Doric Nimrod 3 Regulatory News (DNA3)

11 July, 2018

DORIC NIMROD AIR THREE LIMITED (the "Company")

ANNUAL FINANCIAL REPORT

The Board of the Company is pleased to announce its results for the year ended 31 March, 2018

To view the Company's Annual Financial Report please follow the link below:http://www.rns-pdf.londonstockexchange.com/rns/3710U_1-2018-7-11.pdf

In addition, to comply with DTR 4.1 please find below the full text of the annual financial report. The report will also shortly be available on the Company's website, http://www.dnairthree.com.

For further information, please contact:

Administrative Enquiries:

JTC Fund Solutions (Guernsey) Limited

+44 (0) 1481 702 400

Doric Nimrod Air Three Limited

Consolidated Annual

Financial Report

From 1 April 2017 to

31 March 2018

CONTENTS

SUMMARY INFORMATION

COMPANY OVERVIEW

Doric Nimrod Air Three Limited (LSE Ticker: DNA3) ("DNA3" or the "Company") is a Guernsey company incorporated on 29 March 2012.

Pursuant to the Company's Prospectus dated 20 June 2013, the Company on 2 July 2013, offered its shares for issue by means of a placing and raised approximately £211 million by the issue of Ordinary Preference Shares (the "Ordinary Shares") at an issue price of 100 pence each (the "Placing"). On 2 July 2013 the Company's Ordinary Shares were admitted to trading on the Specialist Fund Segment of the London Stock Exchange's Main Market (the "SFS").

As at 9 July 2018, the last practicable date prior to the publication of this report, the Company's total issued share capital consisted of 220,000,000 Ordinary Shares and the shares were trading at 97.78 pence per Share.

Investment Objectives and Policy

The Company's investment objective is to obtain income returns and a capital return for its shareholders (the "Shareholders") by acquiring, leasing and then selling aircraft (each an "Asset" or "Assets" and together the "Assets or "Aircraft""). To pursue its investment objective, the Company has used the net proceeds of placings and other equity capital raisings, together with debt facilities (or instruments), to initially acquire four Airbus A380 Aircraft which are leased to Emirate Airlines ("Emirates"), the national carrier owned by The Investment Corporation of Dubai based in Dubai, United Arab Emirates.

DNA Alpha

The Company has one wholly-owned subsidiary, DNA Alpha Limited ("DNA Alpha") which holds the Assets for the Company. Together the Company and DNA Alpha are known as the ("Group").

The first Asset was acquired by DNA Alpha on 29 August 2013 for a purchase price of $245 million. Upon delivery, DNA Alpha entered into an operating lease with Emirates, pursuant to which the first Asset has been leased to Emirates for an expected initial term of 12 years, with fixed lease rentals for the duration.

The second Asset was acquired by DNA Alpha on 29 October 2013 for a purchase price of $245 million. Upon delivery, DNA Alpha entered into an operating lease with Emirates, pursuant to which the second Asset has been leased to Emirates for an expected initial term of 12 years, with fixed lease rentals for the duration.

The third Asset was acquired by DNA Alpha on 14 November 2013 for a purchase price of $245 million. Upon delivery, DNA Alpha entered into an operating lease with Emirates, pursuant to which the third Asset has been leased to Emirates for an expected initial term of 12 years, with fixed lease rentals for the duration.

The fourth Asset was acquired by DNA Alpha on 27 November 2013 for a purchase price of $245 million. Upon delivery, DNA Alpha entered into an operating lease with Emirates, pursuant to which the fourth Asset has been leased to Emirates for an expected initial term of 12 years, with fixed lease rentals for the duration.

DNA Alpha acquired the Assets, using a combination of a portion of the proceeds of the issue of the Ordinary Shares by the Company together with the proceeds of the sale of Equipment Notes issued by DNA Alpha (the "Equipment Notes") and the initial rent payment pursuant to the relevant operating leases. The Equipment Notes were acquired by two separate pass through trusts using the proceeds of their issue of enhanced equipment trust certificates (the "Certificates" or "EETC") as detailed within the Offering Circular issued by DNA Alpha dated 10 July 2013. The Certificates, with an aggregate face amount of approximately $630 million, were admitted to the official list of the Irish Stock Exchange and to trading on the Main Securities market thereof on 12 July 2013 and will mature on 30 May 2025.

Further information about the construction of these leases is available in Note 3 to the Financial Statements.

Distribution Policy

The Company aims to provide its Shareholders with an attractive total return comprising income from distributions through the period of the Company's ownership of the Assets and capital upon the sale of the Assets.

The Group receives income from the lease rentals paid by Emirates pursuant to the leases. Income distributions are made quarterly, subject to compliance with applicable laws and regulations. The Company currently targets a distribution of 2.0625 pence per Share per quarter. Emirates bears all costs (including maintenance, repair and insurance) relating to the Assets during the lifetime of the leases.

There can be no guarantee that dividends will be paid to Shareholders and, if dividends are paid, as to the timing and amount of any such dividend. There can also be no guarantee that the Company will, at all times, satisfy the solvency test required to be satisfied pursuant to section 304 of the Law enabling the Directors to effect the payment of dividends.

Performance Overview

All payments by Emirates have to date been made in accordance with the terms of the respective leases.

During the year under review (the "Period") and in accordance with the Distribution Policy the Company declared four interim dividends of 2.0625 pence per Share. One interim dividend of 2.0625 pence per Share was declared after the reporting period. Further details of dividend payments can be found on page 19.

Return of Capital

If and when the Group is wound up (pursuant to a shareholder resolution, including the liquidation resolution) the Company intends to return to Shareholders the net capital proceeds upon the eventual sale of the Assets subject to compliance with the Company's Articles of Incorporation (the "Articles") and the applicable laws (including any applicable requirements of the solvency test contained therein).

Liquidation Resolution

Although the Company does not have a fixed life, the Articles require that the Directors convene a general meeting of the Company in 2026 where an ordinary resolution will be proposed that the Company proceed to an orderly wind-up at the end of the term of the leases and the Directors will consider (and if necessary, propose to Shareholders) alternatives for the future of the Company, including re-leasing the Assets, or selling the Assets and reinvesting the capital received from the sale of the Assets in other aircraft.

CHAIRMAN'S STATEMENT

I am pleased to present the Company's shareholders ("Shareholders") with the Group's fifth Consolidated Annual Financial Report covering the period from 1 April 2017 until 31 March 2018.

The Company's investment objective is to obtain income returns and a capital return for its Shareholders by acquiring, leasing and then selling aircraft. The Group owns four Airbus A380-861 aircraft, which have been leased to Emirates for an initial term of 12 years with fixed lease rentals for the duration. The debt portion of the funding will be fully amortised over the 12 years of the leases, with the aim of leaving the aircraft unencumbered on the conclusion of the leases. All payments thus far by Emirates have been made in accordance with the terms of the leases.

The Company has been targeting a distribution of 2.0625 pence per Share per quarter, equating to 8.25 pence per Share per annum.

The lease payments received by the Group from Emirates cover repayment of the debt as well as income to pay operating expenses and dividends to Shareholders. Emirates bears all costs (including maintenance, repair and insurance) relating to the Company's Airbus A380-861 aircraft (the "Assets") during the lifetime of the leases.

The Group's Asset Manager, Amedeo Management Limited ("Amedeo"), continues to monitor the leases and to report regularly to the Board. Nimrod Capital LLP ("Nimrod"), the Company's Corporate and Shareholder Adviser, continues to liaise between the Board and Shareholders, and also communicates with Shareholders regularly regarding relevant news flow and the Company's quarterly fact sheets.

News flow relating to the Airbus A380, the sole model owned by the Group, has been widespread over the period and the Board keeps a close eye on such developments, receiving regular market updates from Amedeo and Nimrod. Whilst there has been much negative coverage, the confirmation of a new order from Emirates in February 2018 was accompanied by a public commitment by Airbus to produce the A380 at least for another ten years. This order underlines the importance of the A380 to Emirates business model. With 102 A380s now flying as part of the Emirates fleet, it is a key aircraft and likely is to be so for many years to come. Airbus has also stated that it is confident of further orders for the A380 now that production certainty has been achieved. More recently, news that two A380s owned by German Funds managed by Dr Peters Group are to be sold for parts is disappointing. Whilst providing a positive result for investors, according to Dr Peters, it is noted that this outcome is the product of unique circumstances that are unlikely to be repeated. More positively, news that a European wet lease specialist, Hi Fly, is planning to start operating at least one second hand A380 represents an important milestone in the model's lifecycle. Wet leasing typically refers to the provision of aircraft, crew, maintenance and insurance (also known as ACMI) to an aircraft operator. The Group's remaining lease period, some seven years, offers a suitable time horizon in which to assess such market developments.

Emirates posted another year of profitability in the 2017/18 financial year, growing its route network to 157 destinations and adding 17 new aircraft to its fleet - including 8 A380s. Emirates' global passenger load factor rose by 0.4 of a percentage point in 2017 to 77.5 per cent. All regions except the Middle East experienced an increase in load factor in 2017.

The Board recognises Emirates is the sole lessee of the asset, and in the event that Emirates defaults on the rental payments it is unlikely the Company will be able to meet its targeted dividends or, in the case of ongoing default, continue as a going concern, instead being required to sell its aircraft and distribute the proceeds to investors. We do not believe such a default is likely at this moment in time given the current and historical performance of Emirates and its current financial position.

In economic reality, the Group has performed well. Four interim dividends were declared in the period and future dividends are targeted to be declared and paid on a quarterly basis. However, the Consolidated Financial Statements do not, in the Board's view, properly convey this economic reality due to the accounting treatments for foreign exchange, rental income and finance costs, as required by International Financial Reporting Standards ("IFRS").

IFRS require that transactions denominated in currencies other than the presentation currency, (including, most importantly, the cost of the aircraft) are translated into the presentation currency at the exchange rate ruling at the date of the transaction whilst monetary items (principally the outstanding borrowings) are translated at the rate prevailing on the reporting date. The result is that the figures sometimes show very large mismatches which are reported as unrealised foreign exchange differences.

On an on-going basis and assuming the lease and loan payments are made as anticipated, such exchange differences do not reflect the commercial substance of the situation in the sense that the key transactions denominated in US dollars are in fact closely matched. Rental income received in US dollars is used to pay loan repayments due which are likewise denominated in US dollars. US dollar lease rentals and loan repayments are furthermore fixed at the outset of the Group's life and are very similar in amount and timing.

In addition to this, lease rental income receivable is credited evenly to the Consolidated Statement of Comprehensive Income over the planned life of the lease. Conversely, the methodology for accounting for interest cost means that the proportion of the loan repayments which is treated as interest, and is debited to the Consolidated Statement of Comprehensive Income, varies over the course of the loan with a higher proportion of interest expense recognised in earlier periods, so that the differential between rental income and interest cost (as reported in the Consolidated Statement of Comprehensive Income) reduces. In reality however, the amount of rental income is fixed so as to closely match the interest and principal components of each loan repayment instalment and allow for payments of operating costs and dividends.

The Board conducts an annual review of the estimated residual values of the assets at the end of the respective 12-year leases to Emirates for the purpose of validating the depreciation charge. The Board also assesses if an indicator of impairment of aircraft value has arisen which might require the value of the aircraft to be written down. In conducting these reviews, the Board engages three internationally recognised expert appraisers, who provide current and future valuations and also take the advice of Amedeo, the Company's Asset Manager.

Historically, the residual value of the Aircraft has been determined using market values including inflationary effects. However, for the year ended 31 March 2018, after consulting with the auditor and the Company's advisors, the Directors have concluded that the use of forecast market values excluding inflation best approximates residual value in accordance with a strict interpretation of IAS 16 Property, Plant and Equipment. This has resulted in a reduction in the anticipated residual values of the aircraft and an increase in the related depreciation as disclosed in the Statement of Comprehensive Income. Further information about the residual value of the asset may be found in the Audit Committee report on pages 26 to 32 and Note 9 to the Financial Statements.

Further, The Board has considered the impairment triggers as set out under IAS 36 Impairment of Assets, in the context of the Company and determined that there is no indication of impairment loss for the year ended 31 March 2018. Further details can be found in Note 3.

The Board also recognises that the Assets were purchased on the basis of being leased to Emirates for a 12 year term at attractive rates. The Board is conscious that the independent

appraisals of the current market value do not reflect the lease, which is an intrinsic part of the value of the Group's Assets. In addition, upon review of the professional advice they have received, the Board is of the opinion that, the current estimate of the residual value of the asset is a reasonable approximation of the residual value within the IAS 16 definition of residual value given a comparable asset is not available.

Finally, regulatory change has continued apace during the period and the Board continues to monitor and respond to these changes. In particular, the turn of the year saw the introduction of the Markets in Financial Instruments Directive and the Packaged Retail Insurance and Investment Products Regulation ("PRIIPS"). This EU regulation required the Company to prepare a Key Information Document ("KID") which is available on our website. Investors should note that the procedures for calculating the costs, risks and potential returns are prescribed by this regulation, and the figures in the KID may not reflect the results investors will experience in the future. As a result, it is recommended that the KID is not considered in isolation but is read in conjunction with the Company's financial statements and quarterly reports. Further, the Board is conscious of its obligations under the UK Corporate Governance Code and reviews such matters regularly. Further information regarding this can be found in the Directors' Report on pages 19 to 25.

The Board encourages Shareholders to read the Company's quarterly fact sheets which we believe provide a great deal of interesting information and we hope these regular reports, in addition to the communication you receive from Nimrod, the Company's Corporate and Shareholder Adviser, are useful and informative. We welcome Shareholder feedback and encourage you to contact Nimrod to request a meeting.

On behalf of the Board, I would like to thank our service providers for all their help and all Shareholders for their continuing support of the Company and we look forward to keeping all Shareholders up to date with further progress.

Finally, I wish to express my recognition for and appreciation of all the hard work of former Director Norbert Bannon. Norbert brought great commercial insight to the Company during his tenure, and he leaves with our thanks and good wishes.

Charles Wilkinson

Chairman

11 July 2018

ASSET MANAGER'S REPORT

At the request of the Directors of the Company, this commentary has been provided by the Asset Manager of the Company.

1. The Assets

The Company acquired four Airbus A380 aircraft by the end of November 2013. Since delivery, each of the four aircraft has been leased to Emirates - the national carrier owned by the Investment Corporation of Dubai, based in Dubai, United Arab Emirates - for an initial term of 12 years with fixed lease rentals for the duration. In order to complete the purchase of the aircraft, DNA Alpha, a wholly owned subsidiary of the Company, issued two tranches of Certificates - a form of debt security - in July 2013 in the aggregate face amount of $630 million. DNA Alpha used the proceeds from both the Equity and the Certificates to finance the acquisition of the four new Airbus A380 aircraft.

Aircraft utilisation for the period from delivery of each Airbus A380 until the end of March 2018 was as follows:

Maintenance Status

Emirates maintains its A380 aircraft fleet based on a maintenance programme according to which minor maintenance checks are performed every 1,500 flight hours, and more significant maintenance checks ("C checks") at 36 month or 18,000 flight hour intervals, whichever occurs first. The 12 month increased C check interval allows for a higher aircraft availability due to lower downtime.

Emirates bear all costs relating to the aircraft during the lifetime of the leases (including for maintenance, repairs and insurance).

Inspections

The Asset Manager performed inspections of MSNs 133 and 136 in August 2017 and MSN 134 in September 2017. The physical conditions of the aircraft were in compliance with the provisions of the respective lease agreement.

The Asset Manager performed records audits of the aircraft with MSN 132 in November 2017 and of the aircraft with MSNs 133, 134 and 136 in December 2017. The lessee was very helpful in the responses given to the Asset Manager's technical staff, and the technical documentation was found to be in good order.

2. Market Overview

2017 saw global revenue passenger kilometres ("RPKs") grow by 7.6 per cent. compared to the previous year. As a result, 2017 was another year of above-trend passenger growth,

surpassing the ten-year average pace of 5.5 per cent. This momentum in global passenger traffic has continued into 2018, assisted by positive economic conditions. Nevertheless, the International Air Transport Association ("IATA") anticipates a moderate slowdown in full-year growth as the stimulus to demand from lower airfares has been fading. RPK growth in 2018 is forecast to be 6.0%, mainly due to the increase in input costs such as fuel prices and labour costs.

In 2017, industry-wide available seat kilometres increased by 6.4 per cent. compared to 2016. As a result of the RPK growth exceeding this, the global passenger load factor ("PLF") rose by 1.0 percentage points to 81.5 per cent. compared to the previous year, achieving a record high for a calendar year. All regions except the Middle East experienced an increase in PLF in 2017.

The market share of Middle Eastern airlines fell in 2017 for the first time since 1997. It was the only region to experience a slowdown in its full-year international RPK growth rate (down from 11.8 per cent. in 2016 to 6.4 per cent. in 2017) following a challenging first half of the year, which included the now-lifted ban on personal electronic devices on flights and the proposed travel bans to the US. The seasonally adjusted passenger traffic numbers did however recover somewhat during the second half of the year. IATA's January 2018 Air Passenger Market Analysis report showed passenger traffic was trending upwards at an annualized pace of 1 per cent.

In 2017, Asia/Pacific-based operators recorded the highest RPK growth rate with 10.2 per cent. Europe experienced the second highest growth rate with 8.2 per cent., followed by Latin America with 7.0 per cent. The Middle East and Africa achieved growth rates of 6.4 per cent. each, while North America saw a growth rate of 4.2 per cent.

For 2018, IATA forecasts an industry-wide net profit of $38.4 billion, the highest nominal net profit on record. This comes despite rising unit costs, which are partially offset by the rise in achieved load factors. Fuel prices, the single largest operating cost for airlines, are expected to increase to $ 73.8 per barrel and represent 20.5 per cent. of average operating costs in 2018, an increase of 1.8 percentage points compared to the previous year.

© International Air Transport Association, 2018. Air Passenger Market Analysis December 2017, Economic Performance of the Airline Industry 2017 End-year report, Air Passenger Market Analysis January 2018. All Rights Reserved. Available on the IATA Economics page.

3. Lessee - Emirates Key Financials

In the 2017/18 financial year ending on 31 March 2018, Emirates recorded its 30th consecutive year of profit with a net result of AED 2.8 billion ($762 million), an improvement of 124% compared to the previous financial year, leading to a profit margin of 3.0 per cent. Despite continuing political challenges impacting traveller demand and fare adjustments due to a highly competitive business environment, Emirates increased its revenue to AED 92.3 billion ($25.2 billion). This was aided by the decline of the US dollar against currencies in most of Emirates' key markets, which had an AED 661 million ($180 million) positive impact on the airline's bottom line.

Emirates' overall passenger traffic continued to grow during the 2017/18 financial year. The airline carried a record 58.5 million passengers (a 4 per cent. increase over last financial year) and achieved a passenger load factor of 77.5 per cent. compared to last year's 75.1 per cent. The increase in the passenger load factor was the result of capacity management in response to political uncertainty and strong competition in many markets despite a moderate 2 per cent. increase in seat capacity.

Total operating costs increased by 7 per cent. over the previous financial year, largely due to the 15 per cent. increase in the average price of jet fuel during the financial year. Including a 3 per cent. uplift in line with capacity expansion, the airline's fuel bill increased by 18 per cent. to AED 24.7 billion ($6.7 billion) compared to the previous financial year. Fuel now accounts for 28 per cent. of operating costs, compared to 25 per cent. in the 2016/17 financial year, and it remains the largest cost category for the airline.

As of 31 March 2018, Emirates' balance sheet amounted to AED 127.6 billion (US$ 34.8 billion), an increase of 5 per cent. compared to the previous financial year. Total equity increased by 5.6 per cent. to AED 37.0 billion ($10.1 billion) due to higher profit which was partially offset by dividend payments to the owners amounting to AED 1.0 billion ($272 million). The equity ratio remained stable at nearly 29 per cent. The airline's cash balance amounted to AED 20.4 billion (US$ 5.6 billion) at the end of the period, up by AED 4.7 billion ($1.3 billion) compared to the previous financial year. Proceeds from the Sukuk financing of AED 2.2 billion ($600 million) issued in the last quarter of the financial year have been invested in short term bank deposits and will be used to finance aircraft deliveries in 2018/19.The current ratio stood at 0.84, meaning the airline would be able to meet over 80 per cent. of its current liabilities by liquidating all its current assets. Changes on the liabilities' side of the balance sheet included the financing of seven new aircraft and the Sukuk issue, which were offset by repayments of finance lease liabilities, bonds and term loans.

Tim Clark, president of Emirates commented during the year under review that it was Emirates' intention to continue to fly its A380s for the remainder of their useful life, as opposed to retiring the aircraft when they reached 12 years of age. Emirates received 17 new aircraft, comprising of eight A380s and nine Boeing 777-300ERs. During this time, eight older aircraft were phased out, leading to a total fleet count of 268 at the end of March. This fleet roll-over resulted in an average fleet age of 5.7 years. Due to the more moderate fleet renewal pace compared to the previous year, the figure increased by around 6 months. Funding has come from the Japanese structured finance market in conjunction with debt from a wide-ranging group of institutions in China, France, the United Kingdom, and Japan. Emirates raised over AED 3.7 billion ($ 1 billion) during the year from this source. Emirates has also refinanced a commercial bridge facility (due to non-availability of ECA cover) of AED 3.8 billion ($1.0 billion) using a finance lease structure for five A380 aircraft, accessing an institutional investor and bank market base from Korea, Germany, the United Kingdom, and the Middle East. In total, Emirates raised AED 17.9 billion ($4.9 billion) using a variety of financing structures, including the 600 million US dollar Sukuk in March.

In the 2017/18 financial year, Emirates launched two new passenger services (Phnom Penh in Cambodia and Zagreb in Croatia) and added capacity on 15 existing routes. Additionally, Emirates entered into strategic partnerships with flydubai and Cargolux, increasing its global connectivity and expanding the choice of air services on offer to passenger and cargo customers respectively. Emirates also received authorisation to extend its partnership with Qantas until 2023. Its global route network spanned 155 destinations in 83 countries by fiscal year end.

Source: ch-aviation, CNN, Emirates, FlightGlobal

4. Aircraft - A380

With the addition of Tokyo-Narita, Casablanca, Sao Paulo, Johannesburg and Nice the airline grew its A380 network by five new destinations during the course of 2017. As of the end of March 2018, Emirates operated a fleet of 102 A380s, which currently serve 46 destinations within its global network via its hub in Dubai. A380 destinations include: Amsterdam, Auckland, Bangkok, Barcelona, Beijing, Birmingham, Brisbane, Casablanca, Christchurch, Copenhagen, Dusseldorf, Frankfurt, Guangzhou, Hong Kong, Johannesburg, Kuala Lumpur, Kuwait, London Gatwick, London Heathrow, Los Angeles, Madrid, Manchester, Mauritius, Melbourne, Milan, Moscow, Mumbai, Munich, New York JFK, Nice, Paris, Perth, Prague, Rome, San Francisco, Sao Paulo, Seoul, Shanghai, Singapore, Sydney, Taipei, Tokyo, Toronto, Vienna, Washington, and Zurich.

As of the end of March 2018, the global A380 fleet consisted of 219 commercially operated planes in service. The 13 operators are Emirates (102), Singapore Airlines (17), Deutsche Lufthansa (14), Qantas (12), British Airways (12), Korean Air Lines (10), Etihad Airways (10),

Air France (10), Qatar Airways (9), Malaysia Airlines (6), Thai Airways (6), Asiana Airlines (6), and China Southern Airlines (5). Another four were temporarily parked: two for lease return preparations and two were returned to their lessor. Following its redelivery from Singapore Airlines (SIA) earlier in 2018, the second A380 to come off lease has been placed into temporary storage in France whilst its engines are reportedly on short terms leases to Rolls Royce. The number of undelivered A380 orders stood at 108 and no longer includes a six aircraft order from Virgin Atlantic, which has been cancelled after the delivery was postponed multiple times.

Speaking during the Aviation Festival event in London on 7 September 2017, Emirates president Tim Clark stated that the airline will capitalize on its flexibility in order to compete with long-haul, low-cost operators. Clark noted that Emirates' fleet of A380s would enable the airline to "compartmentalise" by offering "three or four economy classes" on the main deck alone. This would allow Emirates to match long-haul, low-cost operators in their base price while still being able to offer additional enhancements.

Emirates, the most important customer of the A380 program, has tied its business model to the capacity offered by the superjumbo more closely than any other A380 operator and currently serves nearly 50 destinations with the aircraft. According to an analysis conducted by CAPA - Centre for Aviation (an independent market commentator), if earlier A380s were to be replaced with Boeing 777-9s, of which Emirates currently has 115 on order, it would lead to a 25-32% loss in capacity. In order to maintain the current capacity levels on the route between London Heathrow and Dubai alone, Emirates would need to deploy up to three additional flights daily and acquire the landing rights for each additional flight. However, this would prove difficult as Emirates already faces challenges from limited slots, hub congestion and traffic rights.

In February 2018, Emirates firmed up an order for an additional 20 Airbus A380 plus an option for another 16 aircraft with deliveries starting from early 2020 onwards. Emirates, which is currently using both Engine Alliance and Rolls-Royce engines, is evaluating the engine options for this order. HH Sheikh Ahmed bin Saeed Al Maktoum explained: "Our customers love it, and we've been able to deploy it on different missions across our network, giving us flexibility in terms of range and passenger mix."

Airbus also announced that it intends to reduce the A380 output to six per year from 2020 onwards in order to sustain the programme and keep losses from the production of this aircraft compressed. The production rate, which is planned at 12 A380s to be delivered this year, will follow with a decrease to eight by 2019 and six by 2020. Tom Enders, Airbus' departing chief executive, explained that he anticipates further A380 orders in the future from existing or new operators, specifically in Asia and, particularly, China. Enders states that the A380 is currently being under-represented in China, but would ideally suit such a market.

Source: CAPA, Emirates, FlightGlobal

DIRECTORS

Charles Edmund Wilkinson - Chairman (Age 75) (Independent non-executive director)

Charles Wilkinson is a solicitor who retired from Lawrence Graham LLP in March 2005. While at Lawrence Graham he specialised in corporate finance and commercial law, latterly concentrating on investment trust and fund work.

Charles is currently Chairman of Doric Nimrod Air One Limited, Chairman of the Audit Committee of Doric Nimrod Air Two Limited, and a director of Landore Resources Ltd, a Guernsey based mining exploration company. He is resident in Guernsey.

Geoffrey Alan Hall (Age 69) (Independent non-executive director)

Geoffrey Hall has extensive experience in asset management, having previously been Chief Investment Officer of Allianz Insurance plc, a major UK general insurance company and an investment manager at HSBC Asset Management, County Investment Management, and British Railways Pension Funds. Geoffrey is also currently a director of Doric Nimrod Air One Limited and Chairman of Doric Nimrod Air Two Limited.

Geoffrey earned his masters degree in Geography at the University of London. He is an associate of the CFA Society of the UK.

John Le Prevost (Age 66) (Independent non-executive director)

John Le Prevost is the Chief Executive Officer of Anson Group Limited and Chairman of Anson Registrars Limited (the Company's Registrar). He has spent over 30 years working in offshore trusts and investment business during which time he was Managing Director of County NatWest Investment Management (Channel Islands) Limited, Royal Bank of Canada's mutual fund company in Guernsey and Republic National Bank of New York's international trust company. He is a director of a number of other companies associated with Anson Group's business as well as being a trustee of the Guernsey Sailing Trust. John is also currently a director of Doric Nimrod Air One Limited, Doric Nimrod Air Two Limited and Amedeo Air Four Plus Limited. He is resident in Guernsey.

SERVICE PROVIDERS

Management and the Delegation of Functions

The Directors, whose details are set out on page 13 are responsible for reviewing the business affairs of the Group in accordance with the Articles and the Prospectus and have overall responsibility for the Group's activities including all business decisions, review of performance and authorisation of distributions. All of the Directors are independent and non-executive. The Group has delegated management of the Company's Airbus A80-361 aircraft (the "Assets") to Amedeo, which is a company incorporated in Ireland. Further details are outlined below under the heading Asset Manager. The Directors delegate secretarial and administrative functions to JTC Fund Solutions (Guernsey) Limited ("JTC" or the "Secretary & Administrator") which is a Company incorporated in Guernsey and licenced by the Guernsey Financial Services Commission (the "GFSC") for the provision of administration services. The registrar function is delegated to Anson Registrars Limited ("Anson") which is licensed and regulated by the Guernsey Financial Services Commission.

Asset Manager and Lease and Debt Arranger

Amedeo Management Limited ("Amedeo") has been appointed by the Company to provide asset management services to the Group. Pursuant to the Asset Management Agreement, Amedeo will: (i) monitor Emirates' and any subsequent lessees' performance of its obligations under the respective operating leases and any subsequent lease respectively (which shall include the obligations relating to the maintenance of insurance cover); (ii) provide the Group with information regarding alternatives with respect to any potential sale or re-lease of the Assets; (iii) carry out mid-lease inspections of the Assets; (iv) provide the Group with asset monitoring reports describing the state and any material changes to the state of the Assets; and (v) liaise, as and when necessary, with lenders, on all matters relating to the loans, as required. Amedeo has further undertaken that it will dedicate sufficient time and resources as it reasonably believes is required from time to time to fulfil any contractual arrangements it enters into with the Company.

Amedeo has also been appointed by the Company, pursuant to the Agency Agreement, to assist the Group, and act as the Group's agent, in relation to the arrangement, negotiation, review, approval, execution and management on behalf of the Group of the acquisition of the Assets, the borrowings of the Group relating to the acquisition of the Assets, and the operating leases. Amedeo is a subsidiary of Amedeo Capital Limited, a Cayman company engaged in the business of aircraft operating leasing and management.

Amedeo Services (UK) Limited has been appointed by the Group, pursuant to the Liaison Services Agreement, to: (i) coordinate the provision of services by Amedeo Management Limited to the Group under the Asset Management Agreement and the Agency Agreement, as relevant; and (ii) facilitate communication between the Group and Amedeo. Amedeo Services (UK) Limited is authorised by the Financial Conduct Authority and is part of the Amedeo group of companies.

The Amedeo group is primarily involved in the operating lease and management of widebody aircraft. The aircraft portfolio currently managed by the Amedeo group is valued at over $8 billion and consists of 50 aircraft under management. These aircraft include commercial airliners including A380, A350, A330, A321 and Boeing 777, 787 and 747-F. Amedeo is a member of ISTAT, the International Society of Transport Aircraft Trading, and is a Strategic Partner of IATA, the International Air Transport Association.

Corporate and Shareholder Adviser

Nimrod Capital LLP ("Nimrod"), which is authorised by the Financial Conduct Authority, has been appointed as the Corporate and Shareholder Adviser by the Company.

Nimrod was founded in 2008 as an entirely independent organisation which specialises in generating and sourcing interesting investment funds, themes and solutions managed by experts in their fields for the professional investor marketplace. It has launched nine listed investment companies since its formation and it also provides investment, marketing, distribution and advisory services to investment companies and their Board and managers.

Secretary & Administrator

JTC plc is a multijurisdictional, independent provider of institutional and private client services whose shares have been admitted to trading on the LSE's Main Market for Listed Securities. Founded in 1987, JTC plc has significant global experience and over £63 billion (US dollars 85 billion) assets under administration. For further information about JTC plc, please visit www.jtcgroup.com.

JTC Fund Solutions (Guernsey) Limited (the "Secretary & Administrator") is a Guernsey incorporated company and provides administration and secretarial services to the Group pursuant to an Administration and Secretarial Agreement. In such capacity, JTC is responsible for the general secretarial functions required by the law and ensures that the Group complies with its continuing obligations as well as advising on the corporate governance requirements and recommendations as applicable to a company admitted to trading on the Specialist Fund Segment of the London Stock Exchange's Main Market.

JTC is also responsible for the Group's general administrative functions such as the calculation of the net asset value of Ordinary Shares and the maintenance of accounting and statutory records and any reporting required under the Foreign Account Tax Compliance Act of the United States of America and the OECD's Common Reporting Standards.

Registrar

Anson Registrars Limited ("Anson") is the Company's CREST compliant registrar. The Company's registrar is responsible for the maintenance of the Company's share register and for the processing of dividend payments and stock transfers. Anson is licensed and regulated by the Guernsey Financial Services Commission and further information about Anson may be found at www.anson-group.com.

Review

The Board keeps under review the performance of the Asset Manager, Corporate and Shareholder Adviser, Secretary & Administrator and the Registrar and the powers delegated to each service provider. In the opinion of the Board, the continuing appointments of the service providers on the terms agreed is in the interest of the Company's shareholders as a whole.

MANAGEMENT REPORT

A description of important events which have occurred during the Period, their impact on the performance of the Group as shown in the financial statements and a description of the principal risks and uncertainties facing the Group is given in the Chairman's Statement, Asset Manager's Report, Statement of Principal Risks and the Notes to the Consolidated Financial Statements contained on pages 44 to 70 and are incorporated here by reference.

Principal Risks and Uncertainties

The Board has undertaken a robust assessment of the principal risks facing the Group and have undertaken a detailed review of the effectiveness of the risk management and internal control systems. The Board is comfortable that the risks are being appropriately monitored on a regular basis.

The risks set out below are those which are considered to be the material risks relating to an investment in the Ordinary Shares but are not the only risks relating to the Ordinary Shares or the Group. Additional risks and uncertainties of which the Group is presently unaware or that the Group currently believes are immaterial may also adversely affect it business, financial condition, results of operations or the value of the Ordinary Shares.

The principal risks associated with the Group are:

• Operational risk: the Board is ultimately responsible for all operational facets of performance including cash management, asset management, regulatory and listing obligations. The Group has no employees and so enters into a series of contracts/legal agreements with a series of service providers to ensure both operational performance and the regulatory obligations are met. This risk has been mitigated by the Group using well established, reputable and experienced service providers and assessing service providers' continued appointment on at least an annual basis.

• Investment risk: there are a number of risks associated with the Group's A380-861 aircraft (the "Assets") in relation to the occurrence of technical faults with the Assets or actions by third parties causing both damage to the Assets and also damaging the demand for global air travel. This risk has been mitigated by the lessee's contractual responsibility to insure, repair and maintain the aircraft for the duration of the leases between the Group and Emirates Airline (the "Leases").

• Borrowings and financing risk: there is a risk that the Group is exposed to fluctuations in market interest rates and foreign exchange rates. This risk has been mitigated by ensuring that loan repayments are made from lease rental revenues received in the matching currency and by fixing the interest rates on loans and lease rentals.

Emirates is the sole lessee of the Assets and is headquartered in the Middle East. Should Emirates default on the rental payments due to domestic events, events in the wider airline industry or other reasons it is unlikely the Company will be able to meet its targeted dividends or, in the case of ongoing default, continue as a going concern. The risk of default is mitigated by the ability of the Company to sell or re-lease the Asset in the event of a single default.

• Secondary market risk: there is a risk that the Group would not be able to achieve the projected resale value of the asset due to changes in demand for second hand aircraft of the type owned by the Group. The Board monitors and revises the residual value of the aircraft on an annual basis.

• Regulatory risk: the Group is required to comply with the disclosure guidance and transparency rules of the Financial Conduct Authority and the requirements imposed by the Companies (Guernsey) Law 2008 (the "Law")and the Guernsey Financial Services Commission. Any failure to comply could lead to criminal or civil proceedings. Although responsibility ultimately lies with the Board, the Company's secretary also monitors compliance with regulatory requirements.

Data Protection

The Company has implemented measures designed to ensure its compliance with the EU General Data Protection Regulation (EU) 2016/679 and associated legislation in Guernsey. The Company has also issued a privacy notice explaining the data it holds, how the data is processed and its procedures for processing this data. This notice is available for review and download at the Company's website.

Going Concern

The Group's principal activities are set out within the Company Overview on pages 2 to 4. The financial position of the Group is set out on page 40. In addition, Note 19 to the Consolidated Financial Statements includes the Group's objectives, policies and processes for managing its capital, its financial risk management objectives and its exposures to credit risk and liquidity risk.

The Equipment Note payments are fixed and the fixed rental income under the relevant operating lease means that the rent should be sufficient to repay the debt and provide surplus income to pay for the Group's expenses and permit payment of dividends.

After making reasonable enquiries, and as described above the Directors have a reasonable expectation that the Group has adequate resources to continue in its operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the annual Consolidated Financial Statements.

Viability Statement

In accordance with provision C.2.2 of the UK Corporate Governance Code, the Directors of the Company have considered the prospects of the Company over the period from present until the liquidation resolution is put to Shareholders six months before the last lease is due to terminate in 2025, a period of approximately seven years.

The Board, in assessing the viability of the Group, has paid particular attention to the principal risks faced by the Company as disclosed in the Asset Manager's Report and the Notes to the Consolidated Financial Statements, reviewing on an annual basis the risks faced and ensuring that any mitigation measures in place are functioning correctly.

In addition, the Board has considered a detailed cash flow projection for the running costs of the Group. Group and has assumed that Emirates is a going concern. The Group retains sufficient cash to cover the forecast operating costs of the Group until the termination date of the Leases in 2025, assuming receipt of planned rental income.

The Directors believe that their assessment of the viability of the Company over the period chosen was sufficiently robust and encompassed the risks which would threaten the business model, future performance, solvency or liquidity of the Company considering a variety of severe but plausible scenarios.

As a result of their review, the Directors of the Group have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due until the leases are due to terminate in 2025.

Responsibility Statement

The Directors jointly and severally confirm that to the best of their knowledge:

(a) The financial statements, prepared in accordance with IFRS give a true and fair view of the assets, liabilities, financial position and profits of the Group and performance of the Group;

(b) This Management Report includes or incorporates by reference a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces;

(c) The annual report taken as a whole is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Group's position, performance, business model and strategy; and

(d) The annual report and financial statements include information required by the LSE and for ensuring the Company complies with the relevant provisions of the DGTRs of the FCA.

DIRECTORS' REPORT

The Directors present their report and financial statements of the Group for the Period.

Principal Activities and Business Review

The principal activity of the Group is to acquire, lease and then sell Aircraft. The Directors do not envisage any change in these activities for the foreseeable future. A description of the activities of the Group in the period under review is given in the Chairman's Statement and the Asset Managers Report on pages 5 to 8 and 9 to 12 respectively.

Status

The Company is a Guernsey domiciled company the Ordinary Shares of which are admitted to trading on the Specialist Fund Segment of the London Stock Exchange's Main Market. Its registered number is 54908. The Company operates in accordance with the Law.

Results and Dividends

The results of the Group for the Period are set out on page 40.

The Company declared the following dividends during the period from 1 April 2017 to date as follows:

The Company aims to continue to pay quarterly dividends of 2.0625 pence per Share, in line with the distribution policy. There is no guarantee that any future dividends will be paid.

Directors

The Directors in office are shown on page 13 and all Directors remain in office as at the date of signing of these financial statements. Further details of the Directors' responsibilities are given on pages 21 to 22.

Anson Registrars Limited ("Anson") is the Company's Registrar, Transfer Agent and Paying Agent. John Le Prevost is a director and controlling shareholder of Anson Group Limited, the holding company of Anson.

Other than the non executive director appointments disclosed above no Director has a contract of service with the Company, nor are any such contracts proposed.

The following interests in Ordinary Shares of the Company are held by Directors and their connected persons:

At the date of this report, there are no outstanding loans or guarantees between the Company and any Director.

There were no material related party transactions which took place in the financial period, other than those disclosed in the Directors' Report and at Note 21 to the financial statements.

Substantial Controllers of Voting Rights

The Company has identified the following substantial controlling interests in voting rights attached to the Company's issued share capital in accordance with Chapter 5 of the DGTRs. These are based on notifications made to the Company since inception and may differ substantially from positions recorded on the Company's share register.

There have been no material changes in the below list of substantial controlling interests between the end of the year under review and 11 July, 2018, being the latest practicable date prior to the date of approval of this report.

Corporate Governance

Statement of Compliance with the UK Corporate Governance Code

As a Guernsey company with shares admitted to the SFS, the Company is not obliged to adopt the UK Corporate Governance Code (the "Code"). The Company has however voluntarily committed to comply with the Code or explain any departures. A copy of the Code is available for download from the Financial Reporting Council's web-site (www.frc.org.uk). Companies which report against the Code are also deemed to meet the requirements of the Guernsey Financial Services Commission Code of Corporate Governance.

Save for departing from the requirements to: (i) have a chief executive (since the Company

does not have any executive directors); (ii) have a senior independent director (since the Company considers that each director who is not Chairman can effectively fulfil this function); (iii) have a remuneration committee (given the small size of the exclusively non-executive and independent Board); (iv) have a nomination committee (given the small size of the exclusively non-executive and independent Board); (v) appoint the Directors for a fixed term (given the terms of the leases between the Group and Emirates Airline (the "Leases") are each twelve years, the Board considers that the defined life of the Company means that the Directors should be appointed to serve until the Leases end, subject to re-election in accordance with the Company's Articles) and (vi) have an internal audit function (as the Company has no executives or employees of its own), the Company is not presently aware of any departures from the Code.

Board Responsibilities

The Board comprised four then three Directors following the resignation of Mr Norbert Bannon on 27 March 2018, who meet at least twice per year to consider the affairs of the Company in a prescribed and structured manner. Biographies of the Directors appear on page 13 demonstrating the wide range of skills and experience they bring to the Board. All the Directors are non-executive and independent. The Board regularly reviews the balance, knowledge and effectiveness of the Board, to identify if any additional experience or skills are needed and to ensure that the current Directors have sufficient available time to undertake the tasks required and remain independent and Directors are able and encouraged to provide statements to the Board of their concerns and ensure that any items of concern are recorded in the Board minutes. When undertaking a search for a new director the Board is mindful of diversity and meritocracy.

Following the resignation of Mr Norbert Bannon as a Director of the Company on 27 March 2018, a structured search and selection process incorporating recommendations from advisors independent of the Board is currently taking place for a new director.

In accordance with the Company's Articles the Directors shall determine the fees payable provided that the aggregate amount of such fees paid in respect of services rendered to the Company shall not exceed £150,000 per annum. All Directors receive an annual fee and there are no share options or other performance related benefits available to them. The terms and conditions of appointment of non-executive directors are available for inspection at the Company's registered office by prior arrangement with the Company's Secretary & Administrator (JTC Fund Solutions (Guernsey) Limited). All Directors are currently paid a fee of £23,000 per annum and the Chairman is paid an additional fee of £6,000 per annum. The Chairman of the Audit Committee is entitled to be paid an additional £4,000 per annum.

Board meetings are held at least twice per year to consider the business and affairs of the Company and of the Group together with such further Board meetings as may be required. The Board hold either a Board meeting or special dividend committee meeting each quarter to consider and if thought suitable, approve the payment of a dividend in accordance with the Company's Distribution Policy.

Between these regular meetings the Board keeps in contact by email and telephone as well as meeting to consider specific matters of a transactional nature. Additionally the Directors

may hold strategy meetings with its relevant advisors as appropriate.

The Directors are kept fully informed by the Asset Manager and Secretary & Administrator of all matters that are relevant to the business of the Group and should be brought to the attention of the Directors and/or the Company's shareholders ("Shareholders"). All Directors have direct access to the Secretary & Administrator who is responsible for ensuring that Board procedures are followed and that there are effective information flows both within the Board and between the Committees and the Board.

The Directors also have access to the advice and services of the Asset Manager, Corporate and Shareholder Advisory Agent as required. The Directors may also, in the furtherance of their duties, take independent professional advice at the Company's expense.

In addition to the scheduled meetings held to consider the declaration of dividends, during the Period the Board met three times, the Directors' attendance is summarised below:-

Audit Committee

The Directors are all members of the Audit Committee. The Audit Committee has regard to the Guidance on Audit Committees published by the Financial Reporting Council in September 2012 and most recently updated in April 2016. The Audit Committee examines the effectiveness of the Group's and service providers' internal control systems as appropriate, the annual and half-yearly reports and financial statements, the auditor's remuneration and engagement, as well as the auditor's independence and any non-audit services provided by them.

The Audit Committee considers the nature, scope and results of the auditor's work and reviews annually prior to providing a recommendation to the Board on the re-appointment or removal of the auditor. When evaluating the external auditor the Audit Committee has regard to a variety of criteria including industry experience, independence, reasonableness of audit plan, ability to deliver constructive criticism, effectiveness of communication with Board and the Group's service providers, quality control procedures, effectiveness of audit process and added value beyond assurance in audit opinion.

Auditor independence is maintained through limiting non-audit services to specific audit-related work that falls within defined categories; for example, the provision of advice on the application of IFRS or formal reports for any stock exchange purposes. All engagements with the auditor are subject to pre-approval from the Audit Committee and fully disclosed within the Annual Financial Report for the relevant period. A new lead audit partner is appointed every five years and the Audit Committee ensures the auditor has appropriate internal mechanisms in place to ensure its independence. The Audit Committee has recommended to the Board that the re-appointment of Deloitte LLP as the Group's external

auditor be proposed to Shareholders at the 2018 annual general meeting. The Committee will consider arranging for the external audit to be tendered in 2023 (being 10 years from the initial appointment) with the aim of ensuring a high quality and effective audit.

The Audit Committee meets at least twice annually, shortly before the Board meets to consider the Group's half-yearly and annual financial reports, and reports to the Board with its deliberations and recommendations and also holds an annual planning meeting with the auditor. The Audit Committee operates within clearly defined terms of reference based on the Institute of Chartered Secretaries and Administrators recommended terms and provides a forum through which the Group's external auditor report to the Board. The Audit Committee can request information from the Group's service providers with the majority of information being directly sourced from the Asset Manager, JTC Fund Solutions (Guernsey) Limited (the "Secretary & Administrator" or "JTC") and the external auditor. The terms of reference of the Audit Committee are available upon request.

Each year the Board examines the Audit Committee's performance and effectiveness, and ensures that its tasks and processes remain appropriate. Key areas covered included the clarity of the committee's role and responsibilities, the balance of skills among its members and the effectiveness of reporting its work to the Board. The Board is satisfied that all members of the Committee have relevant financial experience and knowledge and ensure that such knowledge remains up to date.

Overall the Board considers that the Audit Committee has the right composition in terms of expertise and has effectively undertaken its activities and reported them to the Board during the Period.

Internal Control and Financial Reporting

The Board is responsible for the Group's system of internal control and for reviewing its effectiveness. The Board confirms that there is an on-going process for identifying, evaluating and monitoring the significant risks faced by the Group.

The internal control systems are designed to meet the Group'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 Board on an annual basis conducts a full review of the Group's risk management systems including consideration of a risk matrix which covers various areas of risk including corporate strategy, accuracy of published information, compliance with laws and regulations, relationships with service providers and business activities.

Asset Management services are provided by Amedeo Management Limited ("Amedeo"). Administration and Secretarial duties for the Company and the Group are performed by JTC.

The Directors of the Group 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 on-going performance and contractual arrangements. The Board also specifies which matters are reserved for a decision by the Board and which matters may be delegated to its agents and advisers.

Anti Bribery Policy

The Directors have undertaken to operate the business in an honest and ethical manner and accordingly take a zero-tolerance approach to bribery and corruption. The key components of this approach are implemented as follows:

· The Board is committed to acting professionally, fairly and with integrity in all its business dealings and relationships.

· The Group will implement and enforce effective procedures to counter bribery.

· The Group requires all its service providers and advisors to adopt equivalent or similar principles.

Dialogue with Shareholders

All holders of Ordinary Shares in the Company have the right to receive notice of, and attend, the general meetings of the Company, during which members of the Board will be available to discuss issues affecting the Company.

The primary responsibility for Shareholder relations lies with the Company's Corporate and Shareholder Advisory Agent. In addition the Directors are always available to enter into dialogue with Shareholders and the Chairman is always willing to meet Shareholders as the Company believes such communication to be important. The Company's Directors can be contacted at the Company's registered office or via the Secretary & Administrator.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable Guernsey law and regulations.

Under the Law the Directors are required to prepare financial statements for each financial year. The Directors have chosen to prepare the group financial statements in accordance with IFRS.

Under the Law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period.

In preparing these financial statements, International Accounting Standard 1 requires that Directors:

· Properly select and apply accounting policies;

· Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

· Provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

· Make an assessment of the Group's ability to continue as a going concern.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Law. They are also responsible for safeguarding the Assets of the Group and 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 corporate and 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.

Disclosure of Information to the Auditor

The Directors who held office at the date of approval of this Directors' Report confirm in accordance with the provisions of Section 249 of the Law that, so far as they are each aware, there is no relevant audit information of which the Group's auditor is unaware; and each Director has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Group's auditor is aware of that information.

Auditor

Deloitte LLP have expressed their willingness to continue in office as auditor and the Audit Committee has recommended their reappointment. A resolution proposing their reappointment will be submitted at the forthcoming general meeting to be held pursuant to section 199 of the Law.

Signed on behalf of the Board on 11 July 2018.

AUDIT COMMITTEE REPORT

Membership

Charles Wilkinson - Chairman of the Board

Geoffrey Hall - Director

John Le Prevost - Director

Norbert Bannon - Chairman of the Company until 27 March 2018

Key Objective

The provision of effective governance over (i) the appropriateness of the Group's financial reporting including the adequacy of related disclosures, (ii) the performance of the Company's external auditor, (iii) monitoring of the systems of internal controls operated by the Company and (iv) the Company's principal service providers and the management of the Company's regulatory compliance activities.

Responsibilities

The key duties of the Audit Committee (the "Committee") are as follows:

• Reviewing the Company's financial results announcements and financial statements and monitoring compliance with relevant statutory and listing requirements;

• Reporting to the Board on the appropriateness of the Company's accounting policies and practices including critical accounting policies and practices;

• Advising the Board on whether the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position, performance, business model and strategy;

• Overseeing the relationship with the external auditor and reviewing the effectiveness of the external audit process; and

• Monitoring the systems of internal controls operated by the Company and by the Company's principal service providers.

Committee Meetings

The Committee meet at least twice a year. The Committee reports to the Board as part of a separate agenda item, on its activities and on matters of particular relevance to the Board in the conduct of its work. During the year under review the Committee formally reported to the Board on two occasions.

Main Activities of the Committee during the Period

The Committee assisted the Board in carrying out its responsibilities in relation to financial reporting requirements, compliance and the assessment of internal controls. The Committee also managed the Group's relationship with the external auditor.

Fair, Balanced and Understandable

In order to comply with the UK Corporate Governance Code, the Board requested that the Committee advises them on whether it believes the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Group's performance, business model and strategy.

The Committee engaged with the Group's auditor and the Group's administrator in order to ensure that the financial statements were fair, balanced and understandable.

Financial Reporting and Significant Issues

The Committee's primary role in relation to financial reporting is to review, with its service providers and the external auditor, the appropriateness of the half-year and annual financial statements, the significant financial reporting issues and accounting policies and disclosures in the financial statements. The Committee has considered the key risks identified as being significant to these accounts and the most appropriate treatment and disclosure of any new significant issues identified during the audit and half-year reviews as well as any recommendations or observations made by the external auditor. To aid its review the Committee considered reports prepared by external service providers, including Amedeo Management Limited ("Amedeo") and Nimrod Capital LLP ("Nimrod"), and reports from the external auditor on the outcome of their annual audit. The significant issues considered by the Committee in relation to the 2018 accounts and how these were addressed are detailed below:

We note that the auditor also considers the recognition of rental income and the accounting for debt within their key audit matters. These items have been considered by the Committee in the current year, but, as there have been no changes in respect of these risks they have not been a primary area of focus of the Committee in the current year.

Going Concern

After making enquiries, the Committee has a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Committee believes the Group is well placed to manage its business risks successfully as the interest on the Group's loan has been fixed and the fixed rental income under the operating lease means that the rentals should be sufficient to repay the loan and provide surplus income to pay for the Group's expenses and permit payment of dividends. Accordingly, the Committee has adopted the going concern basis in preparing the financial information.

Internal Controls

The Committee has made due enquiry of the internal controls of the Secretary & Administrator. The Committee is satisfied with the controls currently implemented by the Secretary & Administrator. However it has requested that the Secretary & Administrator keep the Committee informed of any developments and improved internal control procedures. The most recent report on the internal control of JTC's administration services, prepared in accordance with the International Standard on Assurance Engagement 3402 ("ISAE 3402") for the period from 1 February 2017 to 31 January 2018, has been provided to the Committee together with a bridging letter covering the period from 1 February 2018 to 9 April 2018.

Internal audit

The Group has no employees and operates no systems of its own, relying instead on the employees and systems of its external service providers. Following a recommendation from the Committee, the Board has therefore taken the decision that it would be of insufficient benefit for the Group to engage an internal auditor.

External Audit

The effectiveness of the external audit process is dependent on appropriate audit risk identification at the start of the audit cycle. The Committee receives from the auditor, Deloitte LLP ("Deloitte") a detailed audit plan, identifying their assessment of the key risks. During the Period the primary risks identified were in respect of valuation of the Company's Airbus A380-861 aircraft; the recording of lease rental income; and accounting for fixed rate debt using the effective interest rate method.

Using its collective skills the Committee evaluates the effectiveness of the audit process in addressing the matters raised through the reporting it received from Deloitte at the year-end. In particular the Committee formally appraise Deloitte against the following criteria:

· Independence

· Ethics and Conflicts

· Knowledge and Experience

· Challenge

· Promptness

· Cost

· Overall Quality of Service

In addition the Committee also seek feedback from the Administrator on the effectiveness of the audit process.

For the Period, the Committee was satisfied that there had been appropriate focus on the primary areas of audit risk and assessed the quality of the audit process to be good. The Committee discussed their findings with Deloitte and agreed how future external audits could be improved.

The Committee holds meetings with the external auditor to provide additional opportunity for open dialogue and feedback from the auditor. Should it be necessary Committee members may meet with the external auditor without the Administrator and Asset Manager being present. Matters typically discussed include the auditor's assessment of business risks and management activity thereon, the transparency and openness of interactions with the Administrator, confirmation that there has been no restriction in scope placed on them by the Administrator on the independence of their audit and how they have exercised professional scepticism.

Appointment and Independence

The Committee considers the reappointment of the external auditor, including the rotation of the audit partner, each year and also evaluates their independence on an ongoing basis.

The external auditor is required to rotate the audit partner responsible for the audit every five years. The current lead audit partner has been in place since August 2016.

Deloitte has been the Group's external auditor since June 2013. The Committee has provided the Board with its recommendation to the Company's shareholders on the reappointment of Deloitte as external auditor for the year ending 31 March 2019. Accordingly a resolution proposing the reappointment of Deloitte as the Company's auditor will be put to the Company's shareholders at the 2018 Annual General Meeting.

There are no contractual obligations restricting the Committee's choice of external auditor. The Committee continues to consider the audit tendering provisions outlined in the revised Code, of which it is very supportive. The Committee will consider arranging for the external audit contract to be tendered in 2024 (being 10 years from the date of initial appointment of Deloitte) with the aim of ensuring a high quality and effective audit.

Non-Audit Services

To further safeguard the objectivity and independence of the external auditor from becoming compromised, the Committee has a formal policy governing the engagement of the external auditor to provide non-audit services. No changes have been made to this policy during the year. This policy specifies that Deloitte should only be engaged for non-audit services where there is considered to be a very low threat to auditor independence.

Deloitte is prohibited from providing any other services without the Committee's prior approval. In reaching such a determination the Committee will take into consideration whether it is in the best interests of the Group that such services should be supplied by the Group's external auditor (rather than another service provider) and, if so whether any safeguards regarding auditor objectivity and independence in the conduct of the audit should be put in place, whether these would be effective and how such safeguards should be disclosed.

Committee Evaluation

Our activities formed part of the review of Board effectiveness performed in the year under review.

An internal evaluation of our effectiveness was carried out in November 2017.

Yours faithfully

Charles Wilkinson

Chairman

On behalf of the Audit Committee

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DORIC NIMROD AIR THREE LIMITED

Report on the audit of the financial statements

 Report on other legal and regulatory requirements

Nicola Sarah Paul FCA

For and on behalf of Deloitte LLP

Recognised Auditor

St Peter Port, Guernsey

11 July 2018

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2018

In arriving at the results for the financial year, all amounts above relate to continuing operations.

The notes on pages 44 to 70 form an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2018

The consolidated financial statements were approved by the Board of Directors and authorised for issue on 11 July 2018 and are signed on its behalf by:

Charles Wilkinson John Le Prevost

Director Director

The notes on pages 44 to 70form an integral part of these consolidated financial statements.

The notes on pages 44 to 70 form an integral part of these consolidated financial statements.

The notes on pages 44 to 70 form an integral part of these financial statements.

Notes to the Consolidated Financial Statements

For the year ended 31 March 2018

1 GENERAL INFORMATION

The consolidated financial statements incorporate the results of Doric Nimrod Air Three Limited (the "Company") and DNA Alpha Limited (the "Subsidiary") (together known as the "Group").

The Company was incorporated in Guernsey on 29 March 2012 with registered number 54908. The address of the registered office is given on page 71. Its share capital consists of one class of Ordinary Preference Shares ("Shares") and one class of Subordinated Administrative Shares ("Administrative Shares"). The Company's Ordinary Shares have been admitted to trading on the Specialist Fund Segment of the London Stock Exchange's Main Market (the "SFS").

The Company's investment objective is to obtain income returns and a capital return for its Shareholders by acquiring, leasing and then selling aircraft. The principal activities of the Company are set out in the Chairman's Statement and Management Report on pages 5 to 8 and 16 to 18 respectively.

2 ACCOUNTING POLICIES

The significant accounting policies adopted by the Group are as follows:

(a) Basis of Preparation

The consolidated financial statements have been prepared in conformity with IFRS as adopted by the European Union, which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB") and International Financial Reporting Interpretations Committee ("IFRIC") and applicable Law. The consolidated financial statements have been prepared on a historical cost basis.

Changes in accounting policies and disclosure

The following Standards or Interpretations have been adopted in the current year. Their adoption has not had any impact on the amounts reported in these consolidated financial statements and is not expected to have any impact on future financial years:

· IAS 7 Statement of Cash Flows - amendments resulting from the disclosure initiative effective for annual periods beginning on or after 1 January 2017 and is endorsed by the EU. The amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). The Group has provided the information for both the current and the comparative year in Note 20.

The following Standards or Interpretations that are expected to affect the Group have been issued but not yet adopted by the Group as shown below. Other Standards or Interpretations issued by the IASB and IFRIC are not expected to affect the Group.

· IFRS 9 Financial Instruments - finalised version, incorporating requirements for classification and measurement, impairment, general hedge accounting and derecognition. The standard is effective for annual periods commencing on or after 1 January 2018 and is endorsed in the EU. The Group intends to adopt the standard once it becomes mandatory.

IFRS 9 contains three principal classification categories for financial assets and liabilities: measured at amortised cost, fair value through other comprehensive income ("FVOCI") and fair value through profit or loss ("FVTPL"). IFRS 9 classification is generally based on the business model in which a financial asset is managed and its contractual cash flows. Based on the Group's initial assessment, this standard is not expected to have a material impact on the classification of financial assets and financial liabilities of the Group. This is because:

- No financial instruments are currently measured at FVTPL; and

- Financial instruments currently measured at amortised cost are receivables, borrowings and payables which will continue to be measured at amortised cost under IFRS 9.

· Amendments to IFRS 9 'Prepayment Features with Negative Compensation and modifications of financial liabilities' - Amendments to IFRS 9 have been issued to enable companies to measure at amortised cost some prepayable financial assets with negative compensation. The assets affected, that include some loans and debt securities, would otherwise have been measured at FVTPL. The amendment is effective for annual periods beginning on or after 1 January 2019, that is, one year later than the effective date of IFRS 9 and is endorsed by the EU. Early adoption is permitted. This will enable companies to adopt the amendment when they first apply IFRS 9.

· IFRS 15 Revenue from contracts with customers - deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11 'Construction contracts', related interpretations and is endorsed in the EU. The standard is effective for annual periods beginning on or after 1 January 2018. The only contractual receipts which the Group currently has is rental income from Emirates leasing its Airbus A380-861 aircraft (the "Aircraft"). Rental income is currently recognised in accordance with IAS 17 (which will be replaced by IFRS 16) which is specifically excluded from IFRS 15. The standard will thus not materially impact the financial statements.

· Amendments to IFRS 15, 'Revenue from contracts with customers'. Effective for accounting periods commencing on or after 1 January 2018 and is endorsed by the EU.

· IFRS 16 Leases - specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. The standard is effective for annual periods beginning on or after 1 January 2019 and is endorsed by the EU. The Group intends to adopt the standard once it becomes mandatory. Although rental income will be recognised in accordance with the new standard, it will not materially impact the financial statements as lessors will continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from its predecessor, IAS 17.

· IFRIC 22 'Foreign currency transactions and advance consideration' - this IFRIC addresses foreign currency transactions or parts of transactions where there is consideration that is denominated or priced in a foreign currency. The interpretation provides guidance for when a single payment/receipt is made as well as for situations where multiple payments/receipts are made. The guidance aims to reduce diversity in practice and is effective for annual periods beginning on or after 1 January 2018 and is endorsed by the EU.

The Directors have considered the above and are of the opinion that the above Standards and Interpretations are not expected to have an impact on the Group's financial statements except for the presentation of additional disclosures and changes to the presentation of components of the financial statements. These items will be applied in the first financial year for which they are required.

(a) Basis of Consolidation

The consolidated financial statements incorporate the results of the Company and its Subsidiary. The Company owns 100 per cent of all the shares in the Subsidiary and has the power to govern the financial and operating policies of the Subsidiary so as to obtain benefits from its activities. Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

(b) Taxation

The Company and its Subsidiary have been assessed for tax at the Guernsey standard rate of 0 per cent.

(c) Share Capital

Shares are classified as equity. Incremental costs directly attributable to the issue of Ordinary Shares are recognised as a deduction from equity.

(d) Expenses

All expenses are accounted for on an accruals basis.

(e) Interest Income

Interest income is accounted for on an accruals basis.

(f) Foreign Currency Translation

The currency of the primary economic environment in which the Group operates (the functional currency) is Pounds Sterling ("£" or "Sterling"), which is also the presentation currency.

Transactions denominated in foreign currencies are translated into Sterling 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 the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Consolidated Statement of Comprehensive Income.

(g) Cash and Cash Equivalents

Cash at bank and short term deposits which are held to maturity are carried at cost. Cash and cash equivalents are defined as call deposits, short term deposits with a term of no more than three months from the start of the deposit and highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

(h) Segmental Reporting

The Directors are of the opinion that the Group is engaged in a single segment of business, being acquiring, leasing and selling various Airbus A380-861 aircraft (together the "Assets" and each an "Asset").

(i) Going Concern

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Directors believe the Group is well placed to manage its business risks successfully despite the current economic climate as the loans and Equipment Notes interest has been fixed and the fixed rental income under the operating leases means that the rents should be sufficient to repay the debt and provide surplus income to pay for the Group's expenses and permit payment of dividends. Accordingly, the Directors have adopted the going concern basis in preparing the consolidated financial statements. Management is not aware of any material uncertainty that may cast significant doubt upon the Group's ability to continue as a going concern.

(j) Leasing and Rental Income

The leases relating to the Assets have been classified as operating leases as the terms of the leases do not transfer substantially all the risks and rewards of ownership to the lessee. The Assets are shown as non-current assets in the Consolidated Statement of Financial Position. Further details of the leases are given in Note 11.

Rental income and advance lease payments from operating leases are recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased Asset and amortised on a straight-line basis over the lease term.

(k) Property, Plant and Equipment - Aircraft

In line with IAS 16 Property Plant and Equipment, each Asset is initially recorded at the fair value of the consideration paid. The cost of the Asset is made up of the purchase price of the Assets plus any costs directly attributable to bringing it into working condition for its intended use. Costs incurred by the lessee in maintaining, repairing or enhancing the aircraft are not recognised as they do not form part of the costs to the Company. Accumulated depreciation and any recognised impairment losses are deducted from cost to calculate the carrying amount of the Assets.

Depreciation is recognised so as to write off the cost of each Asset less the estimated residual value over the estimated useful life of the Asset of 12 years, using the straight line method. The estimated residual value of the four planes ranges from £71.5 million to £72.4 million (2017: £97.2 million to £98.1 million). Residual values have been arrived at by taking into account disposition fees. The depreciation method reflects the pattern of benefit consumption. The residual value is reviewed annually and is an estimate of the fair amount the entity would receive currently if the asset were already of the age and condition expected at the end of its useful life. Useful life is also reviewed annually and for the purposes of the financial statements represents the likely period of the Group's ownership of these Assets. Depreciation starts when the Assets are available for use.

In the prior year, the residual values of the A380 aircraft were determined using values including inflationary effects. However, following discussions between the Directors, auditor and the Company's advisors for the year ended 31 March 2018, it was determined that the strict application of IAS 16 be applied to the assets of the Group and that the use of forecast values excluding inflation best approximates residual value as required by IAS 16 Property, Plant and Equipment. This has resulted in a reduction in USD terms in the anticipated residual values of the aircraft since the prior financial year.

At each Consolidated Statement of Financial Position date, the Group reviews the carrying amounts of its Aircraft to determine whether there is any indication that those Assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the Assets is estimated to determine the extent of the impairment loss (if any). Further details are given in Note 3.

Recoverable amount is the higher of fair value less costs to sell and the value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the Assets for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an Asset is estimated to be less than its carrying amount, the carrying amount of the Asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the Asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the Asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

(m) Financial Liabilities

Financial liabilities consist of payables and borrowings. The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was issued and its characteristics. All financial liabilities are initially measured at fair value, net of transaction costs. All financial liabilities are recorded on the date on which the Group becomes party to the contractual requirements of the financial liability. Financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of the financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.

3. SIGNIFICANT JUDGEMENTS AND ESTIMATES

In the application of the Group's accounting policies, which are described in Note 2, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the critical judgements and estimates that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements.

Estimates

Residual Value and Useful Life of Aircraft

As described in Note 2 (l), the Group depreciates the Assets on a straight line basis over the estimated useful life of the Assets after taking into consideration the estimated residual value. IAS 16 Property, Plant and Equipment requires residual value to be determined as an estimate of the amount that the Group would currently obtain from the disposal of the Asset, after deducting the estimated costs of disposal, if the Asset were of the age and condition expected at the end of its useful life. However, there are currently no aircraft of a similar type of sufficient age for the Directors to make a direct market comparison in making this estimation. After consulting with the Asset Manager, the Directors have concluded that a uninflated market value for the Aircraft at the end of its useful life best represents residual value, as required by a strict interpretation of relevant accounting standards. In estimating residual value for the 2017/18 year, the directors have made reference to uninflated values for the aircraft obtained from three independent expert aircraft valuers and determined that the residual value (using uninflated values as the basis) of the Assets ranged from £71.5 million to £72.4 million at the year end (2017: £97.2 million to £98.1 million taking into account inflated market values). The residual value has been changed to reflect the most recent average appraised value of the aircraft. This has been disclosed in Note 9.

In the prior year, the residual values of the A380 aircraft were determined using market values including inflationary effects. However, following discussions between the Directors, the Auditors and the Company's Advisors for the year ended 31 March 2018, it was determined that the strict application of IAS 16 be applied to the assets of the Company and that the use of forecast market values excluding inflation best represents residual value as required by IAS 16 Property, Plant and Equipment. This has resulted in a reduction in the anticipated residual values of the aircraft since the prior financial year. This together with the effect of foreign exchange fluctuations on the residual values has resulted in an adjustment made to depreciation, details of which have been disclosed in Note 9. Apart from the aforementioned, the Asset Manager has confirmed in the year ending 31 March 2018 that there were no other required changes to the methodology used to determine the residual value in the current year and they believe that the values of the aircraft are, absent the two factors explained above, not substantially different from those of the aircraft as appraised at 31 March 2017.

The estimation of residual value remains subject to inherent uncertainty. If the estimate of residual value had been decreased by 20 per cent. with effect from the beginning of this year, the net profit for the year and closing shareholders' equity would have been decreased by approximately £6.7 million (31 March 2017: £8.2 million). An increase in residual value by 20 per cent. would have had an equal but opposite effect. This reflects the range of estimates of residual value that the Directors believe would be reasonable at this time. The useful life of each Asset is estimated based on the expected period for which the Group will own and lease the Aircraft.

Judgements

Operating Lease Commitments - Group as Lessor

The Group has entered into operating leases on four (31 Mar 2017: four) Assets. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these Assets and accounts for the contracts as operating leases.

The Group has determined that the operating leases on the Assets are for 12 years based on an initial term of 10 years followed by an extension term of 2 years. Should the lessee choose to exit a lease at the end of the initial term of 10 years a penalty equal to the present value of the remaining 2 years would be due.

Impairment

As described in Note 2(l), an impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The Directors monitor the Assets for any indications of impairment as required by IAS 16 Property, Plant and Equipment and IAS 36 Impairment of Assets.

Factors that are considered important which could trigger an impairment review include, but are not limited to, significant decline in the market value beyond that which would be expected from the passage of time or normal use, significant changes in the technology and regulatory environments, evidence from internal reporting which indicates that the economic performance of the asset is, or will be, worse than expected.

The Group has determined that there is no indication of an impairment loss for the 1 April 2017 to 31 March 2018 year (none for the 1 April 2016 to 31 March 2017 year). This is due to various factors such as the following: a lack of conclusive comparable current market data for the A380 aircraft, the nature of the operations of the Group being aircraft leasing as opposed to an airline operating business, as well as other mitigating factors such as the close monitoring by the Group of each airline's usage of the aircraft and their compliance with agreed maintenance schedules. Accordingly, no impairment review has been undertaken.

4. RENTAL INCOME

Rental income is derived from the leasing of the Assets. Rent is split into A rent, which is received in US dollars ("$") and B rent, which is received in Sterling ("£" or "GBP"). Rental income received in US dollars is translated into the functional currency (Sterling) at the date of the transaction.

A and B rental income receivable will decrease / increase respectively, 10 years from the start of each lease. An adjustment has been made to spread the actual total income receivable over the term of the lease on an annual basis. In addition, advance rentals received have also been spread over the full term of the leases.

5. OPERATING EXPENSES

6. DIRECTORS' REMUNERATION 

Under their terms of appointment, each Director is paid a fee of £23,000 per annum by the Group, except for the Chairman, who receives £29,000 per annum. Where a Chairman of the audit committee has been appointed, they receive an extra £4,000 per annum.

7. DIVIDENDS IN RESPECT OF EQUITY SHARES

8. EARNINGS / (LOSS) PER SHARE

Earnings / (Loss) per Share (''EPS'' / "LPS") is based on the net profit for the year attributable to holders of Ordinary Shares in the Company ("Shareholders") of £65,806,308 (31 March 2017: net loss for the year of £18,416,546) and 220,000,000 (31 March 2017: 220,000,000) Ordinary Shares being the weighted average number of Shares in issue during the year.

There are no dilutive instruments and therefore basic and diluted earnings per Share are identical.

9. PROPERTY, PLANT AND EQUIPMENT - AIRCRAFT

Following review of the aircraft projected residual values,  as is required by IFRS on an annual basis, using the valuers and methodology set out in Note 3, the underlying US dollar residual values of the aircraft has been updated to reflect the uninflated values. This has resulted in a $89,300,000 decrease in the US dollar residual values. The Sterling values converted at the year end Sterling / US dollar exchange rates have decreased significantly by £102,787,340. The combined effect of translating residual values at the Sterling / US dollar exchange rate prevailing at 31 March 2018 of 1.4018 (31 March 2017: 1.255) and a 17.6 per cent. reduction in average appraised residual values in dollar terms (when comparing uninflated residual values at March 2018 with inflated values at March 2017) resulted in a £11,999,300 increase in the annual depreciation charge for the current year.

The Group can sell the Assets during the term of the leases (with the lease attached and in accordance with the terms of the transfer provisions contained therein).

Under IAS 17 the direct costs attributed in negotiating and arranging the operating leases have been added to the carrying amount of the leased asset and recognised as an expense over the lease term. The costs have been allocated to each aircraft based on the proportional cost of the aircraft / assets.

10 FINANCE COSTS

11 OPERATING LEASES

The amounts of minimum future lease receipts at the reporting date under non cancellable operating leases are detailed below:

The operating leases are for four Airbus A380-861 aircraft. The terms of the leases are as follows:

MSN132 Limited - term of the lease is for 12 years ending August 2025. The initial lease is for 10 years ending August 2023, with an extension period of two years ending August 2025, in which rental payments reduce. The present value of the remaining rentals in the extension period at the end of the initial 10 year lease must be paid even if the option is not taken.

MSN133 Limited - term of the lease is for 12 years ending November 2025. The initial lease is for 10 years ending November 2023, with an extension period of two years ending November 2025, in which rental payments reduce. The present value of the remaining rentals in the extension period at the end of the initial 10 year lease term must be paid even if the option is not taken.

MSN134 Limited - term of the lease is for 12 years ending November 2025. The initial lease is for 10 years ending November 2023, with an extension period of two years ending November 2025, in which rental payments reduce. The present value of the remaining rentals in the extension period at the end of the initial 10 year lease term must be paid even if the option is not taken.

MSN136 Limited - term of the lease is for 12 years ending October 2025. The initial lease is for 10 years ending October 2023, with an extension period of two years ending October 2025, in which rental payments reduce. The present value of the remaining rentals in the extension period at the end of the initial 10 year lease term must be paid even if the option is not taken.

At the end of each lease the lessee has the right to exercise an option to purchase the Asset if the Group chooses to sell the Asset. If a purchase option event occurs the Group and the lessee will be required to arrange for a current market value appraisal of the Asset to be carried out by three independent appraisers. The purchase price will be equal to the average valuation of those three appraisals.

11 RECEIVABLES

The above carrying value of receivables is equivalent to fair value.

12 PAYABLES (amounts falling due within one year)

The above carrying value of payables is equivalent to the fair value.

13 BORROWINGS

In addition to the £56.9 million capital that was repaid during the year, as per the Cash Flow Statement, the value of the borrowings decreased by a further £32.3 million due to the 11.7 per cent. increase in the Sterling / US dollar exchange rate for the year ended 31 March 2018. See note 20.

The amounts below detail the future contractual undiscounted cash flows in respect of the loans, including both the principal and interest payments, and will not agree directly to the amounts recognised in the Consolidated Statement of Financial Position:

In order to finance the acquisition of the Assets, the Subsidiary used the proceeds of the August 2013 offering of Pass Through Certificates (the "Certificates"). The Certificates have an aggregate face amount of approximately $630 million, made up of "Class A" certificates and "Class B" certificates. The Class A certificates in aggregate have a face amount of $462 million with an interest rate of 5.250 per cent. and a final expected distribution date of 30 May 2023. The Class B certificates in aggregate have a face amount of $168 million with an interest rate of 6.125 per cent. and a final expected distribution date of 30 November 2019. There is a separate trust for each class of Certificate. The trusts used the funds from the Certificates to acquire equipment notes. The equipment notes were issued to Wilmington Trust, National Association as pass through trustee in exchange of the consideration paid by the purchasers of the Certificates. The equipment notes were issued by the Subsidiary and the proceeds from the sale of the equipment notes financed a portion of the purchase price of the four airbus A380- 861 Aircraft, with the remaining portion being financed through contribution from the Group of the Share issue proceeds. The holders of the equipment notes issued for each aircraft have the benefit of a security interest in such aircraft.

In the Directors' opinion, the carrying values of the equipment notes are approximate to their fair value.

14 REBATES

Upon entering into the leases it was agreed that the lessee would pay to the Group such amount as estimated to be necessary to fund the payment by the Group of certain costs, fees and expenses associated with the transactions arising from the leases. Following payment of the costs, fees and expenses, it was agreed that such amount paid by the lessee exceeded the amount actually necessary. It was agreed that the Group would return the excess to the lessee over the remaining life of the leases in May and November of each year. Upon any termination of a lease prior to its end the Group shall pay the entire remaining unpaid excess relating to such Aircraft to such account as is directed by the lessee, but without any interest accrued thereon.

15 SHARE CAPITAL

The Share Capital of the Company is represented by an unlimited number of shares issued or reclassified by the Company as Shares or Administrative Shares.