Dp Aircraft I Regulatory News (DPA)

20 April 2016

DP Aircraft I Limited (the "Company")

Annual Report and Accounts

Please see attached a copy of the Annual Report and Audited Consolidated Financial Statements for the year ended 31 December 2015 which is available from the Company's registered office.

During the year:

· there was an issue of 96,333,333 Ordinary Shares in the capital of the Company by means of a Placing in June 2015, which raised gross proceeds of US$ 102m and facilitated the purchase of two further Boeing 787-8 aircraft subsequently leased to Thai Airways,

· dividends totalling US$0.09 per Share were paid, and

· profit for the year ended 31 December 2015 was US$ 14,998,572 (Earnings per Share US$ 0.0899 per Share), and

· the NAV was US$ 0.98242 per Share (incl. Swap liabilities) at 31 December 2015 (2014: US$ 0.93575).

A detailed analysis and commentary of the Company's results during the period is presented in the Annual Report published today, which will shortly be available to view or download from the Company's website www.dpaircraft.com

For further information please contact: 

Canaccord Genuity Limited, Corporate Broker

+44 (0) 20 7523 8000

David Yovichic

Fidante Partners (Guernsey) Limited, Company Secretary

+44 (0) 1481 743940

Kellie Blondel / Carol Kilby

This document has been issued by, and is the sole responsibility of the Company and is for information purposes only. It is not, and is not intended to be an invitation, inducement, offer, or solicitation, to deal in the shares of the Company. The price of shares in the Company and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of shares in the Company. An investment in the Company should be considered only as part of a balanced portfolio of which it should not form a disproportionate part. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision.

DP AIRCRAFT I LIMITED

ANNUAL REPORT AND AUDITED CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED 31 DECEMBER 2015

COMPANY OVERVIEW

DP Aircraft I Limited (the 'Company') was incorporated with limited liability in Guernsey under the Companies (Guernsey) Law, 2008 on 5 July 2013 with registered number 56941.

The Company was established to invest in aircraft. The Company is a holding company, and makes its investment in aircraft through four wholly owned subsidiary entities, DP Aircraft Guernsey I Limited, DP Aircraft Guernsey II Limited, DP Aircraft Guernsey III Limited and DP Aircraft Guernsey IV Limited (collectively and hereinafter, the 'Borrowers'), each being a Guernsey incorporated company limited by shares and two intermediate lessor companies, DP Aircraft Ireland Limited and DP Aircraft UK Limited (the 'Lessors'), an Irish incorporated private limited company and a UK incorporated private limited company respectively. The Company and its subsidiaries (the Borrowers and the Lessors) comprise the Group.

Pursuant to the Company's Prospectus dated 27 September 2013, the Company offered 113,000,000 Ordinary Shares of no par value in the capital of the Company at an issue price of US$1.00 per Share by means of a Placing. The Company's Shares were admitted to trading on the Official List of the Channel Islands Securities Exchange and to trading on the Specialist Fund Market of the London Stock Exchange on 4 October 2013. As the ISA Regulations were amended last year so that shares traded on the Specialist Fund Market are now eligible in their own right for inclusion in an ISA, on 27 May 2015, the Company delisted its Shares from the Official List of the Channel Islands Securities Exchange.

On 5 June 2015, the Company offered 96,333,333 Ordinary Shares (the 'New Shares') of no par value in the capital of the Company at an issue price of US$ 1.0589 per Share by means of a Placing. The Company's New Shares were admitted to trading on the Specialist Fund Market of the London Stock Exchange on 12 June 2015.

In total there are 209,333,333 Ordinary Shares in issue with voting rights.

INVESTMENT OBJECTIVE & POLICY

The Company's investment objective is to obtain income and capital returns for its Shareholders by acquiring, leasing and then, when the Board considers it appropriate, selling aircraft (the 'Asset' or 'Assets').

To pursue its investment objective, the Company intends to use the net proceeds of placings and other equity capital raisings, together with loans and borrowings facilities, to acquire aircraft which will be leased to one or more international airlines.

THE BOARD

The Board comprises independent non-executive directors. The directors of the Board are responsible for managing the business affairs of the Company in accordance with the Articles of Incorporation and have overall responsibility for the Company's activities, including portfolio and risk management while the asset management of the Group is undertaken by DS Aviation GmbH & Co. KG (the 'Asset Manager').

THE ASSET MANAGER

The Asset Manager has undertaken to provide the asset management services to the Company under the terms of an asset management agreement but does not undertake any regulated activities for the purpose of the UK Financial Services and Markets Act 2000.

DISTRIBUTION POLICY

The Company aims to provide Shareholders with an attractive total return comprising income, from distributions through the period of the Company's ownership of the Assets, and capital, upon any sale of the Assets. The Company targets a quarterly distribution in February, May, August and November of each year. The target distribution is US$ 0.0225 per share per quarter. Four quarterly dividends have been paid during the year ended 31 December 2015 and one has been paid subsequent to the year end, each meeting the US$ 0.0225 per share target. The target dividends are targets only and should not be treated as an assurance or guarantee of performance or a profit forecast. Investors should not place any reliance on such target dividends or assume that the Company will make any distributions at all.

FACT SHEET

Ticker DPA

Company Number 56941

ISIN Number GG00BBP6HP33

SEDOL Number BBP6HP3

Traded Specialist Fund Market ('SFM') of the London Stock Exchange

SFM Admission Date 4-Oct-13

Share Price US$ 1.0475 at 31 December 2015

Earnings per share US$ 0.08990 for the year ended 31 December 2015

Country of Incorporation Guernsey

Current Shares in Issue 209,333,333

Administrator and Company Secretary Fidante Partners (Guernsey) Limited

(formerly Dexion Capital (Guernsey) Limited)

Asset Manager DS Aviation GmbH & Co. KG

Auditor and Reporting Accountant KPMG, Chartered Accountants

Corporate Broker Canaccord Genuity Limited

Aircraft Registration EI-LNA (re-registered to LN-LNA on 10 February 2016)

LN-LNB

HS-TQD

HS-TQC

Aircraft Serial Number 35304

35305

35320

36110

Aircraft Type and Model B787-8

Lessees Norwegian Air Shuttle ASA

Thai Airways International Public Company Limited

Website www.dpaircraft.com

HIGHLIGHTS

PROFIT FOR THE YEAR

Profit for the year ended 31 December 2015 is US$ 14,998,572 (Earnings per Share US$ 0.0899 per Share) (period from 5 July 2013 to 31 December 2014 US$ 10,195,726 (Earnings per Share US$ 0.09022 per Share)).

NET ASSET VALUE ('NAV')

The NAV was US$ 0.98242 per Share at 31 December 2015 (2014: US$ 0.93575).

Although the fair values of the derivatives will move over their terms, at maturity the derivatives will reduce to nil.

DIVIDENDS

Dividends were declared on:

OFFICIAL LISTING

The Company's Shares were first admitted to trading on the Official List of the Channel Islands Securities Exchange and to trading on the Specialist Fund Market of the London Stock Exchange on 4 October 2013. The Company's Shares were delisted from the Official List of the Channel Islands Securities Exchange on 27 May 2015.

PLACING OF SHARES

On 12 June 2015, 96,333,333 Shares were issued at a price of US$ 1.0589 per Share pursuant to a Placing Agreement, dated 5 June 2015, between the Company, DS Aviation, JS Holdings GmbH & Co. KG (DS Aviation and JS Holdings together the 'Asset Manager Parties') and Canaccord Genuity (the Company's Corporate Broker) whereby Canaccord Genuity acted as agent for the Company, to procure subscribers for Shares under the Placing of Shares at the Issue Price (the 'Placing'). The Placing raised gross proceeds of US$ 102m.

ACQUISITION OF AIRCRAFT

Two additional aircraft were purchased on 18 June 2015 with the equity from the Placing and from new borrowings. The two aircraft are leased to Thai Airways International Public Company Limited ('Thai Airways').

CHAIRMAN'S STATEMENT

I am pleased to present Shareholders with the Annual Report and Financial Statements for the year ended 31 December 2015.

The key highlight for the Company was the issue of 96,333,333 Ordinary Shares (the 'New Shares') of no par value in the capital of the Company at an issue price of US$ 1.0589 per Share by means of a Placing. The Company's New Shares were admitted to trading on the Specialist Fund Market of the London Stock Exchange on 12 June 2015 and facilitated the purchase of two further Boeing 787-8 aircraft which were leased to Thai Airways. DP Aircraft I Limited took over the title to the aircraft HS-TQC and HS-TQD.

There are no issues to bring to the attention of Shareholders concerning the performance of either of the Lessees and the Company is performing very much as expected.

The Total Shareholder Return for the accounting period under review was US$ 0.0899 per Share (2014: US$ 0.09022 per Share). The Company continued to meet its target dividends of US$ 0.0225 per Share for the quarter's ending April, July and October 2015. A fourth interim dividend was declared on 20 January 2016 and paid on 12 February 2016. The Net Asset Value per Share as at 31 December 2015 was US$ 0.98242 per share (2014: U$ 0.93575 per share).

The outlook is described fully in the Asset Manager's Report. The Asset Manager will advise the Directors of any further acquisition opportunities as they arise.

The Company's second annual general meeting ('AGM') is scheduled for July 2016.

On 21 January 2016 we announced with great sadness the death of Didier Benaroya, a non-executive director of the Company. Didier's knowledge and experience of the aviation sector, as well as his pragmatism and good humour, were highly valued by all of us who worked with him. Didier is and will continue to be greatly missed.

Following the sad loss of Didier Benaroya we have embarked on a search for a suitable replacement. We are making excellent progress with a new appointment and expect to make an announcement on or around 1 May 2016.

MSN 35305 was deregistered from the Irish registry (EI-LNB) and subsequently re-registered on the Norwegian registry (LN-LNB) on 29 May 2015.

MSN 35304 was deregistered from the Irish registry (EI-LNA) and subsequently re-registered on the Norwegian registry (LN-LNA) on 10 February 2016.

Jon Bridel

Chairman

19 April 2016

ASSET MANAGER'S REPORT

Overview and Development - The Aviation Market

2015 proved to be a successful year in the airline market. In December 2015, the International Air Transport Association (IATA) raised its outlook for global airline profits for 2015 from US$ 29.3 billion to US$ 33.0 billion. In October 2015, air traffic - measured in Revenue Passenger Kilometres (RPK) - of airlines in the Asia-Pacific region increased by 8.6 per cent and the load factor was up 1.5 percentage points compared to the same month in 2014. Although trade activity to and from Asia decreased and the growth of the Chinese economy was behind expectations, it seems that these factors have not impacted passenger demand for air transportation. Passenger traffic in Europe saw 6.7 per cent growth, with the passenger load factor increasing by 1.9 percentage points to 83.8 per cent, which is the highest among the geographic regions. As the majority of European large carriers are hedging most of their fuel demand, the positive effect of low crude oil prices has been delayed into 2016. In the first ten months of 2015, compared to the same period in the previous year, global capacity - measured in Available Seat Kilometres (ASK) - grew by 6.0 per cent whereas global traffic increased by 6.8 per cent. This resulted in a global average load factor of 80.7 per cent.

Although crude oil prices have dropped markedly, there has been a delay in airlines enjoying the benefits of that fall as a result of pre-existing hedging contracts. On top of that, the strength of the US-dollar and the associated exchange rate effects have tempered the gains from lower oil prices. As future oil prices (as well as the market trend) remain uncertain and the business environment stays competitive, the demand for aircraft benefitting from the latest technology, such as the Dreamliner Boeing 787 and the Airbus A350, is expected to stay strong.

The aircraft manufacturers Airbus and Boeing expect air travel to grow by an average of 4.6 per cent and 4.9 per cent respectively within the next 20 years according to their Global Market Forecast (Airbus) and Current Market Outlook (Boeing) for the period spanning 2015 to 2034. Airbus assumes that the growth in air traffic will result in demand for 32,600 aircraft worth US$ 4.7 trillion during that period; while Boeing expects deliveries of 38,050 aircraft worth US$ 5.6 trillion in the next 20 years. With both manufacturers predicting that more than 13,000 aircraft will be retired due to lower fuel efficiency or older technology, the global passenger and freighter aircraft fleets would, on their forecasts, double in size to 38,500 and 43,560 aircraft respectively by 2034.

For 2016, IATA expects a modest improvement in global economic activity which it is assumed will have a positive effect on air transport demand and airlines` profits. The organisation is of the opinion that emerging markets will continue to see a slow-down in growth in the short term, but remain robust over the medium term. Both the European and North American economies are expected to improve in 2016, and global airline profits are therefore expected to grow further to US$ 36.3 billion. Air travel is forecast to grow by 6.9 per cent over the year, which would be the strongest growth since 2010 and would raise passenger numbers up to 3.8 billion. The number of destinations, as well as the frequency of flights, are expected to grow by 2.2 per cent, while tourist travel alone is expected to account for around US$ 634 billion of spending for air transportation and its services in 2016.

The Assets - Four Boeing Dreamliner B787-8s

By the end of December 2015, 1,142 Dreamliner Boeing 787 had been ordered and 363 Boeing 787 aircraft delivered to 35 different customers. The number of deliveries includes 289 aircraft of the B787-8 variant, whereas the current backlog of all three different B787 types counts for 779 aircraft. In 2015, six of the 35 customers received their first B787 aircraft, amongst others American Airlines, Korean Air and Privatair.

The B787 is a favoured aircraft which is operated on all continents across different climatic conditions and by airlines with different business models. Thai Airways' decision to select the B787 and make it an important part of its fleet strategy is reflected in the statement by Thai´s acting president Siwakiat Jayema that "The Dreamliner is a perfect fit for THAI in terms of its range, size and fuel efficiency". The CEO of Ethiopian Airlines, Tewolde Gebremariam, said of the Dreamliner that "passengers love it and whenever we introduce the Dreamliner on a route then our load factor improves". These testimonials underline the high level of operator and customer satisfaction for this aircraft. Since 2011, 10 per cent of new routes operated by wide-bodies have been launched with B787 aircraft. The B787-8 in particular has been used as a market opener and, due to its efficiency and capability, can be operated economically between hubs and secondary markets. According to Boeing, airlines from the Asia-Pacific region will have especially high demand for small and medium wide-body aircraft. It seems obvious that the Dreamliner B787 will remain a sought-after aircraft.

Since DP Aircraft I Limited took title of the two aircraft LNA and LNB in 2013, Norwegian has met all of its obligations in full. The carrier´s B787 fleet offers a total of 291 seats in premium economy and economy class. The airline deploys its Dreamliner fleet out of Scandinavia and the UK both to Bangkok and to destinations in the US such as Orlando and Los Angeles, as well as to Caribbean destinations like Puerto Rico and St. Croix. In November 2015, both aircraft LNA and LNB were inspected by DS Skytech at the Boeing maintenance facilities at Copenhagen International Airport. This inspection took place during overnight checks and included a review of the technical records. Both aircraft and their technical records were found to be in good condition with no significant defects or airworthiness related issues.

Thai Airways equipped its B787 fleet with a total of 264 seats in business and economy class. The carrier operates this aircraft type on routes within the Asia-Pacific region such as Kuala Lumpur, Singapore and Denpasar, as well as to and from destinations in Australia such as Brisbane and Perth. Both aircraft, TQC and TQD, were inspected by DS Skytech Limited on the 8th and 9th July 2015 at Bangkok International Airport. The inspection found the aircraft to be in good condition with no significant defects or airworthiness related issues and the records are being maintained to an acceptable standard. Since DP Aircraft I Limited took title of both TQC and TQD, Thai Airways has met all of its lease obligations in full.

The two charts below give a short overview of the utilisation of airframe and engines of each of the four Aircraft:

The Lessees

Norwegian Air Shuttle ASA

Norwegian Air Shuttle transported 25.7 million passengers in 2015, which represents a growth in number of 2 million passengers compared to 2014. The airline received eleven new aircraft during the course of last year, and the majority of newly-launched routes were long-haul destinations. The load factor increased by 5 percentage points to 86 per cent in 2015. The airline is the third largest carrier by passenger numbers operating out of London-Gatwick where ten aircraft (as well as 130 pilots and 300 cabin crew members) are based. In addition to receiving several awards which highlighted the airline´s convincing performance, Norwegian Air Shuttle was named the "most fuel-efficient airline on transatlantic routes" by a study of the ICCT (International Council on Clean Transportation); for the purposes of that award, the top 20 airlines on transatlantic routes were compared on their relative fuel efficiency and the associated carbon footprint. Furthermore, Norwegian is the first airline to offer live TV on board European flights.

Norwegian´s third quarter results state operating revenues of NOK 7,277 million (US$ 860 million). This is an increase of 15 per cent compared to the same quarter in the previous year. ASKs and RPKs increased by 2 per cent and 9 per cent respectively. The passenger load factor therefore rose to 91 per cent. Operating profits increased by 122 per cent to NOK 1,182 million (US$ 140 million). EBT amounted to NOK 1,098 million (US$ 130 million), which represented an increase of 117 per cent on the third quarter 2014. The carrier's net profits improved by 123 per cent to NOK 833 million (US$ 98 million) and the net profit margin increased to 11.4 per cent. Unit costs increased by 2 per cent whereas unit revenue increased by 13 per cent. Moreover, ancillary revenues grew by 3 per cent. Cash and cash equivalents as at 30th September 2015 counted for NOK 2,297 million (US$ 271 million). Norwegian transported 7.7 million passengers during the third quarter, a gain of 9 per cent. The strongest growth in passenger numbers was recorded at London Gatwick.

Traffic figures for December 2015 showed an increase in ASK of 12 per cent and in RPK of 15 per cent compared to the same month in the previous year. The load factor therefore improved by 2 percentage points to 83.3 per cent. In the same period, passenger numbers grew by 9 per cent. The yield remained stable whereas the Revenue per Available Seat Kilometre (RASK) increased by 2 per cent. As at 30th September 2015, Norwegian operated 434 scheduled routes to 130 destinations in 31 countries and had a fleet of 105 aircraft.

Apart from the already announced new routes from Europe to Boston, in December Norwegian disclosed its plans to open a route between Oakland and London Gatwick in May of this year. In January 2016, Norwegian announced that it had made a deal with a number of tour operators, such as TUI. This renewal of partnerships is worth GBP 40 million and comprises flights from the UK and Scandinavia to destinations mainly around the Mediterranean Sea.

Norwegian currently operates eight Boeing 787-8s. Last year the airline announced plans to further increase the long-haul fleet. Amongst some orders via lease deals, the carrier placed an order for 19 B787-9s, with options for ten further Dreamliners. This is the largest single order placed by a European airline. In 2016, the airline expects to receive another four B787s and by 2020 the Dreamliner fleet will comprise 38 aircraft from the B787 family. The mix of B787-8s and B787-9s will provide the airline with flexibility in regard to route planning and further long-haul commitment. Furthermore, the carrier has been granted both a UK AOC (Air Operator´s Certificate) and an Operating License. This is an essential step towards further growth as it offers the airline the opportunity to extend its network to Africa, South America and Asia.

The fourth quarter results were due to be published in mid-February. However, Bjørn Kjos, CEO of Norwegian Air Shuttle, said that "[the] long-haul operation has stabilised and contributed significantly to the 2015 figures. It bodes well going forward, as it increases [Norwegian´s] global competitiveness and positions [the carrier] for further growth at London Gatwick". In 2016, Norwegian expects to receive four leased B787-9s and intends to increase capacity in the long-haul market by 40 per cent.

Thai Airways International

The flag carrier Thai Airways International Public Company Limited is a full-service network carrier with 55 years of operational experience. The carrier is market-listed and majority-owned by the Thai Government (51.03 per cent). In 2015, around 18.5 million passengers flew with Thai (including Thai Smile, a fully owned subsidiary of Thai Airways), with the average passenger load factor increasing by 4 percentage points. The carrier (including its subsidiary) currently offers flights from Bangkok to 70 destinations in 60 countries. As at 30th September 2015, Thai's fleet (including Thai Smile) was 95 aircraft in size. Thai itself operates mainly wide-body aircraft from both Airbus and Boeing, whereas Thai Smile operates narrow-body Airbus A320s. Thai Airways has six B787-8s in operation and two more B787-9s on order as part of its fleet renewal plan.

Due to the restructuring, the third quarter results for 2015 were heavily impacted by special items such as impairment charges arising in connection with the sale of older and less fuel-efficient aircraft to reduce operating costs and to become more competitive in the long term. In addition, the third quarter results were impacted by losses on foreign exchange, mainly attributable to the strong US dollar. Only 7 per cent of the carrier´s revenues were received in US dollars, while in contrast 53 per cent of its expenses were incurred in that currency. According to Thai, the results were additionally stressed by the attack in Ratchaprasong in downtown Bangkok, after which air travel on key routes such as to China, Japan, Hong Kong, South Korea and Singapore decreased by around 15 to 20 per cent in the short term. For the third quarter of 2015, Thai Airways showed a THB 8,870 million (US$ 244 million) loss before tax compared to a THB 922 million (US$ 25 million) gain in the same quarter of 2014. The carrier posted a net loss of THB 9,894 million (US$ 272 million).

Thai's operational results show a positive trend. Losses before tax decreased by 19.0 per cent and total expenses decreased by 6.1 per cent compared to the same quarter in the previous year. Capacity had been slightly reduced by 0.8 per cent, while passenger traffic increased by 3.9 per cent and the overall number of passengers went up by 8.8 per cent. This resulted in a 3.4 percentage point increase in the load factor. Passenger revenues remained unchanged. Yields suffer from lower fuel surcharges on the air fare and intense competition. While passengers in a highly competitive market profit from lower oil prices relatively quickly, carriers such as Thai, who hedge out a large proportion of their fuel consumption, profit much later from decreasing oil prices as they have to wait for their fuel hedges to fall away. According to the unaudited consolidated financial statement, cash and cash equivalents as at 30th September 2015 were THB 28,251 million (US$ 776 million).

The nine month performance of 2015 seems to provide proof that the measures introduced by the restructuring plan are beginning to have an effect. The operational loss before tax decreased by 72 per cent from the same period in the previous year - after an operational loss before tax of THB 16,224 million (US$ 501 million) in the first nine months of 2014, the carrier stated an operational loss before tax of THB 4,536 million (US$ 125 million) for the same period in 2015. Even though total revenues decreased by 1.4 per cent, passenger revenues increased slightly by 0.6 per cent. Total expenses decreased by 8.9 per cent whereas non-fuel related costs remained stable. ASK and RPK grew by 1.9 per cent and 9.1 per cent respectively. As a result, the load factor improved by 4.8 percentage points and the number of carried passengers increased by 15 per cent. Last but not least, internet sales as part of the transformation plan´s commercial strategy were up on the previous year. By 30th September 2015, Thai had successfully issued a THB 8,000 million (US$ 220 million) unsubordinated and unsecured debenture. The four tranches vary in size and maturities and the fixed coupon rates range between 3.46 and 4.74 per cent. The debentures were placed with both institutional investors as well as high net worth individuals.

In December 2015, after the ICAO (International Civil Aviation Organisation) had previously announced concerns regarding Thailand's civil aviation authority, the FAA (Federal Aviation Administration) downgraded the country of Thailand to category 2. This prevented Thai Airways from adding new US destinations either through its own operations or through code sharing; existing destinations and codeshare agreements were however untouched. Thai´s decision to cancel flights to Los Angeles at the beginning of the winter schedule was not a result of the downgrade, but rather represented part of its network rationalisation and transformation plan, as Thai would have been permitted by the FAA to continue these flights. In contrast, Thai Airways was the first carrier outside the EU to pass the TCO (Third Country Operator) Audit by the EASA (European Aviation Safety Agency) which will become a requirement for all non EU-based carriers as of November 2016 if they wish to undertake operations to, from or within Europe. This supports the high safety standards which Thai Airways has sought to maintain, as the main concern of the ICAO and FAA is not particularly carrier related but applies instead to the civil aviation authority - in the case of Thailand, for example, the approval of AOCs for new operators, as well as the authority´s understaffing, were concerns.

Thai Airways is on track with its transformation plan. This two year restructuring programme, which comprises six strategies and 21 project charters designed to turn the carrier into profitability, follows three steps: to stop losses, to rebuild Thai´s strength and to grow sustainably. Some of the recent measures have included the postponement of the delivery of 14 aircraft which had been scheduled for between 2016 and 2018. In addition, the company completed the identification of unused or underutilised property, as a result of which Thai now  plans to offer 19 properties including residences, land and office buildings for sale. In 2016 Thai also intends to complete the transition of the A320 narrow-body operations to its subsidiary Thai Smile whose cost structure is lower and allows for a more favourable position in a highly competitive domestic and regional market. Thai Airways therefore continues to pursue its objective of returning to profitability in 2016.

DS Aviation GmbH & Co. KG

Member of Dr. Peters Group

Stockholmer Allee 53

44269 Dortmund, Germany

DIRECTORS

Jonathan (Jon) Bridel, Non- Executive Chairman (51)

Jon is a Guernsey resident and is currently a non-Executive Director of Alcentra European Floating Rate Income Fund Limited, Starwood European Real Estate Finance Limited, The Renewables Infrastructure Group Limited, Sequoia Economic Infrastructure Income Fund Limited and Funding Circle SME Income Fund Limited which are listed on the Main Market of the London Stock Exchange. Other companies include Fair Oaks Income Fund Limited. Jon was previously Managing Director of Royal Bank of Canada's investment businesses in the Channel Islands and served as a Director on other RBC companies including RBC Regent Fund Managers Limited. Prior to joining RBC, Jon served in a number of senior management positions in banking, specialising in credit and corporate finance and private businesses as Chief Financial Officer in London, Australia and Guernsey having previously worked at Price Waterhouse Corporate Finance in London.

Jon graduated from the University of Durham with a degree of Master of Business Administration, holds qualifications from the Institute of Chartered Accountants in England and Wales (1987) where he is a Fellow, the Chartered Institute of Marketing and the Australian Institute of Company Directors. Jon is a Chartered Marketer and a member of the Chartered Institute of Marketing and the Institute of Directors and a Chartered Fellow of the Chartered Institute for Securities and Investment.

Jeremy Thompson, Non- Executive Director (60)

Jeremy Thompson is a Guernsey resident with sector experience in Finance, Telecoms, Aerospace and Oil & Gas. He acts as a consultant to a number of businesses which include independent non-executive directorships for three PE funds and to an Investment Manager serving the listed NextEnergy Solar Fund Limited. Between 2005 and 2009 he was a director of multiple businesses within a London based private equity group. This entailed board positions on both private, listed and SPV companies and highly successful exits. Prior to that he was CEO of four autonomous global businesses within Cable & Wireless PLC and earlier held CEO roles within the Dowty Group. Jeremy has studied and worked in the UK, USA and Germany.

Jeremy currently serves as chairman of the States of Guernsey Renewable Energy Team and is a commissioner of the Alderney Gambling Control Commission. He is also an independent member of the Guernsey Tax Tribunal panel. Jeremy is a graduate of Brunel (B.Sc) and Cranfield (MBA) Universities and was an invited member to the UK's senior defence course (Royal College of Defence Studies). He holds the Institute of Directors (IoD) Certificate and Diploma in Company Direction and is an associate of the Chartered Institute of Arbitration. He is currently completing an M.Sc in Corporate Governance.

Didier Benaroya, Non-Executive Director (65)

Having previously worked as the founder and senior partner of the Transportation Group and the managing director or Paine Webber, Didier had extensive experience in the transportation industry. He was resident in the UK and was the founder and a director of Numera Limited and Numera Services Limited, which has advised investors, lessors, banks, operating lease companies and airlines on aircraft and airline related transactions (including leasing, financing and restructuring) since 1995. Didier held a BS in Economics, an MS in Mathematics and Applied Computer Science from the University of Paris, and an MBA from Northwestern University's Kellog School of Management. Didier sadly passed away on 21 January 2016.

DIRECTORS' REPORT

The Directors present their report and audited consolidated financial statements for DP Aircraft I Limited for the year ended 31 December 2015.

Principal Activity and Review of the Business

The Company's principal activity is to purchase, lease and then sell Boeing 787-8 Aircraft (the 'Assets'). The Company wholly owns six subsidiaries, DP Aircraft Guernsey I Limited, DP Aircraft Guernsey II Limited, DP Aircraft Guernsey III Limited, DP Aircraft Guernsey IV Limited, DP Ireland Aircraft Limited and DP Aircraft UK Limited (together the 'Group').

The investment objective of the Group is to obtain income and capital returns for the Company's shareholders by acquiring, leasing and then, when the Board considers it appropriate, selling the Assets.

The Company has made its investments in the Assets through its subsidiaries. The Ordinary Shares of the Company are admitted to trading on the Specialist Fund Market of the London Stock Exchange.

On 30 April 2015, the Board of Directors of DP Aircraft I Limited announced that the Company was undertaking a placing of Ordinary Shares to finance the acquisition of two additional aircraft. The acquisition was funded through a combination of equity and debt. The two Boeing 787-8 aircraft are leased to Thai Airways.

Results and Dividends

The profit for the year ended 31 December 2015 was US$ 15.00m (period from 5 July 2013 to 31 December 2014 US$ 10.20m).

The Company aims to provide Shareholders with an attractive total return comprising income, from distributions through the period of the Company's ownership of the Assets, and capital, upon any sale of the Assets. The Company targets a quarterly distribution in February, May, August and November of each year. The target distribution is US$ 0.0225 per Share per quarter. Four quarterly dividends have been paid during the year ended 31 December 2015. Subsequent to the year end a dividend has been paid on 12 February 2016. All the dividends paid to date have met the US$ 0.0225 per share target. The target dividends are targets only and should not be treated as an assurance or guarantee of performance or a profit forecast.

The debt to equity ratio was 1.39 as at 31 December 2015 (2014: 1.38).

Subsequent Events

On 20 January 2016 the Company declared a quarterly dividend in respect of the quarter ended 31 December 2015 of US$ 0.0225 per ordinary share to holders of shares on the register at 29 January 2016. The ex-dividend date was 28 January 2016 with payment on 12 February 2016.

Directors

The Directors of the Company, who served during the year and to date are as shown below:

Jonathan Bridel

Jeremy Thompson

Didier Benaroya (until 21 January 2016)

The Board note with regret the death of Didier Benaroya on 21 January 2016.

The Board expects to make an announcement on the appointment of a new non-executive Director on or around 1 May 2016.

Directors interests

The Directors' interests in the shares of the Company as at 31 December 2015 are set out below and there have been no changes in such interests up to the current date:

Substantial Shareholdings

The directors note the following substantial interests in the Company's share capital as at 31 December 2015 (10% or more shareholding):

M&G Investment Management 46,849,546 - 22.38%

CCLA Investment Management 27,509,308 - 13.14%

As at the date of this report there have been no significant changes in the above list of substantial shareholdings.

AIFM Directive

In July 2013 the European Alternative Investment Fund Management Directive ('AIFMD') came into effect with transitional provisions until July 2014. The Company has elected to be a 'self-managed' Guernsey Alternative Investment Fund ('AIF') and as such will be treated as a non-EU AIFM for the purposes of the Directive. The Company has registered with the Financial Conduct Authority (and notified the Guernsey Financial Services Commission) under the AIFMD (Marketing) Rules, 2013.

The Board

The Board comprises non-executive directors each of whom are independent.

During the year ended 31 December 2015, the Board had a breadth of experience relevant to the Company and a balance of skills experience and age. Following the sad loss of Mr Benaroya in January 2016, the Directors embarked on a search for a suitable replacement. The Board are making excellent progress with a new appointment and expect to make an announcement on or around 1 May 2016.

The Board recognises the importance of diversity and will evaluate applicants to fill vacant positions regardless of gender and without prejudice. Applicants will be assessed on their broad range of skills, expertise and industry knowledge, and business and other expertise. In view of the long-term nature of the Company's investments, the Board believes that a stable board composition is fundamental to run the Company properly. The Board has not stipulated a maximum term of any directorship.

As the Company is not a FTSE 350 company, Directors are currently not subject to annual election by the shareholders nor for the requirement for the external audit contract to be put out to tender every 10 years. The Directors will offer themselves for re-election at each annual general meeting ('AGM').

The Directors are on a termination notice of three months.

Directors' Duties and Responsibilities

The Board of Directors has overall responsibility for the Company's affairs and is responsible for the determination of the investment policy of the Company, resolving conflicts and for monitoring the overall portfolio of investments of the Company. To assist the Board in the day-to-day operations of the Company, arrangements have been put in place for the performance of certain of the day-to-day operations of the Company to third-party service providers, such as the Administrator and Company Secretary, under the supervision of the Board. The Board receives full details of the Company's assets, liabilities and other relevant information in advance of Board meetings.

The Board undertakes an annual evaluation of its own performance and the performance of its audit committee and individual Directors, to ensure that they continue to act effectively and efficiently and to fulfil their respective duties, and to identify any training requirements. The results of the most recent evaluation have been reviewed by the Chairman and his fellow directors. No significant corporate governance issues arose from this review.

The Board will also undertake an annual review of the effectiveness of the Company's system of internal controls and the safeguarding of shareholders' investments and the Company's assets. At each quarterly meeting the Board will table and review a risk matrix. There is nothing to highlight from the reviews of these reports as at the date of this report.

Jeremy Thompson was appointed as Senior Independent Director on 1 April 2016.

Board Meetings

The Board meets at least four times a year to consider the business and affairs of the Company for the previous quarter. Between these quarterly meetings the Board keeps in contact by email and telephone as well as meeting to consider specific matters of a transactional nature. There is regular contact with the Secretary.

The Directors are kept fully informed of investment and financial controls and other matters that are relevant to the business of the Company. The Directors also have access, where necessary in the furtherance of their duties, to professional advice at the expense of the Company.

The Board considers agenda items laid out in the Notice and Agenda which are formally circulated to the Board in advance of any meeting as part of the board papers. Such items include but are not limited to; investment performance, share price performance, review of marketing and shareholder communication. The Directors may request any Agenda items to be added that they consider appropriate for Board discussion. In addition, each Director is required to inform the Board of any potential or actual conflict of interest prior to Board discussion. Board meetings are attended by representatives of the Asset Manager. The Company's corporate brokers also attend to assist the Directors in understanding the views of major shareholders about the Company.

Directors Remuneration

The remuneration of the non-executive directors is reviewed on an annual basis and compared with the level of remuneration for directorships of other similar funds.

The board reviewed the current director fee levels (inclusive of all subsidiaries) and whilst it recognised there was a trend for increased fees over the past year it was decided to maintain total annual fees as the group currently stands for the next twelve months subject to current movements if any fees are not paid in Sterling. However, it was agreed to restructure and simplify the fees to better reflect the seniority, experience and responsibilities of the board with effect from 1 April 2016. On this basis, the revised base fee for the Chairman is £35,000 (previously £27,500) with the Audit Chairman receiving £25,000 (£22,500) with a base director fee of £20,000 (£20,000). The fees for all subsidiary positions including the leasing companies would be set at £5,000 each, reducing the total fee for subsidiaries by £10,000 per annum.

During the current year and prior period each Director received the following remuneration in the form of Director fees from Group companies:

There are no executive director service contracts in issue.

Upon the requirement to issue a new prospectus at any time, the Directors will be entitled to receive an additional £5,000 each, per prospectus. The fees in respect of the prospectus issued in June 2015 are included in the table above.

Internal Controls and Risk Management Review

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

The Board carries out an annual review of internal controls. The internal control systems are designed to meet the Company's particular needs and the risks to which it is exposed. Accordingly, the internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and by their nature can only provide reasonable and not absolute assurance against misstatement and loss.

Administration and Secretarial duties for the Company are performed by Fidante Partners (Guernsey) Limited (formerly Dexion Capital (Guernsey) Limited).

The Directors of the Company clearly define the duties and responsibilities of their agents and advisors. The appointment of agents and advisers is conducted by the Board after consideration of the quality of the parties involved and the Board monitors their ongoing performance and contractual arrangements.

Dialogue with Shareholders

All holders of Shares in the Company have the right to receive notice of, and attend, all general meetings of the Company, during which the directors are available to discuss issues affecting the Company. The directors are available to enter into dialogue with shareholders and make themselves available for such purpose when reasonably required. The Company believes such communications to be important. Reports are provided to the Board of Directors on shareholders' views about the Company and any issues or concerns they might have.

Board Policy on Tenure and Independence

The Board has not yet formed a policy on tenure however, it does consider the independence of each Director on an annual basis during the performance evaluation process.

Auditor

KPMG, Ireland, Chartered Accountants have indicated their willingness to continue in office. Accordingly a resolution proposing their reappointment will be submitted at the Company's next annual general meeting.

Going Concern

The lease rental income has been set at an aggregate absolute income stream in excess of the Group's expenses, distributions and financing costs. The Directors are of the opinion that the affairs of the company are suitably structured to enable the Going Concern basis to be adopted in the preparation of these financial statements.

Viability Statement

The Financial Reporting Council's, UK Corporate Governance Code ("FRC") requires boards to include a 'viability statement' in the strategic report to investors. The viability statement is to provide an improved and broader assessment of long-term solvency and liquidity. It is expected that the statement will look forward significantly longer than 12 months and the Board has therefore deemed a three year period of review is appropriate.

The Directors have therefore conducted a robust assessment of the viability of the Company over a three year period, taking account of the Company's current position and the potential impact of the principal risks outlined below.

In making this statement, the Directors have considered the resilience of the Company, taking into account its current position, the principal risks facing the Company in severe but reasonable scenarios and the effectiveness of any mitigating actions. This assessment has considered the potential impacts of these risks on the business model, future performance, solvency and liquidity over the period.

These factors were subjected to a review of different scenarios based on the key assumptions underlying the forecast. Where appropriate, this analysis was carried out to evaluate the potential impact of the Company's principal risks actually occurring, primarily non payment of leases or significant impairment of aircraft values. The Board of Directors have also considered the investment strategy of the Company and the disclosure made in the Prospectus issued during 2015.

The Directors continue to consider that an investment in the Company should be regarded as long term in nature and is suitable only for sophisticated investors, investment professionals, high net worth bodies corporate, unincorporated associations and partnerships and trustees of high value trusts and private clients (all of whom will invest through brokers), in each case, who can bear the economic risk of a substantial or entire loss of their investment and who can accept that there may be limited liquidity in the Shares.

The Directors regularly review the timeliness of receipt of the aircraft rental income. The Directors consider quarterly consolidated management accounts that include cashflow required for dividend purposes and for the purposes of establishing suitable working capital requirements.

The Directors consider that the Notes to the Financial Statements are integral to the support of the Viability Statement. Note 4 discloses the expected rental income up to and in excess of five years hence. Note 18 contains the expected liability flows and when netted off demonstrates significant net assets, prior to any future dividend declarations under normal circumstances.

From the information provided to, and questions posed by the Directors, the Directors have concluded that there is a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the three year period to 31 December 2018.

Annual General Meeting

The Annual General Meeting of the Company will be held in Guernsey in July 2016 at 1 Le Truchot, St Peter Port Guernsey. The meeting will be held to receive the Annual Report and Financial Statements, re-elect Directors and propose the reappointment of the auditor and that the Directors be authorised to determine the auditor's remuneration.

Corporate Governance

The Company is not required to comply with any particular corporate governance codes in the UK or Guernsey (since it is not authorised or regulated by the FCA or GFSC) but the Directors take corporate governance seriously and will have regard to relevant corporate governance standards in determining the Company's governance policies including without limitation in relation to corporate reporting, risk management and internal control procedures.

The Directors intend to comply, and ensure that the Company complies, with any obligations under the Companies (Guernsey) Law, 2008 and the Articles to treat shareholders fairly as between themselves.

Directors' Share Dealings

The Board has agreed to adopt and implement the Model Code for Directors' dealings contained in the Listing Rules of the FCA (the 'Model Code'). The Board will be responsible for taking all proper and reasonable steps to ensure compliance with the Model Code by the Board.

Board Committees

The Board of Directors has established an audit committee, which operates under detailed terms of reference, copies of which are available on request from the Company Secretary.

Alternative Investment Fund Managers Directive ("AIFMD")

For a non-EEA AIFM that has over EUR100K (equivalent to US$ 109k at 31 December 2015) of net assets under management and also utilises leverage, certain Annual Investor Disclosures are required.

For the purpose of AIFMD, the Company is a Self-Managed Alternative Investment Fund Manager with assets above the EUR100k (equivalent to US$ 109k at 31 December 2015), with leverage, threshold.

AIFMD does not prescribe use of any one particular accounting standard however, the accounts must be audited by an auditor empowered by law to audit the accounts in accordance with the EU Statutory Audit Directive.

The required disclosures for investors are contained within the Financial Conduct Authority checklist and the Company's compliance therewith can be found in Appendix 1 to these financial statements.

By order of the Board

Jon Bridel Jeremy Thompson

Director Director

REPORT OF THE AUDIT COMMITTEE

We present the Audit Committee (the 'Committee') Report for 2015, setting out the Committee's structure and composition, principal duties and key activities during the year. The Committee has reviewed the Company's financial reporting, the independence and effectiveness of the independent auditor (the 'auditor') and the internal control and risk management systems of service providers.

The Board is satisfied that for the period under review and thereafter the Committee has recent and relevant commercial and financial knowledge sufficient to satisfy the requirements of the Committee's remit.

Structure and Composition

The Committee is chaired by Mr Thompson and its other members are Messrs Bridel and Benaroya (until 21 January 2016). The Committee operates within clearly defined terms of reference.

The Committee conducts formal meetings not less than three times a year. There were five meetings during the period under review. All Directors were present and forming part of the quorum. The auditor is invited to attend those meetings at which the annual and interim reports are considered.

Principal Duties

The role of the Committee includes:

· monitoring the integrity of the published financial statements of the Group;

· keeping under review the consistency and appropriateness of accounting policies on a year to year basis.

· satisfying itself that the annual accounts, the interim statement of financial results and any other major financial statements issued by the Group follow International Financial Reporting Standards and give a true and fair view of the Group and its subsidiaries affairs; matters raised by the external auditors about any aspect of the accounts or, of the Group's control and audit procedures, are appropriately considered and, if necessary, brought to the attention of the board, for resolution;

· monitoring and reviewing the quality and effectiveness of the auditor and their independence;

· considering and making recommendations to the Board on the appointment, reappointment, replacement and remuneration of the Group's auditor;

· monitoring and reviewing the internal control and risk management systems of the service providers; and

· considering at least once a year whether there is a need for an internal audit function.

The complete details of the Committee's formal duties and responsibilities are set out in the Committee's terms of reference, a copy of which can be obtained from the Secretary.

Independent Auditor

The Committee is also the forum through which the auditor reports to the Board of Directors. The Committee reviews the scope and results of the audit, its cost effectiveness and the independence and objectivity of the auditor, with particular regard to the terms under which it is appointed to perform non audit services including fees. The Committee has established pre-approval policies and procedures for the engagement of KPMG, Ireland ('KPMG') to provide non-audit services. KPMG has been the independent auditor from the date of the initial listing on the Specialist Fund Market of the London Stock Exchange.

The audit fees proposed by the auditor each year are reviewed by the Committee taking into account the Group's structure, operations and other requirements during the year and the Committee make appropriate recommendations to the Board. The Committee considers KPMG to be independent of the Company. The Committee also met with the external auditors without the Asset Manager or Administrator being present so as to provide a forum to raise any matters of concern in confidence.

Evaluations or Assessments made during the year

The following sections discuss the assessments made by the Committee during the year:

Significant Areas of Focus for the Financial Statements

The Committee's review of the interim and annual financial statements focused on:

· Valuation of the Company's Assets

· Lease and loan cash flows

· The financial statements giving a true and fair view and being prepared in accordance with International Financial Reporting Standards and the Companies (Guernsey) Law, 2008

The Company's investment in the four aircraft represents substantially all of the net assets of the Company and as such is the biggest factor in relation to the accuracy of the financial statements. The 31 December 2015 valuations of the four aircraft have been independently obtained from three independent expert valuers (all certified by the International Society of Transport Aircraft Trading 'ISTAT'). Two of the independent expert valuers included encumbered economic full-life valuations in their valuations. These were in excess of the encumbered depreciated value indicated within the Company's Statement of Financial Position. An encumbered valuation assesses the value of an aircraft with a lease attached and therefore incorporates the value of the revenue stream into the aircraft valuation. As a result of the valuations obtained, the Directors resolved to adhere to the straight-line depreciated value method as at 31 December 2015.

Effectiveness of the Audit

The Committee had formal meetings with KPMG during the period under review:

1) Before the start of the audit to discuss formal planning, discuss any potential issues and agree the scope that will be covered, and

2) After the audit work was concluded to discuss any significant matters such as those stated above.

The Board considered the effectiveness and independence of KPMG by using a number of measures, including but not limited to:

· the audit plan presented to them before the start of the audit;

· the audit results report;

· changes to audit personnel;

· the auditor's own internal procedures to identify threats to independence;

· feedback from both the Asset Manager and Administrator.

Internal Audit

There is no internal audit function. As all of the directors are non-executive and all of the Company's administration functions have been delegated to independent third parties, the Audit Committee considers that there is no need for the Company to have an internal audit function. However, this matter is reviewed periodically.

Conclusion and Recommendation

After reviewing various reports such as the operation and risk management framework and performance reports from management, liaising where necessary with KPMG, and assessing the significant areas of focus for the financial statements, the Committee is satisfied that the financial statements appropriately address the critical judgements and key estimates (both in respect to the amounts reported and the disclosures).

The Committee is also satisfied that the significant assumptions used for determining the value of assets and liabilities have been appropriately scrutinised, challenged and are sufficiently robust. The independent auditor reported to the Committee that no material misstatements were found in the course of its work. Furthermore, the Administrator confirmed to the Committee that they were not aware of any material misstatements including matters relating to presentation.

The Committee confirms that it is satisfied that the independent auditor has fulfilled its responsibilities with diligence and professional scepticism. Following the completion of the accounts review process on the effectiveness of the independent audit and the review of audit services, the Committee will recommend that KPMG be reappointed at the next Annual General Meeting.

For any questions on the activities of the Committee not addressed in the foregoing, a member of the Committee will attend each Annual General Meeting to respond to such questions.

By order of the Audit Committee

Jeremy Thompson

Audit Committee Chairman

STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES

Asset risk

The Company's Assets comprise of four Boeing 787-8 aircraft.

The Boeing 787-8 is a newly developed generation of aircraft and therefore there is insufficient experience and data currently available to be able to give a complete assessment of the long-term use and operation of the aircraft. The Group is exposed to the used aircraft market of the 787-8, which at this time is untested.

Market risk

The airline industry is particularly sensitive to changes in economic conditions and is highly competitive; risks affecting the airline industry generally could affect the ability of Norwegian Air Shuttle ASA ('Norwegian') or Thai Airways International Public Company Limited ('Thai Airways') to comply with its obligations under the Leases (or any subsequent lease).

There is no guarantee that, upon expiry of the leases, the Assets could be sold for an amount that would enable shareholders to realise a capital profit on their investment or to avoid a loss. Costs regarding any future re-leasing of the assets would depend upon various economic factors and would be determinable only upon an individual re-leasing event.

Key personnel risk

The ability of the Company to achieve its investment objective is significantly dependent upon the advice of certain key personnel at DS Aviation GmbH & Co. KG; there is no guarantee that such personnel will be available to provide services to the Company for the scheduled term of the Lease or following the termination of the Lease. However, Key Man clauses within the Asset Management agreement do provide a base line level of protection against this risk.

Credit risk & Counterparty risk

Credit risk is the risk that a significant counterparty will default on its contractual obligations. The Group's most significant counterparties are Norwegian and Thai Airways as lessees and providers of income and NordLB and DekaBank as provider of the loans and borrowings, cash and restricted cash (all held at NordLB and DekaBank). The lessees do not maintain a credit rating. The credit rating of NordLB is Aa3 (2014: Aa1) and the credit rating of DekaBank is Aa3.

Norwegian's stated strategy of providing low-cost long haul flights is untested and may not be successful; failure of this strategy, or of any other material part of Norwegian's business, may adversely affect Norwegian's ability to comply with its obligations under the leases.

There is no guarantee that the business model of Thai Airways will be successful. Failure of any material part of the business model may have an adverse impact on its ability to comply with its obligations under the leases.

Any failure by Norwegian or Thai Airways to pay any amounts when due would have an adverse effect on the Group's ability to comply with its obligations under the loan agreements, could ultimately have an impact on the Company's ability to pay dividends and could result in the lenders enforcing their security and selling the relevant Assets on the market potentially negatively impacting the returns to investors. In mitigation, Norwegian is the second largest airline in Scandinavia and the third largest low-cost airline in Europe and Thai Airways is an International full service carrier.

Liquidity risk

In order to finance the purchase of the Assets, the Group has entered into four separate loan agreements pursuant to which the Group has borrowed an initial amount of US$ 316,600,000 in total. Pursuant to the loan agreements, the lenders are given first ranking security over the Assets. Under the provisions of each of the loan agreements, the Borrowers are required to comply with loan covenants and undertakings. A failure to comply with such covenants or undertakings may result in the relevant lenders recalling the relevant loan. In such circumstances, the Group may be required to sell the relevant Asset to repay the outstanding relevant loan. More detailed explanations of the above risks can be found within note 18 to the Audited Consolidated Financial Statements/

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Directors' Report and the Financial Statements in accordance with applicable law and regulations.

The Companies (Guernsey) Law, 2008 permits the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The financial statements are required by law to comply with the Companies (Guernsey) Law, 2008.

The Company is also responsible for ensuring its annual report and financial statements meet the requirements of the UK's FCA Disclosure and Transparency Rules.

The financial statements are required by law to give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable and prudent;

· state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and to enable them to ensure that the financial statements are properly prepared and comply with the Companies (Guernsey) Law, 2008. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

So far as each of the Directors is aware, there is no relevant information of which the Company's auditor is unaware, and they have taken all the steps they ought to have taken as Directors to make themselves aware of any relevant information and to establish that the Company's auditor is aware of that information.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

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.

DIRECTORS' STATEMENT PURSUANT TO THE DISCLOSURE AND TRANSPARENCY RULES

In accordance with the UK's FCA Disclosure and Transparency Rules, the Directors confirm that to the best of each person's knowledge and belief:

(a) The Directors' Report includes a fair review of the development and performance of the business and the position of the Group together with a description of the principal risks and uncertainties that the Group faces; and

(b) The financial statements, prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group.

Signed on behalf of the Board by

Jon Bridel Jeremy Thompson

Director Director

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2015

All the items in the above statement derive from continuing operations.

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

The notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2015

The financial statements were approved by the Board of Directors and were authorised for issue on 19 April 2016. They were signed on its behalf by:

Jon Bridel Jeremy Thompson

Chairman Director

The notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2015

The notes form an integral part of these financial statements.

 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2015

The notes form an integral part of these financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2015

1) GENERAL INFORMATION

The consolidated audited financial statements ('financial statements') incorporate the results of the Company and that of wholly owned subsidiary entities, DP Aircraft Guernsey I Limited, DP Aircraft Guernsey II Limited, DP Aircraft Guernsey III Limited, DP Aircraft Guernsey IV Limited (collectively and hereinafter, the 'Borrowers'), each being a Guernsey Incorporated company limited by shares and two intermediate lessor companies, DP Aircraft Ireland Limited and DP Aircraft UK Limited (the 'Lessors'), an Irish incorporated private limited company and a UK incorporated private limited company respectively.

DP Aircraft I Limited (the 'Company') was incorporated on 5 July 2013 with registered number 56941. The Company was listed on the Channel Islands Securities Exchange until 27 May 2015 and is admitted to trading on the Specialist Fund Market of the London Stock Exchange.

The Share Capital of the Company comprises 209,333,333 Ordinary Shares (2014: 113,000,000) of no par value and one Subordinated Administrative Share of no par value.

The Company's investment objective is to obtain income and capital returns for its Shareholders by acquiring, leasing and then, when the Board considers it appropriate, selling aircraft.

The financial statements were approved by the Board of Directors and authorised for issue on 19 April 2016.

2) SIGNIFICANT ACCOUNTING POLICIES

a) Basis of preparation

These financial statements are prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board ('IASB') and to the extent they have been adopted by the European Union.

The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires the Directors to exercise judgement in applying the Company's accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in note 3.

The financial statements are presented in United States Dollars (US$) which is also the functional currency of the Company and its subsidiaries.

Basis of Measurement

The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair value and designated as hedging instruments.

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 as the interest on the Group's loans have been fixed with the bank or via an interest rate swap and the lease rental income and supplemental rental income have been set at an aggregate absolute income stream in excess of the Group's expenses, distributions and financing costs. Accordingly, the Directors have prepared the financial statements on the going concern basis. The Directors are not aware of any material uncertainty that may cast significant doubt upon the Group's ability to continue as a going concern.

New standards, interpretations and amendments effective from 1 January 2015

There were no new standards or interpretations effective for the first time for periods beginning on or after 1 January 2015 that impacted the Group's accounting policies.

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

There are a number of new standards, amendments to standards and interpretations that are effective for annual periods beginning after 1 January 2016 which have not been early adopted. Those which may have an effect on the Company's future financial statements are set out below:

IFRS 9 Financial Instruments

IFRS 9 Financial Instruments is the IASB's replacement of IAS 39 Financial Instruments: Recognition and Measurement. The package of improvements introduced by IFRS 9 includes a logical model for classification and measurement, a single, forward-looking 'expected loss' impairment model and a substantially-reformed approach to hedge accounting. The new Standard has not yet been adopted by the EU and will come into effect on 1 January 2018.

IFRS 15 Revenues from Contracts with customers

IFRS 15 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' and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is permitted.

IFRS 16 Leases

The IASB recently issued IFRS 16 Leases which supersedes IAS 17 Leases. IFRS 16 eliminates the classification by a lessee of leases as either operating or finance. Instead all leases are treated in a similar way to finance leases in accordance with IAS 17. The standard's approach to lessor accounting is substantially unchanged from IAS 17.

The Directors are assessing the effects of IFRS 9, IFRS 15 and IFRS 16 (neither of which have yet been endorsed by the EU) as the adoption of these standards are expected to have an impact on the Company's future financial statements.

b) Basis of Consolidation

The financial statements incorporate the financial statements of the Company and the subsidiary undertakings controlled by the Company made up to 31 December each year. Control is achieved where the Company has power over the investee, exposure or rights to variable returns from its involvement with the investee and the ability to use its power to affect the amount of the investor's returns.

The results of subsidiary undertakings acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal as appropriate.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

c) Taxation

The Company and the Guernsey subsidiaries are exempt from taxation in Guernsey and are charged an annual exemption fee of £1,200 (2014: £600.)

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

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

d) Property, plant and equipment - Aircraft

Upon delivery, aircraft (the 'Assets') are initially recognised at cost plus initial direct costs which may be capitalised under IAS 16. In accounting for property, plant and equipment, the Group makes estimates about the expected useful lives, the fair value of attached leases and the estimated residual value of aircraft. In estimating useful lives, fair value of leases and residual value of aircraft, the Group relies upon actual industry experience, supported by estimates received from independent appraisers, with the same or similar aircraft types and considering anticipated utilisation of the aircraft.

When an aircraft is acquired with a lease attached, an evaluation of whether the lease is at fair value is undertaken. The contractual lease rate is compared to a range of current market lease rates for similar aircraft. A lease premium is recognised when it is determined that the acquired lease terms are above fair value. Lease premiums are recognised as Aircraft Lease Premium in non-current assets and are amortised to profit or loss on a straight line basis over the term of the lease. Lease discounts are recognised in other liabilities and accounted as additional rental revenue on a straight line basis over the term of the lease.

The Group's policy is to depreciate the Assets over their remaining lease life (given the intention to sell the Assets at the end of each respective lease) to an appraised residual value at the end of the lease. For the annual report, the directors determined a residual valuation at the end of the lease life based on 50 per cent of the purchase cost, supported by external valuations (2014: 50 per cent).

In accordance with IAS 16 - Property, Plant and Equipment, the Group's aircraft that are to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the aircraft may not be recoverable. An impairment review involves consideration as to whether the carrying value of an aircraft is not recoverable and is in excess of its fair value. In such circumstances a loss is recognised as a write down of the carrying value of the aircraft to the higher of value in use and fair value less cost to sell. The review for recoverability has a level of subjectivity and requires the use of judgement in the assessment of estimated future cash flows associated with the use of an item of property, plant and equipment and its eventual disposition. Future cash flows are assumed to occur under the prevailing market conditions and assume adequate time for a sale between a willing buyer and a willing seller. Expected future lease rates are based upon all relevant information available, including the existing lease, current contracted rates for similar aircraft, appraisal data and industry trends.

e) Financial Instruments

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

Derivative financial instruments

The Group has two interest rate swaps in order to provide for fixed-rate interest to be payable in respect of two of the bank loans, matching the timing of the scheduled fixed rental payments under the two Leases, interest rate swaps have been entered into to provide for surety of cash flow and elimination of volatility.

On initial designation of the derivative as a hedging instrument the Group formally documents the relationship between the hedging instrument and the hedged item, including the risk management objective and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the effectiveness of the hedging relationship.

The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, of whether the hedging instruments are expected to be highly effective in offsetting the changes in the cash flows attributable to the hedged risk, and whether the actual results of each hedge are within a range of 80% - 125%.

Fair value movements on the derivative instruments are recorded as other comprehensive income in the consolidated statement of comprehensive income, to the extent they are effective. The fair value of the derivative instruments are recorded as "derivative liabilities" or "derivative assets" in the consolidated statement of financial position.

Non-derivative financial instruments

Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, restricted cash, loans and borrowings, and trade and other payables. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured at amortised cost using the effective interest rate method, less any impairment losses in the case of financial assets.

Fair values of non-derivative financial instruments, which are determined for disclosure purposes, are calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

Financial Assets - Loans and receivables

i. Cash and cash equivalents comprise cash balances held for the purpose of meeting short term cash commitments and investments which are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Where investments are categorised as cash equivalents, the related balance has a maturity of three months or less from the date of acquisition. Cash and cash equivalents are carried at amortised cost.

ii. Restricted cash comprises cash held by the Group but which is ring-fenced or used as security for specific financing arrangements, and to which the Group does not have unfettered access. Restricted cash is measured at amortised cost and includes maintenance reserves and the security deposits.

iii. Trade and other receivables are recognised initially at fair value and are thereafter measured at amortised cost using the effective interest rate less any provision for impairment. Trade and other receivables are discounted when the time value of money is considered material. A provision for impairment of trade receivables is recognised when there is objective evidence the Group will not be able to collect all amounts due according to the original terms of the receivables.

Financial Liabilities at amortised cost

i. Loans and Borrowings are recognised initially at fair value, net of transaction costs incurred. Loans and Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised through profit or loss in the consolidated statement of comprehensive income over the period of borrowings using the effective interest rate method. Loans and Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least one year after the reporting date.

Initial direct costs related to loans and borrowings are capitalised, presented net against the loans and borrowings in the statements of financial position and amortised to the statement of comprehensive income over the period of the related loan.

ii. Maintenance reserves are lessee contributions to a retention account held by the lessor which are calculated by reference to the budgeted cost of maintenance and overhaul events (the 'supplemental rentals'). They are intended to ensure that at all times the lessor holds sufficient funds to cover the proportionate cost of maintenance and overhaul of the Asset relating to the life used on the airframe, engines and parts since new or since the last overhaul. During the term of the lease, all maintenance is required to be carried out at the cost of the lessee, and maintenance reserves are required to be released only upon receipt of satisfactory evidence that the relevant qualifying maintenance or overhaul has been completed.

Maintenance reserves are recorded in the consolidated statement of financial position during the term of the lease. Reimbursements will be charged against this liability as qualifying maintenance work is performed. Maintenance reserves are restricted and not distributable until, at the end of the lease, the Group is released from the obligation to make any further reimbursements in relation to the aircraft, and the remaining balance of maintenance reserves, if any, is released through profit or loss.

iii. Security deposits are paid by the lessee in accordance with the terms of the lease contract, either in cash or in the form of a letter of credit. These deposits are refundable to the lessee upon expiration of the lease and, where such deposits are received in cash, they are recorded in the consolidated statement of financial position as a liability. The cash received related to security deposits is presented as restricted cash in the consolidated statement of financial position.

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

Fair value measurement

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

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

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

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

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

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

f) Share capital

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

g) Share-based payments

Cash settled share-based payment arrangements with the Asset Manager are measured at the fair value of the services acquired. The fair value of the liability is re-measured at each reporting date with changes in fair value being recognised in profit or loss in the consolidated statement of comprehensive income.

h) Dividends

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

i) Lease rental income

Leases relating to the Aircraft are classified as operating leases where the terms of the lease do not transfer substantially all the risks and rewards of ownership to the lessee. Rental income from operating leases is recognised on a straight-line basis over the term of the lease.

Initial direct costs incurred in setting up a lease are capitalised to Property, Plant and Equipment and amortised over the lease term.

j) Expenses

Expenses are accounted for on an accruals basis.

k) Finance costs

Interest payable is calculated using the effective interest rate method. The effective interest method is a method of calculating the amortised cost of a financial asset or liability and of allocating interest income and expense over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees or amounts paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset or liability or where appropriate a shorter period.

l) Foreign currency translation

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

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

m) Segmental reporting

The Directors are of the opinion that the Group is engaged in a single segment of business, being acquiring, leasing and subsequent selling of Aircraft. All significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole.

3) SIGNIFICANT JUDGEMENTS AND ESTIMATES

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

a) Depreciation of aircraft

As described in Note 2, the Group will depreciate the Assets (which are significant) on a straight line basis over the remaining lease life and taking into consideration the estimated residual value. In making a judgement regarding these estimates the Directors will consider previous sales of similar aircraft and other available aviation information. The Group have engaged three Independent Expert Valuers each year, to provide a valuation of the Assets and take into account the average of the three valuations provided. The Group expects that, in performing their valuations, the Independent Expert Valuers will have regard to factors such as the condition of the Assets, the prevailing market conditions (which may impact on the resale value of the Assets), the leases (including the scheduled rental payments and remaining scheduled term of the leases) and the creditworthiness of the lessees. Accordingly, any early termination of the leases may impact on the valuation of the Assets. The Assets residual value is based on appraised residual values. As at 31 December 2015 there was no indication of impairment in the Group's Assets (2014: nil).

b) Derivative fair value

The Directors estimate the fair value of derivative contracts based on valuation techniques. These techniques are significantly affected by the assumptions used, including discount rates and estimates of future cash flows.

4) LEASE RENTAL INCOME

All lease rental income is derived from two customers located in Norway and Thailand and all four Assets are Boeing 787-8 aircraft. During the year ended 31 December 2015 the Group received following amounts of rental income from these two customers:

The contracted cash lease rental payments to be received under non-cancellable operating leases at the reporting date are

5) GENERAL AND ADMINISTRATIVE EXPENSES

In the period 5 July 2013 to 31 December 2014 an amount of US$ 682,507 was included in other fees and expenses in respect of the arrangement fee paid to DS Aviation GmbH & Co. KG on the transfer of the title to the Group of the first two aircraft.

6) FINANCE COSTS

7) TAXATION

With the exception of DP Aircraft Ireland Limited and DP Aircraft UK Limited, all companies within the Group are exempt from taxation in Guernsey and are charged an annual exemption fee of £1,200 each (2014: £600).

DP Aircraft Ireland Limited and DP Aircraft UK Limited are subject to taxation at the applicable rate in Ireland and the United Kingdom respectively. The amount of taxation paid during the year ended 31 December 2015 was US$ 1,395 (Period 5 July 2013 to 31 December 2014: nil). The Directors do not expect the taxation payable to be material to the Group.

A taxation reconciliation has not been presented in these financial statements as the effective tax rate is 0%.

8) EARNINGS PER SHARE

There are no instruments in issue that could potentially dilute earnings per Ordinary Share in future years.

9) PROPERTY, PLANT, EQUIPMENT & INTANGIBLE ASSETS

AIRCRAFT

LEASE PREMIUM

The Boeing 787-8 is a newly developed generation of aircraft and the Company is exposed to the used aircraft market of the 787-8 which is untested. Due to the new type of design, in particular in respect of innovative materials and technology, there is currently insufficient experience and data available to be able to give a complete assessment of the long-term use and operation of the aircraft. There is a risk that the newly developed materials may be found to be less efficient or durable than expected and thereby may lead to higher maintenance and repair costs. Under the terms of the Leases, the cost of repair and maintenance of the Assets will be borne by Norwegian Air Shuttle ASA ('Norwegian) and Thai Airways International Public Company Limited ('Thai Airways'). However, upon expiry or termination of the leases, the cost of repair and maintenance will fall upon the Group. Therefore upon expiry of the leases, the Group may bear higher costs and the terms of any subsequent leasing arrangement (including terms for repair, maintenance and insurance costs relative to those agreed under the leases) may be adversely affected, which could reduce the overall distributions paid to the Shareholders.

The estimated residual value of the Boeing 787-8 Assets as at the end of their respective leases in 2025 and 2026 have been re-evaluated by independent experts on 31 December 2015. The residual value will depend upon a variety of factors including actual or anticipated fluctuations in the results of the airline industry, market perception of the airline industry, general economic and social and political development, changes in industry conditions, fuel prices or rates of inflation. For the annual report, the directors determined a residual valuation at the end of the lease life based on 50 per cent of the purchase cost, supported by external valuations.

The future cash in-flows for the Assets (excluding the assets residual value in the event of a sale) have been fixed at a set rate as agreed between the Group, loan providers and the lessees.

The loans entered into by the Group to complete the purchase of the first two aircraft are cross collateralised. Each of the loans are secured by way of security taken over each of the first aircraft and the second aircraft.

The loans entered into by the Group to complete the purchase of the second two aircraft are cross collateralised. Each of the loans are secured by way of security taken over each of the third aircraft and the fourth aircraft.

10) RESTRICTED CASH

11) SECURITY DEPOSITS

12) TRADE AND OTHER PAYABLES

13) BANK BORROWINGS

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

Loans

During the year ended 31 December 2015 the Company utilised the proceeds from the placing and the proceeds of two separate loans from DekaBank Deutsche Girozentrale ('DekaBank') of US$ 78,500,000 each to fund the purchase of two Boeing 787-8 aircraft. The balance on the loans at 31 December 2015 was US$ 151,977,783.

During the period ended 31 December 2014 the Company utilised the proceeds from the initial public offering and the proceeds of two separate loans from Norddeutsche Landesbank Girozentrale ('NordLB') of US$ 79,800,000 each to fund the purchase of two Boeing 787-8 aircraft. The balance on the loans at 31 December 2015 was US$ 137,124,345 (2014: US$ 147,810,513).

All of the loans will be fully amortised with monthly repayments in arrears over the term until the scheduled expiry of each respective lease. There have been no defaults or breaches under the loan agreements (2014: none).

Structure and term

The committed term of each loan is from the drawdown date until the date falling twelve years from the Delivery Date of the relevant Asset. Each Loan will be amortised with repayments every month in arrears over the term in amounts as set out in a schedule agreed by the Company and the Lenders. Amortisation will be on an annuity-style (i.e. mortgage-style) basis.

Interest

Interest on each DekaBank loan is payable in arrears on the last day of each interest period, which is one month long. Interest on the loan accrues at a fixed rate of 4.10 per cent including a margin of 1.95 per cent per annum. If any amount is not paid by the Borrower when due under the loan agreements, interest will accrue on such amount at the then current rate applicable to the loan plus 2.0 per cent per annum.

Interest on each NordLB loan is payable in arrears on the last day of each interest period, which is one month long (the 'Interest Period'). Interest on each Loan accrues at a floating rate of interest which is calculated using LIBOR for the length of the Interest Period and a margin of 2.6 per cent per annum (the 'Loan Margin') ('Loan Floating Rate'). For the purposes of calculating the Loan Floating Rate, if on the date when LIBOR is set prior to the beginning of an Interest Period it is not possible for LIBOR to be determined by reference to a screen rate at the time that LIBOR is to be set for that Interest Period (a 'Market Disruption Event'), the amount of interest payable to each affected Loan Lender during the Interest Period will be the aggregate of each Lender's cost of funds during that monthly period and the Loan Margin. If any amount is not paid by the Borrower when due under the Loan Transaction Documents, interest will accrue on such amount at the then current rate applicable to the Loan plus 2.0 per cent per annum. The Group has entered into ISDA-standard hedging arrangement with NordLB as hedging provider in connection with the Loans, in order to provide for a fixed interest rate of 5.06% and 5.08% to be payable in respect of the loans throughout the whole term.

Cross Collateralisation

The DekaBank loans entered into by the Group to complete the purchase of the third and fourth Assets are cross collateralised. Each of the third and fourth loan is secured by way of security taken over the third and fourth Assets and enforce security over both Assets. This means that a default on one loan places both of the Assets at risk.

Similarly the NordLB loans entered into by the Group to complete the purchase of the first two Assets are cross collateralised. Each of the first and second loan is secured by way of security taken over the first and second Assets and enforce security over both Assets. This means that a default on one loan places both of the Assets at risk.

Following the enforcement of security and sale of the aircraft, the remaining proceeds, if any, may be substantially lower than investors' initial investment in the Company.

14) SHARE CAPITAL

Subject to the applicable company law and the Company's Articles of Incorporation, the Company may issue an unlimited number of shares of par value and/or no par value or a combination of both.

On 12 June 2015 a total of 96,333,333 shares were issued under the placing at an issue price of US$ 1.0589 per share raising gross proceeds of US$ 102 million. Total issue costs were US$ 2.3 million which included the 1.5% placing commission paid to Canaccord Genuity as placing agent.

On 10 June 2013 a total of 113,000,000 shares were issued under the initial public offering placing at an issue price of US$ 1 per share raising gross proceeds of US$ 113 million. Total issue costs were US$ 2.1 million which included the 1% placing commission paid to Canaccord Genuity as placing agent.

The Subordinated Administrative Share is held by DS Aviation GmbH & Co. KG, (the Asset Manager).

Holders of Subordinated Administrative Shares are not entitled to participate in any dividends and other distributions of the Company. On a winding up of the Company the holders of the Subordinated Administrative Shares are entitled to an amount out of the surplus assets available for distribution equal to the amount paid up, or credited as paid up, on such shares after payment of an amount equal to the amount paid up, or credited as paid up, on the Ordinary Shares to the Shareholders. Holders of Subordinated Administrative Shares shall not have the right to receive notice of and have no right to attend, speak and vote at general meetings of the Company except if there are no Ordinary Shares in existence.

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

The Directors are entitled to issue and allot C Shares. No C Shares have been issued since the Company was incorporated.

15) RESERVES

The movements in the Group's reserves are shown in the consolidated Statement of Changes in Equity.

Retained earnings comprises any surplus arising from the profit for the year or period and is taken to this reserve which may be utilised for the payment of dividends.

The hedging reserve comprises the cumulative net change in the value of hedging instruments used in cash flow hedges pending subsequent recognition in profit or loss as the hedged cash flows affect profit or loss.

16) DIVIDENDS

During the year ended 31 December 2015 the Company declared and paid the following dividends:

A quarterly dividend of US$ 4,710,000 (US$ 0.0225 per share) for the quarter ended 31 December 2015 was paid on 12 February 2016. In accordance with IAS 10, this dividend has not been recognised in these financial statements.

During the period 5 July 2013 to 31 December 2014 the Company declared and paid the following dividends:

17) INVESTMENT IN SUBSIDIARY UNDERTAKINGS

The Company's investments in subsidiaries, all of which have been included in these consolidated financial statements, are as follows:

18) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

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

The primary risks arising from the Group's financial instruments are Capital management, Credit risk, Market risk and Liquidity risk. The principal nature of such risks is summarised below. The Group's main financial instruments comprise two separate loan agreements and interest rate swaps.

Capital Management

The capital managed by the Group comprises the ordinary shares and the subordinated administrative shares. The Company is not subject to externally imposed capital requirements.

Income distributions are made quarterly, subject to compliance with Applicable Law and regulations, in February, May, August and November of each year. The Company aims to make a distribution to investors of US$ 0.0225 per Share per quarter. 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. Any distribution of dividend to Shareholders will be subject always to compliance with the Companies (Guernsey) Law, 2008.

Before recommending any dividend, the Board will consider the financial position of the Company and the impact on such position of paying the proposed dividend. Dividends are declared and paid in US Dollars.

Credit Risk

Credit risk is the risk that a significant counterparty will default on its contractual obligations. The Group's most significant counterparties are Norwegian and Thai Airways as lessees and providers of income and NordLB and DekaBank as provider of the loans and borrowings, cash and restricted cash (all held at NordLB and DekaBank). The lessees do not maintain a credit rating. The credit rating of NordLB is Aa3 (2014: Aa1) and the credit rating of DekaBank is Aa3.

During the term of the leases, the returns on an investment in the Shares will depend in large part on the lease rentals received from Norwegian and Thai Airways under the leases. A failure by Norwegian or Thai Airways to comply with their payment obligations under the leases may lead to a reduction in distributions paid on the shares and/or in the value of the shares and have an adverse effect on the Group.

In advance of the commencement of the lease terms under the leases, both Norwegian and Thai have paid to the Group a security deposit in respect of each Asset. However, the security deposits do not cover the full value of the Group's obligations pursuant to the loan agreements in the event of termination of the leases or default by Norwegian or Thai Airways.

The carrying amount of financial assets recorded in the financial statements represents the Group's maximum exposure to credit risk.

Market risk - interest rate risk

Interest rate risk arises on the Group's various interest bearing assets and liabilities from changes in the general economic conditions of the market from time to time. In respect of the floating rate loans advanced by NordLB for the purchase of the first two Assets, the Directors have sought to mitigate this risk by swapping the interest on each loan from a floating rate of interest to a fixed rate of interest. The floating rate of interest is calculated using LIBOR for the length of the interest period and a margin of 2.6 per cent per annum and has been swapped for a fixed rate of 5.06 per cent and 5.08 per cent for the duration of the loans. The Group has entered into ISDA-standard hedging arrangements with NordLB as hedging provider in order to provide for fixed-rate interest for 12 years to be payable in respect of the loan, funded by the fixed rental payments under the corresponding lease. As at 31 December 2015 the fair value of the interest rate swaps was a loss of US$ 5,422,482 (2014: US$ 5,171,613).

A 1% increase or decrease in interest rates would not have a material impact on the Group.

The following table details the Group's exposure to interest rate risk: