DIRECTORS

 

Jonathan (Jon) Bridel, Non-Executive Chairman (58), appointed 10 July 2013

 

Jon is a Guernsey resident and is currently a non-executive director of SME Credit Realisation Fund Limited (in wind down) which is listed on the Main Market of the London Stock Exchange. Other companies include Fair Oaks Income Fund Limited. Jon was previously Managing Director of Royal Bank of Canada's 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 (67), 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 and to an Investment Manager serving the listed NextEnergy Solar Fund Limited. In addition, Jeremy is also a non-executive director of London listed Riverstone Energy Limited. Between 2005 and 2009 he was a director of multiple businesses within a London based private equity group. This entailed board positions on both private, listed and SPV companies and highly successful exits.  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 has studied and worked in the UK, USA and Germany.

 

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 (68), 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 a resident in Germany and was appointed as a non-executive 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 2022.

 

Principal Activity and Review of the Business

The Company's principal activity is to purchase, lease and then sell 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.

 

For the year ended 31 December 2022 the Group made a profit of US$ 7,660,823 (31 December 2021: loss of US$ 21,859,073). The loss in the prior year was the result of significantly high expected credit losses on receivables, net losses of financial assets at fair value and loss on loss of control of assets, liabilities and subsidiaries. There have been no such high losses in the financial year under review. As a result, the group made a profit during the period ended 31 December 2022, see page 43 for full results for the year.

 

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 most of the 2022 year and are currently in regular commercial use. 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 10 to 19.

 

Results and Dividends

The profit for the year ended 31 December 2022 was US$ 7,660,823 (31 December 2021: loss of US$ 21,859,073).

 

Under normal circumstances, the Company aims 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 targets a quarterly distribution in February, May, August and November of each year. The target distribution is US$ 0.0225 per Share per quarter.

 

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 due to recent developments 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.

 

Subsequent Events

Refer to note 23 for further details regarding Subsequent Events.

 

 

 

 

DIRECTORS' REPORT (CONTINUED)

 

Directors

The 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 2022 are set out below and there have been no changes in such interests up to the current date:

	Number of ordinary shares 31 December 2022	Number of ordinary shares 31 December 2021
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 33 to 35.

 

Substantial Shareholdings          

The Directors note the following substantial interests in the Company's share capital as at 31 December 2022 (10% and more shareholding):

o  M&G Investments 59,633,421 shares - 24.92 %

o  West Yorkshire PF 22,804,367 shares - 9.53 %

 

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 almost ten years, respectively, 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 2022 the Board had a breadth of experience relevant to the Company and a balance of skills and experience.

 

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.

 

 

 

DIRECTORS' REPORT (CONTINUED)

 

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 met very frequently during the Covid and post Covid period and have been actively engaged in negotiating revised agreements with its lending group and Thai.  Jon Bridel and Jeremy Thompson have served for nine 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'). Jon Bridel was re-elected at the AGM on 29 July 2022. Harald Brauns 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.

 

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 Board will table and review 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.

DIRECTORS' REPORT (CONTINUED)

 

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	4	4
Jeremy Thompson	4	4
Harald Brauns	4	4
No. of meetings during the year	4	4

 

The Directors also attended over 20 ad-hoc Board, Management and Committee meetings 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. The board also attended committee meetings for the Management Engagement Committee.

 

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	Oct 22 to Dec 22	Jan 22 to Sept 22	Jan 21 to Dec 21
Jonathan Bridel	£61,750	£66,000	£66,000
Jeremy Thompson	£49,450	£53,700	£53,700
Harald Brauns	£49,450	£53,800	£53,800

 

Director fees have now been reduced by 10% which was the portion being deferred and possibly payable in shares. The reduction in fees is effective 1 October 2022.

DIRECTORS' REPORT (CONTINUED)

 

Directors' Remuneration (continued)

In the prior year, 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 earned extra fees of £65,000 which were not paid in cash but deferred to be possibly settled by the issue of shares. No additional fees were earned by the board during the 2022 financial period.

 

Additional Fees	2022	2021
Jonathan Bridel	-	£25,000
Jeremy Thompson	-	£20,000
Harald Brauns	-	£20,000

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 2022		31 December 2021
	£	US$ equivalent	£	US$ equivalent
Jonathan Bridel (Chairman)	64,937	80,701	91,000	121,613
Jeremy Thompson (Audit Committee Chairman)	52,637	65,503	73,700	98,493
Harald Brauns (Management Engagement Committee Chairman)	48,229	60,064	75,050	100,298
	165,803	206,268	239,750	320,404

 

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 (2021: nil) and the deferred fees remain outstanding as at 31 December 2022 (see note 13).

 

There are no executive director service contracts in issue.

 

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.

 

DIRECTORS' REPORT (CONTINUED)

 

Internal Controls and Risk Management Review (continued)

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

KPMG, Chartered Accountants have indicated their willingness to continue in office.

 

Going Concern

The Directors believe that it is appropriate to prepare these financial statements on the going concern basis due to current cash flow forecasts which include fixed rentals and show that the Group has sufficient cash and resources to cover operating costs for a period of at least 12 months from the signing of these financial statement.

 

In making this conclusion, the Directors have also taken into account: -

 

·    the positive outlook for Thai Airways with both Thai aircraft in a full return to service condition and now earning fixed rentals. There is an expectation, based on commentary by the Thai Administrator responsible for the rehabilitation of Thai Airways, that Thai Airways will continue to be viable and will be able to meet the terms of the revised lease agreements. This position regarding Thai's viability is further enhanced by the announcement on 9 August 2022 that Thai state-owned banks will provide new loans and cash infusions to Thai. Furthermore, the Thai Government has stated that it plans to preserve its 40% holding in Thai which may grow further but will not exceed 50%; and

·    the expectation that DekaBank which made loans to the Group (with certain loan concessions) will continue supporting the Group. The loan agreement with DekaBank was amended and restated in February 2023. Per the amended terms, monthly payments of 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 if the loan is not refinanced. The US$ 475,000 equates to a monthly lease rental of US$ 510,000 less US$ 35,000 paid to the Company as a contribution towards its costs.

 

DIRECTORS' REPORT (CONTINUED)

 

Going Concern (continued)

The Directors are not aware of any material uncertainties that may cast significant doubt upon the Group's ability to continue as a going concern.

 

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. 

 

The Group has been in extensive negotiations with its lenders during the year and subsequent to the year end. 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 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 in line with the lease agreements in place and so the terms are beneficial to the group.

 

The PBH period on the Thai Airways leases expired on 31 December 2022 and now the Group will be receiving fixed monthly rental payments of US$510,000 per aircraft from Thai effective January 2023.  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 interest payable on the DekaBank loans per above.

 

Both aircraft have been operational for most of the 2022 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 the best possible condition for either a re-lease or a sale. The viability and therefore continuation of the Group looks positive save any major, likely force majeure, scenarios.

 

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 2024 assuming Thai Airways continue to meet its lease payment obligations and certain service providers continue to defer some of their fees as agreed.  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 will consider their options after the viability period.

 

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 Thai Administrator (Planner) responsible for the rehabilitation of Thai has outlined that he feels that the measures taken have materially addressed major cost areas (fleet size reduction, staff cuts, pay cuts, property rationalisation) and further that Thai have raised a reasonable amount of capital from asset sales. The Directors note that whilst they believe that Thai Airways has a strong possibility of successfully completing the 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 concluded that to date there has been no material impact on the operations of the Group serve for indirect impacts such as rising fuel costs.

DIRECTORS' REPORT (CONTINUED)

 

Viability Statement (continued)

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.

 

Annual General Meeting

The next AGM of the Company will be held in Guernsey at a date that will 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 29 July 2022 at the Company's last AGM, 22.34% of total votes cast were cast against resolution 4 (to approve the Directors' remuneration report as set out in the 2021 Annual Report) and against resolution 5 (to approve the Directors' Remuneration Policy for the year ending 31 December 2022 as set out in the 2021 Annual Report). The Company noted that 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 explained the reason for higher director fees in 2021 was due to the significant extra work required by the Board to restructure lease and loan agreements resulting from the significant revenue reduction due to the impact of the Covid pandemic on the Company's Lessees. Notwithstanding the higher fees payable, to date no additional fees and some annual fees have not been paid due to restrictions imposed by the Lenders as part of the loan restructuring. The Company also highlighted that additional fees would be unlikely in 2022 notwithstanding the considerable time still invested.

 

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' REPORT (CONTINUED)

 

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.

 

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 74 . 

 

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 2022) 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 2022), 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

REPORT OF THE AUDIT COMMITTEE

 

On the following pages, we present the Audit Committee (the 'Committee') Report for 2022, 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, Ireland ('KPMG') to provide non-audit services. KPMG has been the independent auditor from the date of the initial listing on the Specialist Fund Segment of the London Stock Exchange.

 

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 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.

REPORT OF THE AUDIT COMMITTEE (CONTINUED)

 

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;

·    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 43 to 46, 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).

 

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.

REPORT OF THE AUDIT COMMITTEE (CONTINUED)

 

Conclusion and Recommendation (continued)

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

 

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. The Directors continue to monitor the development of COVID-19 and are continuing to assess the impact on the Company. 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 the subsequent fall-out have the potential to impact travel and/or travellers' willingness to travel which in turn could impact the volume of traffic to and from Thailand.

 

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 would have an adverse impact on the entity's lease arrangements with Thai Airways which is the core source of income for the Group.

 

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 is the sole source of income for the Group.

 

COVID-19 Impact

The COVID-19 pandemic continues to put a significant burden on the airline industry. Even as travel bans are gradually being lifted, it may take years until capacity and numbers of passenger return to pre-COVID-19 levels.  Expectations are that capacity will not return to pre-COVID-19 levels before 2024. This uncertainty as to when capacity will return to normal levels and the possibility of further strains which could again result in lockdowns and travel bans pose a risk to 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)

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 (2021: Aa2).

 

There is no guarantee that the business rehabilitation process of Thai Airways will 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 its ability to comply with its obligations under the 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. In mitigation, Thai Airways is 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. However, 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.

 

 

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.

 

STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES (CONTINUED)

 

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

 

The Directors are responsible for preparing the financial statements in accordance with the applicable financial reporting framework. They have decided to prepare the financial statements in accordance with International Financial Reporting Framework ('IFRS'). The financial statements are required by law to comply with the Companies (Guernsey) Law, 2008.

 

The Directors are also responsible for ensuring its Annual Report and Audited Consolidated Financial Statement meet the requirements of the UK's FCA Disclosure and Transparency Rules.

 

In preparing these financial statements, the Directors have: 

 

·    selected suitable accounting policies and applied them consistently; 

·    made judgements and estimates that are reasonable and prudent; 

·    stated whether they have been prepared in accordance with IFRS;

·    assessed the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

·    used the going concern basis of accounting unless they either intend to liquidate the Company or cease operations or have no realistic alternative but to do so.

 

The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets, liabilities, financial position and profit or loss of the Company and which enable them to ensure that these financial statements comply with IFRS and the Companies (Guernsey) Law, 2008. They are also responsible for such internal controls as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have a general responsible for safeguarding the assets of the Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The Directors are responsible for the maintenance and integrity of the financial information included on the Company's website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

 

 

 

Signed on behalf of the Board by

 

 

 

Jonathan Bridel                                Jeremy Thompson

Director                                               Director

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DP AIRCRAFT I LIMITED

 

Report on the audit of the financial statements

 

Opinion

 

We have audited the consolidated financial statements ("the financial statements") of DP Aircraft I Limited ('the Company') and its consolidated undertakings (collectively 'the Group') for the year ended 31 December 2022, which comprise the consolidated statement of financial position, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows and related notes, including the summary of significant accounting policies set out in note 2. The financial reporting framework that has been applied in their preparation is Guernsey Law, UK adopted international accounting standards and, as regards the Company financial statements, as applied in accordance with the provisions of the Companies (Guernsey) Law 2008 and UK adopted international accounting standards.

 

In our opinion: 

 

•    the financial statements give a true and fair view of the state of the Group's affairs as at 31 December 2022 and of the Group's profit for the year then ended; 

•    the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;

•    the financial statements have been prepared in accordance with the requirements of the Companies (Guernsey) Law 2008.

 

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee. 

 

We were appointed as auditor by the directors for the year ended 31 December 2014. The period of total uninterrupted engagement is for the eight financial years ended 31 December 2022. We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with UK ethical requirements, including the Financial Reporting Council (FRC)'s Ethical Standard as applied to listed public interest entities.

 

During the year we identified a breach of certain aspects of the ethical requirements relating to the provision of prohibited tax services to subsidiaries of the Company.  Notwithstanding the aforementioned we have concluded that our objectivity has not been compromised and the firm and the engagement team are independent of the Company. The firm no longer provides these prohibited services.

 

Conclusions relating to going concern

The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or to cease their operations, and as they have concluded that the Group's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial statements ("the going concern period").

 

 

 

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF DP AIRCRAFT I LIMITED (CONTINUED)

 

Report on the audit of the financial statements (continued)

 

Conclusions relating to going concern (continued)

 

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the entity's ability to continue to adopt the going concern basis of accounting included.

 

We evaluated the directors' assessment of the entity's ability to continue to adopt the going concern basis of accounting. In our evaluation of the Directors' conclusions, we considered the inherent risks to the Group's business model and analysed how those risks might affect the Group's financial resources or ability to continue operations over the going concern period.

 

The risk that we considered most likely to adversely affect the Group's available financial resources over this period is the ability of the Group's lessee to continue to meet its contractual lease obligations.

 

As this is a risk that could potentially cast significant doubt on the Group's ability to continue as a going concern, we considered sensitivities over the level of available financial resources indicated by the Group's financial forecasts taking account of reasonably possible (but not unrealistic) adverse effects that could arise from these risks individually and collectively. We evaluated the achievability of the actions the Directors consider they would take to improve the position should the risks materialise.  

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

 

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 absence of reference to a material uncertainty in this auditor's report is not a guarantee that the Group will continue in operation.

 

Detecting irregularities including fraud

 

We identified the areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements and risks of material misstatement due to fraud, using our understanding of the entity's industry, regulatory environment and other external factors and inquiry with the directors. In addition, our risk assessment procedures included:

 

•    Inquiring with the directors as to the Group's policies and procedures regarding compliance with laws and regulations, identifying, evaluating and accounting for litigation and claims, as well as whether they have knowledge of non-compliance or instances of litigation or claims.

•    Inquiring of directors as to the Group's policies and procedures to prevent and detect fraud, as well as whether they have knowledge of any actual, suspected or alleged fraud.

•    Inquiring of directors regarding their assessment of the risk that the financial statements may be materially misstated due to irregularities, including fraud.

•    Reading Board and audit committee minutes.

We discussed identified laws and regulations, fraud risk factors and the need to remain alert among the audit team.

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF DP AIRCRAFT I LIMITED (CONTINUED)

 

Report on the audit of the financial statements (continued)

 

Detecting irregularities including fraud (continued)

 

Firstly, the Group is subject to laws and regulations that directly affect the financial statements including companies and financial reporting legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items, including assessing the financial statement disclosures and agreeing them to supporting documentation when necessary.

 

Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: ongoing compliance with listing rules given the regulated nature of the Group's activities.

 

Auditing standards limit the required audit procedures to identify non-compliance with these non-direct laws and regulations to inquiry of the directors and inspection of regulatory and legal correspondence, if any. These limited procedures did not identify actual or suspected non-compliance

 

We assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. As required by auditing standards, we performed procedures to address the risk of management override of. On this audit we do not believe there is a fraud risk related to revenue recognition.

 

In response to the fraud risks, we also performed procedures including:

 

•    Identifying journal entries and other adjustments to test based on risk criteria and comparing the identified entries to supporting documentation.

•    Assessing significant accounting estimates for bias

•    Assessing the disclosures in the financial statements

As the Group is regulated, our assessment of risks involved obtaining an understanding of the legal and regulatory framework that the Group operates and gaining an understanding of the control environment including the entity's procedures for complying with regulatory requirements.

 

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.

 

In addition, as with any audit, there remains a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

 

Key audit matters: our assessment of risks of material misstatement

 

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

 

 

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF DP AIRCRAFT I LIMITED (CONTINUED)

 

Report on the audit of the financial statements (continued)

 

 

Valuation of PPE - Aircraft & related components $125.5 million (2021: $126.4 million) Refer to page 49, (accounting policy), pages 53 and 54 (significant estimates) and page 57 and 58 (financial disclosures)

The key audit matter At 31 December 2022, the carrying value of the Group's aircraft portfolio, including related components amounted to $125.5 million or 79% of total assets. The Group applies the requirements of IAS-36 Impairment of Assets ('IAS-36') in order to determine whether it is necessary to recognise an impairment loss on any aircraft and related assets.  There is a significant risk relating to the valuation of aircraft given the judgemental nature of the assumptions and the inputs to the impairment model that require consideration by the Board of Directors.

How the matter was addressed in our audit In relation to the audit of the impairment assessment of aircraft and related components, the procedures we undertook included, amongst others:   We obtained an understanding of, and tested the design and implementation, of  the key control around the impairment assessment of aircraft and related components being the consideration and approval by the Board of Directors of the impairment assessment.   We inquired of the Board of Directors about plans for aircraft disposals or other actions that may negatively impact on aircraft recoverable amounts.   We evaluated the (i) competence, capabilities and objectivity of experts employed by the Group to provide aircraft current market values and (ii) the appropriateness of their work as audit evidence.  We obtained the current market value reports of the independent valuers to validate the current market values to the impairment model and compared to the other independent valuers reports to determine the were reasonable.    We evaluated the Board of Directors identification and reasonableness of impairment indicators, and assessed the methodology adopted in its impairment model with reference to our understanding of the Group's business and the requirements of IAS-36.  We assessed the calculations underlying the impairment model by checking that the data and assumptions input (including current market value) into the model were in agreement with those that we had evaluated.   We assessed the adequacy of the disclosures made by the Group regarding the impairment assessment of aircraft and related components in the financial statements for compliance with the relevant accounting standards.    As a result of the procedures performed, we found the Groups judgements around current market values were reasonable.

 

 

 

 

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF DP AIRCRAFT I LIMITED (CONTINUED)

 

Report on the audit of the financial statements (continued)

 

Our application of materiality and an overview of the scope of our audit 

 

Materiality for the Group financial statements as a whole was set at $1.15m (2021: $0.7m), determined with reference to a benchmark of total assets (of which it represents 0.75% (2021: 0.5%)).

 

In applying our judgement in determining the most appropriate benchmark, the factors, which had the most significant impact were:

 

•    our understanding that one of the principal considerations for investors in assessing the financial performance is the value of the Group's assets; and

•    the stability of the Group, resulting from its nature, where the Group is in its life cycle and the industry in which the Group operates.

In applying our judgement in determining the percentage to be applied to the benchmark, the following qualitative factors, had the most significant impact, increasing our assessment of materiality:

 

•    the increased stability of the business environment in which it operates

We applied Group materiality to assist us determine the overall audit strategy

 

Performance materiality

 

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 financial statements as a whole.

 

Performance materiality was set at 75% (2021: 75%) of materiality for the financial statements, which equates to $0.86m (2021: $0.5m) for the Group.

 

Audit misstatement posting threshold

 

We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding $0.06m, in addition to other identified misstatements that warranted reporting on qualitative grounds.

 

Other information

 

The directors are responsible for the other information presented in the Annual Report together with the financial statements. The other information comprises the information included in the Fact Sheet, Summary, Highlights, Chairmans Statement, Asset Manager's Report, Director's Report, Report of the Audit Committee, Statement of Principal Risks and Uncertainties, Company Information and Appendix 1 - Alternative Investment Fund Directive. The financial statements and our auditor's report thereon do not comprise part of the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

 

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information.

 

 

 

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF DP AIRCRAFT I LIMITED (CONTINUED)

 

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 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 and restrictions on use

 

Responsibilities of directors for the financial statements

 

As explained more fully in the directors' responsibilities statement set out on page 32, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

 

Auditor's responsibilities for the audit of the financial statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud, other irregularities or error, and to issue an opinion in an auditor's report.  Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.  Misstatements can arise from fraud, other irregularities or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.

 

The purpose of our audit work and to whom we owe our responsibilities

Our report is made solely to the Company's members, as a body, in accordance with section 262 of the Companies (Guernsey) Law, 2008.  Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

Niall Naughton                                                                                                   27 April 2023
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Harbourmaster Place
IFSC
Dublin 1

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2022

		Year ended	Year ended
		31 Dec 2022	31 Dec 2021
	Notes	US$	US$
Income
Lease rental income	4	16,462,372	18,391,211
		16,462,372	18,391,211
Expenses
Asset management fees	22	(471,590)	(757,254)
General and administrative expenses	5	(1,094,587)	(2,640,895)
Expected credit loss on straight lining lease asset	11	(1,486,453)	-
Expected credit loss write off	11	(105,063)	(12,508,499)
Depreciation	9	(958,760)	(175,160)
		(4,116,453)	(16,081,808)
Operating profit		12,345,919	2,309,403
Finance costs	6	(4,860,305)	(5,869,097)
Net losses on financial assets at fair value		-	(8,547,935)
Loss on loss of control of assets, liabilities and subsidiary undertaking		-	(9,874,940)
Dividend income/Other Income		1,552	57,902
Finance income		194,906	21,358
Net finance costs		(4,663,847)	(24,212,712)
Profit/(loss) before tax		7,682,072	(21,903,309)
Taxation	7	(21,249)	44,236
Profit/(loss) for the year		7,660,823	(21,859,073)
Total Comprehensive Income/(Loss) for the period		7,660,823	(21,859,073)
Earnings per Share for the year - basic and diluted	8	0.03429	(0.10442)

 

All income is attributable to the Ordinary Shares of the Company.

 

The notes on pages 47 to 73 form an integral part of these financial statements.

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2022

							31 Dec 2022	* Restated 31 Dec 2021	* Restated 1 Jan 2021
					Notes		US$	US$	US$
NON-CURRENT ASSETS
PPE- Aircraft & Related Components					9		125,466,080	126,424,840	126,600,000
Trade and other receivables					11		8,935,454	4,772,296	-
Restricted Cash					10		14,979,197	14,465,329	15,547,974
Total non-current assets							149,380,731	145,662,465	142,147,974
CURRENT ASSETS
Aircraft held for sale							-	-	82,000,000
Investments held at fair value							-	-	15,630,526
Trade and other receivables					11		3,857,514	251,216	45,930
Restricted cash					10		4,175,280	2,788,517	11,890,358
Cash and cash equivalents							1,479,541	1,179,211	6,949,167
Total current assets							9,512,335	4,218,944	116,515,981
TOTAL ASSETS							158,893,066	149,881,409	258,663,955
EQUITY
Share Capital					15		211,279,828	210,556,652	210,556,652
Retained deficit					16		(166,543,707)	(174,204,530)	(152,345,457)
TOTAL EQUITY							44,736,121	36,352,122	58,211,195
NON-CURRENT LIABILITIES
Bank borrowings					14		80,779,172	98,304,863	-
Maintenance provision					12		14,829,296	14,460,682	14,460,682
Total non-current liabilities							95,608,468	112,765,545	14,460,682
CURRENT LIABILITIES
Bank borrowings					14		17,707,184	136,010	180,915,582
Derivative instrument liabilities							-	-	4,183,715
Trade and other payables					13		841,293	627,732	892,781
Total current liabilities							18,548,477	763,742	185,992,078
TOTAL LIABILITIES						114,156,945		113,529,287	200,452,760
TOTAL EQUITY AND LIABILITIES				158,893,066				149,881,409	258,663,955

* Comparative information has been restated due to reclassification adjustments, see note 24 for further information.

 

The financial statements on pages 43 to 73 were approved by the Board of Directors and were authorised for issue on 27 April 2023. They were signed on its behalf by:

 

 

Jonathan Bridel                                                                               Jeremy Thompson

Chairman                                                                                         Director

 

The notes on pages 47 to 73 form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2022

		Year ended	Year ended
	Notes	31 Dec 2022	31 Dec 2021
		US$	US$
Profit/(loss) for the year		7,660,823	(21,859,073)
Adjusted for:
Depreciation and amortisation	9	958,760	175,160
Finance costs	6	4,860,305	6,328,112
Gain on derivatives at fair value	6	-	(459,015)
Loss on financial assets at fair value		-	8,547,935
Taxation	7	21,249	(44,236)
Loss on loss of control of assets, liabilities and subsidiary undertaking		-	9,874,940
Straight lining rental income	4	(8,753,206)	(4,772,296)
Expected credit loss	11	105,063	12,508,499
Provision on straight lining lease asset	11	1,486,453	-
Tax-paid		-	(54,388)
Changes in:
Increase in maintenance reserves	12	368,614	-
Increase/(decrease) in trade and other payables	13	192,312	(92,942)
Increase in trade and other receivables	11	(607,766)	(12,713,785)
NET CASH FLOW FROM/ (USED IN) OPERATING ACTIVITIES		6,292,607	(2,561,089)
INVESTING ACTIVITIES
Loss of control of subsidiary undertakings		-	(5,456,182)
Sales of investments in Norwegian		-	4,069,880
Restricted cash		(1,900,631)	3,348,896
NET CASH FLOW (USED IN)/ FROM INVESTING ACTIVITIES		(1,900,631)	1,962,594
FINANCING ACTIVITIES
Share issue proceeds Share issue costs		750,000 (26,824)	- -
Bank loan principal repaid	14	-	(274,173)
Bank loan interest paid	14	(4,814,822)	(4,595,529)
Swap interest paid	14	-	(301,759)
NET CASH FLOW USED IN FINANCING ACTIVITIES		(4,091,646)	(5,171,461)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		1,179,211	6,949,167
Increase/(decrease) in cash and cash equivalents		300,330	(5,769,956)
CASH AND CASH EQUIVALENTS AT END OF YEAR		1,479,541	1,179,211

 

 

The notes on pages 47 to 73 form an integral part of these financial statements.

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2022

			Retained	Total
		Share capital	deficit	Equity
	Note	US$	US$	US$
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 Share issue costs paid		750,000           (26,824)	- -	750,000 (26,824)
As at 31 December 2022		211,279,828	(166,543,707)	44,736,121
As at 1 January 2021		210,556,652	(152,345,457)	58,211,195
Total comprehensive income for the year
Loss for the year		-	(21,859,073)	(21,859,073)
Total comprehensive loss		-	(21,859,073)	(21,859,073)
As at 31 December 2021		210,556,652	(174,204,530)	36,352,122

 

The notes on pages 47 to 73 form an integral part of these financial statements.

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2022

 

1)       GENERAL INFORMATION

 

The consolidated audited financial statements ('financial statements') incorporate the results of 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 the Group.

 

DP Aircraft I Limited (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 Share Capital of the Company comprises 239,333,333 Ordinary Shares (2021: 209,333,333) of no par value and one Subordinated Administrative Share of no par value.

 

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 27 April 2023.

 

2)       SIGNIFICANT ACCOUNTING POLICIES

 

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 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.

 

Going Concern

The Directors believe that it is appropriate to prepare these financial statements on the going concern basis due to current cash flow forecasts which include fixed rentals and show that the Group has sufficient cash and resources to cover operating costs for a period of at least 12 months from the signing of these financial statement.

 

In making this conclusion, the Directors have also taken into account:-

 

·    the positive outlook for Thai Airways with both Thai aircraft airworthy and earning fixed rentals. There is an expectation, based on commentary by the Thai Administrator responsible for the rehabilitation of Thai Airways, that Thai Airways will continue to be viable and will be able to meet the terms of the revised lease agreements. This position regarding Thai's viability is further enhanced by the announcement on 9 August 2022 that Thai state owned banks will provide new loans and cash infusions to Thai. Furthermore, the Thai Government has stated that it plans to preserve its 40% holding in Thai which may grow further but will not exceed 50%; and

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

2)       SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

a)       Basis of preparation (continued)

Going Concern (continued)

·    the expectation that DekaBank which made loans to the Group (with certain loan concessions) will continue supporting the Group. The loan agreement with DekaBank was amended and restated in February 2023. Per the amended terms, monthly payments of 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 if the loan is not refinanced. The US$ 475,000 equates to a monthly lease rental of US$ 510,000 per aircraft less US$ 35,000 paid to the Company as a contribution towards its costs.

 

The Directors are not aware of any material uncertainties that may cast significant doubt upon the Group's ability to continue as a going concern.

 

New standards, interpretations and amendments effective from 1 January 2022

The below new standards, amendments to standards and interpretations are effective for annual periods beginning on 1 January 2022 and have no material impact on the financial statements:

 

·    Reference to the Conceptual Framework (Amendments to IFRS 3)

·    Property, Plant and Equipment - Proceeds before Intended Use (Amendments to IAS 16)

·    Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)

·    Annual Improvements to IFRS Standards 2018-2020

 

New standards, interpretations and amendments in issue but not yet effective

The below new standards, amendments to standards and interpretations that are effective for annual periods beginning after 1 January 2023 are not expected to have a material impact on the financial statements:

 

·    Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

·    Disclosure of Accounting Policies (Amendments to IAS 1)

·    Definition of Accounting Estimates (Amendments to IAS 8)

·    Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)

·    IFRS 17 Insurance Contracts

 

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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

2)       SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

c)        Taxation

The Company and the Guernsey subsidiaries are exempt from taxation in Guernsey and are charged an annual exemption fee of £1,200 (2021: £1,200). This is treated as an operating expense.

 

DP Aircraft UK Limited is subject to income tax in the United Kingdom.

 

Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the reporting date in the relevant jurisdictions.

 

d)       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.

 

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 three external valuations and discounted by the inflation rate incorporated into those valuations, see note 3 for further details.

 

In accordance with IAS 36, the Group's aircraft and related components that are to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the aircraft may not be recoverable. An impairment review involves consideration as to whether the carrying value of an aircraft including related assets is in excess of the higher of its value in use (discounted cashflows) and its fair value less costs to sell. In such circumstances a loss is recognised as a write down of the carrying value of the aircraft to the higher of value in use and fair value less cost to sell. The review for recoverability has a level of subjectivity and requires the use of judgement in the assessment of estimated future cash flows associated with the use of an item of property, plant and equipment and its eventual disposition. See note 3 for further details regarding impairment assessment.

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

2)       SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

e)       Financial Instruments

A financial instrument is recognised when the Group becomes a party to the contractual provisions of the instrument. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group's obligations, specified in the contract, expire or are discharged or cancelled. Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire, are extinguished, or if the Group transfers the financial assets to a third party and transfers all the risks and rewards of ownership of the asset, or if the Group does not retain control of the asset and transfers substantially all the risk and rewards of ownership of the asset.

 

Under IFRS 9, on initial recognition, a financial asset is classified as measured at:

·    Amortised cost;

·    Fair value through other comprehensive income ('FVOCI') - debt investment;

·    FVOCI - equity investment; or

Fair value through profit or loss ('FVTPL').

 

The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. The Company only has financial assets that are classified as amortised cost or FVTPL.

               

Financial assets at amortised cost are initially measured fair value plus transaction costs that are directly attributed to its acquisition, unless it is a trade receivable without a significant financing component which is initially measured at its transaction price.

 

These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses as detailed below.

 

Financial assets at amortised cost

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated at FVTPL:

·    It is held within a business model whose objective is to hold assets to collect contractual cash flows; and

·    Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

Trade and other receivables are classified as held at amortised cost.

 

Cash and cash equivalents comprise cash balances held for the purpose of meeting short term cash commitments and investments which are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

 

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.

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

2)       SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

e)        Financial Instruments (continued)

 

Financial liabilities at amortised cost

Bank borrowings are recognised initially at fair value, net of transaction costs incurred. Bank borrowings are subsequently stated 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.

 

Initial direct costs related to bank borrowings are capitalised, presented net against the bank borrowings in the statements of financial position and amortised to the 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 statement of comprehensive income regardless of whether the modification is substantial or not.

 

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.

 

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

 

Fair value measurement

The Group measures certain financial instruments such as derivatives at fair value at the end of each reporting period using recognised valuation techniques and following the principles of IFRS 13.

 

The fair value measurement of the Group's financial assets and liabilities utilises market observable inputs as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are:

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

2)       SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

e)       Financial Instruments (continued)

Fair value measurement (continued)

·    Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

·    Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

·    Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

 

The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item.

 

f)        Share capital

Shares are classified as equity. Incremental costs directly attributable to the issue of shares are recognised as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

 

g)       Dividends

Dividends are recognised as a liability in the financial statements in the period in which they become obligations of the Company.

 

h)       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.

 

i)        Expenses

Expenses are accounted for on an accrual basis.

 

j)        Finance costs and finance income

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 asset or liability and of allocating interest income and 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.

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

2)       SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

k)       Foreign currency translation

Transactions denominated in foreign currencies are translated into US$ at the rate of exchange ruling at the date of the transaction.

 

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into US$ at the rate of exchange ruling at the reporting date. Foreign exchange gains or losses arising on translation are recognised through profit or loss in the consolidated statement of comprehensive income.

 

l)        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)       SIGNIFICANT JUDGEMENTS AND ESTIMATES

 

The preparation of financial statements in conformity with IFRS requires that the Directors make estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Such estimates and associated assumptions are generally based on historical experience and various other factors that are believed to be reasonable under the circumstances and form the basis of making the judgements about attributing values of assets and liabilities that are not readily apparent from other sources.

 

Information about assumptions and estimation uncertainty at 31 December 2022 that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year are:

 

Significant estimates

Impairment of property, plant and equipment

As with each reporting date, but more relevant in light of the continuing impact of COVID-19, a detailed impairment assessment of the aircraft has been undertaken.

 

IAS 36 requires an assessment of the aircraft carrying value versus the recoverable amount i.e., the higher of the value in use and fair value less cost to sell. In considering the impairment of the Thai aircraft, the board concluded that the fair value less costs to sell was the recoverable amount. The fair value less costs to sell 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 it appropriate not to apply any discounts and adjustments for these aircraft given the specific circumstances of these aircraft.

 

The board considered all possible valuation ranges and concluded that the Thai aircraft were not impaired as at 31 December 2022 given the fair value less costs to sell 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 2022 ranges from US$ 57.6mil to US$ 74.3 mil. 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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

3)       SIGNIFICANT JUDGEMENTS AND ESTIMATES (CONTINUED)              

 

Significant estimates (continued)

Impairment of property, plant and equipment (continued)

and use different calculation models. This has an influence on future and current market values hence the wide range. Therefore, there is no wrong or right estimate of future and current market values. In order to eliminate peaks in one or the other direction we 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 our aircraft we consider this approach 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 2022 (31 December 2021: US$ nil).

 

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 2022.

 

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. If the Group had used the half-life market value in assessing impairment, the aircraft would be impaired by US$ 30,003,182 (31 December 2021: US$ 24,577,855) in total.

 

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 engage 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 2022 was US$ 120,247,838 (31 December 2021: US$ 121,750,421), carrying value as at 31 December 2022 was US$ 125,466,080 (31 December 2021: US$ 126,424,840). As a result, the year ending 31 December 2023 and future aircraft depreciation charges for aircraft, with all other inputs staying constant, will be US$ 1,343,497 (2022: US$ 958,760). The actual aircraft depreciation charge for 2024 onwards will vary based on the residual value estimates as at 31 December 2023. 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

4)       LEASE RENTAL INCOME

	Year ended		Year ended
	31 December 2022		31 December 2021
		US$	US$
Variable rental (PBH rent) income		7,709,166	1,110,416
Fixed rental income		-	12,508,499
Straight lining rental income		8,753,206	4,772,296
Total lease rental income		16,462,372	18,391,211

 

All lease rental income was derived from Thai Airways and the related two Boeing 787-8 aircraft leased to them. Variable rental income only started being earned in mid-2021 subsequent to lease amendments. Also, the aircraft were less operational in 2021 compared to 2022. As a result, variable rental income for 2021 is less compared to 2022. Furthermore, subsequent to the lease amendment in mid-2021, the Group ceased recognising fixed rental income and started recognising straight lining rental income hence the results as disclosed in the table above.

 

The lease terms provide for a power by the hour ('PBH') arrangement until 31 December 2022 (i.e., rent will be payable by reference to actual monthly utilisation of the Thai aircraft), with monthly fixed lease payments of US$ 510,000 per month thereafter until 2026. The monthly PBH rent amount is capped at US$ 510,000.

 

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 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
>2027	-	-	-
	24,118,065	23,427,097	47,545,162

 

31 Dec 2021	US$	US$	US$
2022	-	-	-
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
>2027	-	-	-
	24,118,065	23,427,097	47,545,162

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

4)       LEASE RENTAL INCOME (CONTINUED)

US$13,525,502 (31 December 2021: US$ 4,772,296) of the future contracted lease rental payments are recognised as a straight lining lease asset as at year end.

 

5)       GENERAL AND ADMINISTRATIVE EXPENSES

	Year ended		Year ended
	31-Dec-22		31-Dec-21
	US$		US$
Administration fees	305,896		438,198
Aircraft agency fees	12,033		12,000
Aircraft valuation fees	9,092		9,170
Aircraft security trustee fees	12,000		17,985
Audit fees	73,056		89,991
Company broker fees	167,902		167,902
Consultancy fees	8,501		-
Broker fees on sale of NAS shares	-		8,140
Directors' fees and expenses	212,593		326,650
Insurance costs, including directors' insurance	100,873		71,318
Foreign exchange	4,974		21,736
IT and printing costs	22,378		6,376
Legal fees	3,157		3,326
Liquidation costs in relation to DPAG I & II	-		19,488
Marketing fees	-		4,175
Miscellaneous costs	8,399		6,118
Registrar fees	28,738		21,454
Regulatory fees	8,040		23,098
Restructuring fees in relation to NAS	19,664		290,278
Restructuring fees in relation to Thai	93,107		1,094,936
Tax advice fees	4,184		8,556
Total general and administrative expenses	1,094,587		2,640,895

 

6)       FINANCE COSTS

				Year ended	Year ended
				31 December 2022	31 December 2021
				US$	US$
Loan interest payable				4,860,305	4,727,053
Loan modification adjustment				-	432,976
Total finance costs at effective interest rate*				4,860,305	5,160,029
Swap interest paid				-	228,277
Swap breakage costs				-	939,806
				4,860,305	6,328,112
Gain on derivative at fair value (note 14)				-	(459,015)
Total finance costs				4,860,305	5,869,097

*On liabilities measured at amortised cost.

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

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 £1,200 each (2021: £1,200).

 

DP Aircraft UK Limited are subject to taxation at the applicable rate in the United Kingdom. The amount of taxation during the year ended 31 December 2022 was US$ 21,249 (2021: refund of US$ 44,236). The Directors do not expect the taxation payable to be material to the Group.

 

A taxation reconciliation has not been presented in these financial statements as the tax expenses is not material. The effective tax rate based on tax charge for the year is 0.0028% (2021: (0.0021%))

 

8)       EARNINGS PER SHARE

			Year ended	Year ended
			31 December 2022	31 December 2021
			US$	US$
Profit/(Loss) for the year			7,660,823	(21,859,073)
Weighted average number of shares			223,388,128	209,333,333
Earnings per Share			0.03429	(0.10442)

 

9)       PROPERTY, PLANT & EQUIPMENT - AIRCRAFT & RELATED COMPONENTS

 

	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 2022

 

9)       PROPERTY, PLANT & EQUIPMENT - AIRCRAFT & RELATED COMPONENTS (CONTINUED)

 

	Aircraft	Lease Premium	Total
	US$	US$	US$
COST
As at 1 January 2021 and 31 December 2021	238,731,161	17,398,493	256,129,654
ACCUMULATED DEPRECIATION / AMORTISATION
As at 1 January 2021	53,291,464	8,200,047	61,491,511
Charge for the year	175,160	-	175,160
As at 31 December 2021	53,466,624	8,200,047	61,666,671
IMPAIRMENT
As at 1 January 2021	58,839,697	9,198,446	68,038,143
Charge for the year	-	-	-
As at 31 December 2021	58,839,697	9,198,446	68,038,143
CARRYING AMOUNT
As at 31 December 2021	126,424,840	-	126,424,840

 

As at year end PPE is comprised of two aircraft leased to Thai Airways. 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 2022 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.

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

10)     RESTRICTED CASH

			2022	*2021 Restated
Current assets			US$	US$
Security deposit accounts			91	90
Lease rental accounts			4,175,189	2,788,427
			4,175,280	2,788,517
Non-current assets
Maintenance reserves accounts*			14,979,197	14,465,329
Total restricted cash			19,154,477	17,253,846

\* The comparative maintenance reserves accounts balance has been reclassified from current to non-current, see note 24 for further information.

          

           Maintenance reserves collected, in line with the lease agreement, are to be used solely to cover costs related to the maintenance of the two Thai aircraft.

 

           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 PBH and 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.

           

11)    TRADE AND OTHER RECEIVABLES

			2022	*2021 Restated
			US$	US$
Prepayments			82,333	110,996
Rent receivable			671,586	140,220
Straight-lining lease asset			13,525,502	4,772,296
Total trade and other receivables			14,279,421	5,023,512
Less: Expected credit loss on straight lining lease asset			(1,486,453)	-
Net trade and other receivables			12,792,968	5,023,512

 

Current and non-current split as at year end is as follows:

			2022	2021
Current assets			US$	US$
Prepayments			82,333	110,996
Rent receivable			671,586	140,220
Straight-lining lease asset			3,103,595	-
			3,857,514	251,216
Non-current assets
Straight-lining lease asset*			8,935,454	4,772,296
Trade and other receivables			12,792,968	5,023,512

\* The comparative straight-lining lease asset balance has been reclassified from current to non-current, see note 24 for further information.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

11)    TRADE AND OTHER RECEIVABLES (CONTINUED)

 

           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 impairment provision as at 31 December 2022 is US$ 1,486,453 (31 December 2021: US$ nil). 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:

				2022	2021
				US$	US$
Opening provision			-		10,111,605
Expected credit loss on straight lining lease asset				1,486,453	-
Expected credit loss on lease receivable				105,063	12,508,499
Lease receivable written off				(105,063)	(22,620,104)
Closing provision				1,486,453	-

 

In the prior year, due to amendment of the lease agreements with Thai, rental due between 1 January 2021 and 14 June 2021 of US$ 12,508,499 was provided for and fully written off during the 2021 year together with the opening provision. In the current period the provision increased by US$ 1,486,453 and rental due from Thai of US$ 105,063 was written off as agreed per the Engine Exchange Agreement entered into on 1 April 2022.

 

12)      MAINTENANCE PROVISION

			2022	2021
			US$	US$
Maintenance provision - Thai Airways			14,829,296	14,460,682
Total maintenance			14,829,296	14,460,682

 

Maintenance reserves liability relates to funds received from Thai Airways reserved for covering the cost of maintenance.

 

13)    TRADE AND OTHER PAYABLES

	2022	2021
	US$	US$
Accruals and other payables	221,749	218,934
Asset Manager fees payable (note 22)	218,033	122,941
Broker fees payable	167,902	67,160
Director fees payable (note 21)	212,360	218,697
Taxation payable	21,249	-
Total trade and other payables	841,293	627,732

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

14)     BANK BORROWINGS

	US$	US$
Current liabilities: Bank interest payable and Bank borrowings	17,707,184	136,010
Non-current liabilities: Bank borrowings	80,779,172	98,304,863
Total liabilities	98,486,356	98,440,873
The borrowings are repayable as follows:
Interest payable	181,493	136,010
Within one year	17,525,691	-
In two to five years	80,779,172	98,304,863
After five years	-	-
Total Bank borrowings	98,486,356	98,440,873

 

The table below analyses the movements in the Group's bank borrowings:

	2022	2021
	US$	US$
Opening balance	98,304,863	180,676,613
Loan modification adjustment	-	432,976
Repayment of loan	-	(274,173)
Loss of control of subsidiary undertakings	-	(82,530,553)
Principal Bank borrowings	98,304,863	98,304,863
Interest payable	181,493	136,010
Total Bank borrowings	98,486,356	98,440,873

 

The table below sets out an analysis of net debt and the movements in net debt for the year ended 31 December 2022

	Cash and cash equivalents	Principal	Interest	Derivative Instrument	Net Debt
	US$	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 2022

 

14)     BANK BORROWINGS (CONTINUED)

 

	Cash and cash equivalents	Principal	Interest	Derivative Instrument	Net Debt
	US$	US$	US$	US$	US$
At 1 January 2021	6,949,167	(180,676,613)	(238,969)	(4,257,198)	(178,223,613)
Cash flows	(5,769,956)	274,173	4,595,529	301,759	(598,495)
Non cash: -
Fair value movement	-	-	-	459,015	459,015
Termination	-	-	-	4,664,507	4,664,507
Interest charge	-	-	(4,727,053)	(228,277)	(4,955,330)
Penalty fee	-	-	-	(939,806)	(939,806)
Loan modification adjustment	-	(432,976)	-	-	(432,976)
Loss of control of assets, liabilities and subsidiary undertaking	-	82,530,553	234,483	-	82,765,036
At 31 December 2021	1,179,211	(98,304,863)	(136,010)	-	(97,261,662)

 

DekaBank Deutsche Girozentrale

During the year ended 31 December 2015, the Company utilised the proceeds from the placing and the proceeds of two separate loans from DekaBank Deutsche Girozentrale ('DekaBank') of US$ 78,500,000 each to fund the purchase of two Boeing 787-8 aircraft. The balance on the loans on 31 December 2022 was US$ 98,486,356 (31 December 2021: US$ 98,440,873).

 

In accordance with the Amendment and Restatement to the Loan Agreements dated 6 May 2021, repayments of any principal were to be deferred until the end of the PBH arrangement i.e., 31 December 2022. Interest on the non-deferred principal of the loans was to accrue at a fixed rate of 4.10 per cent and interest on the deferred principal was to accrue at a rate per annum equal to the sum 5.0% per annum plus LIBOR/SONIA for the applicable period (such rate to be determined by the Facility Agent).

 

On 7 February 2023 the Group and DekaBank entered into a Second Amendment and Restatement to the Loan Agreements. The new terms agreed are as follows:

 

·    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.

·    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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

14)     BANK BORROWINGS (CONTINUED)

·    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.

 

The MSN 35320 loan and the MSN 36110 loan have a final maturity date of 9 December 2026 and 29 October 2026 respectively.

 

The two DekaBank loans (MSN 35320 loan and MSN 36110 loan referred to as the third and fourth loan) entered into by the Group to complete the purchase of the two Thai aircraft (referred to as the third and fourth Assets) are cross collateralised. Each of the third and fourth loan is secured by way of security taken over the third and fourth Assets and enforce security over both Assets. This means that a default on one loan places both of the Assets at risk. Following the enforcement of security and sale of the aircraft, the remaining proceeds, if any, may be substantially lower than investors' initial investment in the Company.

 

Also, please refer to note 23 for further details regarding amendment and restatement of the loan agreement after 31 December 2022.

 

15)     SHARE CAPITAL

 

Company's authorised share capital is unlimited.

 

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
Year ended 31 December 2021	Subordinated
	Administrative		Ordinary
	Share		Shares	Total
Issued and fully paid (no par value shares):	Number		Number	Number
Shares as at 1 January 2021 and 31 December 2021	1		209,333,333	209,333,334
	US$		US$	US$
Share capital as at 1 January 2021 and 31 December 2021		-	210,556,652	210,556,652

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

15)     SHARE CAPITAL (CONTINUED)

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.

 

Without prejudice to the provisions of the applicable company law and without prejudice to any rights attached to any existing shares or class of shares, or the provisions of the Articles of Incorporation, any share may be issued with such preferred, deferred or other rights or restrictions, as the Company may by ordinary resolution, subject to or in default of any such direction, as the Directors may determine.

 

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)     RESERVES

 

The movements in the Group's reserves are shown on page 46.

 

Retained deficit comprises accumulated profits and losses over time and is taken to this reserve which may be utilised for the payment of dividends if overall in a profitable position.

 

17)     DIVIDENDS

 

The dividends declared and paid during the year ended 31 December 2022 are US$ nil (31 December 2021: US$ nil).

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

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 2022
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%

 

19)     FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

 

The following table details the categories of financial instruments held by the Group at the reporting date:

	2022	2021
	US$	US$
Cash and cash equivalents	1,479,541	1,179,211
Restricted cash	19,154,477	17,253,846
Trade and other receivables (excluding prepayments and straight-lining lease asset)	671,586	140,220
Financial assets measured at amortised cost	21,305,604	18,573,277
Financial liabilities
Bank borrowings	98,486,356	98,440,873
Maintenance provision	14,829,296	14,460,682
Trade and other payables (excluding tax)	841,293	627,732
Financial liabilities measured at amortised cost	114,156,945	113,529,287

 

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. Further details on the impact of the COVID-19 pandemic can be found within the Directors' Report.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

19)     FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

 

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.

 

There are gross lease rentals receivable from Thai at 31 December 2022, US$ 671,586 (2021: US$ 140,220). 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 2022 of US$ 13,525,502 (31 December 2021: US$ 4,772,296). A provision is recognised against this straight lining lease asset as at 31 December 2022 of US$ 1,486,453 (31 December 2021: US$ nil). 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. 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 is Aa2 (2021: 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, post year end 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$ 194,177 (2021: US$ 199,680).

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

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 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 asset)	-		-	671,586	671,586
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)

*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 2021	instruments		instruments	instruments	Total
	US$		US$	US$	US$
Restricted cash	-		17,253,846	-	17,253,846
Trade and other receivables (excluding prepayments and straight-lining lease asset)	-		-	140,220	140,220
Cash and cash equivalents	-		1,179,211	-	1,179,211
Total financial assets	-		18,433,057	140,220	18,573,277
Trade and other payables		-	-	(627,732)	(627,732)
Maintenance reserves	-		-	(14,460,682)	(14,460,682)
Bank borrowings	(77,208,294)		(21,096,569)	(136,010)	(98,440,873)
Total financial liabilities	(77,208,294)		(21,096,569)	(15,224,424)	(113,529,287)
Total interest rate sensitivity gap	(77,208,294)		(2,663,512)

 

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 2022

 

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 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 23, post year end 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 23 for further details.

 

The following table details the contractual maturity analysis of the Group's financial liabilities as at 31 December 2022. The amounts are contractual undiscounted cash flows and therefore will not agree directly to the balances in the statement of financial position as at 31 December 2022.

 

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)

 

31 December 2021	Next 12 months	2-5 years	After 5 years	Total
	US$	US$	US$	US$
Bank borrowings and interest	(4,302,804)	(103,353,004)	-	(107,655,808)
Maintenance provision	-	(14,460,682)	-	(14,460,682)
Trade and other payables	(627,732)	-	-	(627,732)
Total	(4,930,536)	(117,813,686)	-	(122,744,222)

 

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. 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-

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

19)     FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

 

Liquidity risk (continued)

Liquidity risk management

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.

 

Derivative instruments held at fair value

In the prior period, the Group held interest rate swaps which were valued on a recurring basis and were categorised within level 2 of the fair value hierarchy required by IFRS 13. The interest rate swaps were terminated in the prior period.

 

21)     RELATED PARTY TRANSACTIONS

 

The Directors who served during the year received the following remuneration:

 

	Year ended 31 December 2022 US$	Year ended 31 December 2021 US$
Jonathan Bridel (Chairman)	80,701	121,613
Jeremy Thompson (Chairman of the Audit Committee and Senior Independent Director)	60,064	98,493
Harald Brauns (Chairman of the Management Engagement Committee)	65,503	100,298
Total	206,268	320,404

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

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 (2021: nil) and the deferred fees remain outstanding as at 31 December 2022 (see note 13).

 

Directors' expenses totalling US$ 1,273 were paid during the year ended 31 December 2022 (2021: US$ 63), with US$ nil due to be paid at the year-end (31 December 2021: US$ nil).

 

Base annual fees are as follows:

 

Annual Fees	Oct 22 to Dec 22	Jan 22 to Sept 22	Jan 21 to Dec 21
Jonathan Bridel	£61,750	£66,000	£66,000
Jeremy Thompson	£49,450	£53,700	£53,700
Harald Brauns	£49,450	£53,800	£53,800

*Note: Directors fees were agreed in GBP, the financial statements are presented in USD

 

Director fees has been reduced by 10% which was the portion being deferred and possibly payable in shares. The reduction in fees is effective 1 October 2022.

 

In recognition of the additional work performed in relation to the Group's circumstances, the board have earned extra fees of £nil (31 December 2021: £65,000) split as follows: -

 

Additional Fee	2022	2021
Jonathan Bridel	-	£25,000
Jeremy Thompson	-	£20,000
Harald Brauns	-	£20,000

 

*Note: Directors fees were agreed in GBP, the financial statements are presented in USD

 

Director's shareholdings in the Company are detailed in the Directors' Report and Directors' received dividends of US$ nil during the year (31 December 2021: US$ nil).

 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

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%.

 

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 2022 (31 December 2021: US$ nil).

 

Management fees

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.

 

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.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

22)     MATERIAL CONTRACTS

 

Asset Management Agreement

 

Management fees (continued)

In the year ended 31 December 2022 Asset Management fees totalled US$ 471,590 (2021: US$ 757,254) of which US$ 218,033 (note 13) was due at 31 December 2022 (31 December 2021: US$ 122,941).

 

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 period were US$ 305,896 (31 December 2021: US$ 438,198) of which US$ 57,711 remained payable at 31 December 2022 (31 December 2021: US$ 46,876).

 

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

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 represents the deferred debt and will be settled as a balloon payment at the end of the loan term.

·    US$ 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 currently 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 realized.

 

DP Aircraft Guernsey I Limited and DP Aircraft Guernsey II Limited were voluntarily liquidated on 20 February 2023.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 December 2022

 

24)     PRIOR YEAR RECLASSIFICATION

In preparing these financial statements, the Group discovered that restricted cash comprising maintenance reserves and the straight lining lease asset included in trade and other receivables were erroneously presented as current assets when should have been reported as non-current assets given these were not expected to be realised within 12 months after the reporting period.

 

The errors have been corrected by reclassifying each of the affected financial statement line items for prior periods from current to non-current as follows:

 

1 January 2021	As previously reported	Reclassification adjustment	As Restated
NON-CURRENT ASSETS	US$	US$	US$
PPR - Aircraft & Related Components	126,600,000	-	126,600,000
Restricted Cash	-	15,547,974	15,547,974
Total non-current assets	126,600,000	15,547,974	142,147,974
CURRENT ASSET
Assets held for sale	82,000,000	-	82,000,000
Investment held at fair value	15,630,526	-	15,630,526
Trade and other receivables	45,930	-	45,930
Restricted Cash	27,438,332	(15,547,974)	11,890,358
Cash and cash equivalents	6,949,167	-	6,949,167
Total current assets	132,063,955	(15,547,974)	116,515,918
TOTAL ASSETS	258,663,955	-	258,663,955

 

31 December 2021	As previously reported	Reclassification adjustment	As Restated
NON-CURRENT ASSETS	US$	US$	US$
PPR - Aircraft & Related Components	126,424,840	-	126,424,840
Trade and other receivables	-	4,772,296	4,772,296
Restricted Cash	-	14,465,329	14,465,329
Total non-current assets	126,424,840	19,237,625	145,662,465
CURRENT ASSET
Trade and other receivables	5,023,512	(4,772,296)	251,216
Restricted Cash	17,253,846	(14,465,329)	2,788,517
Cash and cash equivalents	1,179,211	-	1,179,211
Total current assets	23,456,569	(19,237,625)	4,218944
TOTAL ASSETS	149,881,409	-	149,881,409

 

The reclassification adjustment has no impact on retained earnings, operating profit, earnings per share or any other primary 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, Chartered Accountants

                                                                                                                                1 Harbourmaster Place

                                                                                                                                IFSC

                                                                                                                                Dublin 1

                                                                                                                                Ireland

 

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