DP Aircraft I : Annual Report and Accounts

DP AIRCRAFT I LIMITED

ANNUAL REPORT AND AUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

DP AIRCRAFT I LIMITED ANNUAL REPORT AND AUDITED CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 December 2023

2023

CONTENTS

1. Fact Sheet
2. Summary

7 Highlights

9 Chairman's Statement

11 Asset Manager's Report

1. Directors
2. Directors' Report

35 Report of the Audit Committee

38 Statement of Principal Risks and Uncertainties

41 Statement of Directors' Responsibilities

43 Independent Auditor's Report to the Members of DP Aircraft I Limited

1. Consolidated Statement of Comprehensive Income
2. Consolidated Statement of Financial Position
3. Consolidated Statement of Cash Flows
4. Consolidated Statement of Changes in Equity
5. Notes to the Consolidated Financial Statements

79 Company Information

81 Appendix 1 - Alternative Investment Fund Managers Directive

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DP AIRCRAFT I LIMITED ANNUAL REPORT AND AUDITED CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 December 2023

2023

FACT SHEET

Ticker	DPA
Company Number	56941
ISIN Number	GG00BBP6HP33
SEDOL Number	BBP6HP3
Traded	Specialist Fund Segment ('SFS') of the London Stock Exchange
SFS Admission Date	4-Oct-13
Share Price	US$ 0.0625 as at 31 December 2023
Loss per Share	US$ 0.01047 for the year ended 31 December 2023
Country of Incorporation	Guernsey
Current Ordinary Shares in Issue	239,333,333
Administrator and Company Secretary	Aztec Financial Services (Guernsey) Limited
Asset Manager	DS Aviation GmbH & Co. KG
Independent Auditor	KPMG Channel Islands Limited
Corporate Broker	Investec Bank Plc
Aircraft Registration	HS-TQD
	HS-TQC
Aircraft Serial Number	35320
	36110
Aircraft Type and Model	B787-8
Lessees	Thai Airways International Public Company Limited
	('Thai Airways')
Website	www.dpaircraft.com

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DP AIRCRAFT I LIMITED ANNUAL REPORT AND AUDITED CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 December 2023

2023

SUMMARY

COMPANY OVERVIEW

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

The Company was established to invest in aircraft. The Company is a holding company, and made its investment in aircraft held through two wholly owned subsidiary entities, DP Aircraft Guernsey III Limited and DP Aircraft Guernsey IV Limited (collectively and hereinafter, the 'Borrowers'), each being a Guernsey incorporated company limited by shares and one intermediate lessor company, DP Aircraft UK Limited (the 'Lessor'), a UK incorporated private limited company. The Company and its consolidated subsidiaries, DP Aircraft Guernsey III Limited, DP Aircraft Guernsey IV Limited and DP Aircraft UK Limited comprise the consolidated Group (the 'Group').

Pursuant to the Company's Prospectus dated 27 September 2013, the Company offered 113,000,000 ordinary shares of no par value in the capital of the Company at an issue price of US$ 1.00 per share by means of a Placing. The Company's shares were admitted to trading on the Specialist Fund Segment (previously the Specialist Fund Market) of the London Stock Exchange on 4 October 2013 and the Company was listed on the Channel Islands Securities Exchange until 27 May 2015.

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

On 13 July 2022 the Company raised gross proceeds of $750,000 through the issue of 30,000,000 new ordinary shares in the capital of the Company at a price of US$0.025 per new ordinary share. The new ordinary shares were admitted to trading on the Specialist Fund Segment of the London Stock Exchange on 15 July 2022.

In total there are 239,333,333 Ordinary Shares in issue with voting rights.

In addition to the equity raised above in 2013, 2015 and 2022, the Group also utilised external debt to fund the initial acquisition of the aircraft. Further details are given within this summary section.

INVESTMENT OBJECTIVE & POLICY

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

THE BOARD

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

THE ASSET MANAGER

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

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DP AIRCRAFT I LIMITED ANNUAL REPORT AND AUDITED CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 December 2023

2023

SUMMARY (CONTINUED)

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)

The Group recognises the Paris Agreement on climate change. The Group operates NTA ('New Technology Aircraft'); specifically Boeing 787-8's equipped with Rolls Royce Trent-1000 engines which are 20% more fuel efficient on a revenue-per-kilometre basis than similar comparable legacy aircraft. The Board has taken steps to reduce its own travelling and maximises the use of virtual meetings within the Board and with all its key service providers.

CORONAVIRUS ('COVID-19')

COVID-19 had a significant impact on the airline sector, and by extension the aircraft leasing sector. More information is provided below and in the Asset Manager's Report.

THAI AIRWAYS INTERNATIONAL PCL ('THAI AIRWAYS' / 'THAI')

The suspension of travel due to COVID-19 in 2020 resulted in Thai Airways entering into business rehabilitation. The Central Bankruptcy Court approved Thai's Business Rehabilitation plan on 15 June 2021. The rehabilitation process is currently ongoing, please refer to the Asset Manager Report on pages 11 to 23 for more details regarding the rehabilitation process.

The Group signed a Letter of Intent ('LOI') dated 1 March 2021 with Thai Airways under which the parties agreed to amend the lease terms that existed then. The actual lease agreement reflecting the terms set out in the LOI was signed on 1 April 2022. The effective date for the lease modification was 15 June 2021.

The new lease terms provided for a power by the hour ('PBH') arrangement until 31 December 2022 (with rent payable by reference to actual monthly utilisation of the Thai aircraft and engines), with scaled back monthly fixed lease payments thereafter until October 2026 for aircraft MSN 36110 and December 2026 for aircraft MSN 35320 reflecting reduced market rates in the long-haul market. The lease term can be extended for a further 3 years to October and December 2029 respectively, with further scaled back monthly lease payments starting from November 2026 and January 2027. The Extension Period is however subject to agreement with the Group after consulting the Lenders. Given the uncertainty around the lease extension, the lease terms are considered to be the period up to October and December 2026.

A corresponding agreement was reached with the lenders as detailed below.

DEKABANK DEUTSCHE GIROZENTRALE AND TWO OTHER CONSORTIUM MEMBERS ('DekaBank')

On 6 May 2021, subsequent to the LOI being entered into by the Group and Thai as described above, the Group and DekaBank amended and restated the existing loan facility agreements in respect of the Thai aircraft to accommodate the new lease terms, First Amendment and Restatement to the Loan Agreements. Repayments of principal were deferred until after the end of the PBH arrangement (31 December 2022), and a new repayment schedule was to be renegotiated close to the end of the PBH arrangement.

On 7 February 2023, the Group and DekaBank entered into a Second Amendment and Restatement to the Loan Agreement in which the parties agreed on the following main terms:

• the total loan amount outstanding was split into two tranches:

1. Facility A loan of US$ 61,144,842 made up of MSN 35320 loan of US$ 31,099,453 and MSN 36110 loan of US$ 30,045,389. The Facility A loan amortizes to a combined balloon of US$ 33,947,878 and represents the scheduled debt.

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DP AIRCRAFT I LIMITED ANNUAL REPORT AND AUDITED CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 December 2023

2023

SUMMARY (CONTINUED)

DEKABANK DEUTSCHE GIROZENTRALE AND THREE OTHER CONSORTIUM MEMBERS ('DekaBank')

(CONTINUED)

• 1. Facility B loan of US$ 35,504,024 (non-amortizing), made up of MSN 35320 loan of US$ 17,366,650 and MSN 36110 loan of US$ 18,137,374. The Facility B loan will be settled as a balloon payment at the end of the loan term in 2026.
• USD 2.36m of surplus cash generated under the PBH period was used to immediately repay debt on the amortizing Facility A loan in February 2023, while an agreed cash reserve of US$ 500,000 per aircraft will be retained to cover unforeseen costs going forward.
• the interest rate swap in place for the scheduled debt was dissolved at no net gain or loss.
• the MSN 35320 and MSN 36110 Facility A loans bear fixed interest rates of 6.61% and 6.89% respectively.
• the MSN 35320 and MSN 36110 Facility B loans bear fixed interest rates of 5.26% and 5.42% respectively.
• from the monthly fixed lease rental of US$ 510,000 per aircraft (which denotes the maximum amount the Company can earn in operations per month), US$ 475,000 is legally restricted so that those funds are only payable to the lenders, and US$ 35,000 per aircraft can be retained by the company to contribute towards ongoing fixed costs of the Company.

Due to the limited liquidity position of the Group, restructuring fees associated with the second amendment and restatement will be paid after the eventual remarketing of the aircraft, subject to surplus sales proceeds being realised.

IMPAIRMENT

In line with each reporting date and market capitalisation of US$ 15 million at 31 December 2023, a detailed impairment assessment of the aircraft was undertaken. Following this review an impairment of US$ nil (2022: US$ nil) was booked against the aircraft. See note 3 for further details regarding the impairment and comments under Highlights on page 7 regarding the difference between net asset value and market capitalisation.

DISTRIBUTION POLICY

Under normal circumstances, the Group aimed to provide shareholders with an attractive total return comprising income, from distributions through the period of the Company's ownership of the Assets, and capital, upon any sale of the Assets. The Company originally targeted a quarterly distribution in February, May, August, and November of each year. The target distribution was US$ 0.0225 per share per quarter. The dividends were targets only with no assurance or guarantee of performance or profit forecast.

Due to the impact of COVID-19 on the aviation industry and therefore our lessor, the Board suspended the payment of dividends from 3 April 2020 until further notice. This suspension remains in place to date. Any lease rental payments received by the Company in respect of the Thai aircraft are expected to be applied exclusively towards the running costs of the Company and its subsidiaries, and as a priority towards interest and principal repayments to the DekaBank. Given this backdrop the Company feels that there is no realistic prospect of the Company's shareholders receiving a dividend or other distribution during the remaining lease period. The Board and its advisers will continue to consult with shareholders and its advisors in the future with a view to determining the best course of action to take for the future of the Company.

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DP AIRCRAFT I LIMITED ANNUAL REPORT AND AUDITED CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 December 2023

2023

HIGHLIGHTS

RESULTS FOR THE YEAR

Results for the year ended 31 December 2023 is a loss after tax of US$ 2,505,687 (loss per share US$ 0.01). For the year ended 31 December 2022 there was a profit after tax of US$ 7,660,823 (profit per share US$ 0.03).

The results for the year ended 31 December 2023 are mainly driven by rental income earned of US$ 8,714,249 (2022: US$ 16,462,372) and finance costs incurred of US$ 9,551,675 (2022: US$ 4,860,305). The increase of finance costs is a result of an adjustment required by IFRS to reflect the modification to the loan terms in February 2023. The adjustment for the modification to the loans in February 2023 totalled US$ 5,042,029 and increased both finance costs and the loans payable at the point of modification and resulted in an overall loss for the period. This adjustment essentially recognises a loss now due to the less favourable terms (primarily interest rate increases) under the modified terms compared to the original terms. As a result of this adjustment, interest will be recognised at the lower original effective interest rate as opposed to the higher modified interest rate going forward. The decrease in rent was due to the variable rent earned for the period ended 31 December 2022. For the period to 31 December 2023, the entity only earned fixed rental income.

Refer to page 48 for full details of results for the period.

NET ASSET VALUE ('NAV')

The NAV for the reporting period was US$ 0.17645 per share at 31 December 2023 (2022: US$ 0.18692). NAV per share has decreased due to the loss made during the year (see above). The NAV excluding the financial effects of the straight-lining lease asset and the loan modification adjustment was US$ 0.16018 per share at 31 December 2023 ( 2022: US$ 0.13662).

The straight-lining lease asset and the loan modification adjustment will reduce to nil over time. The adjusted NAV and loan modification adjustment is therefore presented to provide what the Directors consider to be a more relevant assessment of the Group's net asset position.

		As at 31 December 2023,	As at 31 December 2022
	Note	US$	US$ per	US$	US$ per
			share		share
NAV per the financial statements		42,230,434	0.17645	44,736,121	0.18692
Less: Straight-lining lease asset	11	(10,038,709)	(0.04194)	(13,525,502)	(0.05651)
Add: Provision for straight lining lease asset 11	1,103,254	0.00461	1,486,453	0.00621
Add: Loan modification adjustment	6	5,042,029	0.02107	-	-
		(3,893,426)	(0.01627)	(12,039,049)	(0.05030)
Adjusted NAV
	38,337,008	0.16018	32,697,072	0.13662

As at 31 December 2023 the price per share was US$ 0.0625 which is significantly lower than the NAV per share above, excluding the straight-lining lease asset and the loan modification adjustment. The reason for the difference is due to the market price per share reflecting other factors such as market sentiment that cannot be accounted for in a set of annual financial statements. The main asset in the Group, the aircraft, has been assessed for impairment (see note 9) - with no resulting impairment for the period. Other significant assets comprise cash and receivables whose values are considered to be reflective of fair value due to their short-term nature. Therefore, the low share price is not indicative of a need for further impairment to the assets of the Group.

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DP AIRCRAFT I LIMITED ANNUAL REPORT AND AUDITED CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 December 2023

2023

HIGHLIGHTS (CONTINUED)

DIVIDENDS

As previously outlined, as a result of the Coronavirus pandemic on global aviation and particularly on its lessees; the Group suspended dividends on 3 April 2020 until further notice to help preserve liquidity. Further details on the impact of the COVID-19 pandemic can be found within the Summary, the Asset Manager's Report, and the Directors' Report. Furthermore, in accordance with the second amended loan agreement with DekaBank, the Group will make no dividend payments while loan deferrals remained outstanding under the amended loan agreement.

OFFICIAL LISTING

The Company's shares were first admitted to trading on the Specialist Fund Segment of the London Stock Exchange on 4 October 2013.

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DP AIRCRAFT I LIMITED ANNUAL REPORT AND AUDITED CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 December 2023

2023

CHAIRMAN'S STATEMENT

I am pleased to present Shareholders with the Annual Report of the Group for the year ended 31 December 2023.

The loss per share for the period was US$ 0.01047 compared to a profit per share of US$ 0.03429 for the same period last year. The net asset value per share at the period end was US$ 0.17645 compared to US$ 0.18692 at 31 December 2022. For the last six months of the year the Group made a profit of US$ 1.567m.

IFRS requires rental income to be recognised on a straight-line basis over the remaining lease period and consequently the accounfing treatment has resulted in some income being recognised earlier than would normally be the case. In addifion, IFRS requires a provision to be made against that lease income which has been esfimated based on recent credit reports on Thai. Please refer to page 7 which explains the net impact of this on the profit for the period and the NAV of US$ 0.17645 per share.

There has been a confinued improvement in the global aviafion market following the challenges resulfing from the effects of the Covid-19 (Covid) pandemic. Recent senfiment on airline and related stocks has been more opfimisfic. The Ukraine war has not had as a significant impact on the industry as was expected. With Covid restricfions in China being lifted there is cause for some opfimism in tourism numbers from that market going forward.

It has been encouraging to see how the airline and the Thai tourist economy has responded and rebounded from the crippling effect of the Covid years. Thai has regained profitability and anticipates exiting administration - currently anticipated in Q4 2024. They have also projected a potential listing return during 2025.

Both our aircraft, HS-TQC and HS-TQD have mainly flown in the Asian region during the year. This has also been true of the other four, Rolls Royce Trent 1000 powered 787-8 aircraft in the Thai fleet. Sector lengths flown through the year have varied from just under two hours (Singapore and KL) to approximately six hours (Japanese routes). Other larger aircraft in the Thai fleet have also been serving Asian routes which at present represent the largest passenger segment. Under the terms of industry lease arrangements lessee's have the right to fly the routes which serve their needs. Shorter sector lengths do not reduce the airlines responsibility to maintain the aircraft nor in our case to return the aircraft at the lease term end in full life condition. Our asset manager is responsible for liaison with Thai on all operational matters and to regularly inspect our assets.

The vibrant uptick of the tourist economy has led to the airline placing both near term orders for seven larger wide bodied aircraft (both Boeing and Airbus) but also for bigger order sizes in the medium term. This larger reported order of 45 Boeing 787-9's is good news as a reinforcement of Boeing as a core fleet constituent but it has opted for GE engines rather than Rolls Royce which power the current six 787-8's in their fleet (including both our aircraft). The positioning of the smaller 787-8 within Thai's forward fleet plans is not conclusively known and we, through our asset manager, will be seeking to clarify greater detail in that regard.

Our aircraft are now operafing on fixed monthly lease payments with Thai unfil October/December 2026 respecfively, reflecfing the reduced lease rates negofiated earlier. As previously noted, the lease term was extended by a further 3 years to October/December 2029, with further scaled back monthly lease payments starfing from November 2026/January 2027, and the Group retaining a right of early terminafion in October/December 2026 after consultafion with the Lenders.

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DP AIRCRAFT I LIMITED ANNUAL REPORT AND AUDITED CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 December 2023

2023

CHAIRMAN'S STATEMENT (CONTINUED)

The current finance arrangements with our Lenders expire at the end of 2026. In this respect the Group can therefore (i) negofiate to extend the loans with the exisfing Lenders, (ii) refinance the loans with new lenders or

1. sell the aircraft to an investor within a fime frame unfil the end of 2026. Any opfion has to be agreed with the current Lending group and corresponding discussions will start in October 2024. By April 2025, the Group and Lenders have to inform Thai whether or not they will execute the early terminafion opfion under the lease. By October 2025 the Group has to provide the Lenders with informafion on the steps it is taking to refinance or to remarket the aircraft followed by a Term sheet no later than August 2026. As an ongoing obligafion, the Group has to inform the Lenders in relafion to any negofiafions and or consultafion with Thai regarding any restructuring of the Operafing Lease Agreement.

Whilst there can be no absolute certainty the preferred opfion for the Group is the sale of the aircraft with a lease aftached which reflects improved market terms and condifions. The current leases require the aircraft to be returned in full life condifion.

The Board and the Asset Manager remain fully commifted to extract the best value for shareholders in this process and are focussed on acfions to improve and preserve the value of the assets. The forthcoming months will allow us to consider and review the various options and to recommend a preferred path. Necessarily this will need to involve the proactive involvement of our lenders, advisors and our valued lessee.

The Company believes the Boeing 787 remains an aftracfive asset and notes recent transacfions in the market though transparency around transacfion values is not currently available. Boeing 787 wide body producfion is sfill behind historic levels and delayed deliveries for new aircraft are further strengthening this demand.

The Board notes that whilst the 787 aircraft is now key to Thai, the Group's aircraft type are the smaller 8 series and we note that all new wide bodied aircraft Thai propose to add to their fleet are the larger 787-9 variant. The priority of the Group will therefore be commencing discussions with Thai on how our aircraft fit into the overall Thai fleet strategy and to what extent exisfing arrangements can be enhanced for the mutual benefit of both parfies.

As previously noted, there is no realisfic prospect of the Company's shareholders receiving a dividend or other distribufion prior to the end of the lease term. The key uncertainty remains the outlook for Thai, though the posifion of Thai has improved considerably, the impact of inflafion on the travel industry and the knock on effect these factors may have on aircraft values and lease rentals.

Notwithstanding there has been some unavoidable cost increases and inflafionary pressures, with respect to ongoing working capital requirements, the Group has been able to reduce the net cash burn because some service providers and the directors have deferred some amounts due.

In order to ensure the Group has sufficient funds to adequately finance the period over which the Board would like to realise value for shareholders, should an appropriate opportunity arise, a further fund raise up to $1 million will be required in Q3 2024.

The Board and its advisers will confinue consulfing with investors on an ongoing basis. I am especially grateful to the Board and our key service providers for their confinued significant support over the period and going forward. Finally I would like to thank our Investors for their confinued support.

Jonathan Bridel

Chairman

25 April 2024

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