FORM 20-F

[X]                             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

[ ]                       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 0-21756

CHC HELICOPTER CORPORATION
(Exact name of Registrant as specified in its charter)

Canada
(Jurisdiction of incorporation or organization)

Hangar #1, St. John's Airport
P. O. Box 5188
St. John's, Newfoundland
Canada AlC 5V5
 (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act.

Class A Subordinate Voting Shares
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Class A Subordinate Voting Shares
(Title of Class)

The number of Class A Subordinate Voting Shares outstanding on July 31, 2003, was 17,921,290.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X      No

Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17         Item 18 X

This Annual Report may contain projections and other forward looking statements within the meaning of the "safe harbour" provision of the United States Private Securities Litigation Reform Act of 1995. While these projections and other statements represent our best current judgement, they are subject to risks and uncertainties that could cause actual results to vary. These statements may involve risks and uncertainties including but not limited to, factors detailed in this Annual Report and in other filings with the SEC and Canadian securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.

Not Required.

Not Required.

The following consolidated historical financial data as at and for the fiscal years ended April 30, 2003, 2002, 2001, 2000, and 1999 for CHC Helicopter Corporation ("CHC", "the Company", "the Corporation", "we", "our", or "us") are derived from the audited consolidated financial statements of CHC. The CHC consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP"), which differ in certain respects from U.S. GAAP. For the reconciliation to U.S. GAAP for the three most recently completed fiscal years, see Note 29 to the CHC consolidated financial statements included elsewhere in this Annual Report.

The following table sets forth, for the periods indicated, the monthly high and low U.S. dollar exchange rates based on the high and low noon buying rates in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. The rates quoted are the number of United States dollars per one Canadian dollar.

This section is intended to be a summary of more detailed discussions elsewhere in this Annual Report. The risks described below are not the only ones we face. Additional risks may impair our business operations. Our business, results of operations, or financial condition could be materially adversely affected if any of these risks materialize.

Approximately 72.4% of revenue for our fiscal year ended April 30, 2003 is attributable to helicopter support services for oil and gas production and exploration companies. As such, our operations are largely dependent upon the levels of activity in oil and natural gas exploration and production. To varying degrees these activity levels are affected by trends in oil and natural gas prices. Historically, the prices for oil and natural gas have been volatile and are subject to wide fluctuations in response to changes in the supply of and demand for oil and natural gas, market uncertainty and a variety of additional factors beyond our control. We cannot predict future oil and natural gas price movements. Any prolonged reduction in oil and natural gas prices, however, could depress the level of helicopter activity in support of exploration and production activity and, therefore, have a material adverse effect on our business, financial condition and results of operations.

Companies in the oil and natural gas exploration and production sector continually seek to implement measures aimed at greater cost savings, including helicopter support operations. For example, companies are beginning to reduce manning levels on both old and new installations by using new technology to permit unmanned installations and reducing the frequency of transportation of employees between offshore and onshore by increasing the lengths of shifts onshore and offshore. The implementation of such measures could reduce the demand for helicopter transportation services and have a material adverse effect on our business, financial condition and results of operations.

Approximately 70% of our oil and gas based revenues for the fiscal year ended April 30, 2003 were derived from our helicopter support services to customers operating in the North Sea. If activity in oil and natural gas exploration and production in the North Sea declines, our business, financial condition and results of operations would be materially and adversely affected. It is difficult to predict the level of activity in future periods given the uncertain economic climate. During fiscal 2003, activity levels in the North Sea decreased, due in part to the decision by a number of large oil and gas producers to sell older assets in the North Sea to allow them to focus on non-North Sea properties.

The markets in which we operate are highly competitive. Contracting for helicopter services is usually done on the basis of competitive bidding among those having the necessary equipment and resources. In our medium and heavy helicopter operations, which comprise over 90% of our fleet, we compete against a number of global helicopter operators including Offshore Logistics Inc. ("OLOG"), which is the other major global commercial helicopter operator, and numerous local and regional operators. In addition, many of our customers in the oil and gas industry have the capability to perform their own helicopter operations should they elect to do so.

Our main competitors within the repair and overhaul business are the original equipment manufacturers of helicopters and their components. As such, our main competitors are also our main parts suppliers, which could result in our inability to obtain parts in a timely manner in required quantities at competitive prices.

We derive a significant amount of our revenue from long-term offshore helicopter support contracts with oil and gas companies. A substantial number of our long-term contracts contain provisions permitting early termination by the customer. In addition, upon expiration of their term, these contracts are subject to a bidding process that could result in the loss of these contracts to competitors. The loss of one or more of these large contracts could have a material adverse effect on our business, financial condition and results of operations. During fiscal 2003, we were unsuccessful in renewing a contract with bp to supply helicopter services in the northern North Sea.

To acquire new long-term contracts, we will require aircraft configured for offshore flying. At April 30, 2003, we had commitments to take delivery of five new Super Puma MkII aircraft and options to acquire two EC225 helicopters for use primarily in our European operations. We have some flexibility built into the delivery schedule for these aircraft in order to match acquisitions with new demand. During fiscal 2004, we expect to take delivery of three Super Puma MkII aircraft.

We have also ordered four new S76C+ helicopters for our international operations for delivery in December 2003. These aircraft will be used in southeast Asia and in Africa to meet increased demand by customers for newer medium aircraft. Existing aircraft will be re-deployed to other projects in these markets. While up to now we have been able to acquire sufficient aircraft, a lack of available aircraft or the failure of our suppliers to deliver the aircraft we have ordered on a timely basis, could limit our ability to take advantage of growth opportunities.

Operation of helicopters involves some degree of risk. Hazards, such as aircraft accidents, adverse weather and marine conditions, collisions and fire, are inherent in furnishing helicopter services and can cause personal injury and loss of life, severe damage to and destruction of property and equipment, and suspension of operations. The loss of our liability insurance coverage or the loss, expropriation or confiscation of, or severe damage to, a large number of our helicopters could adversely affect our operations and financial condition. As a result of these and other factors, we may not be able to maintain adequate insurance in the future at rates we consider reasonable. Furthermore, we are not insured for loss of profit or use of our helicopters.

Approximately 61% of our revenue for our fiscal year ended April 30, 2003 originated from helicopter services from U.K. and Norway based operations. To operate helicopters in the U.K. and in the U.K. sector of the North Sea, an operator must be licensed by the U.K. Civil Aviation Authority. Under applicable European law, an operator must be "effectively controlled" and "majority owned" by nationals of member states of the European Union (or the European Economic Area) to maintain its license. Our U.K. operating subsidiary, CHC Scotia Limited ("Scotia") has been licensed to operate helicopters by the U.K. Civil Aviation Authority, on the basis that we are (and therefore Scotia is) majority owned and controlled by European Nationals because Mr. Craig L. Dobbin (Chairman and Chief Executive Officer of the Corporation), a citizen of both Canada and the Republic of Ireland (a member state of the European Union) holds a sufficient number of securities of CHC. However, the U.K. Secretary of State (generally acting upon the advice of the U.K. Civil Aviation Authority) may revoke the license held by Scotia or effectively require us to dispose of our interests in Scotia if at any time we do not satisfy applicable nationality requirements. In 1994, two U.K. competitors of CHC alleged that we did not satisfy these requirements and that, as a result, Brintel Helicopters Limited ("Brintel"), our only U.K. helicopter operation at the time, was not entitled to maintain its operating license. Although discussions and correspondence with the European Commission, the United Kingdom Department of Environment, Transport and the Regions and the U.K. Civil Aviation Authority confirmed that the issuance of ordinary shares to Mr. Dobbin in December 1997 allowed us to satisfy the nationality requirements, this will not necessarily preclude further challenges of Scotia's right to maintain its operating license on this or any other basis. Further, Scotia's eligibility to maintain its license could be adversely affected if Mr. Dobbin were to dispose of the shares he holds in CHC or if he were to die and no alternative arrangement acceptable to the U.K. Civil Aviation Authority were implemented. Our Danish and Irish subsidiaries are subject to substantially the same European Union and European Economic Area nationality requirements. The revocation of these licenses would have a material adverse effect on our business, financial condition and results of operations.

Our Norwegian subsidiaries are subject to substantially the same European Union and European Economic Area nationality requirements with regard to ownership and control as are our U.K. subsidiaries. On May 9, 1999, in response to objections initiated by the previous management of HSG, the Norwegian Ministry of Transport confirmed in writing that it had adopted the same position as the U.K. Civil Aviation Authority with regard to CHC's satisfaction of the European Union (and European Economic Area) nationality requirements and therefore would not challenge HSG's eligibility to hold helicopter operating licenses in Norway after our acquisition of HSG. The revocation of these licenses would have a material adverse effect on our business, financial condition and results of operations.

We believe that we are currently "majority owned" and "effectively controlled" within the meaning of European licensing requirements notwithstanding the completion of our April, 2002 offering of 4.2 million Class A subordinate voting shares (the "subordinate voting shares"). However, it may be difficult to establish with certainty that we are majority owned by European nationals, given the difficulty of establishing the beneficial ownership of shares held through depositories and nominees.

The helicopter industry in Canada is regulated by the Canada Transportation Agency and Transport Canada. Canadian charter helicopter operations are conducted pursuant to the licenses issued by the Canada Transportation Agency under the provisions of the Canada Transportation Act and the air operator certificates issued by Transport Canada under the provisions of the Aeronautics Act. One of our subsidiaries operates heavy helicopters off Canada's east coast in support of the oil and gas industry. Our ability to conduct our helicopter operating business in Canada is dependent on our ability to maintain these licenses and certificates.

The Canada Transportation Act provides that a corporation must be controlled in fact by, and at least 75% of the voting interests of a corporation must be held by, Canadian citizens for the corporation to be eligible to continue to hold a license to carry on certain types of transportation activities within Canada (including providing commercial air services), unless an order from the Minister of Transport (Canada) is obtained. Our ability to maintain our license would be adversely affected if we were unable to satisfy this nationality requirement. In this regard our Board of Directors may refuse to register a transfer of any share in our capital to maintain compliance with Canadian ownership requirements.

South African law requires that at least 75% of the voting rights of a holder of a domestic air services license must be held by residents of the Republic of South Africa. Upon acquiring its interest in Court Air (Pty) Ltd. ("Court Air"), HSG obtained a letter from the Ministry of Transport in South Africa, confirming its approval of HSG's indirect acquisition of Court Air on the basis that Court Air's immediate parent, Court Air Holdings (Pty) Ltd., was a South African registered company. Legal advice from our South African counsel has confirmed that Court Air's licenses for helicopter operations in South Africa should not be adversely affected by our acquisition of HSG, but cautioned that there is some continuing risk that the South African Ministry of Transport could reverse its prior decision. While no action with respect to these licenses has been taken since our acquisition of HSG, any such reversal of decision could materially and adversely affect our business, financial condition and results of operations.

Civil aviation in Australia is governed by the Civil Aviation Act, 1988, and regulations made thereunder. To operate an aircraft in Australia, it must be registered with the Australian Civil Aviation Safety Administration and a valid Certificate of Airworthiness must be obtained, be valid and in effect. The operation of an aircraft for a commercial purpose into, out of or within Australian territory can only be undertaken as authorized by an Air Operators' Certificate. Our ability to offer our helicopter transportation services in Australia is dependent on maintaining these certificates.

Our operations in other foreign countries are regulated to various degrees by their governments and must be operated in compliance with those regulations and, where applicable, in accordance with our international air service license and air operator certificates. These regulations may require us to obtain a license to operate in that country, may favor local companies or require operating permits that can only be obtained by locally registered companies and may impose other nationality requirements. Although we have operated in most of these countries for several years, we cannot assure you as to what foreign governmental regulations may be applicable in the future to our helicopter operations.

A substantial portion of our revenue in recent years has been attributable to operations outside North America and Europe. Approximately 25% of revenue for our fiscal year ended April 30, 2003 was generated from these operations. Risks associated with some of our international operations include war and civil disturbances or other events that may limit or disrupt markets, expropriation, international exchange restrictions and currency fluctuations, changing political conditions and monetary policies of foreign governments. Any of the events could materially adversely affect our ability to provide services to our international customers. Certain of our helicopter leases and certain of our loan agreements impose limitations on our ability, including requiring the prior approval of the lessor or the lender, to locate particular helicopters in certain countries. We cannot assure you that these limitations will not affect our ability to allocate resources in the future.

We prepare our financial statements in Canadian dollars. Because many of our revenues and expenses are incurred in currencies other than Canadian dollars, including the U.S. dollar, the pound sterling, the Norwegian kroner and the euro, we are exposed to exchange rate and currency risks. In preparing our financial statements, we must convert all non-Canadian dollar profits to Canadian dollars at varying rates of exchange. This may ultimately result in a currency gain or loss at the end of each fiscal year, the outcome of which we cannot predict. Furthermore, we may sometimes be required to make capital expenditures, or payments on debt, from revenues earned in other currencies. The same is true of expenses in pounds sterling, Norwegian kroner and euros. To the extent that the currency of our revenues weakens relative to the currency of our expenses, we are exposed to exchange rate losses.

In general, our expenses exceed our revenues to a significant extent in only two currencies, the Canadian dollar and the euro. We hedge our exposure to losses from fluctuations in exchange rates where appropriate. Losses from changes in the value of foreign currencies relative to the Canadian dollar could materially affect our business, financial condition and results of operations.

Our success has been dependent on the quality of our key management personnel, including Craig L. Dobbin, our Chairman and Chief Executive Officer, and Sylvain A. Allard, our President. The loss of Mr. Dobbin or Mr. Allard, due to time constraints, illness or death, could have a material adverse effect on our business. In addition, since we focus on independent management teams at our divisions, loss of the services of other key management personnel at our corporate and divisional headquarters without being able to attract personnel of equal ability could have a material adverse effect upon us.

At April 30, 2003, we employed 2,473 persons, consisting of 641 licensed pilots, 822 licensed aircraft maintenance engineers and 1,010 administrative and support personnel. Certain of our employees in the U.K., Australia and Norway are represented under collective bargaining agreements, some of which will require renewal within the next 12 months. We cannot assure you that we will not experience strikes, lockouts or other significant work stoppages in the future or that our relationship with our employees will continue to be good, either of which may adversely affect our business, financial condition and results of operations.

As of July 31, 2003, Mr. Dobbin, directly and indirectly through Discovery Helicopters Inc. and O.S. Holdings Inc., beneficially owned 7% of our subordinate voting shares (which are entitled to one vote per share), 94% of our Class B multiple voting shares ("multiple voting shares") (which are entitled to 10 votes per share) and all of our ordinary shares (which are entitled to one vote per 10 shares), representing in the aggregate 62% of the voting power on matters put before our shareholders. Mr. Dobbin has advised us that if we issue additional shares of voting securities, he intends to purchase, through Discovery, sufficient voting shares to enable him to maintain control of more than 50% of the voting power attached to all outstanding voting shares. As a result, Mr. Dobbin would, subject to certain exceptions, continue to (1) control the outcome of all matters requiring a majority vote of shareholders, including the power to elect all of the directors but excluding those matters that require an affirmative vote of the majority of disinterested minority shareholders, (2) be able to prevent the approval of any matter requiring shareholder approval and (3) be likely to determine the outcome of any matter that under applicable corporate law would require a shareholders' resolution passed by not less than two-thirds of the votes cast, such as the sale by us of all or substantially all of our assets or an amalgamation with an unrelated corporation.

The corporate law under which our Norwegian subsidiaries operate differs from Canadian and U.S. law in a number of areas, including with respect to corporate liquidation. Under Norwegian law, if the losses of any of our Norwegian subsidiaries reduce that subsidiary's equity to an amount less than 50% of its share capital or the equity of the subsidiary becomes inadequate compared to the risks and the size of the subsidiary's business, the directors of the subsidiary would be obligated by law to convene a general shareholders' meeting to resolve to balance the amount of such equity and share capital by either:

To the extent reductions in the share capital of our Norwegian subsidiaries as a result of operating losses are substantial, they could ultimately result in liquidation, which would have a material adverse effect on our business, financial condition and results of operations.

The Company was organized as a corporation under the laws of Canada pursuant to Articles of Incorporation dated February 18, 1987. The Company's registered office is Hangar No. 1, St. John's Airport, P.O. Box 5188, St. John's, Newfoundland, Canada, A1C 5V5 (telephone number 709 570 0700).

The Company was created in 1987 as a holding company to combine the operations of Sealand Helicopters Limited and Toronto Helicopters Limited (both of which were Canadian companies controlled by Mr. Craig L. Dobbin, Chairman of the Board and Chief Executive Officer of the Company and a principal shareholder) and to acquire Okanagan Helicopters Ltd., a Canadian company that operated 125 helicopters at the time of its acquisition. Since its formation, the Company has grown internally as well as through acquisitions, the most significant of which were the acquisition in 1988 of the majority of the assets of Ranger Helicopters Limited, which was then operating 37 helicopters; the acquisition in 1989 of all the outstanding shares of Viking Helicopters Limited, which was then operating 60 helicopters; the acquisition in 1993 and 1994 of all the outstanding shares of Brintel, which was then operating approximately 25 heavy helicopters; and the acquisition in August 1999 of all the outstanding shares of HSG, which was then operating 115 helicopters.

The Company has undergone significant restructuring in recent years.

On June 25, 1998, we sold the repair and overhaul segment of our business (as then constituted) to Vector, a newly-created, then wholly-owned subsidiary, in exchange for shares of Vector and a note payable by Vector. We then sold 80% of the shares of Vector to the public through an initial public offering for net proceeds of approximately $187 million. The note was paid in fiscal 1999. We sold the remaining 20% of the shares of Vector to the public in September 1999 through another public offering for net proceeds of approximately $28.9 million.

On August 11, 1999, through a public tender offer in Norway by our Norwegian subsidiary, Vinland Helicopters AS, we acquired shares of HSG for a total purchase price of NOK 696.9 million (approximately $135.0 million). These shares, when combined with the shares of HSG we already owned, gave us ownership of approximately 91.3% of the outstanding shares of HSG. On September 30, 1999, we completed the purchase of the remaining shares of HSG through a mandatory offer and compulsory acquisition for a purchase price of NOK 108.1 million (approximately $20.9 million). The aggregate purchase price of all the shares of HSG acquired in earlier transactions, the tender offer and the mandatory offer and compulsory acquisition was NOK 1,185.0 million ($229.5 million) including acquisition costs.

In August and September 1999, subsequent to the acquisition of HSG, we sold seven heavy and two medium helicopters owned by HSG to OLOG for gross proceeds of $51.7 million. We subsequently leased back three of the heavy helicopters to continue performing a search and rescue contract in Ireland. On September 30, 1999, we finalized the sale of two heavy helicopters owned by HSG to General Electric Capital Services EEF Limited for proceeds of $27.2 million in a sale-leaseback transaction.

On January 28, 2000, we sold our 33.3% interest in Helicopteros SA, a Spanish company providing helicopter transportation services, for net proceeds of approximately $6.8 million, which included the repayment of an inter-company loan. The amount realized from the sale was approximately equal to the book value of our ownership interest.

In April 2000, we sold our 46.7% ownership interest in Airlift AS ("Airlift") to another major shareholder for a nominal amount. Airlift is a Norwegian onshore helicopter service company that does not compete in the Norwegian offshore helicopter market. We had acquired our ownership interest in Airlift prior to our acquisition of HSG with the intention that we would use Airlift to compete for Norwegian offshore oil and gas contracts.

In May 2000, we also sold our Swedish subsidiary, Heliflyg AB ("Heliflyg"), for gross proceeds of $6.0 million, which was approximately equal to the appraised value of its fleet and the fair market value of its other assets. Heliflyg provided onshore helicopter services in Sweden through the operation of two medium and 12 light helicopters, of which four were owned and 10 were leased. Heliflyg had a net asset book value at the time of sale of approximately $5.0 million.

On June 30, 2000, we sold a Norwegian subsidiary, Lufttransport AS ("Lufttransport"), for approximately $14.7 million. Lufttransport provided onshore air ambulance services in Norway through the operation of three medium helicopters, one light helicopter and ten fixed-wing aircraft, of which seven fixed-wing aircraft were leased.

Effective October 31, 2000, we sold our Canadian onshore helicopter operations and assets to a new company presently known as Canadian Helicopters Limited ("CHL"). Under the terms of the sale we received gross proceeds of $128.5 million for the assets and operations. We acquired a 45% common equity interest in CHL for cash consideration of $4.5 million. The remaining shares are owned by management of CHL and an equity investor. In addition, we invested $15 million in CHL through preferred shares. In order to facilitate debt financing for the new company on a timely basis, we advanced $10.0 million to CHL as part of the syndication of its term debt. This loan has been fully repaid.

We recorded an after-tax loss of $12 million on the sale of our Canadian onshore helicopter business in fiscal 2001. In addition, we had a write-off of goodwill of $9.1 million in fiscal 2001 recorded on the initial acquisition of a portion of the operations that were sold.

Capital expenditures of $44.7 million were incurred during the year ended April 30, 2003. Of this amount, $18.4 million related to aircraft additions and modifications and $26.3 million related to other property and equipment. Proceeds on disposal of capital assets were $74.9 million for the year ended April 30, 2003.

Capital expenditures of $37.3 million were incurred during the year ended April 30, 2002. Of this amount, $23.8 million related to aircraft additions and modifications and $13.5 million related to other property and equipment. Proceeds on disposal of capital assets were $49.8 million for the year ended April 30, 2002.

Capital expenditures of $40.1 million were incurred during the year ended April 30, 2001. Of this amount $29.1 million related to aircraft additions and modifications and $11.0 million related to other property and equipment. Proceeds on disposal of capital assets were $2.7 million for the year ended April 30, 2001.

We are a leading provider of helicopter transportation services to the global oil and gas industry. We or our acquired operations have been providing helicopter services for more than 50 years and we currently operate in over 20 countries, with major operating units based in the U.K., Norway, South Africa, Australia and Canada. We principally provide helicopter transportation services to the oil and gas industry for production and exploration activities and to the emergency medical services and search and rescue sectors. In general, we target opportunities where customers require sophisticated helicopters operated by highly trained pilots, typically under long-term contracts.

We are a market leader in most of the regions we serve, with an established reputation for quality and reliable service. We are the largest operator in the North Sea, one of the world's largest oil producing regions, providing medium and heavy helicopter support to many of the world's major oil companies. We also have operations principally servicing the oil and gas industry in the Caspian Sea, South America, Africa, Southeast Asia and eastern Canada.

In August 1999, we acquired HSG, a leading provider of helicopter services in the Norwegian and U.K. sectors of the North Sea, with operating subsidiaries in Australia and South Africa. Our acquisition of HSG expanded our geographic presence and, we believe, enhanced our ability to service our existing customers and potential new customers on a global basis. CHC and HSG both derived a substantial portion of their revenues from the oil and gas industry, but had limited geographic overlap in areas served, except in the U.K. sector of the North Sea, where both CHC and HSG conducted operations. Since the acquisition of HSG, all of our helicopter operations in the U.K. sector of the North Sea have been combined and now operate as CHC Scotia Limited.

We believe that we have the following competitive advantages in our industry:

Our goal is to enhance our leadership position in the global helicopter services industry by continuing to provide value added services to our customers while maximizing cash flows. In pursuit of this goal, we intend to focus on the following key initiatives:

The helicopters in use today may be divided into two general categories. Single engine (light) aircraft, which have a passenger capacity of 3 to 6, operate under visual flight rules ("VFR") (daylight and good weather flying only) and can be operated with one pilot. Given their low passenger capacity and inability to fly in poor weather conditions, these aircraft are generally limited to onshore operations. In recent years, we have sold most of our operations and aircraft in this category and have only 11 light aircraft in the current fleet. However, we retain a 43.5% interest in CHL, which operates in Canada's onshore market primarily with light aircraft.

Twin-engine (heavy and medium size) aircraft have a capacity of 9 to 26 passengers and can operate under instrument flight rules ("IFR") (daytime and nighttime flying under a variety of weather conditions). The greater passenger capacity, longer range, and ability to operate in adverse weather conditions make these aircraft more suitable than single engine aircraft for offshore support. The high cost of these larger aircraft and their limited availability tend to lessen competition from smaller operators. We currently operate 145 aircraft in this category (69 heavy and 76 medium aircraft).

Helicopters first came into widespread commercial use among companies in the oil and gas industry for transporting personnel and supplies to offshore oil rigs and remote onshore areas. Over the years, the use of helicopters has expanded into many other areas where urgency or difficulty of access justifies the cost of helicopter transportation. Although the oil and gas industry still accounts for a substantial portion of the demand for helicopter services worldwide, helicopters have been used for several decades for a variety of purposes such as forestry, mining, emergency medical services, search and rescue, construction, mapping and recreation.

Different helicopters are required to meet the diverse needs of the industries served. Heavy to medium helicopters are generally utilized to support the oil and gas, construction and forestry industries, and for emergency medical services and search and rescue support. Heavy to medium helicopters are also used for transporting larger numbers of passengers and supplies or for lifting heavy weights. Typically equipped with IFR equipment, which allows for operation during nighttime or in more adverse conditions, medium to heavy helicopters are capable of long distance flights to offshore oil platforms. Where appropriate, specialized equipment is installed for providing emergency medical service support or for use in certain environments such as the North Sea. Light to medium helicopters are used to support the utility and mining sectors, as well as some areas of the construction and forestry industry, where transporting a smaller number of passengers or slinging light loads is required. These helicopters are generally operated during daylight hours and in relatively stable weather conditions, and are equipped with only VFR equipment.

The level of worldwide offshore oil and gas exploration and production has traditionally influenced demand for helicopter transportation services. After a period of decline, there was an improvement and stabilization in oil prices in 1999, which continued into 2001 and part of 2002. While oil and gas prices remained stable in 2003, activity levels in the North Sea decreased. This decrease was in part due to the decision by a number of large oil and gas producers to sell older assets in the North Sea to allow them to focus on non-North Sea properties. These asset sales may bring smaller oil and gas companies into the North Sea who may reinvest in these older assets.

The following tables list our revenue for helicopter operations, which does not include revenue from repair and overhaul, Composites and flight training, by industry sector and geographic area and revenue for each such sector or area as a percentage of total revenue from helicopter operations for each of the fiscal years ended April 30, 2003, 2002, and 2001:

• a four-year contract, to 2007, (plus two option years) for the support of TotalFinaElf's ("TFE") production and exploration activities in the North Sea. The contract is an extension of our long standing relationship with TFE.

• a two-year contract extension, to 2005, in support of Talisman's production and drilling operations in the North Sea.

New Business Opportunities in Europe: There is the potential for new oil and gas developments off the west coasts of Scotland and Ireland, around the Shetland and Faroe Islands, and in the North Sea off the northern coast of Norway. All of these opportunities are expected to lead to additional helicopter service requirements. We believe we are well positioned to compete for these new contracts as a result of: (1) our long-standing relationships with many of the major oil and gas companies which are expected to play a significant role in these projects; and (2) the need for our long-range Super Puma MkII and EC225 helicopters to reach more remote regions.

We currently operate the only licensed commercial major component repair and overhaul facility in the world for the Eurocopter Super Puma helicopter, other than the original equipment manufacturer. Our facility, located in Stavanger, Norway, is also an authorized customer service facility for Bell Helicopter Textron and has been designated by engine manufacturer General Electric as an approved repair and overhaul facility for the GE CT-58 engine used in the Sikorsky S-61 helicopter and other types of aircraft. We also operate an authorized customer service facility for Turbomeca's Makila engines, which are used to power Super Pumas. In January 2000, we entered into an agreement to expand our license with Eurocopter into a worldwide license for the repair and overhaul of Super Puma major components and to include the Super Puma MkII model in the license. In February 2001, we entered into an agreement with Turbomeca to expand our licenses for the repair and overhaul of Makila engines to include civilian and military helicopters in regions outside of Scandinavia. In addition, our facility has been certified to repair and overhaul helicopters by the joint European approval system for aircraft maintenance organizations and is ISO-9001 certified. We have reorganized our European repair and overhaul business into Astec, which operates as a separate business in Stavanger and Aberdeen.

Flight Training

An incident occurred on September 8, 1997, when an HSG Super Puma, on contract with Statoil, crashed into the sea over the Norne oil field, resulting in the deaths of the two crew members and all ten passengers on board. Claims arising in connection with the Norne accident have been divided into three types: loss of hull, search and rescue costs and workers' compensation. The claim for loss of hull was settled during 1997 for U.S. $11.8 million, with HSG and third party insurers each bearing some costs. The Norwegian workers compensation board has paid NOK 2 million per person killed in the accident to their respective families. HSG has not had to pay any amounts with respect to liability claims arising under this accident and does not anticipate any future claims at this time. In July 2003 we reached an agreement with the aircraft manufacturer and our insurers under which the manufacturer will pay U.S. $6.25 million to settle this cost recovery claim. The net proceeds of this claim of approximately U.S. $5.0 million will be allocated between us and our insurers.

• not to directly or indirectly sell or transfer any of the ordinary shares, except for transfers that have been approved by a committee of independent directors of CHC; and

• not to take any action to cause or support our dissolution, liquidation or winding-up or other distribution of our assets unless the dissolution, liquidation or winding-up or other distribution has received minority shareholder approval.

Canadian Regulation

South African Regulation

ORGANIZATIONAL STRUCTURE

PROPERTY, PLANT AND EQUIPMENT

Facilities

For the year ended April 30, 2003, revenue generated by helicopter transportation services for the oil and gas industry was 72.4% of our total revenue of $722.4 million, compared to approximately 78.0% for the previous fiscal year.

The level of worldwide offshore oil and gas exploration and production has traditionally influenced demand for helicopter transportation services. While oil and gas exploration activity in our North Sea market declined during fiscal 2003, industry analysts expect the activity level to recover. Activity levels in our other international markets in fiscal 2003 remained consistent with levels experienced in the prior year.

We expect new exploration activity to occur in both producing and non-producing regions of the remote North Sea and Caspian Sea, and offshore South America, West Africa, Southeast Asia and Eastern Canada. We believe this increase in activity will result in increased global demand for helicopter transportation services. While 14.2% of our revenue is derived from exploration activity, 58.2% is derived from oil and gas production activity. The latter is less affected by cyclical movements in oil and gas prices.

Helicopter Operations

We contract with customers to provide aircraft for various periods of time. For the year ended April 30, 2003, 74.8% of our revenue came from long-term contracts with terms ranging from two to seven years. Such contracts are ordinarily awarded following a competitive bidding process among prequalified bidders. Contracts may be based on a fixed monthly fee with an additional hourly charge for actual flight time, or solely on an hourly charge for actual flight time.

Contracts for helicopter services in support of oil and gas exploration activities are generally short-term, usually twelve months or less. Contracts for transport of personnel and equipment to oil and gas production sites are generally long-term. Typically, we supply crew and maintenance personnel in addition to aircraft. However, we do have a limited number of contracts under which we supply aircraft only, often in conjunction with repair and overhaul and training services. We will continue to pursue this latter type of contract in the future as such arrangements may allow us to partner with other local operators to gain entry to new markets, thereby driving growth.

A substantial number of our long-term contracts contain provisions permitting early termination by the customer without penalties. However, with the exception of contracts that were transferred to another operator due to the merging of oil and gas producers, during the last five years no customer has exercised that right. At the expiration of a contract, our customers typically solicit new bids for the next contract period. Contracts are typically awarded based on a number of factors, including price, long-term relationships, the safety record of the helicopter service provider and quality of customer service. Generally, an incumbent operator has a competitive advantage in the bidding process stemming from its relationship with the customer, its knowledge of site characteristics, its understanding of the cost structure for the specific operations and its proven ability to meet service level requirements and provide the necessary aircraft.

Our contracts require that fuel be provided directly by the customer or be charged directly to the customer based on the actual fuel costs incurred by us. As a result, we have no significant exposure to changes in fuel prices.

We have long-term working relationships with most of the major oil and gas companies, including the operating subsidiaries of bp, ExxonMobil, ConocoPhillips, Shell, Statoil, Norsk Hydro, TotalFinaElf, Talisman, Chevron, Maersk and Unocal. Many of these have been customers of ours for more than 20 years.

Safety is a primary focus in all activities performed by us. We believe that we have one of the best safety records in the industry, as evidenced by our low incident rate and the lowest insurance premiums among the major providers of helicopter services to the offshore oil and gas industry.

Repair and Overhaul Services

Repair and overhaul services cover all major helicopter components, including engines, rotor heads, gearboxes and blades. Contracts with customers specify the extent of the services to be provided by us. Some contracts cover all components on an aircraft, while others include only specific components. Additionally, some of our contracts require customers to pay for services on an hourly flying basis. Typically, a portion of the revenue from these "power-by-the-hour" contracts is recognized on a monthly basis to reflect ongoing services being provided, with the balance deferred and recognized as the major repair and overhaul services are performed. While we are licensed to provide repair and overhaul services on a range of aircraft, the majority of our repair and overhaul revenue is derived from our major aircraft type, the Super Puma.

As part of the sale of our previous repair and overhaul business, Vector, in 1998, we entered into a five-year non-compete agreement that expired on June 25, 2003. With the expiration of the non-compete agreement, we are reviewing our options for the repair and overhaul of our medium aircraft previously provided by Vector, including the possibility of performing a portion or all of this work in our own repair and overhaul facilities.

We are one of only two global providers of helicopter transportation services to the offshore oil and gas industry. Both we and our global competitor have a modern fleet of helicopters, a global presence, long-term relationships with major oil and gas companies and a reputation for providing safe, high-quality, reliable service. There are other competitors, but they are smaller, regional operators. During 2003, a new competitor entered the U.K. sector of the North Sea market. This competitor is establishing operations in Aberdeen, Scotland and on August 1, 2004 is scheduled to commence providing helicopter services that are currently performed by us under a long-term contract that was not renewed by a customer of ours.

We have a significant market position in all global offshore oil and gas markets, with the exception of the Gulf of Mexico, where we do not have a presence. Our absence in that market stems from the fact that the oil and gas companies operating in the Gulf of Mexico utilize primarily light and medium helicopters under short-term contracts. We estimate that we have a market share of approximately 65% in the combined Norwegian, U.K. and Danish sectors of the North Sea, the world's largest area of offshore oil and gas development. We believe we are well positioned to capitalize on growth opportunities in the North Sea and elsewhere. As oil and gas wells are depleted, it is expected that oil companies will go further offshore to develop deep-water reserves. Our global presence, long-term customer relationships and modern fleet of aircraft position us to participate in new oil and gas developments in most offshore oil and gas regions.

In our international markets, the primary aircraft are the Sikorsky S76 and S61. We continue to upgrade our fleet to meet customer requirements and will be taking possession of new S76C+ aircraft in fiscal 2004. As oil and gas production and exploration in the international markets move further offshore, there will be an increasing need for newer heavy aircraft in these markets.

Our fleet includes the newest model of the Super Puma, the MkII, the most advanced heavy aircraft in operation in our markets. At April 30, 2003, we were operating 13 MkII aircraft, while only two other MkII aircraft were operating in our markets.

Our repair and overhaul facilities located in Norway and the U.K. are the only commercial facilities in the world licensed to perform repair and overhaul services on the Super Puma helicopter, other than the original equipment manufacturer. In addition to providing repair and overhaul services for our fleet of 45 Super Pumas, our facilities, experience and reputation position us to increase our market share of repair and overhaul services for the world's approximately 500 Super Pumas, of which 80% are employed in non-civil and military operations.

The helicopters in use today may be divided into two general categories: single-engine (light) aircraft and twin-engine (heavy and medium size) aircraft.

Single-engine aircraft have a passenger capacity of 3 to 6, operate under visual flight rules (daylight and good weather flying only) and can be operated with one pilot. Given their low passenger capacity and inability to fly in poor weather conditions, these aircraft are generally limited to onshore operations. In recent years, we have sold most of our operations and aircraft in this category, and have only 11 light aircraft in our current fleet. However, we have a 43.5% interest in CHL, which operates in Canada's onshore market primarily with light aircraft.

Twin-engine aircraft require two pilots, have a capacity of 9 to 26 passengers and can operate under instrument flight rules (daytime and nighttime flying under a variety of weather conditions). The greater passenger capacity, longer range and ability to operate in adverse weather conditions make these aircraft more suitable than single-engine aircraft for offshore support. The high cost of these larger aircraft and their limited availability tend to lessen competition from smaller operators. We currently operate 145 aircraft in this category (69 heavy and 76 medium aircraft).

At April 30, 2003 our fleet consisted of 159 aircraft, of which 114 were owned and 45 leased. Of these, 71 operated in Europe (primarily in the North Sea market) and the remainder were used in other international markets. An additional 143 aircraft were operated by CHL.

Based on an independent appraisal, as at April 30, 2003 the aggregate estimated resale value of the 114 aircraft owned by us was approximately U.S. $365.5 million ($523.9 million). This appraisal indicates a surplus of $185.1 million over the carrying value reflected in our balance sheet. The appraisal surplus has decreased by $85.9 million since April 30, 2002. This decrease is primarily the result of the sale-leaseback of six Super Puma aircraft during the year and the impact of foreign exchange rate fluctuations on the translation of the aircrafts' appraised values and net book values into Canadian dollars.

During fiscal 2003, we entered into seven long-term aircraft operating leases, including sale-leaseback arrangements for six aircraft previously owned by us and the lease of one new Super Puma MkII to support activity in the North Sea. Our fleet currently operates at close to full capacity.

Our fleet at April 30, 2003 (including owned and leased aircraft) was comprised of the following aircraft by segment:

Approximately 70% of a helicopter's value resides in its dynamic components. Since the components are overhauled, replaced or upgraded on a regular basis pursuant to manufacturer and regulatory requirements, older models of helicopters that have been upgraded are capable of meeting many of the same performance standards as newer models. As a result, as the price of new helicopters rises, older models of these helicopters that have been properly maintained and upgraded generally retain their value. We typically receive sale proceeds in excess of the original purchase price when we sell helicopters as part of our ongoing program of optimizing our fleet mix to meet changing market conditions.

We have entered into aircraft operating leases with third-party lessors in respect of 45 aircraft included in our fleet at April 30, 2003. These leases have expiry dates ranging from June 2003 to June 2010. We have the option of purchasing the aircraft at fair market value or agreed amounts that do not constitute bargain purchase options, but have no commitment to do so. The minimum lease payments under these aircraft operating leases for the period 2004 to 2010 total $172.6 million.

In addition to aircraft operating leases, we have minimum lease payments of $45.5 million for the same period related to operating lease commitments for buildings and non-aircraft equipment.

For additional details on our lease obligations, see "Contractual Obligations" and also Note 23 to the Consolidated Financial Statements included elsewhere in this Annual Report.

We retained operating leases for 11 S76A aircraft in connection with the sale of CHL during fiscal 2001. These leased aircraft were sub-leased to CHL for the remaining period of the existing leases (up to five years) with certain purchase options in favour of CHL during the lease terms. During 2003, CHL arranged its own financing for these aircraft, thereby relieving us of our commitment under the leases.

At April 30, 2003, we had commitments to take delivery of five new Super Puma MkII aircraft and options to acquire two EC225 helicopters for use primarily in our European operations. We have some flexibility built into the delivery schedule for these aircraft in order to match acquisitions with new demand. During fiscal 2004, we expect to take delivery of three Super Puma MkII aircraft.

We have also ordered four new S76C+ helicopters for our international operations for delivery in December 2003. These aircraft will be used in southeast Asia and in Africa to meet increased demand by customers for newer medium aircraft. Existing aircraft will be re-deployed to other projects in these markets.

The approximate total value of our commitments for the nine aircraft expected to be delivered in fiscal 2004 and 2005 is $153 million, including $108 million for the seven aircraft expected to be delivered in fiscal 2004. The purchase prices of the aircraft are denominated in euros and U.S. dollars. The amount that we will need to finance at the date of delivery may differ from the amounts noted above due to changes in foreign exchange rates. We have entered into foreign currency indemnity agreements which may reduce our exposure to fluctuations in exchange rates (see "Financial Instruments"). We intend to lease some of these aircraft under operating lease arrangements.

During fiscal 2002 we sold our 49% equity investment in Wiking Helikopter Service ("Wiking"), a German onshore helicopter company, for total proceeds of $4.6 million. At the time of sale, Wiking owned two medium aircraft. The impact of Wiking on our net earnings prior to the sale was immaterial. The equity in earnings of associated companies recorded for Wiking was $0.7 million in fiscal 2001 and nil for fiscal 2002.

The following table sets forth, for the years indicated, the results of operations as a percentage of revenues:

Total revenue for fiscal 2003 increased $104.5 million, or 16.9%, to $722.4 million from $617.8 million in fiscal 2002. The following are the primary reasons for the change in revenue:

1. The impact of new contracts and price increases, partially offset by reduced flying hours, resulted in an increase in revenue of $47.6 million. The level of interaction between contract rates, flying hours, fixed monthly charges and aircraft mix makes it difficult to more accurately quantify the impact of the individual factors contributing to the revenue increase.
    

2. The strengthening of European currencies against the Canadian dollar was the predominant factor that contributed to the remaining revenue increase of $56.9 million.

The $104.5 million increase in total revenue was derived from the oil and gas industry ($41.6 million), EMS/SAR ($19.2 million), repair and overhaul ($19.4 million), composites manufacturing ($6.4 million), training ($3.1 million), and other ($14.8 million). A significant portion of the increase in the other category relates to revenue earned in connection with modifications made to aircraft as part of a new search and rescue contract.

The table below provides a summary of segment revenue by quarter for fiscal 2002 and 2003:

We derive our helicopter flying revenue from two types of contracts. Approximately 60% of our fiscal 2003 flying revenue is derived from hourly charges (including hourly charges on contracts that also have fixed charges), and the remaining 40% is generated by fixed monthly charges. Because of the significant fixed component, an increase or decrease in flying hours may not result in a proportionate change in revenue. While flying hours may not correlate directly with revenues, they remain a good measure of the level of activity and fleet utilization. The following tables provide a quarterly summary of our flying hours and flying revenue mix for fiscal 2002 and 2003.

We regularly compare our activity levels against available industry data. Aberdeen Airport Ltd. reports monthly helicopter passenger traffic for all helicopter operators in Aberdeen, Scotland, which is our largest base as measured by the number of aircraft and revenue. The following table provides a quarterly summary of all helicopter passenger traffic at Aberdeen Airport for fiscal 2000 to 2003.

The data in the above table shows a year-over-year decline in activity in Aberdeen after a peak in 2002. It also demonstrates the low seasonality in activity levels from quarter to quarter. While activity levels in Aberdeen declined 11.5% in 2003 and our flying hours in Europe overall declined by 7.2%, revenues from the European flying segment increased in 2003 by 15.1%. The increase in revenues is partially the result of a portion of our revenues being derived from fixed charges that are unaffected by flying activity, rate increases on existing contracts and the impact of favourable foreign exchange rate fluctuations.

Total operating expenses for fiscal 2003 increased $83.2 million, to $580.2 million, from $497.0 million for fiscal 2002. The strengthening of the Norwegian kroner and pound sterling against the Canadian dollar during the year accounted for approximately 40% of the increase in operating expenses. Other major factors contributing to the increase in operating expenses include an increase in compensation costs in Europe related to new labour agreements entered into during fiscal 2002, and an increase in operating expenses of $9.6 million related to Composites which commenced commercial production in fiscal 2003. Operating expenses as a percentage of revenue was 80.3%, which was just slightly less than the 80.4% in the prior year.

EBITDA for fiscal 2003 increased $21.4 million, or 17.7%, to $142.2 million from $120.8 million for fiscal 2002. The increase is comprised of favourable foreign exchange rate fluctuations of $12.4 million, increased EBITDA from new contracts and rate increases in the flying and repair and overhaul segments of $9.8 million, and a reduction in Corporate and other costs of $2.4 million. These increases were partially offset by EBITDA losses of $3.2 million in Composites. EBITDA as a percentage of revenue increased slightly to 19.7% from 19.6% in the prior year.

Amortization for fiscal 2003 increased $4.0 million to $22.6 million from $18.6 million for fiscal 2002. Additional amortization of $1.5 million was the result of the commencement of amortization of the pre-operating costs related to Composites and an additional $2.5 million increase related to capital asset additions.

During fiscal 2003, we disposed of property and equipment for net proceeds of $74.9 million (see "Investing Activities"), resulting in a net recognized gain of $2.4 million and a net deferred gain of $13.5 million related to the sale-leaseback of seven and the refinancing of one Super Puma aircraft. The recognized gain of $2.4 million is comprised primarily of a gain from insurance proceeds received for the total loss of an S76 aircraft supporting operations in Azerbaijan.

At April 30, 2003, we evaluated the recoverability from cash flows of future operations of the carrying value of Composites' pre-operating expenses, which had been previously deferred and recorded in other assets on our balance sheet. We determined it appropriate to write off the entire $12.8 million book value of such pre-operating expenses at April 30, 2003 as an asset impairment charge (Notes 2 and 9 to the Consolidated Financial Statements included elsewhere in this Annual Report).

Financing charges consisted primarily of interest on debt, amortization of deferred financing costs and foreign exchange gains and losses on operating activities, working capital revaluation, debt repayment and debt revaluation. Financing charges for fiscal 2003 decreased $13.1 million, or 27.3%, to $34.9 million from $48.0 million for fiscal 2002. This decrease was primarily the result of the redemption of 35% ($71.9 million) of our euro denominated 11.75% senior subordinated notes in May 2002 using a portion of the proceeds of our April 2002 equity issue. Lower interest rates on our variable-rate senior credit facilities also contributed to the reduced financing costs. The average interest rate on our variable-rate senior credit facilities during fiscal 2003 was 5.3% compared to 6.7% in fiscal 2002. The reduction was the result of lower LIBOR rates during the year and a continued reduction in the margin paid by us. The margin changes as we satisfy certain ratios in connection with our senior credit facilities. Effective the first quarter of fiscal 2004, the margin above LIBOR or Bankers Acceptance will be 1.0% as compared to 2.0% at May 1, 2002.

(1) See Note 4(a) to the Consolidated Financial Statements included elsewhere in this Annual Report.

We capitalize interest on debt incurred to finance assets under construction. During fiscal 2003, no financing costs were capitalized, compared to $1.0 million in fiscal 2002.

Equity in earnings of associated companies for fiscal 2003 increased by $1.2 million to $2.3 million, compared to $1.1 million for fiscal 2002. The increase was due primarily to the stronger performance of CHL.

During fiscal 2003, we incurred debt settlement costs of $12.5 million related to the redemption of a portion of our senior subordinated notes. This was comprised of a premium of $8.4 million, amortization of deferred financing costs of $3.3 million and a realized foreign exchange loss of $0.8 million. There were no debt settlement costs during fiscal 2002.

Total income tax recovery for fiscal 2003 was $1.9 million, compared to total income tax expense of $9.9 million recorded in fiscal 2002.

Income tax expense included in net earnings from operations was $19.5 million for the year, compared to $9.9 million in 2002. The effective income tax rate on earnings from operations in fiscal 2003 was 21.8%, compared to 17.3% in fiscal 2002. The effective rate increased in fiscal 2003 as a result of higher earnings in jurisdictions with higher tax rates. In addition, debt reduction during the year reduced interest costs in Canada, our highest tax jurisdiction.

During fiscal 2003 the following tax recoveries totalling $21.4 million were recorded by us and have been excluded from the calculation of income tax expense in determining net earnings from operations:

We are subject to taxation in many jurisdictions throughout the world. The future effective tax rate and tax liability will be affected by a number of factors, such as the amount of taxable income in particular jurisdictions, the tax rates in such jurisdictions, tax treaties between jurisdictions, the extent to which funds are transferred between jurisdictions and income is repatriated, and future changes in law. Generally, the tax liability for each legal entity is determined on either (i) a non-consolidated basis or (ii) a consolidated basis with other entities incorporated in the same jurisdiction, in either case, without regard to the taxable losses of non-consolidated affiliate entities. As a result, we may pay income taxes in certain jurisdictions even though on an overall basis a net loss for the period may be incurred.

Net earnings for fiscal 2003 increased $18.8 million to $66.1 million from $47.3 million for fiscal 2002. The increase was the result of revenue growth ($104.5 million), lower financing charges ($13.1 million), income tax recoveries ($21.4 million) and other increases ($1.9 million), partially offset by increased operating costs ($83.2 million), an asset impairment charge ($12.8 million), increased income taxes on net earnings from operations ($9.6 million), debt settlement costs ($12.5 million) and increased amortization ($4.0 million).

Earnings under Canadian GAAP differ from those under U.S. GAAP. An explanation of the significant differences is provided in Note 29 to the Consolidated Financial Statements included elsewhere in this Annual Report.

Quarterly revenues in fiscal 2003 were favourably impacted by foreign exchange of $15.2 million, $15.7 million, $16.7 million and $9.3 million in quarters 1, 2, 3 and 4 respectively. In addition to the positive impact of foreign currency during fiscal 2003, we also experienced real revenue growth of $14.4 million, $15.0 million, $11.7 million and $6.6 million in quarters 1, 2, 3 and 4, respectively. There is some impact of seasonality in the results, but it is not significant. Generally, the third quarter is most negatively impacted by seasonality. The second quarter, which includes a portion of the summer period, has historically been the strongest. Typically, our net earnings also follow this pattern.

In fiscal 2003, our net earnings included several large, unusual items that affected comparability. In Q1 2003, we incurred a pre-tax $12.5 million cost related to the settlement of debt. In Q4 2003 we recorded an income tax recovery of $14.0 million related to a change in tax law in Australia. In addition, we also recorded a pre-tax asset impairment charge in Composites of $12.8 million in the same quarter.

The primary factor considered by us in identifying segments is geographic coverage, which also impacts the nature of operations, the type of contracts and the type of aircraft utilized. The European flying segment includes primarily helicopter services to the oil and gas industry in the U.K., Norwegian and Danish sectors of the North Sea. In addition, the European flying segment includes helicopter search and rescue operations in Europe.

The international flying segment includes the provision of helicopter services for offshore oil and gas and EMS/SAR customers in Asia, Africa, Australia, South America, the east coast of Canada and other locations around the world.

The repair and overhaul segment includes helicopter repair and overhaul facilities located in Norway and the U.K. that provide services to our helicopter fleet and to third-party customers located in Europe, Asia and North America.

The composites segment includes our composites manufacturing operation in Gander, Canada. This operation was in the pre-operating phase in fiscal 2002 and entered commercial production effective May 1, 2002.

The corporate and other segment includes the activities of our corporate office in St. John's, Canada, other public-company related costs and applicable consolidation eliminations.

The European flying segment consists of major business units in Aberdeen, Scotland and Stavanger, Norway, primarily serving the helicopter transportation requirements of the offshore oil and gas industry in the North Sea.

Revenue in fiscal 2003 was $468.2 million compared to $406.8 million in fiscal 2002. EBITDA in fiscal 2003 was $89.5 million, compared to $74.6 million in fiscal 2002. Additional segmented information is contained in Note 22 to the Consolidated Financial Statements included elsewhere in this Annual Report.

Revenue increases totalling $13.4 million were attributable to rate increases, new contracts and aircraft modifications for external customers, partially offset by reduced flying activity in the North Sea. In addition, revenue increased by $48.0 million as a result of more favourable exchange rates for the pound sterling and Norwegian kroner.

At April 30, 2003 there were 71 aircraft in this segment, consisting of 51 heavy and 20 medium aircraft. Included in the heavy aircraft were 13 Super Puma MkIIs and 26 Super Pumas.

At April 30, 2003, there were 1,058 employees in the segment (2002 - 1,230), including 379 pilots, 294 engineers and 385 administrative and support personnel. The primary reason for the decrease in the number of employees was the transfer of some maintenance and related activities to our repair and overhaul business.

Revenues were derived primarily from long-term contracts (77%). Approximately 33% of fiscal 2003 segment revenues were from the provision of dedicated aircraft to customers. The major customers in this segment remained unchanged from fiscal 2002 and during fiscal 2003 included bp, ExxonMobil, TotalFinaElf, Maersk, Statoil, Norsk Hydro, Phillips, Talisman, Saga, Kerr-McGee, Conoco and the Irish Coast Guard.

During fiscal 2003, we were successful in renewing long-term contracts in Europe with Centrica/BHP Billiton, bp, ExxonMobil, TotalFinaElf and Talisman, representing total annual revenues of approximately $96 million. However, we were unsuccessful in renewing a contract with bp for the provision of helicopter services in the northern North Sea. The current contract with bp, which produced revenues of $49.3 million in fiscal 2003, expires on July 31, 2004. This contract represented approximately 6.8% of our fiscal 2003 revenue.

During the year, we announced that we had embarked on an internal cost review of our European operations. It was indicated that our U.K. division had initiated a cost reduction program that would result in annualized savings of $10.0 million. More than half of these cost reduction measures have been implemented and completion is expected before the end of calendar 2003. With regard to the combined European structure, we are still in consultation with management and unions to develop a structure to yield more savings. We are challenging management and unions to develop more flexible cost structures that will improve our competitive position and ensure we can produce the overall return on capital required to support investment in new aircraft in the North Sea.

In fiscal 2004, long-term contracts with combined annual revenues of approximately $43 million, representing 13.4% of total segment revenues from long-term contracts or 9.2% of total fiscal 2003 segment revenues, will expire and come up for renewal. The contract renewals for 2005 in the chart (above) exclude the non-renewed bp contract noted earlier.

The International flying segment consists of major business units in Vancouver, Canada; Adelaide, Australia; and Cape Town, South Africa serving offshore oil and gas, EMS/SAR and other industries.

For fiscal 2003, revenues were $184.8 million, compared to $167.4 million in the prior year. The net revenue increase of $17.4 million was derived from increased flying activity and new contracts of $18.1 million. The increase was partially offset by a decrease related to lower exchange rates for the U.S. dollar and South African rand of $0.7 million.

The segment EBITDA increased by $0.9 million to $39.9 million in fiscal 2003, compared to $39.0 million in 2002. EBITDA as a percentage of revenue was 21.6% in fiscal 2003, compared to 23.3% in fiscal 2002. The major factors contributing to the decrease in the EBITDA percentage in fiscal 2003 were the strengthening of the South African rand against the U.S. dollar (virtually all of our revenue from our African operations is denominated in U.S. dollars, while only a portion of our expenses is in U.S. dollars) and lower than normal non-major maintenance costs in fiscal 2002.

At April 30, 2003, there were 775 employees in the segment (2002 - 729), including 249 pilots, 224 engineers and 302 administrative and support personnel. Revenues in the segment were derived primarily from long-term contracts (80%). Approximately 76% of revenues in the segment during the year ended April 30, 2003 were from the provision of dedicated aircraft to customers. The major customers in this segment did not change during the year and included ExxonMobil, Unocal, Chevron, Sable Offshore, bp, Shell, TotalFinaElf, Premier, Phillips, Soekor, Sonair, De Beers, the Royal Australian Air Force, Victoria Police, the United Nations, Talisman and Newfield.

During the year, we renewed and/or expanded oil and gas contracts in Thailand and Namibia worth approximately $22.1 million annually. In addition, we were awarded new long-term oil and gas contracts in Malaysia and the Persian Gulf worth approximately $17.8 million annually. We did not lose any major contracts in this segment during fiscal 2003. During fiscal 2004, major long-term contracts with combined annual revenues of approximately $69 million, representing 46.4% of all revenue from long-term contracts or 37.3% of total fiscal 2003 segment revenues, will come up for renewal.

During the year, we were awarded a contract with the United Nations to provide helicopter services for monitoring, verification and inspection activities in Iraq. With the commencement of war in Iraq in late fiscal 2003, this contract was terminated. Total revenue from this contract in 2003 was $2.3 million.

The repair and overhaul segment, operating as Astec Helicopter Services ("Astec"), consists of a major facility located in Stavanger, Norway and other facilities in Aberdeen, Scotland providing repair and overhaul services for our fleet and for an external customer base in Europe, Asia and North America.

For the year ended April 30, 2003, combined internal and third-party revenues were $204.9 million, compared to $152.2 million last year. Third-party revenues were $63.0 million, of which 40% was derived from long-term contracts, compared to $43.6 million last year. Third-party revenue increases totaling $19.4 million (44.5%) were derived from new business ($9.7 million) and a higher exchange rate for the Norwegian kroner ($9.7 million). The increase in internal revenues was partially due to Astec assuming responsibility for maintenance on the U.K. fleet. This work was previously performed by the U.K. flying division. The EBITDA percentage was 18.3% in 2003, compared to 20.4% in 2002. The decrease in the EBITDA percentage is primarily the result of the addition of new lower-margin work from our U.K.-based operations and lower than normal margins on major aircraft repair and rebuild projects for internal customers.

Composites commenced commercial operations on May 1, 2002. Revenues during fiscal 2003 were $6.4 million, primarily from a contract to manufacture airframe components for a major regional jet manufacturer. Also included in revenues is a $1.0 million grant from the Government of Newfoundland and Labrador. This grant may be repayable if certain employment and other targets are not achieved. During the fourth quarter of fiscal 2003, we announced that we had been awarded a five-year contract with Aero Vodochody of the Czech Republic to manufacture components for the S76 aircraft. The expected annual revenue from this contract is $5.0 million. We are currently in the start-up phase of this contract and are anticipating production to commence before the end of calendar 2003.

During the year we announced that we would be exploring strategic alternatives for Composites, including a sale of all or a portion of the business, with the assistance of a financial advisor.

Total revenue for the year ended April 30, 2002 increased $24.0 million, or 4.0%, to $617.8 million from $593.8 million for the year ended April 30, 2001. The following are the primary reasons for the change in revenue:

1. Increased flying activity, new contracts and price increases resulted in an increase in revenue of $86.3 million.
    

2. The sale of non-core operations in Norway, Sweden, Canada and the U.K. during the year ended April 30, 2001 accounted for a decrease of $68.0 million compared to the prior year.
    

3. More favourable exchange rates for the Norwegian kroner, pound sterling, Australian dollar and South African rand accounted for an increase of $5.7 million upon translation of foreign subsidiary revenues to our reporting currency, the Canadian dollar.

During fiscal 2001 we disposed of non-core operations in Sweden, the U.K., Norway and Canada. In order to provide a meaningful comparison of quarterly revenues, the following table includes only revenue from continuing operations. We have shown strong growth in revenue from continuing operations during the year.

We derive our helicopter flying revenues from two types of contracts. Approximately 62% of our flying revenue for the year ended April 30, 2002 was derived from hourly charges, and the remaining 38% is generated by fixed monthly charges. Because of the significant fixed component, an increase or decrease in flying hours may not result in a proportionate change in revenue. While flying hours may not correlate directly with revenues, they remain a good measure of the level of activity and fleet utilization. The following tables provide a quarterly summary of our flying hours from continuing operations and the flying hour mix for fiscal 2001 and 2002.

We regularly compare our activity levels against available industry data. The Aberdeen Airport reports monthly helicopter passenger traffic for all helicopter operators in Aberdeen, Scotland, which is our largest base. The following table provides a quarterly summary of all helicopter passenger traffic at Aberdeen Airport for fiscal 2000 to 2002.

The data in the above table shows a significant year-over-year growth in activity in Aberdeen and the low seasonality in activity levels from quarter to quarter. The Aberdeen Airport data corroborate our flying hour data, indicating strongest activity in the second quarter.

Total operating expenses for the year ended April 30, 2002 increased $19.7 million, to $497.0 million from $477.3 million for the year ended April 30, 2001. Operating expenses as a percentage of revenue was 80.4%, which was the same as the prior year. Operating expenses were impacted by increases in pilot salaries in Europe, a significant portion of which were retroactive to May 2001. In addition, we entered into nine aircraft operating leases to support activity and revenue growth.

EBITDA for the year ended April 30, 2002 increased $4.3 million, or 3.7%, to $120.8 million from $116.5 million for the year ended April 30, 2001. Non-core operations in Norway, Sweden, the U.K., and Canada that were sold in 2001 accounted for a $14.4 million reduction in EBITDA. We realized an $18.7 million increase (16%) in EBITDA from rate increases, higher activity levels and higher heavy aircraft utilization in all our markets.

EBITDA as a percentage of revenue remained consistent in the year ended April 30, 2002 with the previous year at 19.6%. Rate increases from existing contracts were offset by pilots' salary increases in the U.K. and Norway, as well as increased aircraft lease costs to support revenue growth. In addition, the results for the year ended April 30, 2001 included six months of the Canadian flying operations during its peak season. EBITDA as a percentage of revenue for the Canadian operations in the six-month period prior to the sale in October 2000 was 22.4%.

Amortization for the year ended April 30, 2002 decreased $1.4 million to $18.6 million from $20.0 million for the year ended April 30, 2001, primarily due to asset sales. Capital assets increased by $27.0 million during the year ended April 30, 2002, primarily due to helicopter component betterments, major inspections, and additions to buildings and equipment.

During the year ended April 30, 2002 we disposed of property and equipment (not otherwise sold as part of a business) for proceeds of $49.8 million, resulting in a net gain of $1.9 million. The net gain is comprised of a $3.7 million gain from the net insurance proceeds following the rollover of an aircraft on the deck of a drill ship, partially offset by losses on disposals of buildings and other equipment. During the year ended April 30, 2001, we disposed of property and equipment (not otherwise sold as part of a business) for proceeds of $2.7 million.

Financing charges were comprised primarily of interest on debt and the amortization of deferred financing costs and deferred foreign currency translation gains and losses. Financing charges for the year ended April 30, 2002 decreased $8.4 million, or 14.9%, to $48.0 million from $56.4 million for the year ended April 30, 2001. This decrease was the result of debt reduction arising in connection with asset sales during 2001, continued debt reduction from cash flow generated during fiscal 2002, and lower interest rates.

Our average interest rate for fiscal 2002 on the variable-rate senior credit facility was 6.7% in fiscal 2002 compared to 9.0% in fiscal 2001.

We capitalize interest on debt incurred to finance assets under construction. During the year ended April 30, 2002, financing costs of $1.0 million were capitalized, compared to $1.1 million in fiscal 2001.

Equity in earnings of associated companies for the year ended April 30, 2002 increased by $1.5 million to $1.1 million from a loss of $0.4 million for the year ended April 30, 2001. The increase was primarily due to the sale of the Canadian onshore helicopter operations in October 2000, the remaining interest in which was accounted for as an equity investment for all of fiscal 2002.

During the year ended April 30, 2001, we incurred debt settlement and restructuring costs of $18.6 million, related primarily to financing costs and foreign currency translation losses on the settlement of the tender credit facility on July 5, 2000, costs related to the settlement of inter-company loans and costs related to the cancellation of an interest rate swap. There were no debt settlement and restructuring costs during fiscal 2002, other than those related to debt reduction included in financing charges.

During the year ended April 30, 2001 we reported a pre-tax gain of $5.8 million from the sale of operations and investments. In May 2000 we recorded a pre-tax gain of $28.8 million on the sale of primarily U.K.-based non-oil and gas related operations. In May 2000, we also sold our Swedish subsidiary, Heliflyg AB, recognizing a pre-tax gain of $1.3 million. On June 30, 2000, a pre-tax gain of $8.0 million was recorded on the sale of Lufttransport, a Norwegian air ambulance service company. Finally, on October 31, 2000, we recorded a pre-tax loss of $32.3 million on the sale of our Canadian onshore helicopter operations and assets, including a goodwill write-off of $9.1 million.

Income taxes for the year ended April 30, 2002 increased by $15.8 million to an expense of $9.9 million, compared to a recovery of $5.9 million for the year ended April 30, 2001. The income tax expense in fiscal 2002 was comprised solely of income tax on earnings from operations. The income tax recovery in fiscal 2001 was comprised of an income tax expense on earnings from operations of $8.3 million; an income tax expense of $1.2 million on the sale of operations and investments; an income tax recovery of $5.9 million related to non-recurring debt settlement and restructuring costs; and an income tax recovery of $9.5 million related to the recognition of future income tax rate reductions in Canada to be phased in over the 2001 to 2004 income tax years. This latter amount was recorded in accordance with the new future income tax accounting standard in Canada.

The effective income tax rate on earnings from operations (excluding equity in earnings of associated companies) was 17.3% during fiscal 2002 compared to 20.1% in the prior year. The lower rate in fiscal 2002 is the result of changes in the mix of net earnings amongst the jurisdictions in which we operate.

Net earnings for the year ended April 30, 2002 increased $13.5 million to $47.3 million from $33.8 million for the year ended April 30, 2001. The increase was primarily attributable to revenue growth and lower financing charges and was partially offset by higher operating expenses, as discussed above.

Earnings under Canadian GAAP differ from those under U.S. GAAP. Explanation of the significant differences is provided in Note 29 to the consolidated financial statements included elsewhere in this Annual Report.

(1) See Note 4(a) to the Consolidated Financial Statements included elsewhere in this Annual Report.

The primary factor considered by us in identifying segments is geographic coverage, which also impacts the nature of operations, the type of contracts and the type of aircraft utilized. The European flying segment includes primarily helicopter services to the oil and gas industry in the U.K., Norwegian and Danish sectors of the North Sea. In addition, the European flying segment includes helicopter search and rescue operations in Norway and Ireland.

The International flying segment includes the provision of helicopter services for offshore oil and gas, search and rescue and emergency medical customers in Asia, Africa, Australia, South America, the East Coast of Canada and other locations around the world.

The Canadian flying segment included onshore-based helicopter operations for a wide range of customers in Canada. The operations included in this segment were disposed of on October 31, 2000, but we retained a 45% interest in CHL, the new company created to operate this business. Since November 1, 2000 this investment has been accounted for on the equity basis.

The following table sets forth, for the years indicated, revenue by segment:

The European flying segment consists of major business units in Aberdeen, Scotland and Stavanger, Norway, primarily serving the helicopter transportation requirements of the offshore oil and gas industry in the North Sea.

For the year ended April 30, 2002, revenues were $406.8 million, compared to $351.3 million in the prior year. Revenue increases of $50.3 million were attributable to increased flying activity, new contracts and rate increases in the North Sea. The additional $11.2 million realized from more favourable exchange rates for the pound sterling and Norwegian kroner was partially offset by a decrease of $6.0 million in revenue from operations that were sold in fiscal 2001.

The segment EBITDA increase of $12.5 million can be attributed to higher flying activity, increased heavy and medium aircraft utilization and rate increases. EBITDA as a percentage of revenue was 18.3% in fiscal 2002, compared to 17.7% in fiscal 2001.

During the year ended April 30, 2002 we reached agreements with pilots unions in the U.K. and Norway. There was no immediate cost impact in the U.K., but the strike action and work slowdowns in Norway reduced revenues and EBITDA, as the segment was unable to meet all of the customers' flight requirements. In addition, the segment incurred additional costs related to the Norwegian agreement since the wage increases were retroactive to May 2001.

At April 30, 2002 there were 72 aircraft in this segment, consisting of 52 heavy and 20 medium aircraft. Included in the heavy aircraft were 12 Super Puma MkIIs and 27 Super Pumas.

At April 30, 2002, there were 1,230 employees in the segment, including 419 pilots, 285 engineers and 526 administrative and support personnel. Revenues were derived primarily from long-term contracts (90%). Approximately 36% of revenues in the segment were from the provision of dedicated aircraft to customers during the year ended April 30, 2002. The major customers in this segment during the year ended April 30, 2002 included bp, ExxonMobil, TotalFinaElf, Maersk, Statoil, Norsk Hydro, Phillips, Talisman, Saga, Conoco and the Irish Coast Guard.

We were awarded a new five-year Search and Rescue contract in this segment for the Irish Coast Guard based in Waterford, Ireland. The contract commenced in July 2002 and requires the dedicated use of one S61 and one back-up aircraft.

During fiscal 2002, we did not lose any major contracts in this segment. We were successful in renewing a 30-month contract with Kerr McGee in the U.K., which calls for the conversion from the use of pooled aircraft to the dedicated use of a newly acquired Super Puma MkII at higher rates. A 36-month contract worth approximately $27 million annually with Statoil in Kristainsund, Norway was also renewed during the fiscal 2002 year. We also renewed a contract with Marathon International Petroleum Ireland Limited in that year. The five-year contract requires the sole use of an AS365 Dauphin out of Cork, Ireland.

The International flying segment consists of major business units in Vancouver, Canada; Adelaide, Australia; and Cape Town, South Africa serving offshore oil and gas, EMS/SAR and other industries.

For the year ended April 30, 2002, revenues were $167.4 million compared to $146.2 million in the prior year. The net revenue increase of $21.2 million was derived from increased flying activity and new contracts of $28.9 million. This increase was partially offset by a decrease related to lower exchange rates for the Australian dollar and South African rand of $7.7 million.

The segment EBITDA increase of $8.2 million can be attributed to increased flying revenue at higher rates of $9.0 million, partially offset by the lower exchange rates on the Australian dollar and South African rand of $0.8 million. EBITDA as a percentage of revenue was 23.3% in fiscal 2002, compared to 21.1% in fiscal 2001.

At April 30, 2002 there were 88 aircraft in this segment, consisting of 18 heavy, 56 medium, 11 light aircraft and three fixed-wing aircraft.

During fiscal 2002, we won new oil and gas contracts in East Timor, Venezuela, Thailand and the Persian Gulf worth approximately $30 million annually. We did not lose any major contracts in this segment during fiscal 2002. We renewed contracts in East Timor, Thailand, Equatorial Guinea, and Bosnia worth approximately $38 million annually.

The fleet in the segment consists primarily of medium aircraft such as the Sikorsky S-76, but also includes a number of heavy aircraft, including the Eurocopter Super Puma and the Sikorsky S-61. Increased flying activity during fiscal 2002, combined with new contracts, resulted in six aircraft being added to the fleet.

The Repair and Overhaul segment consists of a major facility located in Stavanger, Norway, and other facilities in Aberdeen, Scotland, providing repair and overhaul services for our own fleet and for an external customer base in Europe, Asia and North America.

For the year ended April 30, 2002, combined internal and third-party revenues were $152.2 million, compared to $131.9 million in the prior year. Third-party revenues for the year ended April 30, 2002 were $43.6 million compared to $34.4 million in the prior year. Third-party revenue increases of $9.2 million were derived from new business of $7.1 million and a higher exchange rate for the Norwegian kroner of $2.1 million. EBITDA growth and margins improved primarily because of the increase in higher-margin third-party work.

During 2001 we announced an expansion of our license arrangements with Turbomeca for the repair and overhaul of various engine types manufactured by Turbomeca. The expanded engine license enables us to provide overhaul, repair and logistics requirements for the European fleet of Super Puma helicopters, with the added capability of servicing other customers worldwide in coordination with Turbomeca. This expanded on an existing license for the repair and overhaul of engines in Scandinavia and within our own Super Puma fleet.

During fiscal 2002, approximately 28% of third-party segment revenues were derived from long-term contracts.

The Canadian segment consisted of onshore helicopter operations in Canada. These operations were sold effective October 31, 2000, but we retained a 45% common equity interest. Revenue and EBITDA for the six-month period prior to the sale on October 31, 2000 were $62.0 million and $13.9 million, respectively, resulting in EBITDA as a percentage of revenue of 22.4%. Effective November 1, 2000 we began accounting for the Canadian onshore helicopter operations as an equity investment. During fiscal 2002 equity earnings of $0.5 million were reported compared to an equity loss of $1.6 million in fiscal 2001. The 2001 equity loss includes the third and fourth quarters only, which are typically the worst quarters in this seasonal business.

For fiscal 2003, we generated cash flow from operations of $87.3 million, up $22.3 million from the $65.0 million generated in fiscal 2002. An increase in EBITDA of $21.4 million was the primary factor resulting in the increase in cash generation. Cash flow from operations for fiscal 2002 of $65.0 million was up $17.2 million from the $47.8 million generated in fiscal 2001. Increased earnings, combined with lower interest payments, partially offset by an increase in taxes paid, accounted for the increase. In fiscal 2001, a net income tax refund was received compared to a net payment of $5.1 million during 2002.

Working capital was $280.7 million at April 30, 2003, compared to $199.7 million at April 30, 2002, an increase of $81.0 million. The major factors resulting in the increase in working capital were an increase in inventory of $40.5 million, a $93.0 million reduction in the current portion of debt obligations and a $54.7 million reduction in cash. Cash was $58.1 million at April 30, 2003, compared to $112.8 million at the end of the previous year. The cash balance at April 30, 2002 included $80.3 million from the April 2002 equity issue that was used in May 2002 to redeem 35% of our senior subordinated notes. The increase in inventory of $40.5 million was the result of changes in foreign exchange rates and increased activity in the repair and overhaul business during the year. Included in inventory are spare aircraft components of $8.3 million that were transferred from a flying division (where they are classified as fixed assets) to the repair and overhaul division (where they are classified as inventory). Accounts receivable were $139.6 million at April 30, 2003, a $7.4 million decrease over the balance at the end of the previous year primarily due to a general reduction in receivables levels of $14.3 million, partially offset by the impact of foreign currency translation. The current portion of long-term debt decreased by $93.0 million compared to the prior year. The April 30, 2002 amount included 35% of the senior subordinated notes that were redeemed in Q1 of fiscal 2003 and a short-term U.S. dollar denominated facility.

Working capital was $199.7 million at April 30, 2002 compared to $172.7 million at April 30, 2001. The increase of $27.0 million was due primarily to inventory purchases required to support increased repair and overhaul and flying operations. Cash was $112.8 million at April 30, 2002, compared to $23.6 million at the end of the previous year. A portion of the cash balance ($80.3 million) was subsequently used to redeem 35% of our senior subordinated notes in May 2002. Accounts receivable were $147.0 million at April 30, 2002, a $9.3 million increase over the balance at the end of the previous year, primarily due to increased activity levels. Inventory levels at April 30, 2001 were low as a result of asset sales but increased during 2002 to support growth in helicopter flying and repair and overhaul activities. Payables and accruals at April 30, 2002 were $140.4 million, a $3.3 million increase from the balance at the end of the previous year. The current portion of long-term debt increased by $95.7 million at April 30, 2002 compared to the prior year due to the inclusion of 35% of the senior subordinated notes that were redeemed in May 2002 and a new U.S. dollar denominated facility.

We believe that we will be able to generate sufficient cash flow to meet our current and future working capital, capital expenditure and debt obligation requirements. As at April 30, 2003, we had unused credit facilities of $69.8 million and cash of $58.1 million, for a total of $127.9 million, compared to a total of $110.7 million at April 30, 2002 (excluding cash of $80.3 million used to redeem a portion of our senior subordinated notes in May 2002).

Total debt (net of cash) was $263.2 million at April 30, 2003, compared to $311.9 million at April 30, 2002, a decrease of $48.7 million. Net debt reductions of $66.6 million during the year were offset by the impact of exchange rates on the translation of our foreign currency denominated debt of $17.9 million. The improvement in our net debt position and the favourable re-negotiation of our pricing for our senior credit facilities will result in a further reduction in the margin over LIBOR and Bankers Acceptance on our senior credit facilities to 1.0%, effective Q1 2004. This will reduce future interest costs. At April 30, 2003, the margin was 1.125%.

Total debt (net of cash) was $311.9 million at April 30, 2002, compared at $440.5 million at April 30, 2001. Net debt reductions of $145.0 million were offset by the impact of exchange rates on the translation of our foreign denominated debt of $16.4 million. The improvement in our net debt position resulted in a further reduction in the margin on our senior credit facilities by 50 basis points, effective July 2002, thus reducing future interest costs.

As a result of debt reduction and increased EBITDA, the ratio of total debt (net of cash) to EBITDA improved from 6.5:1 at April 30, 2000 to 1.85:1 at April 30, 2003. During fiscal 2000, we established a target of 3.5:1 for this ratio. The chart below provides a comparison of the reduction in net debt and the net debt to EBITDA ratio over the last three fiscal years.

During fiscal 2003, we completed the sale-leaseback of six Super Puma AS332L aircraft, generating net proceeds of $58.5 million that are reflected in the reduction in net debt at April 30, 2003.

In April 2002, we completed an equity offering of 4.2 million subordinate voting shares, generating net proceeds of $113.9 million of which $33.6 million was used to pay down credit facilities in April 2002. In May 2002, we used the balance of these proceeds ($80.3 million) to redeem 35% of our senior subordinated notes, including a premium of $8.4 million, as permitted by the terms of the notes. These 11.75% notes were issued on July 5, 2000 at 98.825% of their face value for an effective yield of 12.0%.

On July 5, 2000 we established senior credit facilities with a Canadian chartered bank. The senior credit facilities consisted of two term loans and a revolving credit facility in an aggregate amount available of U.S. $225.0 million. The total amount available was later reduced to U.S. $161.0 million, reflecting the asset sales completed during fiscal 2001. During fiscal 2001, as part of our foreign currency risk management strategy, we converted U.S. $90.0 million and $38.5 million of the senior credit facilities to pounds sterling. The total pound sterling debt at April 30, 2003 was £ 55.2 million. At April 30, 2003, we had drawn $130.8 million of the senior credit facilities (including letters of credit and guarantees), with $69.8 million remaining available for future working capital requirements. The senior credit facilities will mature on July 6, 2005. During fiscal 2003, a short-term U.S. dollar denominated facility of U.S. $13 million was repaid.

The interest rate on the senior credit facilities decreases as the ratio of total debt to EBITDA decreases. At April 30, 2003, the interest rate was Bankers Acceptance or LIBOR plus a margin of 1.125%. Effective July 1, 2003, the margin will be reduced to 1.0% as a result of us achieving thresholds established in the loan agreement.

To minimize the impact of foreign exchange on our cash flow, we have denominated our debt in various currencies to more closely match net operating cash flows with debt service obligations. At April 30, 2003, our net debt was denominated in the following currencies:

The terms of certain of our debt agreements and helicopter lease agreements impose operating and financial limitations on us. Such agreements limit, among other things, our ability to incur additional indebtedness, create liens, make capital expenditures, sell or sublease assets, engage in mergers or acquisitions and make dividend and other payments. Our ability to comply with any of the foregoing limitations and with loan repayment provisions will depend on future performance. This will be subject to prevailing economic conditions and other factors, some of which may be beyond our control. We were throughout fiscal 2003, and continue to be, in compliance with all covenants and other conditions imposed by our debt and helicopter operating lease agreements.

At April 30, 2003, we had 17.9 million subordinate voting shares (2002 - 17.7 million) and 3.0 million multiple voting shares (2002 - 3.0 million) issued and outstanding. The increase in the subordinate voting shares is due to the issuance of shares under the employee share purchase plan and the employee stock option plan, share conversions and the conversion of a promissory note, generating net proceeds of $0.6 million during fiscal 2003.

During the year ended April 30, 2001, we issued an additional 1.0 million subordinate voting shares related to the conversion of warrants, the exercise of options, and the issue of shares under the employee share purchase plan. Total proceeds from the issue of these shares were $4.6 million. April 30, 2002, we had 17.7 million subordinate voting shares (2001 - 13.4 million) and 3.0 million multiple voting shares (2001 - 3.0 million) issued and outstanding. The increase in the subordinate voting shares is due primarily to the issuance of 4.2 million shares as part of our equity offering on April 25, 2002. Shares issued under the employee share purchase plan generated proceeds of $0.2 million during the year ended April 30, 2002, compared to $0.2 million in 2001.

We paid a dividend of $0.20 per share or $4.0 million in fiscal 2003. No dividends were paid during fiscal 2002.

Capital expenditures of $44.7 million were incurred during fiscal 2003. Of this amount, $18.4 million related to aircraft additions and modifications and $26.3 million related to other property and equipment. Included in aircraft additions and modifications are ongoing aircraft modifications of $12.3 million and $6.1 million related to the re-build of a Super Puma aircraft. The other property and equipment additions included $4.0 million for a new passenger terminal in Halifax, Canada, $4.0 million related to the completion of a new passenger terminal in the U.K., $6.6 million related to the purchase of major spares, $4.7 million for ground and other flying equipment and $7.0 million related to the acquisition of new information technology systems. All of these additions were funded through cash flow from operations. Proceeds on disposal of capital assets were $74.9 million in fiscal 2003. The proceeds were derived primarily from the sale-leaseback of six Super Puma AS332L aircraft for $65.4 million and insurance proceeds of $4.5 million.

Capital expenditures of $37.3 million were incurred during the year ended April 30, 2002. Of this amount, $23.8 million related to aircraft additions and modifications and $13.5 million related to other property and equipment. The other property and equipment additions included $5.9 million for a new passenger terminal in Aberdeen. Proceeds on disposal of capital assets were $49.8 million for the year ended April 30, 2002. The proceeds were derived primarily from the sale-leaseback of aircraft of $25.7 million, insurance proceeds of $12.2 million and the sale of two S-61s, one Bell 212, and four light aircraft for proceeds of $8.0 million.

Capital expenditures of $40.1 million were incurred during the year ended April 30, 2001. Of this amount, $29.1 million related to aircraft additions and modifications and $11.0 million related to other property and equipment. The other property and equipment additions included $1.6 million related to the Composites facility. Proceeds on disposal of capital assets were $2.7 million for the year ended April 30, 2001.

We spent $3.1 million on pre-operating costs during fiscal 2003, most of which related to the startup of new contracts during the year.

We spent $7.4 million on pre-operating costs during the year ended April 30, 2002, most of which related to the startup of our aerospace composites and bonding facility in Canada, Composites. Pre-operating expenses of $6.8 million were capitalized during the year ended April 30, 2001. Composites completed its pre-operating phase as of April 30, 2002, and will commence amortization of pre-operating costs in fiscal 2003, during which it expects to generate revenues of approximately $9.0 million from existing contracts.

During the year ended April 30, 2001, we introduced an Executive Share Purchase Plan, under which certain senior management can use interest-free loans advanced by us to acquire our shares. The total amount outstanding under these loans at April 30, 2003 was $3.4 million compared to $3.5 million at April 30, 2002 and $3.8 million at April 30, 2001.

In order to facilitate debt financing for CHL on a timely basis at the time of its sale in 2001, we advanced $10.0 million to CHL as part of the syndication of its term debt. During 2003, this loan was refinanced by CHL and we were repaid, with no impact on net earnings.

We periodically enter into interest rate swaps, forward foreign currency contracts, equity forward pricing and other derivative instruments to hedge our exposure to interest rate risk, foreign currency exchange rate risk and stock price volatility. We do not enter into derivative transactions for speculative or trading purposes.

The interest rate applicable to our senior credit facilities is based on floating rates plus a predetermined margin. As at April 30, 2003, $152.9 million of our total debt obligations were subject to floating interest rates. To hedge a portion of this interest rate risk, we entered into an interest rate swap agreement on £ 40.0 million of debt with a Canadian chartered bank. The difference between the fixed and floating rates is settled quarterly with the bank and recorded in financing charges. At April 30, 2003, the spot rate was 3.62%, compared to a rate of 6.90% in the swap agreement, resulting in a fair value of $(7.6) million.

We have also entered into a monthly forward foreign currency contract to buy euros for pounds sterling and to sell U.S. dollars for Canadian dollars to hedge the operating cash flows of certain of our U.K. and international operations. The net foreign exchange gain related to these forward foreign currency contracts is recorded in operations and totalled $0.7 million in fiscal 2003. The fair value of these forward contracts at April 30, 2003 was $0.8 million.

We have also entered into forward foreign currency indemnity agreements to purchase euros for U.S. dollars to reduce our risk of exposure to fluctuations in the euro-U.S. dollar exchange rate. In December 2002, a euro-U.S. dollar indemnity agreement matured which had been designated as a hedge related to the purchase of a helicopter that was concurrently sold and leased back to us. The resultant foreign exchange gain was deferred and is being amortized against lease expense over the term of the operating lease. At April 30, 2003, the deferred foreign exchange gain recorded in other liabilities as a deferred gain on the sale-leaseback of aircraft was $2.1 million (net of amortization of $0.1 million). The fair value of the remaining foreign currency indemnity agreements at April 30, 2003 was $9.8 million.

In July 2002, we entered into a hedging agreement with a major Canadian financial institution to hedge our stock appreciation rights plans ("SARs") using an equity forward price agreement to reduce volatility in cash flow and earnings due to possible future increases in our share price. We accrue the liability and related expense associated with SARs based on the difference between the reference price and the hedged price. At April 30, 2003, the amount recorded in current liabilities related to the SARs was $6.8 million.

The fair value of each of our financial instruments, including the factors used in making this determination, are described in Note 18 to the Consolidated Financial Statements included elsewhere in this Annual Report.

We have entered into guarantees and variable interest arrangements that can broadly be considered as off-balance sheet arrangements. The following is a summary of the significant off-balance sheet arrangements at April 30, 2003:

(a)        Guarantees

We have given guarantees to certain lessors in respect of operating leases. If we fail to meet the senior credit facilities' financial ratios or breach any of the covenants of those facilities and, as a result, the senior lenders accelerate repayment of their debt, the leases provide for a cross-acceleration that could give the lessors and financial institutions the right to terminate the leases and require return of the aircraft and payment of the present value of all future lease payments and certain other amounts. If the realized value of the aircraft is insufficient to discharge the indebtedness due to those lessors in respect of the present value of the future lease payments, the financial institution could obtain payment of that deficiency from us under these guarantees.

We have also provided limited guarantees to third parties under some of our operating leases in connection with a portion of the aircraft values at the termination of the leases. The leases have terms expiring between 2004 and 2010. Our exposure under the asset value guarantees, including guarantees in the form of junior loans, deferred payments and advance rentals, is approximately $36.4 million. The resale market for the aircraft types for which we have provided guarantees remains strong, and as a result, we do not anticipate incurring any liability or loss with respect to these guarantees.

We have performance guarantees with two customers of a third-party lessee. These guarantees have been in effect since August 1995 and November 1998 and relate to the provision of helicopter transportation services involving three heavy aircraft. In the event of non-performance by the third-party lessee, the guarantee may require us to continue the provision of services under the contract as we are the lessor to the third-party lessee of the three helicopters. The guarantees are currently being contested as we maintain that the contract renewals with the two customers by the third-party lessee were not made in accordance with the express terms of the contracts guaranteed by us.

In addition, as at April 30, 2003 we have provided limited guarantees of approximately $47.1 million to third parties, principally related to our performance under long-term customer contracts.

(b)        Variable Interest Entities

At April 30, 2003 we operated 17 aircraft under operating leases with eight entities that would be considered variable interest entities ("VIEs") under U.S. GAAP. These leases have terms and conditions similar to those of our other operating leases over periods ending between 2004 and 2010. Canadian guidance on this issue, "Accounting Guideline 15", is consistent with the provisions contained in U.S. GAAP with regard to the disclosure and consolidation requirements for VIEs.

The VIEs are owned by independent third parties and we are not involved in the management or administration of these entities. During the year ended April 30, 2003, we made payments to these entities of approximately $18.5 million in accordance with the terms of our operating leases.

U.S. GAAP per FASB Interpretation No. 46 ("FIN 46"), was effective for all VIEs created after January 31, 2003, and will be effective for those VIEs created prior to January 31, 2003 for our interim period commencing August 1, 2003. The Canadian guidance applies to all annual and interim periods beginning on or after November 1, 2004.

Under both U.S. and Canadian GAAP, we will be required to consolidate those entities for which we are deemed to be the primary beneficiary.

The fair market value of the 17 aircraft leased from the VIEs at April 30, 2003, based on an independent appraisal, was $241.1 million. We have provided junior loans, advance rentals and asset value guarantees in connection with operating leases with these VIEs. We have also entered into remarketing agreements for the aircraft leased from the VIEs. Our maximum exposure to loss as a result of our interest in the VIEs is $19.4 million.

Contractual Obligations

While the asset mix varies in each plan, overall the asset mix is 38.4% equities, 20.1% fixed income and 41.5% money market as at April 30, 2003. Our U.K. defined benefit plans contained equities comprising 84.2% of their total plan assets. The Norwegian defined benefit plans contained a significantly lower portion of their total plan assets in equities (8.7%), with the remainder being held in fixed income and money market assets.

Risks and Uncertainties

During fiscal 2003, we derived 72.4% ($523.3 million) of our revenues from the provision of helicopter transportation services to customers in the offshore oil and gas industry. We believe the future demand for these helicopter services and our competitive position will enable us to continue to be a major provider of helicopter transportation services to the oil and gas industry. However, a change in the demand for offshore oil and gas or the entry of significant new competitors could have a material impact on our revenues from our customers in the offshore oil and gas industry. Approximately 80.4% of our revenues from customers in the oil and gas industry are derived from the more stable oil and gas production activities, which tend to be less affected by short-term fluctuations in oil and gas prices.

Contract Loss

Application of Critical Accounting Policies

v)         Effectiveness of foreign currency hedge

Principal Differences between Canadian GAAP and U.S. GAAP