch-aviation: "Thailand's Nok Air firms Suvarnabhumi base for 2H24"; 6(th)
February 2024
47 Cirium: "ANALYSIS: Can Thailand recoup lost ground after the pandemic?";
5(th) February 2023
48 ISHKA: Thai Airways and Thai AirAsia seize demand recovery as rival Nok
Air lags behind"; 5th February 2024
49 Exchange rate as at 6(th) February 2024
50 The Nation Thailand: "AOT earmarks 97 billion baht to expand 6 airports
in the next 6 years"; 26(th) November 2023
51 Thai Airways International PCL: "Management´s Discussion and Analysis
for year 2023 ended December 31, 2023, for Thai Airways International Public
Company Limited and Its Subsidiaries"
52 Cirium: "ANALYSIS: Can Thailand recoup lost ground after the pandemic?";
5(th) February 2023
53 Bangkok Post: "THAI baulks at Rolls-Royce engine prices"; 9(th) November
2023
54 Boeing Commercial Airplanes: Orders and Deliveries as per 27(th) February
2024
55 Flight Global: "Boeing moves forward with plan to bump up 737 and 787
production rates"; 26(th) July 2023 / Reuter: "Boeing execs stand by 2025-26
financial guidance; near-term focus is safety"; 1(st) February 2024
56 ISHKA: "Remarketing Watch Data Sheet: March 2024"; 5(th) March 2024
57 Boeing Commercial Airplanes: Orders and Deliveries as per 27(th) February
2024
58 Cirium: "Rolls-Royce homes in on durability improvements"; 23(rd)
February 2024
59 Cirium: "Rolls-Royce homes in on durability improvements"; 23rd February
2024
60 Cirium: "Credit Agricole arranges Vistara 787 finance lease"; 30(th)
November 2023
61 Cirium: "Juneyao breaks Chinese 787 delivery drought"; 22(nd) December
2023
62 Cirium: "LATAM switches to GEnx engines for new order of five 787s";
20(th) December 2023
63 ISHKA: "Lessor order books: Avolon moves to head of the pack with
140-strong December narrowbody orders"; 22(nd) January 2024
64 Cirium: "AerCap sells 20 aircraft in fourth quarter"; 4(th) January 2024
65 ch-Aviation: "AirJapan takes first B787-8; launches"; 12(th) February
2024
66 Cirium: "Royal Brunei orders four 787-9s"; 20(th) February 2024
67 Thai Airways International PCL: "THAI Strengthens Fleet Efficiency by
Adding Boeing 787 Dreamliners Powered by GEnx Engines"; 20th February 2024
68 Cirium: "Jackson Square finances Hawaiian Airlines' first 787-9"; 22(nd)
February 2024
69 Cirium: "DEALS REPORT: What to do with an A330 as a regional lessor";
23(rd) February 2024
70 Cirium: "Oman Air selling widebodies: sources"; 8(th) March 2024
71 Reuters: "Supply chain strains set to weigh on aviation industry
bounce-back"; 23(rd) February 2024
72 Forbes: "Airbus CEO On 'World Of Bottlenecks' In Supply, Spirit
AeroSystems"; 16(th) February 2024
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