U .S.
      SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549




FORM
      20-F




o
            REGISTRATION
                STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE
                ACT OF 1934





OR





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




For
      the
      fiscal year ended April 30, 2006


OR





o
            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)





4740
      Agar Drive


Richmond,
      British Columbia


Canada
      V7B 1A3


(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 April 30, 2006,
      was 36,859,647.





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.





Yesx
            Noo





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





Item
                17o
            Item
                18x
















TABLE
      OF
      CONTENTS




Item
            
            Page**PART
                I**
            
            **3**ITEM
                1.
            IDENTITY
                OF
                DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
            3ITEM
                2.
            OFFER
                STATISTICS AND EXPECTED TIMETABLE
            3ITEM
                3.
            KEY
                INFORMATION
            3ITEM
                4.
            INFORMATION
                ON THE COMPANY
            15ITEM
                5.
            OPERATING
                AND
                FINANCIAL REVIEW AND PROSPECTS
            34ITEM
                6.
            DIRECTORS,
                SENIOR MANAGEMENT AND EMPLOYEES
            66ITEM
                7.
            MAJOR
                SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
            87ITEM
                8.
            FINANCIAL
                INFORMATION
            88ITEM
                9.
            THE
                OFFER AND
                LISTING
            88ITEM
                10.
            ADDITIONAL
                INFORMATION
            90ITEM
                11.
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            93ITEM
                12.
            DESCRIPTION
                OF SECURITIES OTHER THAN EQUITY SECURITIES
            94**PART
                II**
            
            **95**ITEM13.
            DEFAULTS,
                DIVIDEND ARREARAGES AND DELINQUENCIES
            95ITEM
                14.
            MATERIAL
                MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
                PROCEEDS
            95ITEM
                15.
            CONTROLS
                AND
                PROCEDURES
            95ITEM
                16A.
            AUDIT
                COMMITTEE FINANCIAL EXPERT
            95ITEM
                16B.
            CODE
                OF
                ETHICS
            95ITEM
                16C.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            96ITEM
                16D.
            EXEMPTIONS
                FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
            96ITEM
                16E.
            PURCHASE
                OF
                EQUITY SECURITIES BY ISSUER AND AFFILIATED PURCHASERS
            96**PART
                III**
            
            **97**ITEM
                17.
            FINANCIAL
                STATEMENTS
            97ITEM
                18.
            FINANCIAL
                STATEMENTS
            97ITEM
                19.
            EXHIBITS
            152




*All
      defined terms under Rule 4-10(a) of Regulation S-X shall have their
      statutorily-prescribed meanings when used in this Annual
      Report.*










*For
      purposes of this Annual Report, all references to dollar amounts are expressed
      in Canadian dollars unless otherwise specified. On September 6, 2006, the
      noon buying rate in New York City for cable transfers in Canadian dollars as
      certified for customs purposes by the Federal Reserve Bank of New York was
      $0.9048 US = $1.00 Canadian.*




**FORWARD-LOOKING
      STATEMENTS**




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. These statements may involve risks and uncertainties including
      but not limited to, factors detailed in this Annual Report and in other filings
      with the United States Securities and Exchange Commission and Canadian
      securities regulatory authorities. Certain material factors or assumptions
      were
      applied in drawing the conclusions or making the forecasts or projections in
      the
      forward-looking information herein. Should one or more of these risks or
      uncertainties materialize, or should underlying assumptions prove incorrect,
      actual outcomes may vary materially from those indicated. CHC Helicopter
      Corporation disclaims any intentions or obligations to update or revise any
      forward-looking information, whether as a result of new information or
      otherwise, except in accordance with applicable securities laws.













**PART
      I**






ITEM
      1.IDENTITY
      OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS




Not
      Applicable.







ITEM
      2.OFFER
      STATISTICS AND EXPECTED TIMETABLE




Not
      Applicable.






ITEM
      3.KEY
      INFORMATION




**SELECTED
      FINANCIAL DATA**




The
      following consolidated historical financial data as at and for the fiscal years
      ended April 30, 2006, 2005, 2004, 2003, and 2002 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 US GAAP. For the reconciliation to US GAAP for the three most
      recently completed fiscal years, see Note 32 to our audited consolidated
      financial statements included elsewhere in this Annual Report.




3


The
      following data should be read in conjunction with "Operating and Financial
      Review and Prospects" and our audited consolidated financial statements included
      elsewhere in this Annual Report.




**As
                at and for the fiscal year ended April 30****2006**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002***(i)*
            
            *(i)*
            
            *(i)*
            
            *(i)*(in millions
                of Canadian dollars except per share amounts)**Amounts
                under Canadian GAAP****Operating
                Data:**Revenue
            
            $
            1,011.5
            
            $
            967.2
            
            $
            771.4
            
            $
            762.9
            
            $
            658.1Direct
                costs
            
            
            (797.4
            )
            
            (742.1
            )
            
            (620.3
            )
            
            (579.2
            )
            
            (519.8
            )General
                and administration costs
            
            
            (27.9
            )
            
            (35.3
            )
            
            (18.6
            )
            
            (31.1
            )
            
            (23.8
            )Amortization
            
            
            (58.6
            )
            
            (53.1
            )
            
            (38.5
            )
            
            (32.1
            )
            
            (25.1
            )Restructuring
                costs
            
            
            (16.3
            )
            
            (17.6
            )
            
            (9.2
            )
            
            -
            
            
            -Gain
                on disposals of assets
            
            
            0.2
            
            
            4.1
            
            
            3.3
            
            
            2.4
            
            
            1.9Fair
                value adjustment
            
            
            -
            
            
            (14.3
            )
            
            -
            
            
            (12.8
            )
            
            -*Operating
                income*
            
            
            111.5
            
            
            108.9
            
            
            88.1
            
            
            110.1
            
            
            91.3Debt
                settlement costs
            
            
            -
            
            
            (2.0
            )
            
            (19.7
            )
            
            (12.5
            )
            
            -Financing
                chargesInterest
                expense
            
            
            (43.9
            )
            
            (32.9
            )
            
            (30.6
            )
            
            (31.1
            )
            
            (42.3
            )Other
            
            
            (10.1
            )
            
            (5.4
            )
            
            0.8
            
            
            (4.5
            )
            
            (6.5
            )Earnings
                from continuing operations before taxes and undernoted
                items
            
            
            57.5
            
            
            68.6
            
            
            38.6
            
            
            62.0
            
            
            42.5Non-controlling
                interest
            
            
            (0.1
            )
            
            (0.3
            )
            
            -
            
            
            -
            
            
            -Gain
                on sale of long-term investments
            
            
            37.6
            
            
            -
            
            
            -
            
            
            -
            
            
            -Equity
                in earnings of associated companies
            
            
            6.6
            
            
            5.5
            
            
            3.9
            
            
            2.3
            
            
            1.1Income
                tax (provision) recovery
            
            
            (10.9
            )
            
            (27.6
            )
            
            9.7
            
            
            2.2
            
            
            (4.9
            )*Net
                earnings from continuing operations*
            
            
            90.7
            
            
            46.2
            
            
            52.2
            
            
            66.5
            
            
            38.7Net
                earnings (loss) from discontinued operations
            
            
            -
            
            
            10.3
            
            
            (0.3
            )
            
            -
            
            
            -*Net
                earnings*
            
            $
            90.7
            
            $
            56.5
            
            $
            51.9
            
            $
            66.5
            
            $
            38.7**Per
                Share Data:**BasicNet
                earnings from continuing operations
            
            $
            2.16
            
            $
            1.10
            
            $
            1.26
            
            $
            1.60
            
            $
            1.17Net
                earnings (loss) from discontinued operations
            
            
            -
            
            
            0.25
            
            
            (0.01
            )
            
            -
            
            
            -Net
                earnings
            
            
            2.16
            
            
            1.35
            
            
            1.25
            
            
            1.60
            
            
            1.17DilutedNet
                earnings from continuing operations
            
            
            1.97
            
            
            1.01
            
            
            1.16
            
            
            1.48
            
            
            1.07Net
                earnings (loss) from discontinued operations
            
            
            -
            
            
            0.22
            
            
            (0.01
            )
            
            -
            
            
            -Net
                earnings
            
            
            1.97
            
            
            1.23
            
            
            1.15
            
            
            1.48
            
            
            1.07Dividends
                per participating voting share
            
            
            0.40
            
            
            0.30
            
            
            0.25
            
            
            0.10
            
            
            -Dividends
                (in US $) per share*(ii)*
            
            
            0.34
            
            
            0.24
            
            
            0.19
            
            
            0.06
            
            
            -Weighted
                average shares outstanding in (000)
            
            
            42,708
            
            
            42,673
            
            
            42,122
            
            
            41,456
            
            
            32,929**Other
                Financial Data*****(iii)*****:**Revenue
                - 2006 and 2005Operating
                segmentsGlobal
                Operations
            
            $
            330.9
            
            $
            292.1European
                Operations
            
            
            520.4
            
            
            530.9Heli-One
            
            
            160.1
            
            
            143.81,011.4
            
            
            966.8Corporate
                and
                other
            
            
            0.1
            
            
            0.4Total
                revenue
            
            $
            1,011.5
            
            $
            967.2





4




**As
                at and for the fiscal year ended April 30****2006**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002***(i)*
            
            *(i)*
            
            *(i)*
            
            *(i)*(in millions
                of Canadian dollars except per share amounts)**Other
                Financial Data*****(iii)*****(cont’d):**Revenue
                - 2004, 2003 and 2002Helicopter
                operationsEurope
            
            
            
            
            
            
            
            $
            482.1
            
            $
            508.7
            
            $
            447.0International
            
            
            
            
            
            
            
            
            191.8
            
            
            184.8
            
            
            167.5Schreiner*(iv)*
            
            
            
            
            
            
            
            
            32.4
            
            
            -
            
            
            -Composites
            
            
            
            
            
            
            
            
            7.0
            
            
            6.4
            
            
            -713.3
            
            
            699.9
            
            
            614.5Repair
                and overhaul
            
            
            
            
            
            
            
            
            58.1
            
            
            63.0
            
            
            43.6Total
                revenue
            
            
            
            
            
            
            
            $
            771.4
            
            $
            762.9
            
            $
            658.1Segment
                EBITDAR - 2006 and 2005*(v)*Operating
                segmentsGlobal
                Operations
            
            $
            90.9
            
            $
            87.3European
                Operations
            
            
            107.5
            
            
            110.8Heli-One
            
            
            235.1
            
            
            234.8433.5
            
            
            432.9Corporate
                and other
            
            
            (27.7
            )
            
            (32.1
            )$
            405.8
            
            $
            400.8Segment
                EBITDA - 2004, 2003 and 2002*(vi)*Helicopter
                operationsEurope
            
            
            
            
            
            
            
            $
            72.1
            
            $
            89.3
            
            $
            62.5International
            
            
            
            
            
            
            
            
            23.4
            
            
            35.3
            
            
            22.6Schreiner
            
            
            
            
            
            
            
            
            3.4
            
            
            -
            
            
            -Composites
            
            
            
            
            
            
            
            
            (2.0
            )
            
            (3.2
            )
            
            -96.9
            
            
            121.4
            
            
            85.1Repair
                and overhaul
            
            
            
            
            
            
            
            
            55.4
            
            
            52.8
            
            
            53.6Corporate
                and
                other
            
            
            
            
            
            
            
            
            (19.7
            )
            
            (21.5
            )
            
            (24.2
            )$
            132.6
            
            $
            152.7
            
            $
            114.5Total
                capital asset additions*(vii)*
            
            $
            307.2
            
            $
            251.6
            
            $
            170.6
            
            $
            58.1
            
            $
            44.0Ratio
                of earnings to fixed charges*(viii)*
            
            
            1.9x
            
            
            1.9x
            
            
            1.7x
            
            
            1.9x
            
            
            1.5x**Balance
                Sheet Data:**Working
                capital*(ix)*
            
            $
            147.8
            
            $
            111.3
            
            $
            127.7
            
            $
            131.6
            
            $
            201.4Total
                assets
            
            
            1,678.3
            
            
            1,686.7
            
            
            1,527.6
            
            
            1,106.7
            
            
            1,125.4Total
                debt
            
            
            625.0
            
            
            627.1
            
            
            514.0
            
            
            321.3
            
            
            424.8Total
                liabilities
            
            
            1,187.6
            
            
            1,226.6
            
            
            1,108.3
            
            
            726.3
            
            
            822.3Capital
                stock
            
            
            240.2
            
            
            239.5
            
            
            238.4
            
            
            237.0
            
            
            236.0Shareholders’
                equity
            
            
            490.7
            
            
            460.1
            
            
            419.3
            
            
            380.4
            
            
            303.1**Amounts
                under US GAAP****Operating
                Data:**Revenue
            
            $
            1,011.5
            
            $
            967.2
            
            $
            771.4
            
            $
            762.9
            
            $
            658.1Direct
                and general and administrative costs
            
            
            823.1
            
            
            782.4
            
            
            637.7
            
            
            613.8
            
            
            550.0Amortization
            
            
            58.6
            
            
            53.1
            
            
            38.5
            
            
            32.1
            
            
            25.1Financing
                charges
            
            
            7.6
            
            
            43.1
            
            
            53.2
            
            
            18.9
            
            
            48.8Net
                earnings
            
            
            130.6
            
            
            49.1
            
            
            34.0
            
            
            87.6
            
            
            43.5







5




**As
                at and for the fiscal year ended April 30****2006**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002***(i)*
            
            *(i)*
            
            *(i)*
            
            *(i)*(in millions
                of Canadian dollars except per share amounts)**Amounts
                under US GAAP****Operating
                Data (cont'd):****Per
                Share Data:**Basic
                earnings per share
            
            $
            3.11
            
            $
            1.17
            
            $
            0.82
            
            $
            2.11
            
            $
            1.32Diluted
                earnings per share
            
            
            2.84
            
            
            1.06
            
            
            0.74
            
            
            1.95
            
            
            1.20Dividends
                per participating voting share
            
            
            0.40
            
            
            0.30
            
            
            0.25
            
            
            0.10
            
            
            -Dividends
                (in US $) per share*(ii)*
            
            
            0.34
            
            
            0.24
            
            
            0.19
            
            
            0.06
            
            
            -Weighted
                average shares outstanding in (000)
            
            
            42,708
            
            
            42,673
            
            
            42,122
            
            
            41,456
            
            
            32,929**Balance
                Sheet Data:**Working
                capital*(ix)*
            
            $
            149.7
            
            $
            108.3
            
            $
            128.8
            
            $
            145.9
            
            $
            203.6Total
                assets
            
            
            1,679.8
            
            
            1,685.8
            
            
            1,528.5
            
            
            1,073.9
            
            
            1,107.4Total
                debt
            
            
            625.3
            
            
            627.6
            
            
            515.0
            
            
            322.2
            
            
            424.8Total
                liabilities
            
            
            1,230.5
            
            
            1,289.9
            
            
            1,113.6
            
            
            724.0
            
            
            820.6Capital
                stock
            
            
            240.2
            
            
            239.5
            
            
            238.4
            
            
            237.0
            
            
            236.0Shareholders’
                equity
            
            
            449.3
            
            
            395.9
            
            
            414.9
            
            
            349.9
            
            
            286.8




(i)
            Reclassified
                and restated. See Note 4 to our audited consolidated financial
                statements included elsewhere in this Annual
                Report.


(ii)
            Amounts
                have been converted to US dollars at the average exchange rate for
                the
                period as provided below.


(iii)
            Comparative
                information has been reclassified and restated to reflect the
                reclassification and restatements as noted in (i), except that the
                segment
                information for the years ended April 30, 2004, 2003 and 2002 has not
                been presented under the current organizational structure as accurate
                estimates to reflect certain lease, power by the hour and
                associated transactions between the Company’s operating segments could not
                be made.


(iv)
            Schreiner
                helicopter operations revenue includes some repair and overhaul
                revenue.


(v)
            Segment
                EBITDAR is defined as segment EBITDA before aircraft leases and associated
                costs.


(vi)
            Segment
                EBITDA is revenue less operating expenses allocated to each of our
                segments. See Note 25 to our audited consolidated financial
                statements included elsewhere in this Annual
                Report.


(vii)
            Total
                capital asset additions include all asset acquisitions, including
                aircraft, as well as helicopter major inspection and helicopter component
                expenditures during the period.


(viii)
            For
                the purpose of this calculation "earnings" is defined as earnings
                before
                income taxes and undistributed earnings from equity investees. Fixed
                charges consist of interest and an estimated portion of aircraft
                lease
                expense representative of the interest
                factor.


(ix)
            Working
                capital consists of current assets less current liabilities, excluding
                the
                current portion of debt
                obligations.





**EXCHANGE
      RATE DATA**




The
      following table sets forth, for the periods indicated, certain 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 average exchange rate is based on the average of the
      exchange rates on the last day of each month during such periods. The rates
      quoted are the number of United States dollars per one Canadian
      dollar.




**Year
                ended April 30,****2006**
              **US$**
            
            **2005**
              **US$**
            
            **2004**
              **US$**
            
            **2003**
              **US$**
            
            **2002**
              **US$**Exchange
                rate at the end of period
            0.8926
            
            0.7957
            
            0.7293
            
            0.6975
            
            0.6377Average
                exchange rate during period
            0.8499
            
            0.7891
            
            0.7445
            
            0.6498
            
            0.6370High
                exchange rate during period
            0.8926
            
            0.8493
            
            0.7880
            
            0.6975
            
            0.6636Low
                exchange rate during period
            0.7872
            
            0.7158
            
            0.7032
            
            0.6264
            
            0.6179







6




The
      following table sets forth, for the periods indicated, the monthly high and
      low
      US 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.




**Month
                ended****August
                31, 2006**
              **US$**
            
            **July
                31, 2006**
              **US$**
            
            **June
                30, 2006**
              **US$**
            
            **May
                31,****2006**
              **US$**
            
            **April
                30, 2006**
              **US$**
            
            **March
                31, 2006**
              **US$**High
            0.9037
            
            0.8999
            
            0.9098
            
            0.9100
            
            0.8926
            
            0.8834Low
            0.8840
            
            0.8760
            
            0.8896
            
            0.8903
            
            0.8534
            
            0.8531




We
      report our financial results in Canadian dollars and, unless otherwise
      indicated, references herein to "dollars", "$" or "CDN" are to Canadian dollars.
      Except where otherwise specifically noted, all amounts stated in US dollars
      are
      included for convenience and are stated as a matter of arithmetical computation
      only. Except where otherwise specifically noted, US dollar amounts are based
      on
      the April 30, 2006 noon buying rate for cable transfers of the Canadian
      dollar in New York City of US $0.8926 as certified for customs purposes by
      the Federal Reserve Bank of New York. These amounts should not be construed
      as
      representations that the Canadian dollar amounts actually represent such US
      dollar amounts or could be converted into US dollars at these rates. These
      rates
      differ from some of the rates used in the preparation of our financial
      statements included in this Annual Report and therefore US dollar amounts used
      herein may differ from corresponding actual US dollar amounts that were
      translated into Canadian dollars in the preparation of these financial
      statements. On September 6, 2006 the noon buying rate for a Canadian dollar
      was US $0.9048.




**RISK
      FACTORS**




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.




**Our
      operations are largely dependent upon the level of activity in the oil and
      gas
      industry**




To
      varying degrees these activity levels are affected by trends in oil and gas
      prices. Historically, the prices for oil and gas have been volatile and are
      subject to wide fluctuations in response to changes in the supply of and demand
      for oil and gas, market uncertainty and a variety of additional factors beyond
      our control. We cannot predict future oil and gas price movements. Any prolonged
      reduction in oil and gas prices could depress the level of helicopter activity
      in support of exploration and, to a lesser extent, production activity and,
      therefore, have a material adverse effect on our business, financial condition
      and results of operations. For the fiscal year ended April 30, 2006 revenue
      generated by helicopter transportation services for the oil and gas industry
      was
      69% of our total revenue, unchanged from the previous fiscal year.




**If
      oil and gas companies undertake cost reduction measures there may be an adverse
      effect on our business**




Companies
      in the oil and gas production and exploration sector continually seek to
      implement measures aimed at greater cost savings, including helicopter support
      operations. For example, companies have reduced manning levels on both old
      and
      new installations by using new technology to permit unmanned installations.
      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.






**Our
      overall operations are highly dependent upon the level of activity in the North
      Sea**




Approximately
      66% of our oil and gas based revenues for the fiscal year ended April 30,
      2006 were derived from our helicopter support services to customers operating
      in
      the North Sea. If activity in oil and gas production and exploration in the
      North Sea declines, our business, financial condition and results of operations
      would be materially and adversely affected.




7




**Many
      of the markets in which we operate are highly competitive, which may result
      in a
      loss of market share or a decrease in revenue or profit
      margins**




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, for which helicopters comprising 96% of our
      helicopter fleet at April 30, 2006 are used, we compete against a number of
      helicopter operators including Bristow Group Inc. (“Bristow”), which is the
      other major global commercial helicopter operator, and other local and regional
      operators. In addition, many of our customers in the oil and gas industry have
      the financial ability to perform their own helicopter flying operations in-house
      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
      rely on a limited number of large, long-term offshore helicopter support
      contracts and, if some of these are discontinued, our revenues could
      suffer**




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.




**If
      we are unable to acquire the necessary aircraft or insurance, we may not be
      able
      to take advantage of growth opportunities**




There
      are lead times of up to 18 months to obtain the primary new heavy and
      medium aircraft types most often required by our customers. 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.




**Helicopter
      operations involve risks that may not be covered by our insurance or may
      increase the cost of our insurance**




The
      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. Our inability to renew 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. We believe we are adequately covered by insurance in light
      of our historical need for insurance coverage. The events of September 11,
      2001 caused a worldwide increase in insurance rates, particularly in the
      business in which we operate, and restricted the ability of operators to acquire
      war liability coverage above certain limits. As a result of these and other
      factors, no assurance can be given that we will 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. We maintain a flight
      safety organization that is responsible for ensuring compliance with safety
      standards within our organization and the requisite proficiency among flight
      crews. Our safety organization is responsible for training flight crews,
      conducting regular safety audits and seminars for all flight personnel, and
      generally ensuring safe operating techniques and standards consistent with
      Canadian and other government regulations and customer requirements. In
      addition, aviation regulatory bodies and customers conduct safety audits to
      ensure that our standards meet their requirements.







8




**If
      we are unable to maintain required government-issued licenses for our
      operations, we will be unable to conduct helicopter operations in the applicable
      country**




**Europe**




49%
      of
      our revenue for the fiscal year ended April 30, 2006 originated from
      helicopter flying services from our European based operations (UK, Norway,
      Denmark, the Netherlands and Ireland). To operate helicopters in the UK and
      in
      the UK sector of the North Sea, an operator must be licensed by the UK 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
      UK operating subsidiary, CHC Scotia Limited (“Scotia”), has been licensed to
      operate helicopters by the UK Civil Aviation Authority on the basis that we
      are
      (and therefore Scotia is) majority owned and controlled by European Nationals
      because our Executive Chairman, Mr. Craig L. Dobbin, a citizen of both
      Canada and Ireland (a Member State of the European Union), holds a sufficient
      number of securities of CHC. However, the UK Secretary of State (generally
      acting upon the advice of the UK 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 UK competitors of CHC alleged that we did not satisfy these
      requirements and that, as a result, Brintel Helicopters Limited (“Brintel”), our
      only UK 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 UK 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, if
      his percentage ownership of CHC were to otherwise decrease, or if he were to
      die
      and no alternative arrangement acceptable to the UK Civil Aviation Authority
      were implemented.




Our
      Danish, Irish and Dutch subsidiaries are subject to the same European Union
      nationality requirements as Denmark, Ireland and the Netherlands are all member
      states of the European Union. The Dutch Civil Aviation Authority advised us
      in
      writing prior to our acquisition of Schreiner Luchtvaart Groep B.V.
      (“Schreiner”) that Schreiner was in compliance with applicable European
      ownership and control requirements and, based on information provided by us,
      would continue to be so following its acquisition by us. In accordance with
      Dutch Civil Aviation procedures, we were required to submit certain information
      regarding our ownership and control to the Dutch Civil Aviation Authority
      following our acquisition of Schreiner to formally demonstrate that our flying
      subsidiary in the Netherlands, CHC Helicopters Netherlands B.V., continues
      to
      meet the European ownership and control requirements. We have submitted the
      required information to the Dutch Civil Aviation Authority. We believe that
      we
      are currently “majority owned” and “effectively controlled” within the meaning
      of European Union and European Economic Area licensing requirements. 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.




Our
      Norwegian flying subsidiary, CHC Helikopter Service AS (“HSG”), is subject to
      substantially the same European Union nationality requirements with regard
      to
      ownership and control as are our other European subsidiaries due to Norway’s
      status as a Member State of the European Economic Area, and the agreement
      between the European Union and the European Economic Area harmonizing aviation
      relations between the two. 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 UK 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.




**Canada**




Our
      helicopter operations in Canada are regulated by Transport Canada. Our
      helicopter operations in Canada and certain other countries are conducted
      pursuant to an air operator certificate issued by the Minister of Transport
      (Canada) under the provisions of the Aeronautics Act (Canada). 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 this
      certificate.





9


**South
      Africa**




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 confirmed that
      Court Air's licenses for helicopter operations in South Africa would 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 in 1999, any such reversal of decision could
      materially and adversely affect our business, financial condition and results
      of
      operations.




**Australia**




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 operator
      certificate. Our ability to offer our helicopter transportation services in
      Australia is dependent on maintaining these certificates.




**Barbados**




The
      Barbados subsidiaries are incorporated pursuant to the Companies Act Chapter
      308
      of the laws of Barbados as international business companies. As such, they
      are
      registered and licensed annually by the Ministry of Economic Development and
      International Business in accordance with the International Business Companies
      Act. An IBC license is issued annually which enables the respective companies
      to
      engage in international business or international trade and commerce. No
      registration, licensing or authorization is required with the Civil Aviation
      Authority which is the local governmental authority that regulates aviation
      operations in Barbados. Our ability to engage in international business or
      international trade and commerce is dependent on maintaining these
      licenses.




**Other
      Countries**




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 licenses and air
      operator certificates. These regulations may require us to obtain a license
      to
      operate in that country, may favour 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 a number of years, we cannot assure you as to what foreign governmental
      regulations may be applicable in the future to our helicopter operations. In
      addition, we operate in association with local parties in many of these other
      foreign countries.




**Our
      international operators may suffer due to political, economic and regulatory
      uncertainty**




A
      substantial portion of our revenue in recent years has been attributable to
      operations outside North America and Europe by our Global Operations segment.
      34% of revenue for our fiscal year ended April 30, 2006 was generated from
      these operations. Risks associated with some of our Global Operations include
      war and civil disturbances or other events that may limit or disrupt markets,
      expropriation, requirements to award contracts, concessions or licenses to
      nationals, international exchange restrictions and currency fluctuations,
      changing political conditions, licensing requirements and monetary policies
      of
      foreign governments. Any of these 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.




10


**Fluctuations
      in currencies may make it more costly for us to pay our
      debt**




We
      prepare our financial statements in Canadian dollars. However, a significant
      portion of revenue and operating expenses are denominated in the functional
      currencies of our principal foreign operating subsidiaries which consist
      primarily of pound sterling, Norwegian kroner, US dollars, Australian dollars,
      South African rand and euros. In addition, certain revenue and operating
      expenses are transacted in currencies other than the functional currencies
      of
      these subsidiaries. The foreign exchange impact on revenue and segment EBITDAR
      is comprised of (i) foreign exchange on the translation of the financial
      results of the foreign subsidiaries into Canadian dollars (“translation
      impact”); and (ii) foreign exchange on the translation of foreign
      denominated transactions into the functional currencies of the subsidiaries
      (“transaction impact”).




The
      total unfavourable foreign exchange impact on revenue for fiscal 2006 was
      $98.4 million. This consisted of an unfavourable translation impact of
      $97.4 million and a $1.0 million unfavourable transaction
      impact.




The
      total unfavourable foreign exchange impact on segment EBITDAR for fiscal 2006
      was $25.7 million. This consisted of an unfavourable translation impact of
      $26.1 million and a favourable transaction impact of
      $0.8 million.




The
      total unfavourable foreign exchange impact on operating income for fiscal 2006
      was $13.4 million. This consisted of an unfavourable translation impact of
      $14.3 million and a favourable transaction impact of
      $0.9 million.




Our
      overall approach to managing foreign currency exposures includes identifying
      and
      quantifying exposures and putting in place the necessary financial instruments
      to manage the exposure. We operate under a corporate policy that restricts
      us
      from using any financial instrument for speculative or trading purposes. The
      policy provides that we may participate in derivative transactions only with
      Schedule I Canadian chartered banks or other financial institutions with an
“A” credit rating.




We
      have
      developed a risk management plan to mitigate potential risks with respect to
      foreign currencies. The strategy is to match cash inflows and outflows by
      currency, thereby minimizing net currency exposures to the extent possible.
      This
      is accomplished by ensuring that customer contracts, major expenditures and
      debt
      are denominated in the appropriate currencies. To mitigate the impact that
      weakening European currencies could have on operating cash flows, we have
      denominated, either directly or via currency swaps, a significant portion of
      our
      long-term debt in pound sterling, euros and Norwegian kroner.




**The
      loss of key personnel could affect our growth and future
      success**




Our
      success has been dependent on the quality of our key management personnel,
      including Craig L. Dobbin, our Executive Chairman, and Sylvain A. Allard, our
      President and Chief Executive Officer. The loss of Mr. Dobbin or
      Mr. Allard, due to time constraints, illness, death or any other reason,
      could have a material adverse effect on our business. In addition, since we
      have
      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.




**We
      may experience work stoppages that could cause disruptions in our
      operations**




We
      are
      party to the following collective labour agreements:




•
            In
                Norway our pilots have a two-year collective agreement that expired
                April 30, 2006. Ground staff and engineers had a central agreement
                that expired March 31, 2006 and a local agreement that expires on
                September 30, 2006. Negotiations are currently being held with each
                of these groups. Repair and overhaul employees had central agreements
                that
                expired on March 31, 2006. There are also two-year local agreements
                with the repair and overhaul employees that expire on September 30,
                2006.




•
            In
                the UK, we have a collective agreement with our pilots and a separate
                agreement with our engineers and other ground staff, both of which
                expire
                on June 30, 2010.






11




•
            In
                Denmark, we have a multi-year collective agreement with our pilots
                that
                expires on June 30, 2007, and separately with our engineers and
                ground staff that expires June 30,
                2007.




•
            In
                Ireland, we had collective pay agreements in place with our pilots,
                aircrew and engineers that expired on April 30, 2006. Negotiations
                are currently being held with all three
                groups.




•
            In
                Australia, we have a collective agreement with our pilots that will
                expire
                on May 1, 2008 and a collective agreement with our aircrew which will
                expire on August 21, 2008. Our engineers’ agreement in Australia
                expired August 31, 2005, with negotiations ongoing for a new
                agreement.




•
            In
                the Netherlands, we have two collective agreements with our pilots
                which
                expire on April 30, 2009. The ground staff and general administrative
                staff collective agreement expires on April 30,
                2008.




•
            We
                also have a collective agreement with certain of the employees at
                CHC
                Composites Ltd. (“Composites”) that expires on October 15,
                2006.




Employees
      at our other helicopter operations are not unionized.




During
      the past three years there have been some short-term national strikes in Nigeria
      that have had no significant impact on our Nigerian operations.




Our
      operations in the Netherlands are subject to the Netherlands Work Council Act
      and must seek the advice of the Netherlands Work Council prior to implementing
      a
      variety of decisions. 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.




**We
      are controlled by our principal shareholder who can determine the outcome of
      matters to be decided by our shareholders**




As
      of
      April 30, 2006, Mr. Dobbin, directly and indirectly through Discovery
      Helicopters Inc. (“Discovery”) and O.S. Holdings Inc., beneficially
      owned 6.8% of our Class A Subordinate Voting Shares (which are entitled to
      one vote per share), 94.8% of our Class B 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 61.7% 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.




**If
      our Norwegian operating subsidiaries incur substantial operating losses, they
      may be subject to liquidation under Norwegian law**




The
      corporate law under which our Norwegian subsidiaries operate differs from
      Canadian and US 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:




•
            increasing
                the equity in an amount sufficient to achieve such balance and to
                ensure
                that the equity of the subsidiary becomes adequate compared to the
                risks
                and the size of the subsidiary's business;
                or






12




•
            reducing
                the share capital to pay off losses in an amount sufficient to achieve
                such balance.




To
      the
      extent reductions in the share capital of our Norwegian subsidiaries as a result
      of operating losses are substantial and if no appropriate resolutions are made,
      they could ultimately result in liquidation, which would have a material adverse
      effect on our business, financial condition and results of
      operations.




**Failure
      to maintain a record of acceptable safety performance may have an adverse impact
      on our ability to attract and retain customers**




Our
      customers consider safety and reliability two primary attributes when selecting
      a provider of helicopter transportation services. If we fail to maintain a
      record of safety and reliability that is satisfactory to our customers, our
      ability to retain current customers and attract new customers may be adversely
      affected.




**Assimilating
      our recent acquisitions or any future material acquisitions into our corporate
      structure may strain our resources and have an adverse impact on our
      business**




The
      assimilation of recent acquisitions and any future material acquisitions we
      may
      make into our company will require substantial time, effort, attention and
      dedication of management resources and may distract our management in
      unpredictable ways from our ordinary operations. The transition process could
      create a number of potential challenges and adverse consequences for us,
      including the possible unexpected loss of key employees, customers or suppliers,
      a possible loss of revenues or an increase in operating or other costs.
      Inefficiencies and difficulties may arise because of unfamiliarity with new
      assets and the business associated with them, new geographic areas and new
      regulatory systems. These types of challenges and uncertainties could have
      a
      material adverse effect on our business, financial condition and results of
      operations. We may not be able to effectively manage the combined operations
      and
      assets or realize any of the anticipated benefits of acquiring such acquisitions
      or any future material acquisition.




**If
      the assets in our pension plans are not sufficient to meet the plans’
obligations, we may be required to make substantial cash contributions and
      our
      liquidity may be adversely affected**




We
      sponsor funded and unfunded defined benefit pension plans for our employees
      principally in Canada, the UK, the Netherlands and Norway. As of April 30,
      2006, there was a $28.0 million funding deficit related to our various
      defined benefit pension plans which require ongoing funding by us and a
      $46.2 million obligation related to our various unfunded
      plans.




Our
      estimate of liabilities and expenses for pensions incorporates significant
      assumptions, including interest used to discount future liabilities and expected
      long-term rates of return on plan assets. Our pension contributions and expense,
      results of operations, liquidity or shareholders’ equity in a particular period
      could be materially adversely affected by market returns that are less than
      the
      plans’ expected long-term rates of return, a decline in the rate used to
      discount future liabilities and changes in the currency exchange
      rates.




If
      the
      assets of our pension plans do not achieve expected investment returns for
      a
      fiscal year, such deficiency may require increases in our pension expense.
      Changing economic conditions, poor pension investment returns or other factors
      may require us to make substantial cash contributions to our pension plans
      in
      the future, preventing the use of such cash for other purposes and adversely
      affecting our liquidity.




**Our
      customers are concentrated in the oil and gas industry and, as a result, our
      credit exposure within this industry is significant**




The
      majority of our customers are engaged in oil and gas production and exploration.
      This concentration may impact our overall exposure to credit risk because
      changes in economic and industry conditions that adversely affect the oil and
      gas industry could affect the majority of our customers. We generally do not
      require letters of credit or other collateral to support our trade receivables.
      Accordingly, a sudden or protracted downturn in the economic conditions of
      the
      oil and gas industry could adversely impact our ability to collect our
      receivables and thus our financial condition.




13


**We
      are subject to certain environmental regulations which may have an adverse
      impact on our business**




We
      are
      subject to extensive laws, rules, regulations and ordinances relating to
      pollution and protection of the environment, including those relating to
      emissions to the air, discharges to waters, the use, storage and disposal of
      petroleum and other regulated materials and the remediation of contaminated
      sites.




Our
      operations sometimes involve the use, handling and storage of material that
      may
      be classified as environmentally hazardous. Laws protecting the environment
      have
      become more stringent in Canada and certain other countries in recent years
      and
      may, in certain circumstances, impose liability for cleanup of releases of
      regulated materials and related environmental damage without regard to
      negligence or fault. These laws also may expose us to liability for the conduct
      of, or conditions caused by others such as historic spills of regulated
      materials at our facilities or for our acts that were in compliance with all
      applicable laws at the time these acts were performed. We believe we are in
      substantial compliance with applicable environmental requirements and that
      ensuring compliance has not, to date, had a material adverse effect on our
      financial position. We cannot, however, predict the likelihood of change to
      these laws or in their enforcement nor the impact of any such change, or
      discovery of previously unknown conditions which may require unanticipated
      costs, on our financial position.




**The
      reorganization and consolidation of our operations may strain our resources
      and
      have an adverse impact on our business**




The
      reorganization and consolidation of our operations into a new organizational
      structure will require substantial time, effort, attention and dedication of
      management resources to complete and may distract our management in
      unpredictable ways from our ordinary operations. The transition process could
      create a number of potential challenges and adverse consequences for us,
      including the possible loss of key employees, customers or suppliers, a possible
      loss of revenue or an increase in operating or other costs. These types of
      challenges and uncertainties could have a material adverse effect on our
      business, financial condition and results of operations. We may not be able
      to
      effectively manage the reorganized operations and assets or realize any of
      the
      anticipated benefits from the restructuring.




**We
      are subject to many different forms of taxation in various jurisdictions
      throughout the world, including but not limited to income tax, withholding
      tax,
      commodity tax and social security and other payroll related taxes, which may
      lead to disagreements with tax authorities regarding the application of tax
      law**




Tax
      law
      and administration is extremely complex and often requires us to make subjective
      determinations. The computation of income, payroll and other taxes involves
      many
      factors, including the interpretation of tax legislation in various
      jurisdictions in which we are subject to ongoing tax assessments. The tax
      authorities in the various jurisdictions where we carry on business may not
      agree with the determinations that are made by us with respect to the
      application of tax law. Such disagreements could result in lengthy legal
      disputes and, ultimately, in the payment of substantial amounts of tax, interest
      and penalties and have a material effect on our results of
      operations.




Our
      estimate of tax related assets, liabilities, recoveries and expenses
      incorporates significant assumptions. These assumptions include, but are not
      limited to, the tax rates in various jurisdictions, the effect of tax treaties
      between jurisdictions, taxable income projections, and the benefits of various
      restructuring plans. To the extent that such assumptions differ from actual
      results, we may have to record additional income tax expenses and liabilities,
      including interest and penalties.




**We
      are exposed to risks from legislation requiring companies to evaluate internal
      controls over financial reporting**




Section 404
      of the Sarbanes-Oxley Act of 2002 (“SOX 404”) requires our management to
      report on, and our independent registered public accounting firm to attest
      to,
      the effectiveness of our internal controls over financial reporting. We have
      an
      ongoing program to perform the system and process evaluation and testing
      necessary to comply with these requirements. This requirement will become
      effective for the year ended April 30, 2007.







14




We
      expect to continue to incur significant expenses and to devote additional
      resources to SOX 404 compliance on an ongoing basis. In addition, it is
      difficult for us to predict how long it will take to complete the assessment
      of
      the effectiveness of our internal controls over financial reporting each year
      and we may not be able to complete the process on a timely basis. In the event
      that our chief executive officer, chief financial officer or independent
      registered public accounting firm determine that our internal controls over
      financial reporting are not effective as defined under SOX 404, we cannot
      predict how regulators will react or how the market prices of our shares will
      be
      affected.




ITEM
      4.INFORMATION
      ON THE COMPANY




**HISTORY
      AND DEVELOPMENT OF THE COMPANY**




CHC
      Helicopter Corporation was formed by amalgamation on July 31, 1987 under
      the Canada Business Corporations Act. Our registered office is 34 Harvey
      Road, 5 th Floor,
      St. John’s, Newfoundland and Labrador, Canada, A1C 5V5. Our head
      office is 4740 Agar Drive, Richmond, British Columbia, Canada, V7B 1A3
      (telephone number 604-276-7500). Our internet website address is located at
      http://www.chc.ca.




In
      the
      United States, our agent for service of process is CT Corporation System,
      111 Eighth Avenue, 13 th Floor,
      New York, New York, 10011 (telephone number
      1-800-223-7567).




We
      were
      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, Executive Chairman 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 our formation, we have 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; the acquisition in August
      1999 of all the outstanding shares of HSG, which was then operating 115
      helicopters; and the acquisition in February 2004 of all the shares of Schreiner
      which was then operating 43 aircraft. Since that date we have acquired a number
      of smaller operations as noted below.




**PRINCIPAL
      ACQUISITIONS, DISCONTINUED OPERATIONS AND CAPITAL EXPENDITURES**




**Acquisitions**




During
      the fourth quarter of fiscal 2006, we entered into discussions with two
      unaffiliated private equity firms regarding a potential acquisition of the
      Company. These discussions terminated with no offer being made to the
      shareholders.




During
      fiscal 2006, we purchased the remaining 40% non-controlling interest in Aero
      Turbine Support Ltd. (“ATSL”). The acquisition supports Heli-One’s strategic
      expansion objectives for global helicopter support.




On
      December 8, 2005, we exercised our option to acquire an equity position in
      BHS-Brazilian Helicopter Services Taxi Aereo Ltda. (“BHS”). BHS is one of the
      largest helicopter operators in the Brazilian offshore sector. Closing is
      expected to take place in the second quarter of fiscal 2007.




On
      January 13,  2005,
      we acquired the assets and capabilities of Coulson Aero Technologies Ltd.
      (“Coulson”), a British Columbia based helicopter component and turbine engine
      maintenance repair and overhaul (“MRO”) provider.




On
      September 23, 2004, we acquired a majority of the shares of ATSL. ATSL is
      an aircraft engine repair and overhaul company servicing General Electric
      CT58/T58 and Pratt & Whitney Canada, PT6T turboshaft engines.




15


On
      August 17, 2004, we acquired 100% of the shares of Multifabs Survival Ltd.
      (“Multifabs”), an Aberdeen based company specializing in the production of cold
      water survival suits for military forces, emergency services and offshore oil
      and gas companies around the world.




On
      March 5, 2004, we completed the acquisition of UK-based Whirly Bird
      Services Limited (“Whirlybird”). Whirlybird is a global supplier of survival
      suits and related aircraft passenger survival equipment.




On
      February 16, 2004, we completed the acquisition of Schreiner, located in
      the Netherlands, for total consideration of $143.9 million
      (€87.1 million), including the settlement of $41.5 million
      (€25.2 million) of Schreiner’s debt. At April 30, 2004 Schreiner’s
      fleet of 38 aircraft consisted of 28 helicopters and 10 fixed-wing aircraft.
      In
      addition, Schreiner operated nine aircraft belonging to its 40% owned equity
      investee in Nigeria.




**Discontinued
      operations**




CHC
      Composites Inc. (“Composites”) was reclassified to continuing operations in the
      Heli-One segment for the year ended April 30, 2006 as we did not receive an
      acceptable offer for Composites while this business was held for sale. During
      the period that Composites was held for sale, the assets and liabilities of
      this
      business were measured using discounted future cash flows at the lower of their
      carrying amounts and their estimated fair value less cost to sell. As a result,
      a fair value adjustment of $14.3 million was recorded in fiscal 2005,
      allocated to property and equipment ($11.4 million) and other long-term
      assets ($2.9 million). This fair value adjustment is now reflected in
      operating income in fiscal 2005.




**Capital
      Expenditures**




Total
      capital asset additions include all asset acquisitions, including aircraft,
      as
      well as helicopter major inspection expenditures. Capital asset additions of
      $283.6 million during the year ended April 30, 2006 comprised of
      (i) $177.2 million for the purchase of 20 helicopters, including
      12 that were subsequently leased through sale-leaseback transactions,
      (ii) $12.6 million for aircraft modifications,
      (iii) $67.1 million for major spares and repairable parts,
      (iv) $3.6 million in connection with the construction of buildings and
      hangars; and (v) 23.1 million for ground equipment, vehicles, a
      simulator and office furniture and fixtures. We also spent $23.6 million on
      helicopter major inspections. Proceeds on disposal of capital assets were
      $219.5 million for the year ended April 30, 2006.




Subsequent
      to fiscal 2006, we announced the establishment of a new helicopter maintenance,
      repair and overhaul facility at Boundary Bay Airport in Delta, BC, Canada,
      approximately 20 kilometres southeast of Vancouver, British Columbia.
      Heli-One will establish a 235,000 square-foot facility including aircraft
      hangar, workshops and office space, with completion anticipated in October
      2007.
      This new facility will support a wide range of components, engines and aircraft
      types including AgustaWestland, Bell, Eurocopter and Sikorsky.




We
      will
      invest approximately $30 million in establishing the new facility, which
      will allow Heli-One to provide total helicopter support and improved efficiency
      for our rapidly expanding fleet of aircraft and for third-party customers around
      the world. The facility will consolidate Heli-One’s existing workshops and
      facilities in the Vancouver area, and create additional capacity. This new
      facility will complement Heli-One’s major European Repair and Overhaul centre in
      Stavanger, Norway, which specializes in tip-to-tail support of Eurocopter
      aircraft.




Capital
      asset additions of $236.0 million were incurred during the year ended
      April 30, 2005. Of this amount, (i) $149.0 million related to the
      purchase of 20 helicopters including four that were subsequently leased
      through sale-leaseback transactions, (ii) $21.6 million for aircraft
      modifications, (iii) $44.4 million for major spares and repairable
      parts, and (iv) $21.0 million related to other property and equipment.
      We also spent $15.5 million on helicopter major inspections. Proceeds on
      disposal of capital assets were $90.9 million for the year ended
      April 30, 2005.




Capital
      asset additions of $161.3 million were incurred during the year ended
      April 30, 2004. Of this amount, (i) $80.8 million related to the
      purchase of 12 helicopters, including five that were subsequently leased
      through sale-leaseback transactions, (ii) $18.2 million for aircraft
      modifications, (iii) $44.4 million for major spares and repairable
      parts, and (iv) $17.9 million related to other property and equipment.
      We also spent $9.2 million on helicopter major inspections. Proceeds on
      disposal of capital assets were $126.9 million for the year ended
      April 30, 2004.




16


**INDUSTRY
      OVERVIEW**




Helicopters
      first came into widespread commercial use 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. Although the oil
      and
      gas industry still accounts for a substantial portion of the demand for
      helicopter services worldwide, helicopters have been used for a variety of
      purposes for several decades, including forestry, mining, search and rescue,
      emergency medical services, construction, and recreation.




The
      level of worldwide offshore oil and gas exploration and production has
      traditionally influenced demand for helicopter transportation services.
      Exploration activities are sensitive to changes in oil and gas prices, whereas
      production activities are generally more stable. For the fiscal year ended
      April 30, 2006, approximately 69% of our total revenue was derived from oil
      and gas activity (fiscal 2005 - 69%). We expect technology improvements to
      allow
      oil and gas exploration and production companies to pursue opportunities farther
      offshore, increasing demand for helicopter transportation services, particularly
      for modern helicopters, which generally have a greater range and passenger
      capacity. We also expect new exploration and production activity to occur in
      already producing regions and in currently non-producing regions of Africa,
      Asia, South America, the Caspian Sea, Australia, the North Sea and Eastern
      Canada. We believe this increase in activity will result in increased global
      demand for helicopter transportation services.




The
      North Sea is the largest producing offshore oil and gas market in the world
      and continues to experience strong growth in rig demand. Rig utilization in
      the
      North Sea rose above 90% in May 2006 for a new high in recent history.
      Projected utilization rates have also risen, indicating the market will likely
      remain strong through 2007. In addition to new smaller oil and gas producers
      targeting the North Sea, large companies are expanding their activities and
      upgrading production facilities to extend field production life. The market’s
      buoyancy is also prompting an increase in new-build contracts. We believe the
      need for transportation services will increase as activity in the North Sea
      continues to increase from current levels.




We
      expect further increased demand for helicopter services as a result of the
      UK
      government’s decision to privatize eight additional coastguard bases commencing
      in 2012 for a period of 20-30 years. Contract bidding begins in
      2008.




To
      effectively compete on a global basis for helicopter transportation service
      contracts, we believe a helicopter service provider needs to have:




•
            an
                established brand name;


•
            a
                strong track record of providing high quality, safe and reliable
                service;


•
            a
                large, diversified fleet of helicopters to accommodate various customer
                requirements;


•
            a
                highly skilled and dedicated team of pilots, engineers and support
                staff;


•
            a
                cost structure that allows the provision of services at competitive
                prices;


•
            an
                effective capital structure that permits financing of new
                aircraft;


•
            a
                broad network of regional bases to cost-effectively bid for new contracts
                in most areas of the world as opportunities arise;
                and


•
            familiarity
                with a variety of local business practices and regulations around
                the
                world and established local joint venture partnerships and strategic
                customer alliances.


We
        believe we possess all of these characteristics.




17


**BUSINESS
      OVERVIEW**




**General**




We
      are
      the world’s largest global commercial helicopter operator. We, through our
      subsidiaries, have been providing helicopter services for more than
      50 years and currently operate in over 30 countries, on all seven
      continents and in most of the major offshore oil and gas producing regions
      of
      the world. Our major operating units are based in the United Kingdom, Norway,
      the Netherlands, South Africa, Australia and Canada. We provide helicopter
      transportation services to the oil and gas industry for production and
      exploration activities through our European and Global Operations segments.
      Our
      Heli-One segment is the world’s largest independent helicopter support company,
      providing repair and overhaul services, aircraft leasing, integrated logistics
      support, helicopter parts sales and distribution, safety and survival equipment
      and other related services to our flight operations and third-party customers
      around the world. We also provide helicopter transportation services for
      emergency medical services and search and rescue activities (“EMS/SAR”) and
      ancillary services such as flight training.




We
      provide helicopter transportation services to a broad base of independent and
      state-owned oil and gas companies, transporting personnel and, to a lesser
      extent, parts and equipment, to offshore production platforms, drilling rigs
      and
      other facilities. In general, we target opportunities with long-term contracts
      and customers who require sophisticated medium and heavy helicopters operated
      by
      highly trained personnel. We are a market leader in most of the regions we
      serve, with an established reputation for high quality and reliable service.
      We
      are the largest operator in the North Sea, one of the world’s largest oil
      producing regions, and a global operator servicing the oil and gas industry
      in
      South America, Africa, Australia, Asia and north-eastern
      North America. For the fiscal year ended April 30, 2006, revenue
      generated by helicopter transportation services for the oil and gas industry
      was
      approximately 69% of our total revenue, unchanged from the previous fiscal
      year.




We
      believe that our repair and overhaul and flight training capabilities reduce
      our
      costs and give us control over the quality and timeliness of our maintenance
      and
      training. We believe that these capabilities enhance our competitive position,
      further diversify our revenue and solidify our worldwide reputation as a
      full-service, high-quality helicopter operator. Furthermore, we believe that
      our
      repair and overhaul capabilities provide us with a source of relatively stable
      third-party revenue.




Our
      global customer base consists of a broad range of oil and gas companies and
      governmental bodies and includes operating subsidiaries of, and government
      bodies in:




Agip
            DeBeers
            IrelandApache
            Exxon
                Mobil
            Royal
                Dutch/Shell GroupBp
            Kerr-McGee
            StatoilChevron
            Maersk
            TotalFinaElfCommonwealth
                of Australia
            Norsk
                Hydro
            UnocalConocoPhillips
            Premier




**Competitive
      Strengths**




We
      believe that we have the following competitive advantages:




•
            ***Global
                Coverage******.***We currently provide helicopter transportation services in over 30
                countries and on all seven continents. This broad geographic coverage
                and
                an efficient management structure enable us to respond quickly and
                cost
                effectively to customer needs and new business opportunities while
                adhering to local market regulations and customs. Since new contract
                start-up costs and base set-up costs can represent a significant
                portion
                of operating expenses, our global network of bases allows us to reallocate
                equipment and crews efficiently and bid on new contracts at competitive
                rates. Additionally, as multinational oil and gas companies seek
                service
                providers that can provide one standard of service in many locations
                around the world, our geographic coverage makes us one of only two
                global
                providers that can effectively compete for many of these
                contracts.






18




•
            ***Focus
                on Safety******.***In over 50 years of operations, we have developed sophisticated
                safety and training programs and practices that have resulted in
                a strong
                safety record. During the year we led the industry with the implementation
                of a single Safety Management System worldwide. We continue to meet
                or
                exceed the stringent safety and performance audits that are conducted
                by
                our customers. Our advanced flight training facility in Norway provides
                a
                wide variety of training services to our employees as well as third-party
                civil and military organizations around the world. Providing these
                advanced training services enhances our global reputation for leadership
                and excellence in helicopter
                services.




•
            ***Low
                Cost Operator******.***We believe that we have significant cost advantages over our competitors
                with respect to our medium and heavy helicopter services, which increase
                our likelihood of winning new contracts. We believe that our economies
                of
                scale and in-house repair and overhaul and training capabilities
                give us a
                cost advantage over competitors who must incorporate higher third-party
                repair and overhaul costs into their contract
                bids.




•
            ***Long-Term
                Customer Relationships******.***We have worked successfully for many years with major oil and gas
                companies, some of which have been customers continuously for more
                than
                20 years. As a result of our established long-term customer
                relationships, our focus on safety and flight training, our crews’
                experience and the quality of our services, we consistently meet
                or exceed
                our customers’ standards and are invited to bid on new projects. In
                addition to standard helicopter transportation services, certain
                of our
                customers rely on us for ancillary services, including our computerized
                logistics systems for crew scheduling and passenger handling services,
                all
                of which help strengthen customer
                relationships.




•
            ***Large,
                Modern and Diversified Fleet of Helicopters******.***To meet the diverse operational requirements of our customers, we
                operate
                a large fleet that includes some of the most sophisticated helicopters
                in
                the world. We have led the industry in fleet renewal with aircraft
                sought
                after by customers for their superior performance. As of April 30,
                2006, we operated 233 aircraft, comprised of 82 heavy helicopters,
                124
                medium helicopters, nine light helicopters and 18 fixed-wing aircraft.
                The
                helicopter fleet consists of more than ten types of helicopters
                manufactured primarily by Eurocopter, Sikorsky, AgustaWestland and
                Bell.
                During the year we added an additional four Sikorsky S-92s for a
                total of
                six S-92s to compliment our fleet of 18 Super Puma MkIIs. These two
                aircraft types represent the most advanced civilian heavy helicopter
                types
                in service today.




•
            ***Retention
                of Asset Value******.***Based on independent appraisals as of April 30, 2006 the estimated
                fair market value of our owned aircraft fleet was $594.7 million,
                exceeding our net book value by approximately $46.7 million. As well,
                since a significant portion of a helicopter’s value resides in its major
                components including engines, gearboxes, transmissions and repairable
                parts, which are replaced or upgraded on a regular basis, older models
                of
                helicopters that have been upgraded are capable of meeting many of
                the
                same performance standards as newer aircraft. As a result, when
                helicopters are sold as part of our ongoing fleet management, we
                often
                receive prices in excess of net book
                value.




•
            ***In-house
                Repair and Overhaul Business******.***We believe that our repair and overhaul activities reduce our costs,
                diversify our revenue streams and help position us as a full-service,
                high-quality helicopter operator. We are a market leader in repair
                and
                overhaul capability and have the only licensed commercial engine
                and major
                component repair and overhaul facility in the world for the Eurocopter
                Super Puma helicopter, other than the original equipment manufacturers,
                and have the capability to support several other helicopter types
                including Eurocopter Dauphin, Sikorsky S-61 and S-76 and
                Bell 212/412. This capability allows us to control the quality and
                cost of our helicopter maintenance, repair and
                refurbishment.




**Business
      Strategy**




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 return on assets and cash flows. In our pursuit of this goal, we
      intend to focus on the following key initiatives:




•
            ***Strengthen
                Competitive Position in Existing Markets******.***We intend to increase our ability to win new contracts, renew existing
                contracts, strengthen our existing customer relationships and enhance
                our
                competitive position by improving our focus on customer needs and
                reducing
                costs while maintaining high standards for safety and reliability.
                Our
                organizational structure means we were ideally positioned to service
                increased demand from existing customers and new entrants to the
                marketplace.






19




•
            ***Growth
                Through Acquisition******.***During the year we acquired the remaining non-controlling interest
                in ATSL
                and exercised our option to acquire BHS. The acquisition of BHS is
                expected to be completed in the second quarter of fiscal 2007. We
                intend
                to seek out additional acquisition opportunities to further strengthen
                our
                position in existing markets and expansion into new
                markets.




•
            ***Selectively
                Expand International Operations******.***We intend to capitalize on our broad geographic coverage, our long-term
                customer relationships and our fleet capabilities to pursue new
                opportunities in Africa, Asia, Brazil and other developing oil and
                gas
                regions, which are expected to be the fastest growing markets for
                offshore
                helicopter transportation services.




•
            ***Expand
                the Helicopter Support Business with Heli-One******.***We plan to expand our repair and overhaul business by further penetrating
                the Super Puma major component and engine overhaul market and pursuing
                new
                opportunities in medium aircraft maintenance and military helicopter
                support through the development of facilities in North America.
                Heli-One has the capability to support, on a nose-to-tail basis,
                our
                entire fleet of over 90 Sikorsky S-61 and S-76 aircraft and to compete
                for
                helicopter work for a worldwide fleet of more than 500 aircraft in
                this
                sector. In addition to repair and overhaul Heli-One provides the
                following
                services to the helicopter
                industry:




•
            Integrated
                logistics support;


•
            Aircraft
                leasing;


•
            Heavy
                maintenance;


•
            Design
                and engineering;


•
            Helicopter
                parts and distribution;


•
            Inventory
                management; and


•
            Safety
                and survival equipment, manufacturing and
                support.




•
            ***Pursue
                Profitable New Business Beyond the Oil and Gas
                Sector******.***We believe that we have a competitive advantage in the EMS/SAR sectors
                by
                virtue of our experience in servicing the oil and gas industry. We
                believe
                that this advantage stems from our ability to operate sophisticated
                twin-engine medium and heavy helicopters with highly trained pilots
                in
                complex situations. Typically, EMS/SAR customers require the operator
                to
                meet stringent quality standards on a long-term basis, excluding
                from the
                bidding process operators that would otherwise compete primarily
                on the
                basis of price. During the year we were awarded a $215 million
                five-year contract from the United Kingdom Maritime and Coastguard
                Agency (“MCA”) for the provision of commercial search and rescue
                helicopter service from four bases in the UK commencing July 1,
                2007.




•
            ***Continue
                to Focus on Long-Term Contracts******.***We seek to enter into long-term contracts with our major customers
                in
                order to maximize the stability of our revenue. Revenue from operations
                under long-term contracts represented approximately 66% of our revenue
                during the last two fiscal years.




During
      the year we completed the consolidation of our operations into three new
      operating divisions; Global Operations, European Operations and Heli-One. The
      restructuring associated with the consolidation are now essentially complete.
      We
      are realizing savings from headcount reductions, improved fleet management,
      working capital management, procurement, logistics and other areas.




**Industry**




Helicopter
      Flying Operations




Helicopters
      in use today may be divided into two general categories. Single engine (light)
      aircraft, which have a passenger capacity of three to six, 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, at April 30, 2006, we had only nine light helicopters in
      our fleet.




20


Twin-engine
      (heavy and medium size) aircraft generally require two pilots, have a passenger
      capacity of nine to twenty-six and can operate under instrument flight rules
      (“IFR”), (daytime and night time 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 operations. We operated
      206
      helicopters in this category (82 heavy and 124 medium helicopters) as at
      April 30, 2006.




Various
      types of helicopters are required to meet the diverse needs of the industries
      they serve. Medium to heavy helicopters are generally utilized to support the
      oil and gas, construction and forestry industries and EMS/SAR customer base.
      They are also used for transporting larger numbers of passengers and supplies
      or
      for lifting heavy weights, and are capable of operating during the night and
      in
      adverse weather conditions. Typically equipped with IFR equipment, medium to
      heavy helicopters are capable of long distance flights to offshore oil
      platforms. Where appropriate, specialized equipment are installed for providing
      emergency medical service support or for use in certain challenging environments
      such as the North Sea. Light to medium helicopters are used to support the
      utility and mining sectors, as well as certain parts of the construction and
      forestry industry, where transporting a smaller number of passengers or carrying
      light loads are required.




We
      contract with customers to provide aircraft for various periods of 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 with terms typically ranging from two to ten years,
      averaging approximately 3.5 years. Such contracts are ordinarily awarded
      following a competitive bidding process among pre-qualified 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. Approximately
      51% of our fiscal 2006 flying revenue (fiscal 2005 - 52%; fiscal 2004 - 56%)
      was
      derived from hourly charges and the remaining 49% (fiscal 2005 - 48%; fiscal
      2004 - 44%) was generated by fixed monthly charges. Typically, we supply crew
      and maintenance personnel in addition to aircraft. However, we have a limited
      number of contracts under which we supply aircraft only to local helicopter
      operators, often in conjunction with other services. We will continue to pursue
      this latter type of contract as such arrangements may allow us to partner with
      other local operators to effectively penetrate new markets.




A
      substantial number of our long-term contracts contain provisions permitting
      early termination by the customer without penalty. However, during the last
      seven fiscal years, with the exception of contracts that were transferred to
      another operator due to the merger of oil and gas producers and contracts
      cancelled as a result of political instability or local unrest, no customer
      has
      exercised that right. At the expiration of a contract, customers typically
      solicit new bids for the next contract period. Contracts are usually awarded
      based on a number of factors, including price, long-term relationships, 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 and services.




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




New
      contract start-up costs can represent a significant portion of operating costs.
      We therefore believe that our global network of bases and aircraft operating
      licenses give us a competitive advantage in bidding on new contracts throughout
      most of the world. We are well positioned to meet the requirements of customers
      in most regions of the world within short periods of time at competitive rates.
      We also 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, Chevron, Maersk
      and
      Unocal. Many of these companies have been customers of ours for more than
      20 years.




21


**Revenue
                  by Industry Sector**
              **2006**
              
              
              **2005*****(i)***
              
              
              **2004*****(i)***(in
                  millions)
              %
              
              (in
                  millions)
              %
              
              (in
                  millions)
              %Oil
                  and Gas
              696.7
              68.9%
              
              667.6
              69.0%
              
              573.0
              74.3%Repair
                  and Overhaul
              131.5
              13.0%
              
              112.2
              11.6%
              
              74.1
              9.6%EMS/SAR
              82.7
              8.2%
              
              84.8
              8.8%
              
              62.0
              8.0%Other
              75.8
              7.5%
              
              70.5
              7.3%
              
              42.8
              5.5%Passenger
                  Transportation
              18.0
              1.8%
              
              24.7
              2.6%
              
              12.6
              1.7%Training
              6.8
              0.6%
              
              7.4
              0.7%
              
              7.0
              0.9%Total
              $
                  1,011.5
              100.0%
              
              $967.2
              100.0%
              
              $
                  771.5
              100.0%






**Revenue
                by Geographic Area**
            **2006**
            
            
            **2005*****(i)***
            
            
            **2004*****(i)***(in
                millions)
            %
            
            (in
                millions)
            %
            
            (in
                millions)
            %Canada
            **$
                32.9**
            3.2%
            
            $24.0
            2.4%
            
            $
                21.8
            2.8%United
                Kingdom
            **221.2**
            21.9%
            
            248.2
            25.7%
            
            237.0
            30.7%Norway
            **207.1**
            20.5%
            
            183.1
            18.9%
            
            184.8
            24.0%Africa
            **150.1**
            14.8%
            
            124.4
            12.9%
            
            56.0
            7.3%Australia
            **64.6**
            6.4%
            
            62.2
            6.4%
            
            52.5
            6.8%Denmark
            **28.1**
            2.8%
            
            35.5
            3.7%
            
            28.2
            3.7%The
                Netherlands
            **67.2**
            6.6%
            
            66.0
            6.8%
            
            15.8
            2.0%Other
                Asian countries
            **52.7**
            5.2%
            
            88.5
            9.2%
            
            74.0
            9.6%Other
                European countries
            **109.1**
            10.8%
            
            90.0
            9.3%
            
            80.2
            10.4%Other
                countries
            **78.5**
            7.8%
            
            45.3
            4.7%
            
            21.2
            2.7%Consolidated
                total
            **$
                1,011.5**
            100.0%
            
            $
                967.2
            100.0%
            
            $
                771.5
            100.0%




(i)
            Reclassified
                and restated. See Note 4 to our audited consolidated financial
                statements included elsewhere in this Annual
                Report.





European
      Operations




We
      are
      one of the leading providers of helicopter services in Europe. We provide
      services to the offshore oil and gas industry to customers located primarily
      in
      the UK, Norwegian and Danish and Dutch sectors of the North Sea. We also
      provide helicopter services (primarily search and rescue) in Ireland. Our
      primary European bases are located in Aberdeen (Scotland), Stavanger (Norway),
      Bergen (Norway) and Den Helder (the Netherlands) where we conduct our operations
      in the respective sectors of the North Sea. We operate 72 aircraft in this
      segment, consisting of 46 heavy and 26 medium aircraft. Included in the heavy
      aircraft were 33 Super Pumas, eight Sikorsky S-61N and five Sikorsky S-92
      aircraft.




*Norwegian
      Operations:* While
      the focus on the oil and gas sector in Norway is substantially the same as
      in
      the UK, differences in regulatory regimes and territorial issues make it more
      appropriate to service the Norwegian sector of the North Sea from Norway.
      These regulatory differences also limit somewhat our operational flexibility
      and
      impact our costs.




Our
      Norwegian operations primarily service oil and gas customers in the
      North Sea, including Statoil, ConocoPhillips, bp and Norsk
      Hydro.




The
      other major helicopter service provider in the Norwegian sector of the
      North Sea is Norsk Helicopters.




*UK
      Operations:* Our UK
      operations primarily service oil and gas customers in the UK sector of the
      North Sea, including operating subsidiaries of  ConocoPhillips,
      Apache, Nexen, Total, Marathon and TotalFinaElf, some of which we have serviced
      for more than 10 years.




Our
      UK
      operations also manage our operations in Denmark, where we signed a long-term
      contract in 1999 with Maersk Oil and Gas AS to provide offshore helicopter
      support. This contract was recently extended for one year to June 2007. During
      Fiscal 2006, we were awarded a five-year contract renewal (plus three one-year
      options) by Maersk Oil and Gas AS for the provision of helicopter transportation
      services in support of our oil and gas operations in the Danish sector of the
      North Sea beginning on July 1, 2007.


22


In
            Ireland the services of search and rescue are performed as well as oil
            and gas
            support. The Irish SAR contract was extended for two years to July
            2007.Subsequent to fiscal 2006, we were awarded a contract renewal by
            the Irish
            Minister for Transport for the continued provision of Marine Search and
            Rescue
            Services in Ireland from July 2007 to July 2010, plus three option
            years.




There
      is potential for new oil and gas developments off the west coasts of Scotland
      and Ireland and in the North Sea off the northern coast of Norway. 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 long-range Super Puma MkIIs and
      Sikorsky S-92 helicopters to reach more remote regions.




Future
      opportunities within the search and rescue sector are being investigated with
      regard to providing these services within the UK




Global
      Operations




Our
      Global Operations segment provide helicopter services in over 30 countries
      in Africa, Asia, Australia, the Middle East, South America and offshore
      Canada, to customers in oil and gas, EMS/SAR and other industries. We
      believe that the collective international experience we have gained over the
      last 47 years enables us to draw upon our knowledge of local conditions to
      provide high levels of customer service in diverse operating environments.
      Our
      Global Operations segment consist of CHC Helicopters International, based
      in Vancouver, Canada; CHC Australia, based in Adelaide, Australia; and CHC
      Africa, based in Cape Town, South Africa. We operate 131 aircraft in this
      segment, consisting of 23 heavy, 84 medium, and six light
      aircraft as well as 18 fixed-wing aircraft.




In
      some
      of the countries in which we operate, local regulations impose certain
      nationality requirements. As a result, we often obtain a license to operate
      in
      that country in conjunction with a local representative or partner. Our
      representatives or partners typically receive a small percentage of local
      revenues or a fixed fee but generally do not provide any personnel or assume
      any
      of the liabilities related to performance of the contract. We currently have
      representatives or partners in a number of countries including Azerbaijan,
      Ecuador, Equatorial Guinea, Libya, Myanmar, Namibia, Saudi Arabia and Thailand.
      We believe we have a competitive advantage in securing contracts in these areas
      due to our established local partnerships. In other jurisdictions such as India,
      Angola, Brazil and Malaysia, we provide aircraft and maintenance services to
      other local helicopter operators.




CHC
        Helicopters International conducted business with major oil and gas companies
        including operating subsidiaries of Shell, bp, ExxonMobil, Unocal, Chevron,
        Triton and TotalFinaElf. Our strong customer relationships, established
        reputation, ability to operate in various environments and commitment to
        quality, safety and cost efficiency have proven to be extremely important
        in the
        international markets. We have been serving Unocal in Thailand for over
        30 years. Since our establishment in Azerbaijan over 10 years ago, we
        have been working on long-term projects in the Caspian Sea with a
        consortium led by bp and another consortium led by TotalFinaElf and Exxon
        Mobil.
        During fiscal 2006, we were awarded a two-year contract with Malaysian
        Helicopter Services in support of Shell offshore operations. We are well
        established on the east coast of Canada, having a contract with Exxon Mobil.
        We
        also maintain contracts for ongoing work in such countries as Ecuador and
        Georgia, and expanded our fleet size in Malaysia. We have been able to penetrate
        the oil and gas industry in India and, during fiscal 2006, we were awarded
        a
        four-year contract for the lease of two Bell 412 in India. Subsequent to
        fiscal 2006, we were awarded, through BHS, a five-year contract for the
        provision of eight Sikorsky S-76C+ helicopters in support of Petrobras
        operations in the Brazilian offshore sector.


Our
      Australian operations, as well as a small portion of our Southeast Asian
      operations (principally East Timor), are conducted by CHC Australia, with
      headquarters in Adelaide, Australia. We are a leading commercial helicopter
      operator in Australia. Our customers include Coogee Resources and ConocoPhillips
      Petroleum.  In addition, we operate emergency medical services in South
      Australia, Western Australia, Queensland, New South Wales, the Australian
      Capital Territory and Victoria, perform search and rescue services for the
      Royal
      Australian Air Force, and provide various functions supporting the utility
      and
      construction industries, such as pipeline inspection.




23




Our
        African operations are headquartered in Cape Town, South Africa, with nine
        bases
        in many countries in Africa that support oil and gas exploration, as well
        as
        provide emergency medical and other services. Our African operations service
        a
        variety of customers, including Chevron, Sonair, Triton/Hess, Murphy Oil,
        Premier, Noble Energy, Petronas, Devon and South African Government Antarctic
        Expedition, among others.


Our
      geographic coverage enables us to serve multinational oil and gas customers
      on a
      worldwide basis. Growth in the Global Operations segment is expected to continue
      as new opportunities develop in Africa, Brazil and Malaysia.




Competition




We
      are
      one of only two global providers of helicopter transportation services to the
      offshore oil and gas industry. There are other competitors, but they are
      smaller, regional operators. 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, UK, Danish and
      Dutch sectors of the North Sea, the world’s largest area of offshore oil and gas
      development. We are well positioned to capitalize on future growth
      opportunities. 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.




At
      present, the limited supply of helicopters available for use in the offshore
      oil
      and gas industry is a competitive advantage for us. In our experience, the
      Super
      Puma and, more recently, the Sikorsky S-92 and Agusta Westland AW139 aircraft
      are the aircraft of choice for major oil and gas companies operating in the
      North Sea due to their superior maximum flying range, passenger capacity and
      cabin crew comfort. At present, our major competitor and we operate
      approximately 90% of the worldwide fleet of commercial Super Puma aircraft
      configured for offshore work. The manufacturers of these aircraft do not stock
      new aircraft. The current lead time to acquire a new Super Puma, S-92 or AW139
      is approximately 18 months. During the year, the Company introduced four
      Sikorsky S-92 aircraft in Norway, the UK and Malaysia. The S-92 is a heavy
      helicopter that has similar capabilities to the Super Puma MkII.




In
      our
      international markets, services are usually provided by medium helicopters.
      However, as oil and gas production and exploration in the international markets
      move further offshore, there will be an increasing need for newer heavy
      helicopters.




In
      medium and heavy helicopter operations, we compete against a number of
      helicopter operators including Bristow, the other global commercial helicopter
      operator, and numerous local and regional operators. In addition, many of our
      customers in the oil and gas industry have the financial capability to perform
      their own helicopter flying operations in-house should they elect to do so.
      The
      technical requirements of operating helicopters offshore have increased as
      oil
      and gas activities have moved further offshore and more sophisticated aircraft
      are required to service the market, which increases the costs of assets required
      to be deployed.




Fixed-Wing
      Flying Operations




We
      also
      provide fixed-wing aviation services to support, directly and indirectly, oil
      and gas operations around the world, flying in conjunction with, or independent
      of, our offshore helicopter services. Fixed-wing customers include Woodside,
      EEPCI, Encana, COTCO, Debmar and Premier. We operate dedicated Bombardier
      Dash 8 series aircraft, business jets and other turbo prop aircraft, as
      well as Boeing 737 aircraft. We had 18 fixed-wing aircraft in our fleet as
      at April 30, 2006.




24


Repair
        and Overhaul
  All
        aircraft airframes, engines and components are required by their manufacturers
        and government regulations to be serviced and overhauled after a predetermined
        period. The repair and overhaul process includes the disassembly, cleaning,
        inspection, repair and reassembly of engines, components and accessories,
        which
        have a limited time-life, including the testing of complete engines and
        components. The choice of whether to perform a given task in-house or to
        outsource to a third party depends on the complexity and cost of the task
        and
        the capabilities of the operator in question. Companies engaged in the repair
        and overhaul business are required to obtain licenses from government regulatory
        bodies and, in many cases, the manufacturers. Companies active in this industry
        include (i) the manufacturers of the helicopters, components, and
        accessories, (ii) repair facilities authorized by the manufacturers to
        repair and overhaul their products, and (iii) small workshops not typically
        authorized by the manufacturers. The low cost of transporting components
        relative to the total cost of the repair and overhaul services has resulted
        in
        the development of a worldwide market for repair and overhaul
        services.






Our
      Heli-One segment is the world’s largest independent helicopter support
      company. Heli-One provides comprehensive capability for repair, overhaul,
      modification and testing of dynamic components, including S61 and S76,
      Bell 206, 205, 212 and 412 and all Super Puma AS332/532 models. Heli-One’s
      major servicing facilities in North America and Europe provide engine
      overhaul servicing. Heli-One, Norway specializes in nose-to-tail support of
      the
      AS332 Super Puma and overhaul of the Makila 1A/1A1/1A2 engines. Heli-One,
      Vancouver, including ATSL, specializes in nose-to-tail support of the S61 and
      S76 and overhauls of the General Electric CT58/T58 gas turbine engines and
      Pratt
& Whitney Canada PT6T turboshaft engines. Heli-One provides low cost repair
      and overhaul services to internal customers and to third-party customers around
      the world.




Heli-One
      is also able to provide to its customers integrated logistics support, providing
      24-hour service, covering all scheduled and unscheduled repair and overhaul
      for
      engines, dynamic components, all rotable components and consumable parts, plus
      support for any special mission equipment. Our global buying power translates
      to
      competitive pricing on all major components. Heli-One can offer next-day
      delivery in most locations on a wide range of helicopter parts from all major
      manufacturers through its global distribution network using its new global
      warehouse facility in the Netherlands. In addition, we have extensive expertise
      in all areas of engineering and design, for either conversion upgrades or
      refurbishments, including avionics.




Competition




Heli-One’s
      main competitors within the repair and overhaul business are the original
      equipment manufacturers of helicopters and their components. As such, its main
      competitors are also its main parts suppliers. To minimize issues related to
      the
      availability and pricing of parts that Heli-One needs to perform its business,
      Heli-One generally has long-term supply arrangements with the original equipment
      manufacturers and works closely with them on items such as modifications and
      approvals of parts and components.




Factors
      that affect competition within the repair and overhaul market include price,
      quality and customer service. We believe that Heli-One has a competitive
      advantage over original equipment manufacturers in that it focuses on supporting
      commercial operations and can leverage CHC’s extensive operational experience.
      We believe that Heli-One is able to provide low cost, quality support services
      to civilian and military helicopter operators worldwide.




Flight
      Training




We
      operate an advanced flight training facility in Norway that provides additional
      revenue and enhances our global reputation for excellence and leadership in
      helicopter services. The facility enables us to satisfy fully the Eurocopter
      Super Puma training requirements for our pilots, in addition to selling training
      services to external pilots. Our experienced instructors provide a wide variety
      of training services to our employees as well as civil and military
      organizations around the world. Our Norwegian flight training group operates
      two
      full flight simulators and is certified and approved by the Norwegian Civil
      Aviation Authority as well as several other national aviation authorities.
      Since
      inception, this facility has trained more than 27,000 pilots, engineers and
      helideck landing officers from over 40 countries.




Helicopter
      Leasing




Heli-One
      manages the world’s largest fleet of medium and heavy civilian helicopters,
      enabling us to offer flexible leasing terms on a wide range of aircraft to
      third-party customers.




Safety
      and Survival Equipment




Operating
      in the world’s most dangerous cold-water environments requires protection,
      quality and comfort. We have over 30 years experience providing
      survival-wear solutions to military forces, emergency services and oil and
      gas
      operators around the world.




Seasonality




There
      is some impact of seasonality on our operations. The seasonal variations are
      due
      primarily to variations in the exploration and development activities of oil
      and
      gas industry customers. From time to time, inclement weather may impair our
      ability to conduct flying operations resulting in decreased flying
      activity.See
      page 39, “Results of Operations*-*Aberdeen
      Airport - Helicopter Passengers*”*and
      page 44, “Results of Operations*-*Quarterly
      Information” for discussion on the impacts of
      seasonality.




25







Safety
      and Insurance




Operation
      of helicopters involves some degree of risk. Hazards, such as aircraft
      accidents, collisions and fire, are inherent in providing helicopter services.
      We maintain a flight safety organization that is responsible for ensuring
      compliance with safety standards within our organization and the requisite
      proficiency among flight crews. Our safety organization is responsible for
      training flight crews, conducting regular safety audits and seminars for all
      flight personnel, and generally ensuring safe operating techniques and standards
      consistent with Canadian and other government regulations and customer
      requirements. In addition, aviation regulatory bodies and customers conduct
      safety audits to ensure that our standards meet their requirements.




During
      fiscal 2006, there were no major insurance incidents reported.




During
      fiscal 2005, we received insurance proceeds of $1.7 million for the total
      loss of a Bell 212 aircraft operating in Australia on June 2, 2004.
      The book value of the aircraft was $0.8 million, resulting in a gain of
      $0.9 million. The aircraft was being flown for a medical evacuation and
      crashed while manoeuvring in heavy rain during approach resulting in only minor
      injuries of passengers and crew. Any incurred or outstanding liabilities
      relating to the incident are covered by our insurance providers.




We
      maintain liability insurance coverage against general and aircraft liability,
      including personal injury, subject to a self-insured retention. In addition,
      we
      have separate hull policies that insure against physical loss of, or damage
      to,
      our helicopters in certain circumstances, subject to a self-insured retention,
      including losses due to war, expropriation, confiscation and nationalization.
      We
      are not insured for loss of profit or loss of use of our
      helicopters.




**Government
      Regulation**




European
      Aviation Licenses




Companies
      wishing to hold a license to operate helicopters in the European Union or the
      European Economic Area must be owned and controlled by a citizen of a country
      of
      the European Union or the European Economic Area. Our ability to hold aviation
      licenses in Europe is contingent on our controlling shareholder, Mr. Craig
      L. Dobbin, who is a citizen of both Canada and Ireland, a European Union Member
      State, owning and controlling us. As required by our senior credit facility,
      we
      have developed a proposal for steps that we may take, including through a
      restructuring of our European operations, so that our operating licenses in
      Europe are not dependent on the citizenship of Mr. Craig L. Dobbin. The
      proposal must be capable of being implemented within six months of a request
      by
      the lenders under the facility. During fiscal 2002, Mr. Dobbin’s five adult
      children were granted Irish citizenship, thereby providing a further succession
      alternative to ensure our long-term eligibility to operate in
      Europe.




26


UK
      Regulation




Requirements
      for Operating License




Our
      UK
      operating subsidiary, Scotia, has been licensed to operate helicopters by the
      UK
      Civil Aviation Authority, on the basis that we are (and therefore Scotia is)
      majority owned and controlled by European Nationals because our Executive
      Chairman, Mr. Craig L. Dobbin, a citizen of both Canada and Ireland (a
      Member State of the European Union) holds a sufficient number of securities
      of
      the Company. However, the UK Secretary of State (generally acting upon the
      advice of the UK 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 UK
      competitors of the Company alleged that we did not satisfy these requirements
      and that, as a result, Brintel, our only UK 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 UK 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 the Company, if his percentage ownership
      of
      the Company were to otherwise decrease, or if he were to die and no alternative
      arrangement acceptable to the UK Civil Aviation Authority were
      implemented.




Norwegian
      Regulation




Requirements
      for Operating License




Our
      Norwegian flying subsidiary, HSG, is subject to substantially the same European
      Union nationality requirements with regard to ownership and control as our
      other
      European subsidiaries due to Norway’s status as a Member State of the European
      Economic Area and the agreement between the European Union and the European
      Economic Area harmonizing aviation relations between the two. 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 UK Civil Aviation Authority with regard to our 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.




Dutch
      Regulation




Requirements
      for Operating License




Our
      Dutch subsidiary is, through the operations of its subsidiaries, subject to
      the
      same European Union and European Economic Area nationality requirements with
      regard to ownership and control as are our UK and Norwegian subsidiaries. The
      Dutch Civil Aviation Authority advised us in writing prior to our acquisition
      of
      Schreiner that Schreiner was in compliance with applicable European ownership
      and control requirements and, based on information provided by us, would
      continue to be so following its acquisition by us. In accordance with Dutch
      Civil Aviation Authority procedures, we were required to submit certain
      information regarding our ownership and control to the Dutch Civil Aviation
      Authority following our acquisition of Schreiner to formally demonstrate that
      our flying subsidiary in the Netherlands, CHC Helicopters Netherlands BV,
      continues to meet the European ownership and control requirements. We have
      submitted the required information to the Dutch Civil Aviation Authority. We
      believe that we are currently “majority owned” and “effectively controlled”
within the meaning of European Union and European Economic Area licensing
      requirements. 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.




Canadian
      Regulation




Requirements
      for Operating License




Our
      helicopter operations in Canada are regulated under the provisions of the
      Aeronautics Act (Canada) (the "Aeronautics Act"). Air operator certificates
      are
      issued by the Minister of Transport (Canada) pursuant to the Aeronautics Act
      and
      related regulations and orders. To receive an air operator certificate, an
      applicant must satisfy certain requirements with respect to its
      operations.




27




We
      have
      an air operator certificate. Our ability to conduct business is dependent on
      our
      ability to maintain our air operator certificate. One of our subsidiaries
      operates heavy helicopters off Canada’s east coast in support of the oil and gas
      industry.




Australian
      Regulation




Requirements
      for Operating License




The
      helicopter industry in Australia is regulated by various authorities, the most
      significant of which is the Australian Civil Aviation Safety Authority ("CASA").
      Pursuant to the Civil Aviation Act, 1988, CASA is primarily responsible for
      safety regulations for (1) civil air operations within Australian territory
      and (2) Australian registered aircraft operating outside of Australian
      territory.




To
      operate an aircraft in Australia, it must be registered with CASA and a valid
      Certificate of Airworthiness must be obtained and 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 operator
      certificate. CHC Australia has been licensed by CASA to conduct charter
      operations within, into, out of and outside of Australian territory and to
      engage in the maintenance of aircraft and maintenance of aircraft
      components.




South
      African Regulation




Requirements
      for Operating License




Aviation
      services in South Africa are regulated under the Air Services Licensing Act
      for
      domestic service and the International Air Services Act for international
      services. Additionally, aircraft used in such services must be registered under
      the Aviation Act, 1962. The Air Services Licensing Council issues domestic
      licenses if satisfied that (a) the service will be safe and reliable,
      (b) the applicant is a resident of South Africa or, if a corporation is
      incorporated in South Africa and 75% of the voting rights are held by South
      African residents, (c) the applicant will be in control of the service, and
      (d) the aircraft is registered in South Africa. Upon acquiring its interest
      in 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. No action with respect to these
      licenses has been taken since our acquisition of HSG in 1999. While we do not
      believe this is probable, any such action could materially and adversely affect
      our business, financial condition and results of operations. There are also
      requirements for an operating certificate, uninterrupted operation and
      insurance. The requirements for an international license are similar, with
      an
      additional requirement that the service can be operated within the structure
      of
      existing air service in South Africa. The International Air Services Council
      may
      also take into account the financial capability of the applicant, economic
      and
      other national interests of South Africa and the effect on existing services.
      Domestic fares are unregulated but international fares are governed by
      international agreements between governments.




Black
      Empowerment




Black
      Empowerment legislation in South Africa requires that we have a local partner
      that satisfies the black empowerment requirements in order to be able to bid
      on
      contracts in South Africa. We have entered into an arrangement with a black
      empowerment partner that will enable us to bid on future contracts.




28




Other
      International Regulation




Helicopter
      operations in other foreign countries are regulated to various degrees by their
      governments and must be operated in compliance with those regulations. These
      regulations may require us to obtain a license to operate in that country,
      may
      favour local companies or require operating permits that can only be obtained
      by
      locally registered companies and may impose other nationality requirements.
      To
      conduct helicopter operations in these countries, we may operate in conjunction
      with a local representative or partner. Our representatives or partners
      typically receive a small percentage of local revenues or a fixed fee but
      generally do not provide any personnel or assume any of the liabilities related
      to the performance of the contract. We currently have representatives or
      partners in a number of countries including Azerbaijan, Ecuador, Equatorial
      Guinea, Libya, Myanmar, Namibia, Saudi Arabia and Thailand.






29




**ORGANIZATIONAL
      STRUCTURE**




The
      following table
      lists our principal subsidiaries, their jurisdiction of incorporation and the
      percentage of votes attached to voting securities held directly or indirectly
      by
      us. This list excludes certain subsidiaries, the total aggregated assets of
      which constituted less than 20% of our fiscal 2006 consolidated assets and
      total
      aggregated revenues of which constituted less than 20% of our fiscal 2006
      consolidated revenues.




**CHC
                Helicopter Corporation**
              **Principal
                Subsidiaries**





**Subsidiary**
            **Jurisdiction
                of**
              **Incorporation**
            **Percentage
                of votes attaching to voting securities beneficially owned, controlled
                or
                directed by the Company**CHC
                Helicopters International Inc.
            Canada
            100%CHC
                Composites Inc.
            Canada
            100%4083423
                Canada Inc.
            Canada
            100%CHC
                Helicopters (Barbados) Limited
            Barbados
            100%CHC
                Leasing (Barbados) Limited
            Barbados
            100%CHC
                Capital (Barbados) Limited
            Barbados
            100%Canadian
                Helicopters (UK) Limited
            Scotland
            100%Survival-One
                Limited
            Scotland
            100%CHC
                Scotia Limited
            England
                and Wales
            100%Heliworld
                Leasing Limited
            England
                and Wales
            100%Vinland
                Denmark AS
            Denmark
            100%CHC
                Denmark ApS
            Denmark
            100%Helicopter
                Services Group AS
            Norway
            100%CHC
                Helikopter Service AS
            Norway
            100%Heli-One
                (Norway) AS
            Norway
            100%Heliwest
                AS
            Norway
            100%Heli-One
                (Europe) AS
            Norway
            100%Heli-One
                America Leasing Inc.
            Canada
            100%Heli-One
                (UK) Limited
            Scotland
            100%Lloyd
                Off-Shore Helicopters Services Pty. Ltd.
            Australia
            100%CHC
                Helicopters (Africa) Pty. Ltd.
            South
                Africa
            100%CHC
                Helicopters South Africa (Proprietary) Ltd.
            South
                Africa
            75%CHC
                Ireland Limited
            Ireland
            100%CHC
                Sweden AB
            Sweden
            100%CHC
                Helicopters Netherlands BV
            The
                Netherlands
            100%Schreiner
                Luchtvaart Groep BV
            The
                Netherlands
            100%CHC
                Airways BV
            The
                Netherlands
            100%Heli-One
                (Netherlands) BV
            The
                Netherlands
            100%Capital
                Aviation Services B.V.
            The
                Netherlands
            100%CHC
                Reinsurance SA
            Luxembourg
            100%CHC
                (Chad) SA
            Chad
            100%Aero
                Turbine Support Ltd.
            British
                Columbia
            100%





30


**PROPERTY
      AND EQUIPMENT**




**Fleet** **- By Type of Aircraft**




The
      composition of our fleet at April 30, 2006, and some of the characteristics
      of the individual types of aircraft we own or lease are as follows:




**Number
                in Fleet****Fleet
                Composition**
            **Owned**
            **Leased**
            
            **Type
                of Engine**
            
            **Passenger Capacity*****(i)*****Light
                Helicopters**Bell
                206 Series
            5
            -
            
            Turbine
            
            6Eurocopter
                350 Series
            1
            -
            
            Turbine
            
            5Eurocopter
                355 Twin Star
            1
            -
            
            Twin
                Turbine
            
            4MD
                902
            2
            
            
            Twin
                Turbine
            
            7**Total
                Light Helicopters**
            9
            -**Medium
                Helicopters**AgustaWestland
                AW139
            -
            2
            
            Twin
                Turbine
            
            15Bell
                212 Series
            8
            3
            
            Twin
                Turbine
            
            14Bell
                214
            1
            -
            
            Twin
                Turbine
            
            19Bell
                412
            8
            3
            
            Twin
                Turbine
            
            14Eurocopter
                155B
            1
            -
            
            Twin
                Turbine
            
            12Eurocopter
                365 Series
            19
            12
            
            Twin
                Turbine
            
            10Sikorsky
                S-76 Series
            50
            17
            
            Twin
                Turbine
            
            9**Total
                Medium Helicopters**
            87
            37**Heavy
                Helicopters**Eurocopter
                Super Puma 332L/L-1
            19
            13
            
            Twin
                Turbine
            
            20Eurocopter
                Super Puma 332 MkII
            1
            17
            
            Twin
                Turbine
            
            19Sikorsky
                S61N
            22
            4
            
            Twin
                Turbine
            
            26Sikorsky
                S-92 Series
            -
            6
            
            Twin
                Turbine
            
            19**Total
                Heavy Helicopters**
            42
            40**Fixed-Wing
                Aircraft**Boeing
                737-300
            -
            2
            
            Twin
                Jet
            
            149Convair
                580
            2
            -
            
            Twin
                Turboprop
            
            55Dash
                8
            5
            2
            
            Twin
                Turboprop
            
            47Learjet
                45
            1
            -
            
            Twin
                Jet
            
            9Twin
                Otter
            5
            1
            
            Twin
                Turboprop
            
            19**Total
                Fixed-Wing Aircraft**
            13
            5**TOTAL**
            151
            82




(i)
            Excludes
                pilots and assumes standard seating of only one
                pilot.







31


**Fleet
      - By Segment**




Our
      fleet at April 30, 2006 was comprised of the following aircraft by
      segment:




Aircraft
                Type
            Global
                Operations
            European
                Operations
            Heli-One
            **Total**
            Owned
            LeasedHeavyEurocopter
                Super Puma
            8
            18
            6
            **32**
            19
            13Eurocopter
                Super Puma MkII
            1
            15
            2
            **18**
            1
            17Sikorsky
                S-61N
            13
            8
            5
            **26**
            22
            4Sikorsky
                S-92 series
            1
            5
            -
            **6**
            -
            623
            46
            13
            **82**
            42
            40MediumAgustaWestland
                AW139
            -
            1
            1
            **2**
            -
            2Bell
                212
            11
            -
            -
            **11**
            8
            3Bell
                412
            11
            -
            -
            **11**
            8
            3Eurocopter
                365 Series
            17
            11
            3
            **31**
            19
            12Sikorsky
                S-76
            45
            13
            9
            **67**
            50
            17Other
            -
            1
            1
            **2**
            2
            -84
            26
            14
            **124**
            87
            37LightBell
                206
            5
            -
            -
            **5**
            5
            -Eurocopter
                AS350/355
            1
            -
            1
            **2**
            2
            -Other
            -
            -
            2
            **2**
            2
            -6
            -
            3
            **9**
            9
            -Total
                Helicopters
            113
            72
            30
            **215**
            138
            77Fixed-wing
            18
            -
            -
            **18**
            13
            5Total
                Aircraft
            131
            72
            30
            **233**
            151
            82




During
      fiscal 2006, we completed 21 sale-leaseback transactions, entered into new
      operating leases for seven aircraft, returned five aircraft to lessors and
      purchased four aircraft off-lease. As a result of the foregoing transactions,
      the number of leased aircraft in our fleet increased by 19 during fiscal 2006,
      from 63 leased aircraft as at April 30, 2006 to 82 leased aircraft as at
      April 30, 2006. We also purchased 20 aircraft and disposed of four
      aircraft. As a result of these purchases, disposals and the aforementioned
      leasing transactions, the number of owned aircraft in our fleet decreased from
      152 as at April 30, 2005 to 151 as at April 30, 2006.




Based
      on independent appraisals, the estimated fair market value of our owned aircraft
      fleet was $594.7 million as at April 30, 2006, exceeding its book
      value by approximately $46.7 million. See page 19, “ *Competitive
      Strengths - Retention of Asset Value* ”.
      The
      appraisal surplus has declined from $59.1 million at April 30, 2006 to
      $46.7 million at April 30, 2006.




**Lease
      Obligations**




We
      had
      entered into aircraft operating leases with 25 lessors on 82 aircraft included
      in our fleet at April 30, 2006. At inception, our aircraft leases had terms
      not exceeding 8.5 years. At April 30, 2006, these leases had expiry
      dates ranging from fiscal 2007 to 2015. The total minimum lease payments under
      these aircraft operating leases totalled $388.1 million at April 30,
      2006. We had options to purchase the aircraft at fair market value or agreed
      amounts that do not constitute bargain purchase options, but had no commitment
      to do so. With respect to such leased aircraft, substantially all of the costs
      to perform inspections, major repairs and overhauls of major components are
      at
      our expense. We may either perform this work internally through Heli-One or
      have
      the work performed by an external repair and overhaul service provider. We
      had
      also given guarantees to certain lessors in connection with these aircraft
      leases. See page 60, “ *Off-Balance
      Sheet Arrangements* ”.




In
      addition to payment under aircraft operating leases, we had minimum lease
      payments of $50.2 million for the same periods related to operating lease
      commitments for buildings, land and other equipment.




32


For
      additional details see page 60, “ *Contractual
      Obligations* ”
and
      also Notes 26 and 28 to our fiscal 2006 audited consolidated financial
      statements.




**Commitments
      to Acquire New Aircraft**




As
      at
      April 30, 2006, we had ordered and made deposits for a number of aircraft.
      At April 30, 2006, we had committed to purchase 13 heavy and 38 medium
      aircraft, most of which are expected to be delivered by the end of fiscal 2008.
      Total capital committed to these purchases is approximately $648.0 million
      (US $578.4 million). We also have options to purchase up to 31
      additional medium aircraft over the next five years. We expect that most of
      these aircraft will be used internally to support continued growth.




Where
      possible, we intend to finance these aircraft through operating
      leases.




**Facilities**




We
      currently operate from approximately 90 bases worldwide, including 29 in Europe,
      using facilities that include hangars, supply and service centers, engineering
      support facilities and offices. In Norway, the UK, Canada, the Netherlands
      and
      Australia, we generally own the hangars we use in our helicopter operations,
      which are located primarily on leased airport lands. We generally lease supply
      and service centers, engineering support facilities and offices from third
      parties.




The
      principal properties from which we now conduct our operations are:




**Owned
                or Leased/Lease Expiration Date****Location**
            **Operations**
            **Buildings**
              **(Sq.
                Feet)**
            **Land**
            **Buildings**Richmond,
                British Columbia, Canada
            Headquarters
                for Corporate,
              Global
                Operations and Heli-One; Repair and Overhaul
            80,000
            Leased
              October
                1, 2038
            OwnedGander,
                Newfoundland and Labrador, Canada
            CHC
                Composites Inc.
              Composites
                Manufacturer
            60,000
            Leased
              July,
                2018
            OwnedAberdeen,
                Scotland
            CHC
                Scotia Limited;
              Helicopter
                Operations
            42,000
            Leased
              April
                16, 2030
            Leased
              April
                30, 2016CHC
                Scotia Limited;
              Terminal
                Building
            25,000
            Leased
              June
                30, 2027
            OwnedStavanger,
                Norway
            CHC
                Helikopter Service AS Helicopter Operations
            199,000
            Leased
              March
                1, 2012
            OwnedHeli-One
                (Norway) AS Headquarters;
              Repair
                and Overhaul
            179,000(1)
            Leased
              April
                20, 2010
            Owned
              April
                30, 2010Cape
                Town,
              South
                Africa
            CHC
                Africa;
              Helicopter
                Operations
            142,884
            Leased
              April
                30, 2010
            Owned


Adelaide,
                Australia
            CHC
                Australia;
              Helicopter
                Operations
            10,000
            Owned
            OwnedHoofddorp,
              The
                Netherlands
            CHC
                Netherlands BV;
              Heli-One
                (Netherlands) BV
            39,000
            Leased
            LeasedDen
                Helder,
              The
                Netherlands
            CHC
                Netherlands;
              Helicopter
                Operations
            5,200
            Leased
              June
                30, 2008
            Leased
              June
                30, 2008




(i)
            Sub-leased
                from CHC Helicopter Services AS who leases from Heliwest AS and included
                within the 199,000 square feet shown in the table above for that
                company.






33


ITEM
      5.OPERATING
      AND FINANCIAL REVIEW AND PROSPECTS




*This
      section should be read in conjunction with "Selected Financial Data" and our
      audited consolidated financial statements included elsewhere in this Annual
      Report. Our audited consolidated financial statements have been prepared in
      accordance with Canadian GAAP which differ in certain respects from US GAAP.
      For
      a discussion of the principal differences between Canadian GAAP and US GAAP,
      see
      "Principal Differences between Canadian and US GAAP," and Note 32 to our
      audited consolidated financial statements.*




*We
      acquired Schreiner on February 16, 2004. Accordingly, the operating and
      financial review for periods prior to that date do not reflect the impact of
      our
      acquisition of Schreiner.*




**OVERVIEW**




Revenue
      for the fiscal year ended April 30, 2006 was $1,011.5 million, up
      $44.3 million from revenue of $967.2 million in fiscal 2005 and up
      $240.1 million from revenue of $771.4 million in fiscal 2004. Net
      earnings from continuing operations for fiscal 2006 were $90.7 million
      ($1.97 per share, diluted) compared to $46.2 million ($1.01 per
      share, diluted) in fiscal 2005 and $52.2 million ($1.16 per share,
      diluted) in fiscal 2004.




Net
      earnings from continuing operations includes gains from the sale of various
      investments, restructuring costs, debt settlement costs and tax adjustments
      totalling $29.6 million after-tax (2005 - ($17.4) million; 2004 -
      $2.0 million) or $0.64 diluted net earnings per share (2005 -
      ($0.38) per share, diluted; 2004 - $0.04 per share
      diluted).




Our
      Class A subordinate voting shares and our Class B multiple voting
      shares trade on the Toronto Stock Exchange (“TSX”) under the symbols “FLY.A” and
“FLY.B”. Prior to May 29, 2006, our Class A Subordinate Voting Shares
      and Class B Multiple Voting Shares traded on the TSX under the symbols
“FLY.SV.A” and “FLY.MV.B”, respectively. Our Class A subordinate voting
      shares also trade on the New York Stock Exchange under the symbol
“FLI”.




**RESULTS
      OF OPERATIONS**




**Restatements**




As
      part
      of ongoing restructuring initiatives and with the benefit of centralized
      financial processes and oversight, we have completed a review in several key
      areas, particularly maintenance, fixed asset accounting and taxes. This review
      is part of our continued improvement process to streamline and improve financial
      processes and assist us in preparing for SOX Section 404 internal control
      implementation for fiscal 2007. As a result we have restated certain previously
      issued financial information and included fiscal 2004 restated operating results
      in our audited consolidated financial statements for the year ended
      April 30, 2006 and have included comparative discussion in this MD&A.
      The restated financial information reflects the following:




(a)
            *Maintenance,
                classification and amortization of major components, spares and repairable
                parts*




We
      have
      reviewed our accounting policies and their application relating to the
      maintenance, classification and amortization of major components, spares and
      repairable parts. As a result of this review, which identified the requirement
      to record additional amortization on these assets and other matters, the
      following restatements have been implemented retroactively:




(i)
            Maintenance,
                repair and overhaul costs incurred on major components previously
                accounted for using the built-in overhaul method (owned aircraft)
                and the
                accrual method (leased aircraft) are now expensed as incurred using
                the
                direct expense method of accounting for both owned and leased
                aircraft.




(ii)
            Repairable
                parts are now classified entirely as capital assets and amortized
                over
                their estimated useful lives.






34


We
      believe the direct expense method is preferable because it eliminates the
      judgement and estimations needed to determine capital versus expense allocations
      of maintenance activities; it results in a consistent accounting policy for
      maintenance of both owned and leased aircraft major components; it is the
      predominant method used in the North American aviation industry,
      particularly among companies with large fleets of aircraft; and it better aligns
      our policies with emerging guidance for the US aviation industry.




The
      combined result of these changes in net earnings from continuing operations
      for
      the years ended April 30, 2005 and 2004 was an increase of
      $2.0 million and decrease of $0.3 million, respectively. Previously
      reported retained earnings at May 1, 2003 determined in accordance with
      Canadian generally accepted accounting principles was reduced by
      $17.9 million as a result of the adjustment to all fiscal years prior to
      this date. This reduction is primarily the result of increased amortization
      and
      the timing of expenditures reported for maintenance costs in these prior fiscal
      years.




(b)
            *Payroll
                and corporate taxes*




In
      connection with the consolidation of Global Operations, we completed a review
      of
      operations in various foreign jurisdictions. Several of these jurisdictions
      have
      different practices relating to expatriate payroll taxes and, in some cases,
      the
      information has been difficult to obtain and somewhat ambiguous. We believe
      that
      our compliance was consistent with other multinationals working in foreign
      jurisdictions but after an in-depth review decided that it was prudent to record
      additional payroll tax provisions. To that end, we have restated certain
      previously issued financial statements to record additional payroll taxes and
      related penalties, interest and other costs associated with activities in some
      of these jurisdictions. This adjustment reduced net earnings from continuing
      operations for the years ended April 30, 2005 and 2004 by $3.3 million
      and $2.3 million, respectively. Previously reported retained earnings at
      May 1, 2003 was reduced by approximately $5.0 million as a result of
      the adjustment to fiscal years prior to this date.




Also
      in
      connection with a review of income taxes, we have corrected certain future
      and
      current income tax balances and, as a result, recorded additional income tax
      expense of $4.8 million for the year ended April 30, 2005. In
      addition, we determined that it was necessary to restate certain previously
      issued financial statements to correct a $21 million future income tax
      recovery recorded in the fiscal year ended April 30, 2004 related to the
      disposition of certain of our European fleet and the reversal of other tax
      liabilities. This non-cash tax recovery has been reduced by approximately
      $9.2 million for fiscal 2004.




(c)
            *Reimbursables*




Prior
      periods have been restated to conform to the current period's classification
      of
      certain fuel, landing fees and other costs recovered from customers as revenue
      rather than as cost reductions. As a result, revenue and direct costs have
      increased by $54.9 million and $44.5 million in the fiscal years ended
      April 30, 2005 and 2004, respectively. This reclassification has had no
      impact on operating income, net earnings, retained earnings, or earnings per
      share.




**Foreign
      Exchange**




We
      are
      a global operator and our financial results are therefore impacted by
      fluctuations in foreign exchange rates, particularly those with respect to
      various European currencies and the US dollar. The unfavourable impact of
      foreign exchange (“FX”) due to rate changes from the prior fiscal year on
      revenue for fiscal 2006 was approximately $98.4 million. The unfavourable
      FX impact on segment EBITDAR was approximately $25.7 million for fiscal
      2006. Since financing charges, income tax expense, capital expenditures and
      debt
      repayments are also primarily in various European currencies and US dollars,
      the
      net impact of FX on net earnings and cash flow is not as significant; however,
      operating income was still negatively impacted by FX of approximately
      $13.4 million. Our overall approach to managing foreign currency exposures
      includes identifying and quantifying our currency exposures, utilizing natural
      hedges where possible and putting in place financial instruments, when
      considered appropriate, to manage the remaining exposures. In managing this
      risk, we may use financial instruments including forwards, swaps, and other
      derivative instruments. Our policy specifically prohibits the use of derivatives
      for speculative purposes. See page 56, “ *Liquidity
      and Capital Resources - Financing Activities* ”,
      page 58, “ *Financial
      Instruments* ”
and
      page 11, “ *Risk
      Factors - Fluctuations in currencies may make it more costly for us to pay
      our
      debt”* .




35


**Segments**




The
      following discussion provides certain financial and related information about
      our operating segments and also about our products and services, the geographic
      areas in which we operate and our major customers. Our objective is to provide
      information about the different types of business activities in which we engage
      and the different economic environments in which we operate in order to help
      users of our consolidated financial statements (i) better understand our
      performance, (ii) better assess our prospects for future net cash flows and
      (iii) make more informed judgments about us as a whole. In our efforts to
      achieve this objective, we provide information about segment revenues, segment
      EBITDAR and operating income because these financial measures are used by our
      key decision makers in making operating decisions and assessing performance.
      For
      additional information about our segment revenues and segment EBITDAR, including
      a reconciliation of these measures to our consolidated financial statements,
      see
      Note 25 to our fiscal 2006 audited consolidated financial
      statements.




Effective
      May 1, 2005, we reorganized under a new operational and management
      structure. This new structure provides us with opportunities for external growth
      and operational efficiencies that were not realizable prior to the
      restructuring. Consistent with this new structure, we have revised our segmented
      reporting and now report our results under four segments. The primary factors
      considered in identifying segments are: consistency with our internal
      operational and management structure, geographic coverage, the type of contracts
      that are entered into, the type of aircraft that are utilized and information
      used by our key decision makers to evaluate the results of operations. Our
      four
      reporting segments are:




•
            The
                Global Operations segment includes helicopter and fixed-wing flying
                services for offshore oil and gas, EMS/SAR customers in Asia, Africa,
                Australia, South America, the east coast of Canada and other
                locations around the world, excluding
                Europe.




•
            The
                European Operations segment provides offshore oil and gas flying
                operations from 17 bases in the UK, Norway, Ireland, the Netherlands
                and
                Denmark, as well as EMS/SAR and training operations throughout
                Europe.




•
            The
                Heli-One segment combines our helicopter services support capabilities
                including repair and overhaul, maintenance, integrated logistics
                support
                and aircraft leasing to both internal and external customers. Heli-One
                operates repair and overhaul facilities located in Norway, Canada,
                Australia and Africa. Heli-One also provides survival suit manufacturing
                and supply services and composite aerospace component
                manufacturing.




•
            The
                Corporate and other segment includes corporate head office and other
                activities.




Comparative
      figures for the prior fiscal year have been restated to reflect the new
      operational structure as if certain lease, power-by-the-hour (“PBH”) and
      associated transactions between our operating segments, as detailed above,
      had
      occurred for that period as well. The restatement is based on management’s best
      estimate of how these transactions would have been recorded if the operational
      and management restructuring had been effective on May 1, 2004. In
      addition, comparative figures have been restated for various restatements and
      adjustments as outlined in Note 4 to our fiscal 2006 audited consolidated
      financial statements.




**YEAR
      ENDED APRIL 30, 2006 COMPARED TO YEAR ENDED APRIL 30,
      2005**




**Revenue**




Total
      revenue for fiscal 2006 was $1,011.5 million, an increase of
      $44.3 million from revenue of $967.2 million for fiscal 2005 and an
      increase of $240.0 million from revenue of $771.5 million from fiscal
      2004. The increase of $44.3 million from fiscal 2005 includes revenue
      growth of $142.7 million offset by unfavourable FX of $98.4 million.
      The following are the primary reasons for the change in revenue:




(i)
            Excluding
                the impact of FX, there was a $66.7 million increase in revenue in
                fiscal 2006 in Global Operations primarily due to increased flying
                revenue
                from new and expanded contracts in Southeast Asia, the Ivory Coast,
                Canada
                and Azerbaijan. This increase also relates to increased revenue from
                fixed-wing activity.




(ii)
            An
                increase, excluding FX, in revenue in fiscal 2006 in European Operations
                of $44.0 million due to new and expanded contracts and increased
                flying activity on existing
                contracts.




(iii)
            An
                increase, excluding the impact of FX, in revenue in fiscal 2006 in
                Heli-One of $32.2 million. This increase was due primarily to
                increased revenue from existing customers and moving into new markets
                including Brazil.






36


By
      industry sector, the distribution of the year-over-year change in revenue is
      set
      forth in the table below:




Revenue
      Summary by Industry Sector




Fiscal
                Year Ended April 302006
            2005
            Change
            
            2006
            2005
            ChangeIndustry
                Sector
            (percentage
                of total revenue)
            
            (in millions
                of CDN dollars)Oil
                and Gas
            68.9%
            69.0%
            (0.1)%
            
            696.7
            667.6
            $
                29.1Repair
                and Overhaul
            13.0%
            11.6%
            1.4%
            
            131.5
            112.2
            19.3EMS/SAR
            8.2%
            8.8%
            (0.6)%
            
            82.7
            84.8
            (2.1)Other
            7.5%
            7.3%
            0.2%
            
            75.8
            70.5
            5.3Passenger
                Transportation
            1.8%
            2.6%
            (0.8)%
            
            18.0
            24.7
            (6.7)Training
            0.6%
            0.7%
            (0.1)%
            
            6.8
            7.4
            (0.6)Total
            100.0%
            100.0%
            0.0%
            
            $1,011.5
            $967.2
            $44.3




(i)
            The
                $29.1 million increase in revenue in the oil and gas sector was due
                primarily to growth in Global Operations and European Operations
                offset
                partially by unfavourable FX. The $19.3 million increase in repair
                and overhaul revenue was due primarily to revenue from growth in
                the
                business from new and expanded contracts partially offset by unfavourable
                FX.




The
      table below provides a summary of segment revenue by quarter for fiscal 2006
      and
      2005:




Revenue
      Summary by Quarter


(in
      millions of Canadian dollars)




Period
            
            
            
            
            
            Global
                Operations
            
            
            European
                Operations
            
            
            Total
                Flying Segments
            
            
            Heli-One
            
            
            Corporate
                & Other
            
            
            TotalFiscal
                2006
            
            
            Q1
            
            $
            76.0
            
            $
            133.6
            
            $
            209.6
            
            $
            37.4
            
            $
            -
            
            $
            247.0Q2
            
            
            79.5
            
            
            138.5
            
            
            218.0
            
            
            38.5
            
            
            -
            
            
            256.5Q3
            
            
            86.6
            
            
            126.0
            
            
            212.6
            
            
            44.8
            
            
            -
            
            
            257.4Q4
            
            
            88.8
            
            
            122.3
            
            
            211.1
            
            
            39.4
            
            
            0.1
            
            
            250.6$
            330.9
            
            $
            520.4
            
            $
            851.3
            
            $
            160.1
            
            $
            0.1
            
            $
            1,011.5Fiscal
                2005
            
            
            Q1
            
            $
            71.9
            
            $
            137.6
            
            $
            209.5
            
            $
            31.3
            
            $
            -
            
            $
            240.8Q2
            
            
            71.2
            
            
            134.6
            
            
            205.8
            
            
            36.0
            
            
            0.1
            
            
            241.9Q3
            
            
            73.8
            
            
            132.0
            
            
            205.8
            
            
            36.4
            
            
            0.1
            
            
            242.3Q4
            
            
            75.2
            
            
            126.7
            
            
            201.9
            
            
            40.1
            
            
            0.2
            
            
            242.2$
            292.1
            
            $
            530.9
            
            $
            823.0
            
            $
            143.8
            
            $
            0.4
            
            $
            967.2




We
      derive our flying revenue from two types of contracts. Approximately 51% of
      our
      fiscal 2006 flying revenue (fiscal 2005 - 52%) was derived from hourly charges
      (including hourly charges on contracts that also have fixed charges), and the
      remainder was generated by fixed monthly charges. Because of the significant
      fixed charge component of our flying revenue mix, 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 two tables provide,
      respectively, a quarterly summary of our flying hours and a summary of our
      flying revenue hourly vs. fixed mix for fiscal 2006 and 2005, in each case
      by
      segment.




37


Flying
      Hours




Flying
                Hours
            
            Number
                of Aircraft at Period EndPeriod
            
            Global
              Operations
            
            European
              Operations
            
            Total
            
            Global
              Operations
            
            European
              Operations
            
            Heli-One
            
            TotalFiscal
                2006
            Q1
            16,262
            
            23,713
            
            39,975
            
            127
            
            77
            
            14
            
            218Q2
            17,042
            
            25,968
            
            43,010
            
            128
            
            71
            
            27
            
            226Q3
            18,854
            
            23,764
            
            42,618
            
            131
            
            72
            
            27
            
            230Q4
            17,701
            
            22,026
            
            39,727
            
            131
            
            72
            
            30
            
            23369,859
            
            95,471
            
            165,330Fiscal
                2005
            Q1
            16,481
            
            24,468
            
            40,949
            
            112
            
            82
            
            13
            
            207Q2
            16,364
            
            24,028
            
            40,392
            
            114
            
            80
            
            13
            
            207Q3
            17,070
            
            22,927
            
            39,997
            
            122
            
            79
            
            13
            
            214Q4
            16,778
            
            22,183
            
            38,961
            
            121
            
            81
            
            13
            
            21566,693
            
            93,606
            
            160,299





Flying
      Revenue Mix - Hourly vs. Fixed


(in
      millions of Canadian dollars)




Hourly
            
            
            Fixed
            
            
            TotalSegment
            
            
            Fiscal
                2006
            
            
            Fiscal
                2005
            
            
            Fiscal
                2006
            
            
            Fiscal
                2005
            
            
            Fiscal
                2006
            
            
            Fiscal
                2005Global
                Operations
            
            $
            97.1
            
            $
            82.1
            
            $
            210.7
            
            $
            194.5
            
            $
            307.8
            
            $
            276.6European
                Operations
            
            
            311.0
            
            
            321.1
            
            
            186.2
            
            
            181.6
            
            
            497.2
            
            
            502.7$
            408.1
            
            $
            403.2
            
            $
            396.9
            
            $
            376.1
            
            $
            805.0
            
            $
            779.3




We
      utilize primarily heavy aircraft in our European Operations segment and medium
      aircraft in our Global Operations segment. As illustrated in the table below,
      the overall mix of revenue by aircraft type remained relatively consistent
      from
      fiscal 2005 to fiscal 2006.




Flying
      Revenue Mix - Aircraft Type


(in
      millions of Canadian dollars)




Fiscal
                2006
            
            
            Fiscal
                2005Segment
            
            
            Heavy
            
            
            Medium
            
            
            Light
            
            
            Fixed
              Wing
            
            
            Total
            
            
            Heavy
            
            
            Medium
            
            
            Light
            
            
            Fixed
              Wing
            
            
            TotalGlobal
                Operations
            
            $
            70.0
            
            $
            204.8
            
            $
            2.5
            
            $
            30.5
            
            $
            307.8
            
            $
            69.1
            
            $
            174.3
            
            $
            3.5
            
            $
            29.7
            
            $
            276.6European
                Operations
            
            
            369.7
            
            
            127.5
            
            
            -
            
            
            -
            
            
            497.2
            
            
            363.2
            
            
            137.9
            
            
            1.6
            
            
            -
            
            
            502.7Total
                FlyingRevenue
            
            $
            439.7
            
            $
            332.3
            
            $
            2.5
            
            $
            30.5
            
            $
            805.0
            
            $
            432.3
            
            $
            312.2
            
            $
            5.1
            
            $
            29.7
            
            $
            779.3Total
                %
            
            
            54.6
            %
            
            41.3
            %
            
            0.3
            %
            
            3.7
            %
            
            100.0
            %
            
            55.5
            %
            
            40.1
            %
            
            0.7
            %
            
            3.8
            %
            
            100.0
            %




We
      regularly compare our activity levels against available industry data. Aberdeen
      Airport Ltd. reports monthly helicopter passenger traffic for all helicopter
      operations in Aberdeen, Scotland, which is our largest base (accounting for
      approximately 25% of total European Operations revenue) as measured by the
      number of aircraft and revenue. The following table provides a quarterly summary
      of all helic1opter passenger traffic at Aberdeen Airport for fiscal 2006 and
      2005.




38


Aberdeen
      Airport - Helicopter Passengers




Fiscal
                2006
            Fiscal
                2005
            %
                Change
              (2006
                vs 2005)Q1
            115,696
            102,228
            13.2%Q2
            120,813
            104,715
            15.4%Q3
            113,743
            95,896
            18.6%Q4
            114,684
            101,132
            13.4%Total
            464,936
            403,971
            15.1%


Source:
      Aberdeen
      Airport Ltd.




The
      data in the above table shows a year-over-year increase in activity in Aberdeen.
      Helicopter passenger activity levels in Aberdeen increased approximately 15%
      in
      fiscal 2006 versus fiscal 2005. This 15% increase is greater than the flying
      hour increase experienced by the European Operations segment in the same period
      primarily due to the redeployment of aircraft to support growth in international
      markets and reduced activity from expired contracts that have been partially
      offset by revenue from new entrants to the North Sea.




**Direct
      Costs**




Direct
      costs for fiscal 2006 increased by $55.3 million, to $797.4 million,
      from $742.1 million for fiscal 2005 and increased by $177.1 million
      from $620.3 million for fiscal 2004. The $55.3 million increase from
      fiscal 2005 is primarily due to an increase in variable costs incurred to
      support revenue growth. The increase of $177.1 million from fiscal 2004 is
      primarily due to the acquisition of Schreiner which was acquired in February
      2004.




**General
      and Administration Costs**




General
      and administration costs for fiscal 2006 decreased by $7.4 million to
      $27.9 million from $35.3 million for fiscal 2005 and increased by
      $9.3 million from $18.6 million in fiscal 2004. This decrease of
      $7.4 million from fiscal 2005 is due primarily to adjustments in claim
      reserves for various insured risks, reduced variable compensation costs from
      fiscal 2005 and a reduction in Schreiner corporate office expense as a result
      of
      restructuring initiatives. The increase of $9.3 million from fiscal 2004
      relates to an increase in variable compensation costs and the addition of
      Schreiner in February 2004.




**Amortization**




Amortization
      expense increased $5.6 million to $58.7 million in fiscal 2006 from
      $53.1 million in fiscal 2005 and increased $20.2 million from
      $38.5 million in fiscal 2004. These increases in amortization were due
      largely to amortization on an increased value of repairable parts from the
      prior
      year and an increase in the owned aircraft fleet size since fiscal 2004 and
      other asset additions including the addition of Schreiner assets acquired in
      February 2004. Repairable parts balances have increased from the prior year
      to
      support the addition of 18 aircraft and several new aircraft types to the fleet.
      See page 32, “*Property and Equipment -* *Fleet
      - By Segment* ”
for
      additional information regarding aircraft additions.




**Restructuring** **Costs**




During
      the year we completed the consolidation of all our current operations into
      three
      new operating divisions, Global Operations, European Operations and
      Heli-One.




We
      expensed costs of $16.3 million and $17.6 million for fiscal 2006 and
      2005 respectively in connection with these restructuring activities.
      Restructuring costs were comprised of severance, termination, relocation,
      planning, consulting and benefit adjustments.




39


During
      fiscal 2004 we incurred restructuring costs of $9.2 million in connection
      with the consolidation of our European operations and other related activities.
      Restructuring costs were comprised of termination benefits, professional fees,
      travel costs and other incremental costs directly associated with the
      restructuring activities. As at April 30, 2006 the consolidation of the
      European operations was completed with no material additional costs to be
      incurred.




**Fair
      Value Adjustment**




During
      fiscal 2005, a fair value adjustment of $14.3 million relating to the
      property and equipment and other assets of Composites was recorded.




**Gain
      on Disposal of Assets**




During
      fiscal 2006 we disposed of property and equipment, primarily aircraft (see
      page 32, *“Property
      and Equipment - Fleet - By Segment* ”
and
      page 58, “ *Liquidity
      and Capital Resources - Investing Activities* ”),
      and
      received net proceeds of $219.5 million, resulting in a net recognized gain
      of $0.2 million and a deferred gain of $22.1 million. The latter
      related primarily to the 21 aircraft sale-leaseback transactions realized during
      the year.




**Operating
      Income**




Operating
      income increased by $2.6 million to $111.5 million in fiscal 2006 from
      $108.9 million in fiscal 2005 and increased $23.4 million from
      $88.1 million in fiscal 2004. The $2.6 million increase from fiscal
      2005 was due primarily to a $19.6 million (net of FX) increase in the
      European Operations segment and the $14.3 million fair market value
      adjustment on the assets of Composites in fiscal 2005, largely offset by a
      net
      operating income decrease in other segments and an unfavourable FX impact of
      $13.4 million.




**Debt
      Settlement**




During
      fiscal 2006 we had no debt settlement costs but expensed $2.0 million of
      debt settlement costs in fiscal 2005 in connection with a senior credit facility
      revision and redemption of our remaining 113⁄4% senior subordinated notes and 8%
      subordinated debentures.




During
      fiscal 2004 we incurred $19.7 million of debt settlement costs in
      connection with the retirement, in April 2004, of
      (i) €87.3 million ($140.6 million) (60% of original principal
      amount) of our 113⁄4% senior subordinated notes, (ii) £32.7 million
      ($78.7 million) and €25 million ($40.3 million) of our senior
      credit facilities and (iii) NOK123.5 million ($24.3 million) of
      our 7% term loan.




**Financing
      Charges**




Financing
      charges for the fiscal year ended April 30, 2006 totalled
      $54.0 million versus $38.3 million in fiscal 2005 and
      $29.8 million in fiscal 2004. The increase in financing charges this year
      compared to fiscal 2005 and fiscal 2004 was driven primarily by increased
      interest on debt obligations and increases in FX losses somewhat offset by
      increased interest income.




(in
                millions of Canadian dollars)
            
            
            **2006**
            
            
            2005
            
            
            2004Interest
                on debt obligations
            
            **$**
            **43.9**
            
            $
            32.9
            
            $
            30.6Amortization
                of deferred financing costs
            
            
            **1.6**
            
            
            3.2
            
            
            3.5Foreign
                exchange losses (gains)
            
            
            **6.2**
            
            
            (1.2
            )
            
            (6.1
            )Release
                of currency translation adjustment
            
            
            **2.6**
            
            
            -
            
            
            -Interest
                revenue
            
            
            **(4.5**
            **)**
            
            (0.5
            )
            
            (1.4
            )Other
                interest and banking expenses
            
            
            **4.2**
            
            
            3.9
            
            
            3.2Total
            
            **$**
            **54.0**
            
            $
            38.3
            
            $
            29.8




The
      average rate on our variable-rate senior credit facilities during fiscal 2006
      was 4.4% compared to 4.0% in fiscal 2005 and 4.4% in fiscal 2004. In addition
      to
      higher effective interest rates on the senior credit facility borrowings,
      interest on long-term debt increased by $11.0 million due to higher average
      borrowings primarily for capital expenditures and aircraft deposits in fiscal
      2006 compared to fiscal 2005.




40


**Gain
      on Sale of Long-term Investments**




Gain
      on
      sale of long-term investments in fiscal 2006 included a $15.7 million gain
      from the sale of our interest in Inversiones Aereas SL (“Inaer”) and a
      $21.8 million gain from the sale of our interest in Canadian Helicopters
      Limited (“CHL”) and other long-term investments.




**Equity
      in Earnings of Associated Companies**




Equity
      in earnings of associated companies increased by $1.1 million to
      $6.6 million in fiscal 2006, from $5.5 million in fiscal 2005 and
      increased $2.7 million from $3.9 million in fiscal 2004. During the
      year we sold our 38% equity ownership in Inaer and our 41.75% interest in CHL,
      which together accounted for $6.2 million of equity earnings in fiscal 2006
      compared to $5.5 million in fiscal 2005 and $3.5 million in fiscal
      2004.




**Income
      Taxes**




We
      had
      an income tax provision of $10.9 million in fiscal 2006 compared to
      $27.6 million in fiscal 2005 and a recovery of $9.7 million in fiscal
      2004. This provision was comprised of the following:




(in
                millions of Canadian dollars)
            
            
            **2006**
            
            
            2005
            
            
            2004Earnings
                from continuing operations before income taxes
            
            **$**
            **101.7**
            
            $
            73.8
            
            $
            42.5Combined
                Canadian federal and provincialstatutory
                income tax rate
            
            
            **34**
            **%**
            
            35
            %
            
            37
            %Income
                tax provision calculated at statutory rate
            
            
            **(34.6**
            **)**
            
            (25.8
            )
            
            (15.7
            )(Increase)
                decrease in income tax (provision) recovery resulting
                from:Reversal
                of tax
                liability
            
            
            **-**
            
            
            -
            
            
            11.8Rate
                differences in various jurisdictions
            
            
            **13.6**
            
            
            16.0
            
            
            15.1Effect
                of change in tax legislation
            
            
            **(0.2**
            **)**
            
            (4.2
            )
            
            -Non-deductible
                items
            
            
            **(1.2**
            **)**
            
            (3.2
            )
            
            (2.4
            )Large
                corporations tax
            
            
            **(0.5**
            **)**
            
            (0.5
            )
            
            (0.2
            )Other
                foreign taxes paid
            
            
            **(3.5**
            **)**
            
            (1.8
            )
            
            (1.6
            )Non-taxable
                portion of capital gains
            
            
            **13.6**
            
            
            1.1
            
            
            2.5Non-taxable
                income
            
            
            **2.7**
            
            
            1.3
            
            
            -Valuation
                allowance
            
            
            **(0.3**
            **)**
            
            (7.0
            )
            
            -Other
            
            
            **(0.5**
            **)**
            
            (3.5
            )
            
            0.2Income
                tax (provision) recovery
            
            **$**
            **(10.9**
            **)**
            $
            (27.6
            )
            $
            9.7




We
      have
      recorded a valuation allowance in respect of our net future income tax asset
      in
      Composites. The prior period amounts relating to the valuation allowance have
      been reclassified to continuing operations as outlined in Note 6 to our
      2006 audited consolidated financial statements.




During
      fiscal 2005, legislation was substantively enacted in the Netherlands to reduce
      the corporate income tax rate from 34.5% to 30.0%. As a result, we adjusted
      the
      value of our future income tax assets related to losses carried forward and
      other temporary differences in the Netherlands by
      $4.2 million.




During
      fiscal 2004, we recorded an $11.8 million future income tax recovery, which
      was attributable to the reversal of a previously recorded tax liability as
      a
      result of the disposition of certain of our European fleet.




We
      are
      subject to taxation in many jurisdictions throughout the world. The effective
      tax rate and tax liability are 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 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.




41




We
      have
      accumulated approximately $117.0 million in non-capital tax losses of which
      $78.1 million is available to reduce future Canadian income taxes otherwise
      payable, $28.7 million is available to reduce future Dutch income taxes
      otherwise payable and the remainder is available to reduce future income taxes
      otherwise payable in other foreign jurisdictions. If unused, these losses will
      expire as follows:




(in
                millions of Canadian dollars)2007
            
            $
            5.02008
            
            
            5.22009
            
            
            9.92014
            
            
            12.92015
            
            
            17.22026
            
            
            27.8Indefinitely
            
            
            39.0$
            117.0




**Net
      Earnings from Continuing Operations**




Net
      earnings from continuing operations for fiscal 2006 was $90.7 million
      ($1.97 per share, diluted), an increase of $44.5 million from
      $46.2 million ($1.01 per share, diluted) in fiscal 2005 and an
      increase of $38.5 million ($1.16 per share, diluted) in fiscal 2004.
      The $44.5 million increase from fiscal 2005 was primarily the result of
      gains on sale of Inaer, CHL and other investments totalling $37.5 million
      and a lower tax provision of $16.6 million, partially offset by increased
      financing charges of $15.7 million. The $38.5 million increase from
      fiscal 2004 was primarily due to the Schreiner acquisition in the fourth quarter
      of fiscal 2004, growth in the operation, partially offset by increased financing
      charges and a higher tax provision in fiscal 2006 compared to fiscal
      2004.




**Net
      Loss from Discontinued Operations**




Net
      loss from discontinued operations for fiscal 2006 was $nil compared to earnings
      of $10.3 million for fiscal 2005 ($0.22 per share, diluted) and a net
      loss of $0.3 million for fiscal 2004 ($0.01 per share, diluted). The
      earnings in fiscal 2005 relate primarily to an $8.6 million net gain on the
      disposal of two non-core businesses.




**Net
      Earnings**




Net
      earnings increased by $34.2 million to $90.7 million ($1.97 per
      share, diluted) in fiscal 2006, up from $56.5 million ($1.23 per
      share, diluted) in fiscal 2005 and increased $38.8 million from
      $51.9 million in fiscal 2004. This reflects a $44.5 million and
      $38.5 million increase in net earnings from continuing operations for
      fiscal 2005 and 2004, respectively, and a $10.3 million decrease and a
      $0.3 million increase in net earnings from fiscal 2005 and 2004,
      respectively, from discontinued operations.




**Quarterly
      Financial Data (Unaudited)**




The
      following financial data presents the impact of various restatements on our
      previously issued consolidated statements of earnings for each of the first
      three quarters of fiscal 2006 and fiscal 2005. The restated fourth quarter
      of
      fiscal 2005 and year ended April 30, 2006 have been previously presented in
      our July 13 th ,
      2006
      fourth quarter press release (see Notes 3 and 4 to our fiscal 2006 audited
      consolidated financial statements).




42


**Consolidated
      Statements of Earnings**


**Unaudited**


**(in
      thousands of Canadian dollars, except per share amounts)**





**Three
                Months Ended**
              **July
                31, 2005**
            
            **Three
                Months Ended**
              **July
                31, 2004**As
                Previously Reported
            
            
            **As
                Restated**
            
            
            As
                Previously Reported
            
            
            **As
                Restated****Revenue**
            
            $
            231,345
            
            **$**
            **247,034**
            
            $
            225,471
            
            **$**
            **240,839**Direct
                costs
            
            
            (179,609
            )
            
            **(188,592**
            **)**
            
            (172,313
            )
            
            **(188,084**
            **)**General
                and administration costs
            
            
            (6,176
            )
            
            **(6,177**
            **)**
            
            (8,759
            )
            
            **(8,759**
            **)**Amortization
            
            
            (8,617
            )
            
            **(14,393**
            **)**
            
            (7,800
            )
            
            **(13,165**
            **)**Restructuring
                costs
            
            
            (3,735
            )
            
            **(3,736**
            **)**
            
            (816
            )
            
            **(816**
            **)**(Loss)
                gain on disposal of assets
            
            
            169
            
            
            **169**
            
            
            1,062
            
            
            **1,062**Fair
                value adjustment
            
            
            -
            
            
            **-**
            
            
            -
            
            
            **-****Operating
                income**
            
            
            33,377
            
            
            **34,305**
            
            
            36,845
            
            
            **31,077**Debt
                settlement costs
            
            
            -
            
            
            **-**
            
            
            (1,360
            )
            
            **(1,360**
            **)**Financing
                charges
            
            
            (12,041
            )
            
            **(12,173**
            **)**
            
            (8,999
            )
            
            **(9,158**
            **)****Earnings
                from continuing operations before income taxes and undernoted
                items**
            
            
            21,336
            
            
            **22,132**
            
            
            26,486
            
            
            **20,559**Non-controlling
                interest
            
            
            (3
            )
            
            **(3**
            **)**
            
            -
            
            
            **-**Gain
                on sale of long-term investments
            
            
            -
            
            
            **-**
            
            
            -
            
            
            **-**Equity
                (losses) earnings of associated companies
            
            
            3,179
            
            
            **3,180**
            
            
            3,092
            
            
            **3,092**Income
                tax provision
            
            
            (5,831
            )
            
            **(6,083**
            **)**
            
            (6,312
            )
            
            **(5,773**
            **)****Net
                earnings from continuing operations**
            
            
            18,681
            
            
            **19,226**
            
            
            23,266
            
            
            **17,878****Net
                loss from discontinued operations**
            
            
            (428
            )
            
            **-**
            
            
            (923
            )
            
            **(325**
            **)****Net
                earnings**
            
            $
            18,253
            
            **$**
            **19,226**
            
            $
            22,343
            
            **$**
            **17,553****Earnings
                per share***Basic*Net
                earnings from continuing operations
            
            $
            0.45
            
            **$**
            **0.46**
            
            $
            0.56
            
            **$**
            **0.43**Net
                loss from discontinued operations
            
            
            (0.01
            )
            
            **-**
            
            
            (0.03
            )
            
            **(0.01**
            **)**Net
                earnings
            
            
            0.44
            
            
            **0.46**
            
            
            0.53
            
            
            **0.42***Diluted*Net
                earnings from continuing operations
            
            $
            0.41
            
            **$**
            **0.42**
            
            $
            0.51
            
            **$**
            **0.39**Net
                loss from discontinued operations
            
            
            (0.01
            )
            
            **-**
            
            
            (0.02
            )
            
            **(0.02**
            **)**Net
                earnings
            
            
            0.40
            
            
            **0.42**
            
            
            0.49
            
            
            **0.37**







**Consolidated
      Statements of Earnings**


**Unaudited**


**(in
      thousands of Canadian dollars, except per share amounts)**










**Three
                Months Ended**
              **October
                31, 2005**
            **Three
                Months Ended**
              **October
                31, 2004**
            **Six
                Months Ended**
              **October
                31, 2005**
            **Six
                Months Ended**
              **October
                31, 2004**As
                Previously Reported
            
            
            **As
                Restated**
            
            
            As
                Previously Reported
            
            
            **As
                Restated**
            
            
            As
                Previously Reported
            
            
            **As
                Restated**
            
            
            As
                Previously Reported
            
            
            **As
                Restated****Revenue**
            
            $
            252,122
            
            **$**
            **256,450**
            
            $
            239,495
            
            **$**
            **241,852**
            
            $
            496,499
            
            **$**
            **503,484**
            
            $
            478,270
            
            **$**
            **482,691**Direct
                costs
            
            
            (201,089
            )
            
            **(202,955**
            **)**
            
            (186,314
            )
            
            **(183,549**
            **)**
            
            (393,730
            )
            
            **(391,547**
            **)**
            
            (371,932
            )
            
            **(371,633**
            **)**General
                and administration costs
            
            
            (6,353
            )
            
            **(6,353**
            **)**
            
            (10,310
            )
            
            **(10,293**
            **)**
            
            (12,529
            )
            
            **(12,530**
            **)**
            
            (19,068
            )
            
            **(19,052**
            **)**Amortization
            
            
            (8,794
            )
            
            **(14,719**
            **)**
            
            (6,602
            )
            
            **(12,151**
            **)**
            
            (17,411
            )
            
            **(29,112**
            **)**
            
            (14,402
            )
            
            **(25,316**
            **)**Restructuring
                costs
            
            
            (5,288
            )
            
            **(5,288**
            **)**
            
            (4,161
            )
            
            **(4,138**
            **)**
            
            (9,023
            )
            
            **(9,024**
            **)**
            
            (4,977
            )
            
            **(4,954**
            **)**(Loss)
                gain on disposal of assets
            
            
            23,021
            
            
            **1,184**
            
            
            (10
            )
            
            **(10**
            **)**
            
            23,190
            
            
            **1,353**
            
            
            1,053
            
            
            **1,052**Fair
                value adjustment
            
            
            -
            
            
            **-**
            
            
            -
            
            
            **(14,260**
            **)**
            
            -
            
            
            **-**
            
            
            -
            
            
            **(14,260**
            **)****Operating
                income**
            
            
            53,619
            
            
            **28,319**
            
            
            32,098
            
            
            **17,451**
            
            
            86,996
            
            
            **62,624**
            
            
            68,944
            
            
            **48,528**Debt
                settlement costs
            
            
            -
            
            
            **-**
            
            
            23
            
            
            **-**
            
            
            -
            
            
            **-**
            
            
            (1,337
            )
            
            **(1,360**
            **)**Financing
                charges
            
            
            (11,483
            )
            
            **(11,539**
            **)**
            
            (9,220
            )
            
            **(9,545**
            **)**
            
            (23,524
            )
            
            **(23,712**
            **)**
            
            (18,215
            )
            
            **(18,703**
            **)****Earnings
              from continuing operations
              before****income
                taxes and undernoted items**
            
            
            42,136
            
            
            **16,780**
            
            
            22,901
            
            
            **7,906**
            
            
            63,472
            
            
            **38,912**
            
            
            49,392
            
            
            **28,465**Non-controlling
                interest
            
            
            (63
            )
            
            **(63**
            **)**
            
            18
            
            
            **18**
            
            
            (66
            )
            
            **(66**
            **)**
            
            18
            
            
            **18**Gain
                on sale of long-term investments
            
            
            -
            
            
            **21,837**
            
            
            -
            
            
            **-**
            
            
            -
            
            
            **21,837**
            
            
            -
            
            
            **-**Equity
                (losses) earnings of associated companies
            
            
            3,229
            
            
            **3,229**
            
            
            2,774
            
            
            **2,774**
            
            
            6,408
            
            
            **6,409**
            
            
            5,867
            
            
            **5,866**Income
                tax provision
            
            
            (3,678
            )
            
            **(2,578**
            **)**
            
            (9,680
            )
            
            **(11,351**
            **)**
            
            (9,509
            )
            
            **(8,661**
            **)**
            
            (15,992
            )
            
            **(17,124**
            **)****Net
                earnings from continuing operations**
            
            
            41,624
            
            
            **39,205**
            
            
            16,013
            
            
            **(653**
            **)**
            
            60,305
            
            
            **58,431**
            
            
            39,285
            
            
            **17,225****Net
                loss from discontinued operations**
            
            
            (93
            )
            
            **-**
            
            
            (17,356
            )
            
            **(85**
            **)**
            
            (521
            )
            
            **-**
            
            
            (18,279
            )
            
            **(410**
            **)****Net
                earnings**
            
            $
            41,531
            
            **$**
            **39,205**
            
            $
            (1,343
            )
            **$**
            **(738**
            **)**
            $
            59,784
            
            **$**
            **58,431**
            
            $
            21,006
            
            **$**
            **16,815****Earnings
                per share***Basic*Net
                earnings (loss) from continuing operations
            
            $
            0.99
            
            **$**
            **0.93**
            
            $
            0.38
            
            **$**
            **(0.02**
            **)**
            $
            1.44
            
            **$**
            **1.39**
            
            $
            0.94
            
            **$**
            **0.41**Net
                loss from discontinued operations
            
            
            -
            
            
            **-**
            
            
            (0.41
            )
            
            **-**
            
            
            (0.01
            )
            
            **-**
            
            
            (0.44
            )
            
            **(0.01**
            **)**Net
                earnings (loss)
            
            
            0.99
            
            
            **0.93**
            
            
            (0.03
            )
            
            **(0.02**
            **)**
            
            1.43
            
            
            **1.39**
            
            
            0.50
            
            
            **0.40***Diluted*Net
                earnings (loss) from continuing operations
            
            $
            0.91
            
            **$**
            **0.85**
            
            $
            0.35
            
            **$**
            **(0.01**
            **)**
            $
            1.31
            
            **$**
            **1.27**
            
            $
            0.86
            
            **$**
            **0.38**Net
                loss from discontinued operations
            
            
            -
            
            
            **-**
            
            
            (0.38
            )
            
            **-**
            
            
            (0.01
            )
            
            **-**
            
            
            (0.40
            )
            
            **(0.01**
            **)**Net
                earnings (loss)
            
            
            0.91
            
            
            **0.85**
            
            
            (0.03
            )
            
            **(0.01**
            **)**
            
            1.30
            
            
            **1.27**
            
            
            0.46
            
            
            **0.37**




43




**Consolidated
      Statements of Earnings**


**Unaudited**


**(in
      thousands of Canadian dollars, except per share amounts)**




**Three
                Months Ended**
              **January
                31, 2006**
            **Three
                Months Ended**
              **January
                31, 2005**
            **Nine
                Months Ended**
              **January
                31, 2006**
            **Nine
                Months Ended**
              **January
                31, 2005**As
                Previously Reported
            
            
            **As
                Restated**
            
            
            As
                Previously Reported
            
            
            **As
                Restated**
            
            
            As
                Previously Reported
            
            
            **As
                Restated**
            
            
            As
                Previously Reported
            
            
            **As
                Restated****Revenue**
            
            $
            257,455
            
            **$**
            **257,455**
            
            $
            242,237
            
            **$**
            **242,237**
            
            $
            760,940
            
            **$**
            **760,939**
            
            $
            724,928
            
            **$**
            **724,928**Direct
                costs
            
            
            (211,423
            )
            
            **(208,853**
            **)**
            
            (194,215
            )
            
            **(187,445**
            **)**
            
            (612,730
            )
            
            **(600,400**
            **)**
            
            (573,966
            )
            
            **(559,078**
            **)**General
                and administration costs
            
            
            (5,557
            )
            
            **(5,557**
            **)**
            
            (7,248
            )
            
            **(7,248**
            **)**
            
            (18,086
            )
            
            **(18,087**
            **)**
            
            (26,300
            )
            
            **(26,300**
            **)**Amortization
            
            
            (8,734
            )
            
            **(14,756**
            **)**
            
            (8,147
            )
            
            **(13,791**
            **)**
            
            (26,145
            )
            
            **(43,868**
            **)**
            
            (22,809
            )
            
            **(39,107**
            **)**Restructuring
                costs
            
            
            (3,739
            )
            
            **(3,739**
            **)**
            
            (3,912
            )
            
            **(3,912**
            **)**
            
            (12,762
            )
            
            **(12,763**
            **)**
            
            (8,866
            )
            
            **(8,866**
            **)**(Loss)
                gain on disposal of assets
            
            
            (267
            )
            
            **(267**
            **)**
            
            2,536
            
            
            **2,536**
            
            
            1,086
            
            
            **1,086**
            
            
            3,589
            
            
            **3,588**Fair
                value adjustment
            
            
            -
            
            
            **-**
            
            
            -
            
            
            **-**
            
            
            -
            
            
            **-**
            
            
            (14,260
            )
            
            **(14,260**
            **)****Operating
                income**
            
            
            27,735
            
            
            **24,283**
            
            
            31,251
            
            
            **32,377**
            
            
            92,303
            
            
            **86,907**
            
            
            82,316
            
            
            **80,905**Debt
                settlement costs
            
            
            -
            
            
            
            
            
            (621
            )
            
            **(621**
            **)**
            
            -
            
            
            **-**
            
            
            (1,981
            )
            
            **(1,981**
            **)**Financing
                charges
            
            
            (17,866
            )
            
            **(17,990**
            **)**
            
            (10,468
            )
            
            **(10,572**
            **)**
            
            (41,320
            )
            
            **(41,702**
            **)**
            
            (28,961
            )
            
            **(29,275**
            **)****Earnings
              from continuing operations
              before****income
                taxes and undernoted items**
            
            
            9,869
            
            
            **6,293**
            
            
            20,162
            
            
            **21,184**
            
            
            50,983
            
            
            **45,205**
            
            
            51,374
            
            
            **49,649**Non-controlling
                interest
            
            
            -
            
            
            **-**
            
            
            (185
            )
            
            **(185**
            **)**
            
            (66
            )
            
            **(66**
            **)**
            
            (167
            )
            
            **(167**
            **)**Gain
                on sale of long-term investments
            
            
            15,721
            
            
            **15,721**
            
            
            -
            
            
            **-**
            
            
            37,558
            
            
            **37,558**
            
            
            -
            
            
            **-**Equity
                (losses) earnings of associated companies
            
            
            (53
            )
            
            **(53**
            **)**
            
            262
            
            
            **262**
            
            
            6,355
            
            
            **6,356**
            
            
            6,129
            
            
            **6,128**Income
                tax provision
            
            
            (1,538
            )
            
            **(432**
            **)**
            
            (5,058
            )
            
            **(6,398**
            **)**
            
            (11,047
            )
            
            **(9,093**
            **)**
            
            (20,740
            )
            
            **(23,522**
            **)****Net
                earnings from continuing operations**
            
            
            23,999
            
            
            **21,529**
            
            
            15,181
            
            
            **14,863**
            
            
            83,783
            
            
            **79,960**
            
            
            36,596
            
            
            **32,088****Net
                earnings from discontinued operations**
            
            
            -
            
            
            **-**
            
            
            7,607
            
            
            **7,607**
            
            
            -
            
            
            **-**
            
            
            7,197
            
            
            **7,197****Net
                earnings**
            
            $
            23,999
            
            **$**
            **21,529**
            
            $
            22,788
            
            **$**
            **22,470**
            
            $
            83,783
            
            **$**
            **79,960**
            
            $
            43,793
            
            **$**
            **39,285****Earnings
                per share***Basic*Net
                earnings from continuing operations
            
            $
            0.57
            
            **$**
            **0.51**
            
            $
            0.36
            
            **$**
            **0.35**
            
            $
            2.00
            
            **$**
            **1.90**
            
            $
            0.88
            
            **$**
            **0.77**Net
                earnings from discontinued operations
            
            
            -
            
            
            **-**
            
            
            0.19
            
            
            **0.19**
            
            
            -
            
            
            **-**
            
            
            0.17
            
            
            **0.17**Net
                earnings
            
            
            0.57
            
            
            **0.51**
            
            
            0.55
            
            
            **0.54**
            
            
            2.00
            
            
            **1.90**
            
            
            1.05
            
            
            **0.94***Diluted*Net
                earnings from continuing operations
            
            $
            0.52
            
            **$**
            **0.47**
            
            $
            0.33
            
            **$**
            **0.32**
            
            $
            1.82
            
            **$**
            **1.73**
            
            $
            0.80
            
            **$**
            **0.72**Net
                earnings from discontinued operations
            
            
            -
            
            
            **-**
            
            
            0.17
            
            
            **0.17**
            
            
            -
            
            
            **-**
            
            
            0.16
            
            
            **0.16**Net
                earnings
            
            
            0.52
            
            
            **0.47**
            
            
            0.50
            
            
            **0.49**
            
            
            1.82
            
            
            **1.73**
            
            
            0.96
            
            
            **0.88**





**Quarterly
      Information**




The
      table below provides a summary of our revenue, net earnings from continuing
      operations, net earnings, total assets, total long-term financial liabilities,
      cash dividends per share, net earnings per share from continuing operations
      and
      net earnings per share for each quarter of fiscal 2006, 2005 and 2004. All
      information has been restated for various restatements and adjustments as
      outlined in Notes 3 and 4 to our fiscal 2006 audited consolidated financial
      statements.




Revenue
            
            
            Net
                earnings from continuing operations
            
            
            Net
                earnings
            
            
            Total
                assets
            
            
            Total
              long-term
                financial liabilities
            
            
            Cash
                dividends per share
            
            Net
                earnings
              per
                share from continuing operations
            Net
                earnings
              per
                shareFiscal
                  2006
            
            (in millions
                of Canadian dollars)
            
            declared
            
            
            Basic
            
            
            Diluted
            
            
            Basic
            
            
            DilutedQ1
            
            $
            247.0
            
            $
            19.2
            
            $
            19.2
            
            $
            1,669.8
            
            $
            975.2
            
            $
            -
            
            $
            0.46
            
            $
            0.42
            
            $
            0.46
            
            $
            0.42Q2
            
            
            256.5
            
            
            39.2
            
            
            39.2
            
            
            1,675.1
            
            
            939.1
            
            
            0.40
            
            
            0.93
            
            
            0.85
            
            
            0.93
            
            
            0.85Q3
            
            
            257.4
            
            
            21.5
            
            
            21.5
            
            
            1,685.6
            
            
            945.8
            
            
            -
            
            
            0.51
            
            
            0.47
            
            
            0.51
            
            
            0.47Q4
            
            
            250.6
            
            
            10.8
            
            
            10.8
            
            
            1,678.3
            
            
            911.7
            
            
            -
            
            
            0.26
            
            
            0.23
            
            
            0.26
            
            
            0.23Total
            
            $
            1,011.5
            
            $
            90.7
            
            $
            90.7
            
            
            
            
            
            
            
            $
            0.40
            
            $
            2.16
            
            $
            1.97
            
            $
            2.16
            
            $
            1.97Fiscal
              2005
                *(Restated)*Q1
            
            $
            240.8
            
            $
            17.9
            
            $
            17.5
            
            $
            1,494.0
            
            $
            829.9
            
            $
            -
            
            $
            0.43
            
            $
            0.39
            
            $
            0.42
            
            $
            0.37Q2
            
            
            241.9
            
            
            (0.7
            )
            
            (0.7
            )
            
            1,512.8
            
            
            855.0
            
            
            0.30
            
            
            (0.02
            )
            
            (0.01
            )
            
            (0.02
            )
            
            (0.01
            )Q3
            
            
            242.3
            
            
            14.9
            
            
            22.5
            
            
            1,624.5
            
            
            924.2
            
            
            -
            
            
            0.35
            
            
            0.32
            
            
            0.54
            
            
            0.49Q4
            
            
            242.2
            
            
            14.1
            
            
            17.2
            
            
            1,686.7
            
            
            934.4
            
            
            -
            
            
            0.34
            
            
            0.31
            
            
            0.41
            
            
            0.38Total
            
            $
            967.2
            
            $
            46.2
            
            $
            56.5
            
            
            
            
            
            
            
            $
            0.30
            
            $
            1.10
            
            $
            1.01
            
            $
            1.35
            
            $
            1.23Fiscal
              2004
                *(Restated)*Q1
            
            $
            182.1
            
            $
            15.5
            
            $
            15.5
            
            $
            1,079.3
            
            $
            556.1
            
            $
            -
            
            $
            0.37
            
            $
            0.34
            
            $
            0.37
            
            $
            0.34Q2
            
            
            185.1
            
            
            18.7
            
            
            18.7
            
            
            1,092.3
            
            
            547.1
            
            
            -
            
            
            0.45
            
            
            0.41
            
            
            0.45
            
            
            0.41Q3
            
            
            181.2
            
            
            8.1
            
            
            7.9
            
            
            1,139.1
            
            
            563.7
            
            
            0.25
            
            
            0.19
            
            
            0.18
            
            
            0.19
            
            
            0.17Q4
            
            
            223.1
            
            
            9.9
            
            
            9.8
            
            
            1,527.6
            
            
            832.9
            
            
            -
            
            
            0.25
            
            
            0.23
            
            
            0.24
            
            
            0.23Total
            
            $
            771.5
            
            $
            52.2
            
            $
            51.9
            
            
            
            
            
            
            
            $
            0.25
            
            $
            1.26
            
            $
            1.16
            
            $
            1.25
            
            $
            1.15







44




There
      is some impact of seasonality in the quarterly results in the foregoing table.
      The seasonal variations are due primarily to variations in exploration and
      development activities of our oil and gas industry customers. Poor weather
      in
      the North Sea can inhibit flying during the winter months. In the current
      fiscal year poor weather conditions in February prevented flying activity for
      a
      number of days resulting in a 420 hour reduction in flying
      activity.




FX
      has
      had significant impact on quarterly revenue levels on a year-over-year basis.
      Quarterly revenues for fiscal 2006, in comparison to quarterly revenues for
      fiscal 2005, have been impacted by FX in the following amounts:
      Q1-$(23.8) million, Q2-$(23.4) million, Q3-$(23.1) million and
      Q4-$(28.1) million for a total negative FX impact of
      $98.4 million.




Quarterly
      revenue net earnings from continuing operations and net earnings in the table
      above were impacted by a number of factors that affect their comparability
      including the following:




(i)
            In
                Q4 of fiscal 2004, the Company acquired Schreiner Aviation
                Group.




(ii)
            In
                Q2 of fiscal 2005, the Company incurred a tax asset adjustment of
                $4.2 million relating to a tax rate reduction in the
                Netherlands.




(iii)
            In
                Q2 of fiscal 2005, the Company recorded a fair value adjustment for
                Composites of $14.3 million.




(iv)
            In
                Q3 of fiscal 2005, the Company incurred a net-of-tax gain on the
                sale of
                Schreiner Aircraft Maintenance B.V. (“SAMCO”) and Schreiner Canada Ltd.
                (“Schreiner Canada”) of $7.5 million included in discontinued
                operations. The remaining $1.1 million net-of-tax gain on the sale of
                SAMCO and Schreiner Canada was incurred in Q4 of fiscal
                2006.




(v)
            Results
                for Q2 of fiscal 2006 included a pre-tax gain of $21.8 million for
                the sale of the Company’s remaining interest in CHL and other long-term
                investments.




(vi)
            Results
                for Q3 of fiscal 2006 included a pre-tax gain of $15.7 million for
                the sale of the Company’s equity interest in
                Inaer.




For
      additional information on the foregoing quarterly items, see page 41,
“ *Results
      of Operations - Income Taxes* ”,
      and
      page 42, *“Results
      of Operations - Net Loss from Discontinued Operations* ”.




45


**REVIEW
      BY SEGMENT - FISCAL 2006 COMPARED TO FISCAL 2005 BASED ON OUR CURRENT
      ORGANIZATIONAL STRUCTURE**




**Segment****Revenue** **(i)** **from****External Customers - Variance
      Analysis**


**(in
      thousands of Canadian dollars)**




**Global
                Operations**
            
            
            **European
                Operations**
            
            
            **Heli-One**
            
            
            **Corporate
                &**
              **Other**
            
            
            **Inter-segment
                Eliminations**
            
            
            **Total**Year
                ended April 30, 2005*(i)*
            
            $
            292,066
            
            $
            530,897
            
            $
            143,765
            
            $
            435
            
            
            N/A
            
            $
            967,163Foreign
                exchange impact*(ii)*
            
            
            (27,868
            )
            
            (54,575
            )
            
            (15,898
            )
            
            (17
            )
            
            N/A
            
            
            (98,358
            )Revenue
                increase (decrease)
            
            
            66,679
            
            
            44,045
            
            
            32,241
            
            
            (243
            )
            
            N/A
            
            
            142,722**Year
                ended April 30, 2006**
            
            **$**
            **330,877**
            
            **$**
            **520,367**
            
            **$**
            **160,108**
            
            **$**
            **175**
            
            
            **N/A**
            
            **$**
            **1,011,527***Total
                revenue increase (decrease)*
            
            *$*
            *38,811*
            
            *$*
            *(10,530*
            *)*
            *$*
            *16,343*
            
            
            *N/A*
            
            
            *N/A*
            
            *$*
            *44,364**%
                increase (decrease)*
            
            
            *13.3*
            *%*
            
            *(2.0*
            *%)*
            
            *11.4*
            *%*
            
            *N/A*
            
            
            *N/A*
            
            
            *4.6*
            *%**%
                increase (decrease) excluding FX*
            
            
            *22.8*
            *%*
            
            *8.3*
            *%*
            
            *22.4*
            *%*
            
            *N/A*
            
            
            *N/A*
            
            
            *14.8*
            *%*




**Segment
      EBITDAR** **(i),(iv)** **Variance Analysis**


**(in
      thousands of Canadian dollars)**





**Global
                Operations**
            
            
            **European
                Operations**
            
            
            **Heli-One**
            
            
            **Corporate
                &**
              **Other**
            
            
            **Inter-segment
                Eliminations**
            
            
            **Total**Year
                ended April 30, 2005*(i)*
            
            $
            87,284
            
            $
            110,792
            
            $
            234,849
            
            $
            (32,103
            )
            $
            (153,227
            )
            $
            247,595Foreign
                exchange impact*(ii)*
            
            
            (6,730
            )
            
            (12,766
            )
            
            (7,668
            )
            
            1,471
            
            
            -
            
            
            (25,693
            )Segment
                EBITDAR increase (decrease)
            
            
            10,368
            
            
            9,455
            
            
            7,880
            
            
            2,970
            
            
            (822
            )
            
            29,851**Year
                ended April 30, 2006**
            
            **$**
            **90,922**
            
            **$**
            **107,481**
            
            **$**
            **235,061**
            
            **$**
            **(27,662**
            **)**
            **$**
            **(154,049**
            **)**
            **$**
            **251,753***Segment
                EBITDAR margin (iii)**-
                Last year*
            
            
            *29.9*
            *%*
            
            *20.9*
            *%*
            
            *44.7*
            *%*
            
            *N/A*
            
            
            *N/A*
            
            
            *25.6*
            *%**-
                This year*
            
            
            *27.5*
            *%*
            
            *20.7*
            *%*
            
            *45.6*
            *%*
            
            *N/A*
            
            
            *N/A*
            
            
            *24.9*
            *%**Total
                Segment EBITDAR increase (decrease)*
            
            *$*
            *3,638*
            
            *$*
            *(3,311*
            *)*
            *$*
            *212*
            
            *$*
            *4,441*
            
            *$*
            *(822*
            *)*
            *$*
            *4,158**%
                increase (decrease)*
            
            
            *4.2*
            *%*
            
            *(3.0*
            *%)*
            
            *0.1*
            *%*
            
            *13.8*
            *%*
            
            *N/A*
            
            
            *1.7*
            *%**%
                increase (decrease) excluding FX*
            
            
            *11.9*
            *%*
            
            *8.5*
            *%*
            
            *3.4*
            *%*
            
            *9.3*
            *%*
            
            *N/A*
            
            
            *12.1*
            *%*





**Segment
      Operating** **(i)** **Income Variance Analysis**


**(in
      thousands of Canadian dollars)**





**Global**
              **Operations**
            
            
            **European
                Operations**
            
            
            **Heli-One**
            
            
            **Corporate
                &**
              **Other**
            
            
            **Inter-segment
                Eliminations**
            
            
            **Total**Year
                ended April 30, 2005*(i)*
            
            $
            10,899
            
            $
            13,573
            
            $
            127,858
            
            $
            (43,411
            )
            
            N/A
            
            $
            108,919Foreign
                exchange impact*(ii)*
            
            
            (6,310
            )
            
            (8,460
            )
            
            1,444
            
            
            (62
            )
            
            N/A
            
            
            (13,388
            )Operating
                income increase (decrease)
            
            
            (1,676
            )
            
            19,608
            
            
            (10,553
            )
            
            8,608
            
            
            N/A
            
            
            15,987**Year
                ended April 30, 2006**
            
            **$**
            **2,913**
            
            **$**
            **24,721**
            
            **$**
            **118,749**
            
            **$**
            **(34,865**
            **)**
            
            **N/A**
            
            **$**
            **111,518***Total
                operating income increase (decrease)*
            
            *$*
            *(7,986*
            *)*
            *$*
            *11,148*
            
            *$*
            *(9,109*
            *)*
            *$*
            *8,546*
            
            
            *N/A*
            
            *$*
            *2,599**%
                increase (decrease)*
            
            
            *(73.3*
            *%)*
            
            *82.1*
            *%*
            
            *(7.1*
            *%)*
            
            *19.7*
            *%*
            
            *N/A*
            
            
            *2.4*
            *%**%
                increase (decrease) excluding FX*
            
            
            *(15.4*
            *%)*
            
            *144.5*
            *%*
            
            *(8.3*
            *%)*
            
            *19.8*
            *%*
            
            *N/A*
            
            
            *14.7*
            *%*





(i)
            Comparative
                figures have been restated for various restatements and adjustments
                as
                outlined in Notes 3 and 4 to our fiscal 2006 audited consolidated
                financial statements.


(ii)
            Includes
                both the foreign exchange on the translation of the financial results
                of
                the foreign subsidiaries into Canadian dollars (“translation impact”) and
                the foreign exchange on the translation of foreign currency denominated
                transactions into the reporting currencies of the subsidiaries
                (“transaction impact”).


(iii)
            Segment
                EBITDAR as a percent of revenue from external customers except for
                the
                Heli-One segment, which is a percent of total
                revenue.


(iv)
            See
                Note 25 to our fiscal 2006 audited consolidated financial
                statements.





**Global
      Operations**




The
      Global Operations segment consists of operations in Australia, Africa, Asia,
      Brazil and offshore work in eastern Canada and in other locations around the
      world, serving offshore oil and gas, EMS/SAR and other industries.




46










Revenue
      for fiscal 2006 was $330.9 million, an increase of $38.8 million from
      revenue of $292.1 million in fiscal 2005. The increase included revenue
      growth of $66.7 million, partially offset by an unfavourable FX impact of
      $27.9 million. The $66.7 million revenue increase was driven by
      increased flying activity, primarily for oil and gas customers from new contract
      awards and increased flying activity on existing contracts. Total flying hours
      increased from 66,693 in fiscal 2005 to 69,859 in fiscal 2006, representing
      growth of 3,166 hours or 5%. Increased flying hours were derived from
      increased flying from new and expanded helicopter contracts in Southeast Asia,
      the Ivory Coast, Canada and Azerbaijan in addition to ad hoc work in Africa
      and increased revenue from fixed-wing activity in Nigeria.




Segment
      EBITDAR for fiscal 2006 was $90.9 million, up by $3.6 million from
      segment EBITDAR of $87.3 million in fiscal 2005. This increase included an
      unfavourable FX impact of $6.7 million. The segment EBITDAR improvement of
      $10.3 million was primarily related to increased revenue from new contracts
      and expanded contracts.




The
      segment EBITDAR margin for Global Operations decreased from 29.9% in fiscal
      2005
      to 27.5% in fiscal 2006. Adjusted for the impact of FX, the margin in fiscal
      2006 was 27.2%. The decrease from 29.9% last year to 27.2% this year was due
      primarily to incremental costs expensed in the year to support future growth
      including recruiting and training of employees.




Operating
      income for fiscal 2006 was $2.9 million, down $8.0 million from
      operating income of $10.9 million in fiscal 2005. This decrease was due
      primarily to a negative FX impact of $6.3 million and increased
      inter-company aircraft lease costs of $12.0 million as the number of
      aircraft in the Global Operations segment increased which was somewhat offset
      by
      increased segment EBITDAR from incremental activity.




At
      April 30, 2006, there were 131 aircraft in this segment, consisting of 23
      heavy, 84 medium and six light helicopters and 18 fixed-wing aircraft. This
      represents an increase of ten aircraft since the start of the fiscal year,
      which
      is related to increased activity in the Global Operations segment in fiscal
      2006. The fleet deployed in this 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, the Sikorsky S-61N and the Sikorsky
      S-92.




Approximately
      88% of flying revenue in the segment was derived from long-term contracts.
      The
      major customers in this segment included AIOC, Amerada Hess, ExxonMobil, Unocal,
      Chevron, bp, Shell, Premier, Phillips, Soekor, Sonair, the Royal Australian
      Air
      Force, Victoria Police, the United Nations, Encana and United
      Helicharters.




During
      and subsequent to fiscal 2006 we were awarded the following new contracts and
      contract renewals:




•
            a
                five-year contract renewal (plus two one-year options) with ConocoPhillips
                Australia Pty Ltd. for two Super Puma AS332 helicopters in
                Australia;




•
            a
                five-year contract renewal (plus one-year option) with Petronas for
                S-76C+
                and fixed-wing services in Southeast
                Asia;




•
            a
                four-year contract for the lease of two Bell 412 in
                India;




•
            a
                two-year contract (plus one-year option) with Cairn Energy Sangu
                Field in
                Bangladesh;




•
            a
                multi-year renewal for Sikorsky S-61 services in support of the Sable
                Offshore Energy Project in Halifax,
                Canada;




47




•
            a
                two-year contract for an S-92 in Asia with Malaysian Helicopter Services
                in support of Shell offshore operations;
                and




•
            through
                BHS, was awarded a five-year contract for the provision of eight
                Sikorsky
                S-76C+ helicopters in support of Petrobras’ operations in the Brazilian
                offshore sector.




**European** **Operations**




The
      European Operations segment consists primarily of operations in the UK, Ireland,
      Norway, the Netherlands and Denmark, mainly serving the helicopter
      transportation requirements of the offshore oil and gas industry in the North
      Sea.








Revenue
      for fiscal 2006 was $520.4 million, a decrease of $10.5 million from
      revenue of $530.9 million earned in fiscal 2005. This $10.5 million
      decrease was attributable to unfavourable FX of $54.6 million offset by a
      $44.1 million increase (excluding FX) in flying revenue. The flying revenue
      increase of $44.1 million was related to an increase in revenue from Norsk
      Hydro, Statoil, ConocoPhillips (UK), Marathon, Total and Nexan. Flying hours
      increased by 1,865 hours to 95,471 hours in fiscal 2006 compared to
      93,606 hours in fiscal 2005.




Segment
      EBITDAR for fiscal 2006 was $107.5 million, down $3.3 million from
      segment EBITDAR of $110.8 million in fiscal 2005. This decrease was due
      primarily to an unfavourable FX of $12.8 million, partially offset by a
      $9.5 million EBITDAR increase earned on increased activity.




Segment
      EBITDAR margins decreased from 20.9% in fiscal 2005 to 20.7% in fiscal 2006.
      Excluding the impact of FX, the segment EBITDAR margin in fiscal 2006 was 20.9%,
      unchanged from fiscal 2005. Fiscal 2006 margins were negatively impacted by
      incremental costs expensed in the year to support future growth including
      recruiting, training and other business development opportunities. In addition,
      $1.6 million was expensed to settle a contract dispute due to the late
      delivery by the manufacturer of certain aircraft and costs related to
      performance issues on this aircraft type. These additional costs were offset
      by
      lower PBH rates charged by Heli-One.




Operating
      income for fiscal 2006 was $24.7 million, up $11.1 million from
      operating income of $13.6 million in fiscal 2005. This improvement was due
      primarily to decreased inter-company lease costs of $14.4 million, somewhat
      offset by reduced segment EBITDAR.




At
      April 30, 2006 there were 72 aircraft in this segment, consisting of 46
      heavy and 26 medium aircraft. Included in the heavy aircraft were 33 Super
      Pumas
      including 15 Super Puma MkIIs and five Sikorsky S-92 aircraft.




In
      fiscal 2006, approximately 75% of flying revenue in this segment was derived
      from long-term contracts. The major customers in this segment remained largely
      unchanged from fiscal 2005 and during fiscal 2006 included Apache, bp,
      TotalFinaElf, Maersk, Statoil, Norsk Hydro, ConocoPhillips, Nexen, Marathon
      and
      the Irish Coast Guard.




48




During
      and subsequent to fiscal 2006 the Company was awarded the following new
      contracts and contract renewals:




•
            a
                five-year contract by the United Kingdom Maritime and Coastguard
                Agency (MCA) for the provision of commercial search and rescue helicopter
                services from four bases in the UK commencing July 1, 2007. The
                contract requires the deployment of four Sikorsky S-92s and three
                AgustaWestland AW139s;




•
            a
                five-year contract renewal by ConocoPhillips (UK) Limited for the
                provision of a dedicated Sikorsky S-76C, plus additional flight hours,
                in
                support of ConocoPhillips Southern North Sea
                operations;




•
            a
                contract from Tullow Oil Plc. for the provision of a dedicated Sikorsky
                S-76A+ to support development activity in Southern North Sea and a
                three-year contract renewal, plus options, for the provision of a
                sole-use
                AgustaWestland AW139 helicopter commencing in July
                2006;




•
            a
                five-year contract renewal (plus three one-year options) by Maersk
                Oil and
                Gas AS for the provision of helicopter transportation services in
                support
                of its offshore oil and gas operations in the Danish sector of the
                North Sea. The contract will be supported by three dedicated Sikorsky
                S-92 helicopters beginning on July 1, 2007;




•
            a
                seven-year contract renewal, plus options, by Perenco UK Limited
                for the
                provision of a sole-use AgustaWestland AW139 helicopter commencing
                in
                fiscal 2007;




•
            a
                contract renewal by the Irish Minister for Transport for the continued
                provision of marine Search and Rescue (SAR) services in Ireland from
                July 2007 to July 2010, plus three option years;
                and




•
            a
                three-year contract and two five-year contracts by Statoil for the
                provision of helicopter services in the Norwegian Sea commencing
                in
                mid-2007.




**Heli-One**




The
      Heli-One segment includes helicopter repair and overhaul facilities in Norway,
      Canada, Australia and the UK, providing helicopter repair and overhaul services
      for our fleet and for a growing external customer base in Europe, Asia and
      North
      America. As well, Heli-One includes survival suit and safety equipment
      production businesses and composite aerospace component
      manufacturing.









Heli-One’s
      third-party revenue for fiscal 2006 was $160.1 million, of which
      approximately 33% was derived from long term contracts, compared to
      $143.8 million in fiscal 2005. This $16.3 million increase in
      third-party revenue was due to growth from new leasing, PBH and increases in
      third-party repair and overhaul activity totalling $32.2 million, partially
      offset by an unfavourable FX impact of $15.9 million. Heli-One’s internal
      revenues have decreased by $26.1 million to $355.0 million in fiscal
      2006 from $381.1 million in fiscal 2005. This decrease is primarily due to
      lower lease rates, unfavourable FX and reduced PBH charges to internal
      customers. Internal lease rates were fixed at the beginning of fiscal 2006
      in
      the flying divisions’ functional currencies. These currencies have weakened
      against the Canadian dollar, therefore reducing Heli-One revenues by
      approximately $10.0 million in the year compared to last year. In addition,
      internal revenues reflect reduced PBH rates of approximately $7.5 million
      from European Operations to reflect current and future efficiencies in
      Heli-One.




49




Segment
      EBITDAR for fiscal 2006 was $235.1 million, up $0.2 million from
      segment EBITDAR of $234.9 million in fiscal 2005. This was the combined
      result of increased EBITDAR of $7.9 million, offset by an unfavourable FX
      impact of $7.7 million. The increase in EBITDAR is primarily attributable
      to direct cost savings of approximately $13.4 million from restructuring
      initiatives and EBITDAR earned on increased external revenues, offset by lower
      lease and PBH revenues from internal customers.




Heli-One’s
      segment EBITDAR margin has increased slightly from 44.7% last year to 45.6%
      this
      year. This increase is due to direct cost savings achieved through the
      restructuring process and from performing work in-house rather than through
      sub-contracting maintenance services to third parties. These cost savings are
      being passed on to internal customers through lower PBH rates as noted
      above.




Operating
      income for fiscal 2006 was $118.7 million, down $9.1 million from
      operating income of $127.8 million in fiscal 2005. This decrease was due
      primarily to a $6.6 million increase in external lease costs due to an
      increase in the number of leased aircraft, increased amortization of
      $4.9 million, partially due to the increase in repairable parts to support
      our increased fleet, and new aircraft types and a $4.3 million increase in
      restructuring charges. These increases were partially offset by the fiscal
      2005
      fair value adjustment to Composites of $14.3 million.




**Corporate
      and Other Segment**




Corporate
      segment EBITDAR of $(27.7) million in fiscal 2006 increased
      $4.4 million from the same period last year. The primary reasons for the
      decrease were adjustments in claims reserves for various insured risks, reduced
      variable compensation costs and a reduction in Schreiner corporate office costs
      as a result of restructuring initiatives.




**REVIEW
      BY SEGMENT - FISCAL 2005 COMPARED TO FISCAL 2004 BASED ON OUR FORMER
      ORGANIZATIONAL STRUCTURE**




The
      following table provides annual external revenue and segment EBITDA variance
      analysis between fiscal 2005 and 2004 based on our former organizational
      structure. Comparative figures for the year ended April 30, 2004 have not
      been restated to reflect the new operational structure as accurate estimates
      to
      reflect certain lease, PBH and associated transactions between our operating
      segments could not be made. Our consolidated results are not impacted by these
      items as they relate only to internal and eliminated transactions. All
      comparative figures under the current and previous organizational structures
      have been restated for various restatements and adjustments as outlined in
      Notes 3 and 4 to our fiscal 2006 audited consolidated financial
      statements.




**Segment
      Revenue** **from External Customers - Variance Analysis**


**(in
      thousands of Canadian dollars)**




**Europe**
            
            **International**
            
            **Schreiner*****(i)***
            
            **Repair
                & Overhaul**
            
            **Composites**
            
            **Corporate
                & Other*****(iii)***
            
            **Total**Year
                ended April 30, 2004
            
            $
            482,112
            
            $
            191,773
            
            $
            32,490
            
            $
            58,119
            
            
            6,962
            
            
            -
            
            $
            771,456Foreign
                exchange impact
            
            
            6,693
            
            
            (6,223
            )
            
            (202
            )
            
            (148
            )
            
            -
            
            
            -
            
            
            120Revenue
                increase (decrease)
            
            
            (6,285
            )
            
            48,499
            
            
            132,061
            
            
            19,332
            
            
            1,980
            
            
            -
            
            
            195,587**Year
                ended April 30, 2005**
            
            **$**
            **482,520**
            
            **$**
            **234,049**
            
            **$**
            **164,349**
            
            **$**
            **77,303**
            
            **$**
            **8,942**
            
            **$**
            **-**
            
            **$**
            **967,163***Total
                revenue increase (decrease)*
            
            *$*
            *408*
            
            *$*
            *42,276*
            
            *$*
            *131,859*
            
            *$*
            *19,184*
            
            *$*
            *1,980*
            
            
            *N/A*
            
            *$*
            *195,707**%
                increase (decrease)*
            
            
            *0.1*
            *%*
            
            *22.0*
            *%*
            
            *N/A*
            
            
            *33.0*
            *%*
            
            *28.4*
            *%*
            
            *N/A*
            
            
            *25.4*
            *%**%
                increase (decrease) excluding FX*
            
            
            *(1.3*
            *%)*
            
            *25.3*
            *%*
            
            *N/A*
            
            
            *33.3*
            *%*
            
            *28.4*
            *%*
            
            *N/A*
            
            
            *25.4*
            *%*





**Segment
      EBITDA** **Variance Analysis**


**(in
      thousands of Canadian dollars)**





**Europe**
            
            
            **International**
            
            
            **Schreiner*****(ii)***
            
            
            **Repair
                & Overhaul**
            
            
            **Composites**
            
            
            **Corporate
                & Other*****(iii)***
            
            
            **Total**Year
                ended April 30, 2004
            
            $
            72,104
            
            $
            23,350
            
            $
            3,379
            
            $
            55,421
            
            $
            (2,044
            )
            $
            (19,666
            )
            $
            132,544Foreign
                exchange impact
            
            
            3,991
            
            
            (3,517
            )
            
            (777
            )
            
            (915
            )
            
            -
            
            
            -
            
            
            (1,218
            )Segment
                EBITDA increase (decrease)
            
            
            (2,037
            )
            
            22,003
            
            
            35,062
            
            
            9,766
            
            
            (3,806
            )
            
            (2,551
            )
            
            58,437**Year
                ended April 30, 2005**
            
            **$**
            **74,058**
            
            **$**
            **41,836**
            
            **$**
            **37,664**
            
            **$**
            **64,272**
            
            **$**
            **(5,850**
            **)**
            **$**
            **(22,217**
            **)**
            **$**
            **189,763***Segment
                EBITDA margin (i)**-
                Last year*
            
            
            *15.0*
            *%*
            
            *12.2*
            *%*
            
            *10.4*
            *%*
            
            *28.6*
            *%*
            
            *(29.4*
            *%)*
            
            *N/A*
            
            
            *17.2*
            *%**-
                This year*
            
            
            *15.3*
            *%*
            
            *17.9*
            *%*
            
            *22.9*
            *%*
            
            *28.8*
            *%*
            
            *(65.4*
            *%)*
            
            *N/A*
            
            
            *19.6*
            *%**Total
                Segment EBITDA increase (decrease)*
            
            *$*
            *1,954*
            
            *$*
            *18,486*
            
            *$*
            *34,285*
            
            *$*
            *8,851*
            
            *$*
            *(3,806*
            *)*
            *$*
            *(2,551*
            *)*
            *$*
            *57,219**%
                increase (decrease)*
            
            
            *2.7*
            *%*
            
            *79.2*
            *%*
            
            *N/A*
            
            
            *16.0*
            *%*
            
            *(186.2*
            *%)*
            
            *(13.0*
            *%)*
            
            *43.2*
            *%**%
                increase (decrease) excluding FX*
            
            
            *(2.8*
            *%)*
            
            *94.2*
            *%*
            
            *N/A*
            
            
            *17.6*
            *%*
            
            *(186.2*
            *%)*
            
            *(13.0*
            *%)*
            
            *44.1*
            *%*




(i)
              Segment
                  EBITDA as a percent of revenue from external customers except for
                  the
                  R&O segment, which is a percent of total
                  revenue.
 (ii)
              Results
                  for Schreiner for the comparative period are for the period from
                  February 16, 2004 to April 30,
                  2004.
 (iii)
              Corporate
                  and other includes Inter-segment
                  eliminations.


50





**European
      Flying Segment**




The
      European flying segment consisted primarily of operations in the UK, Ireland,
      Norway and Denmark, mainly serving the helicopter transportation requirements
      of
      the offshore oil and gas industry in the North Sea.









Revenue
      for fiscal 2005 was $482.5 million, an increase of $0.4 million from
      revenue of $482.1 million earned in fiscal 2004. This $0.4 million
      increase was attributable to (i) favourable FX of $6.7 million,
      essentially offset by (ii) a $6.3 million decrease in flying revenue.
      The flying revenue decrease of $6.3 million was related to the redeployment
      of aircraft to support growth in international markets and reduced activity
      from
      expired contracts, offset partially by revenue from new entrants to the
      North Sea.




Segment
      EBITDA for fiscal 2005 was $74.1 million, up $2.0 million from segment
      EBITDA of $72.1 million in fiscal 2004. This increase was due primarily to
      (i) favourable FX of $4.0 million and (ii) increased margins on
      contracts replacing the low margin bp contract that expired in July 2004, offset
      by (iii) $0.9 million of direct costs incurred in the fourth quarter
      of fiscal 2005 as a result of the delay in deployment of new aircraft as
      described below, and (iv) increased short-term lease payments to a
      third-party helicopter operator and other costs totalling $1.8 million
      incurred during a dispute with pilots in Denmark that was settled in the third
      quarter of fiscal 2005.




Segment
      EBITDA margin improved from 15.0% in fiscal 2004 to 15.3% in fiscal 2005.
      Excluding the impact of FX, the segment EBITDA margin in fiscal 2005 was 14.7%.
      The primary factor causing the margin to decline from 15.0% to 14.7% was the
      above noted $0.9 million of costs related to the delay in deployment of new
      aircraft and the $1.8 million related to the Danish pilot strike. Excluding
      both the impact of FX and the increase in expenses as noted, the segment EBITDA
      margin in fiscal 2005 was 15.3%, up modestly from fiscal 2004.




Operating
      income for fiscal 2005 was $59.1 million, up $4.8 million from
      operating income of $54.3 million in fiscal 2004. This improvement was due
      primarily to (i) improved segment EBITDA, and (ii) reduced
      restructuring costs of $4.3 million from fiscal 2004. In 2004, we incurred
      restructuring costs to implement a new management structure in our European
      operations to provide an increased focus on the critical areas of the
      business.




We
      started a long-term contract in Norway that required the deployment of two
      new
      heavy aircraft at specific dates in the fourth quarter of fiscal 2005. This
      contract commitment was not met due to the late delivery of the aircraft by
      the
      manufacturer. We provided substitute aircraft to meet the customer’s flying
      requirements. If the new aircraft had been deployed on the required dates we
      would have realized additional segment EBITDA of approximately $3.0 million
      in fiscal 2005. Direct costs incurred as a result of this delay included salary,
      overtime and related costs totalling approximately
      $0.9 million.




At
      April 30, 2005 there were 69 aircraft in this segment, consisting of 50
      heavy and 19 medium aircraft. Included in the heavy aircraft were 37 Super
      Pumas
      including 16 Super Puma MkIIs and 2 Sikorsky S-92 aircraft.




51




In
      fiscal 2005, 72.5% of revenue in this segment was derived primarily from
      long-term contracts. The major customers in this segment remained largely
      unchanged from fiscal 2004 and during fiscal 2005 included bp, ExxonMobil,
      TotalFinaElf, Maersk, Statoil, Norsk Hydro, ConocoPhillips, Talisman, Kerr-McGee
      and the Irish Coast Guard.




During
      and subsequent to fiscal 2005 we were awarded the following new contracts and
      contract renewals:




•
            A
                five-year North Sea contract with Marathon Oil UK
                Ltd.




•
            Commencing
                September 1, 2006, a five-year contract, plus two two-year options,
                with Nexen Petroleum UK Limited for the provision of helicopter services
                in support of Nexen’s UK Central and Northern North Sea
                operations.




•
            A
                two-year contract, plus three one-year options, by the Peak
                Group.




•
            Contract
                renewals by PGS Production AS, Kerr-McGee and ConocoPhillips Norway
                for
                the provision of heavy helicopter transportation services in the
                Norwegian
                North Sea. These contracts have contract periods ranging from one
                to five
                years. Including option periods, the total potential contract periods
                range from three to five years.




•
            An
                expanded Search and Rescue contract by the Irish Coast
                guard.




The
      following contracts were not renewed:




•
            In
                March 2005 a contract with Talisman Energy (UK) Limited in the North
                Sea
                expired and was not renewed by the customer. This contract generated
                revenue of approximately $22.0 million per
                year.




•
            Subsequent
                to the 2005 fiscal year end, ConocoPhillips Norway extended an existing
                crew-change contract to September 1, 2006, but announced it would not
                renew the contract beyond this date. Bp/Talisman extended a related
                crew-change contract to December 31, 2005, but announced it will not
                renew the contract beyond this date. These two contracts are currently
                valued at a total of $46.0 million per
                annum.




**International
      Flying Segment**




The
      International flying segment consisted of operations in Australia, Africa,
      Asia
      and offshore work in eastern Canada and in other locations around the world,
      serving offshore oil and gas, EMS/SAR and other industries.









Revenue
      for fiscal 2005 was $234.1 million, an increase of $42.3 million from
      revenue of $191.8 million in fiscal 2004. The increase included revenue
      growth of $48.5 million, partially offset by an unfavourable FX impact of
      $6.2 million. The $48.5 million revenue increase was driven by
      increased flying activity, primarily for oil and gas customers from new contract
      awards and increased flying activity on existing contracts. Total flying hours
      increased from 47,265 in fiscal 2004 to 51,132 in fiscal 2005, representing
      growth of 3,867 hours or 8%. Increased flying hours were derived from
      increased flying from new and expanded contracts in Malaysia, India, Venezuela
      and other countries. Revenue also increased due to new dry lease contracts
      in
      Brazil and Venezuela.




52




Segment
      EBITDA for fiscal 2005 was $41.8 million, up $18.5 million from
      segment EBITDA of $23.3 million in fiscal 2004. This increase included an
      unfavourable FX impact of $3.5 million. The segment EBITDA improvement of
      $22.0 million was primarily related to (i) increased revenue from new
      contracts and renewed contracts at higher margins, and the (ii) addition of
      high margin dry lease contracts in Brazil and Venezuela in fiscal
      2005.




In
      fiscal 2005 the segment EBITDA margin for the International flying segment
      rose
      from 12.2% in fiscal 2004 to 17.9% in fiscal 2005. Absent the impact of FX,
      the
      margin in fiscal 2005 was 18.9%. The increase from 12.2% in fiscal 2004 to
      18.9%
      in fiscal 2005 was due primarily to the items noted above.




Operating
      income for fiscal 2005 was $30.6 million, up $13.4 million from
      operating income of $17.2 million in fiscal 2004. This increase was due
      primarily to improved segment EBITDA somewhat offset by increased amortization
      expense.




At
      April 30, 2005, there were 105 aircraft in this segment, consisting of 23
      heavy, 70 medium and 8 light helicopters and 4 fixed-wing aircraft. This
      represents an increase of 8 aircraft since the start of fiscal 2005, which
      is
      related to increased activity in the International flying segment in fiscal
      2005. The fleet deployed in this segment consisted primarily of medium aircraft
      such as the Sikorsky S-76, but also included a number of heavy aircraft,
      including the Eurocopter Super Puma and the Sikorsky S-61N.




In
      fiscal 2005 approximately 78% of revenues in the segment were derived from
      long-term contracts. The major customers in this segment included ExxonMobil,
      Unocal, Chevron, bp, Shell, TotalFinaElf, Premier, Phillips, Soekor, Sonair,
      DeBeers, the Royal Australian Air Force, Victoria Police, the United Nations,
      Talisman, Newfield, Petrobras, Encana and United Helicharters.




During
      fiscal 2005 we were awarded a new contract in West Africa for the provision
      of
      one Super Puma MkII aircraft for an initial period of 18 months commencing
      June 2004. Anticipated revenue over the term of the contract is approximately
      $11.0 million.




**Schreiner
      Segment**




Schreiner
      is the largest helicopter operator in the Dutch sector of the North Sea,
      operating in the Netherlands, providing support to the oil and gas industry
      and
      emergency medical services. Schreiner also supports oil and gas operations
      in
      Africa in addition to operating an aircraft parts business. We acquired
      Schreiner on February 16, 2004. Therefore the results of Schreiner are
      included in our statement of earnings and financial position subsequent to
      that
      date.




During
      fiscal 2005, we disposed of two non-core Schreiner businesses; Schreiner Canada
      and SAMCO. The results of Schreiner Canada and SAMCO are not included in the
      Schreiner business segment but are included in discontinued
      operations.









Revenue
      for fiscal 2005 was $164.4 million while segment EBITDA earned for fiscal
      2005 was $37.7 million. The $164.4 million in revenue was comprised of
      (i) $116.5 million in flying revenue of which $85.1 million
      related to oil and gas and other customers, (ii) $47.1 million of
      repair and overhaul revenue, and (iii) $0.8 million in other
      revenue.




Schreiner’s
      segment EBITDA margin in fiscal 2005 increased from 10.4% in fiscal 2004 to
      22.9% in fiscal 2005. This increase was the result of improved operating margins
      from reduced support costs and other operational efficiencies implemented since
      Schreiner was acquired.




53




Operating
      income for fiscal 2005 was $24.8 million, which included restructuring
      costs of $5.6 million, largely consisting of severance, termination,
      consulting and other costs.




During
      and subsequent to fiscal 2005 we were awarded the following new contracts and
      contract renewals:




•
            New
                two-year contract (plus one option year) valued at approximately
                $6.5 million per annum by GNPOC for the provision of aircraft in
                Northeast Africa.




•
            Five
                year contract renewal for the provision of offshore transportation
                services to oil and gas fields in the Dutch sector of the North Sea
                to a consortium of Total E&P Nederland, Wintershall Noordzee and
                Petro-Canada Netherlands. This contract is valued at approximately
                $25.0 million per annum and has two one-year renewal
                options.




**Repair
      and Overhaul Segment**




The
      Repair and overhaul segment, which became an important component of Heli-One
      in
      fiscal 2006, included helicopter repair and overhaul facilities in Norway,
      Canada, Australia and the U.K., providing helicopter repair and overhaul
      services for our fleet and for an external customer base in Europe, Asia and
      North America and included the survival suit and safety equipment production
      business.




During
      fiscal 2005, our Repair and overhaul segment acquired three new businesses
      to
      complement our existing helicopter support services. The August 2004 acquisition
      of Multifabs, an Aberdeen-based company specializing in the production of cold
      water survival suits for military forces, emergency services and offshore
      transportation companies around the world enhances our ability to deliver the
      most comprehensive, cost effective offshore services package to our customers
      in
      the oil and gas and emergency search and rescue sectors. Multifabs complements
      the existing third-party marine, military and aviation safety business of this
      segment. In fiscal 2005 the Company also acquired a majority position in ATSL,
      an aircraft engine repair and overhaul company servicing General Electric CT
      58/T58 and Pratt and Whitney, PT6T turboshaft engines, and the assets and
      capabilities of Coulson, a British Columbia, Canada based helicopter component
      and turbine maintenance repair and overhaul provider. ATSL and Coulson are
      important elements of our strategic expansion of our global repair and overhaul
      capabilities.









Third-party
      repair and overhaul revenue for fiscal 2005 was $77.3 million, of which
      approximately 31.6% was derived from long term contracts, compared to
      $58.1 million in fiscal 2004. This $19.2 million increase in
      third-party revenue was due to growth from newly acquired businesses partially
      offset by an unfavourable FX impact of $0.1 million. Other offsetting
      variances included (i) a decrease in revenue from base maintenance of
      $5.4 million, (ii) a $2.3 million increase in revenue from PBH
      customers, and (iii) an increase in major component overhaul revenue of
      $2.7 million.




Segment
      EBITDA for the repair and overhaul segment for fiscal 2005 was
      $64.3 million, up $8.9 million from segment EBITDA of
      $55.4 million in fiscal 2004. This was the combined result of
      (i) increased revenue as noted above; (ii) reduced overhaul costs
      resulting from insourcing services previously provided by third parties; offset
      by (iii) increased parts costs as low cost inventory acquired on the
      acquisition of Helicopter Service Group was largely depleted;
      (iv) increased repair and subcontract costs for parts used to support the
      power-by-the-hour fleet; (v) the decision not to increase prices to
      internal customers in fiscal 2005; and (vi) an unfavourable FX impact of
      $0.9 million.




54




The
      foregoing were also the cause of the increase in the Repair and overhaul segment
      EBITDA margin from 28.6% in fiscal 2004 to 28.8% in fiscal 2005. Excluding
      the
      impact of FX, the fiscal 2005 segment EBITDA margin was 29.2%.




Operating
      income for fiscal 2005 was $43.3 million, down $0.6 million from
      operating income of $43.9 million in fiscal 2004. This decrease was due
      primarily to a $3.9 million increase in amortization relating to assets
      employed in the newly acquired businesses, an increase of $3.0 million in
      amortization on other assets, primarily due to investment in repairable parts
      to
      support a larger fleet, and an increase of $2.5 million in restructuring
      costs from those incurred in fiscal 2004 partially offset by the
      $8.9 million increase in segment EBITDA. Restructuring costs largely
      consisted of severance, termination, consulting and other costs.




**Composites**




Revenue
      for fiscal 2005 was $8.9 million, an increase of $2.0 million from
      $6.9 million in fiscal 2004. This $2.0 million increase was due to
      increased activity on a contract to manufacture airframe components for a major
      helicopter manufacturer. Segment EBITDA for fiscal 2005 was a loss of
      $5.9 million, a decrease of $3.8 million from fiscal 2004. In fiscal
      2005 we recorded a $14.3 million fair market adjustment to the assets of
      Composites.




**Corporate
      and Other Segment**




Corporate
      segment EBITDA (including Inter-segment eliminations) of $(22.2) million in
      fiscal 2005 decreased $2.6 million from fiscal 2004. The primary reasons
      for the decrease were higher costs of $6.7 million due primarily to
      increases in variable compensation costs and the build up of the Financial
      Services Department in Vancouver, Canada in anticipation of delivering services
      to our operating divisions in fiscal 2006. These increases were substantially
      offset by variances in inter-segment eliminations.




**LIQUIDITY
      AND CAPITAL RESOURCES**




**Operating
      Activities**




We
      generated $95.4 million of operating cash flow (before changes in non-cash
      working capital) in fiscal 2006, an increase of $3.3 million from the
      $92.1 million generated for fiscal 2005. This increase is due primarily to
      (i) a $44.5 million increase in net earnings from continuing
      operations which included a $33.7 million increase in gains on the sale of
      assets and long term investments and increased amortization of
      $5.6 million, and (ii) a decrease in net pension plan funding of
      $11.3 million, partially offset by the $14.3 million fair value
      adjustment recorded in fiscal 2005. The $56.1 million in non-cash working
      capital investment in fiscal 2006 is primarily due to increases in inventory
      and
      accounts receivable.




Inventory
      investment in the current fiscal year has been significant for the following
      reasons:




•
            the
                addition of 18 new aircraft and several new aircraft types, including
                the
                Sikorsky S-92, AgustaWestland AW139 and Eurocopter
                EC155;




•
            the
                establishment of a new global warehouse in the Netherlands and the
                build-up of repair and overhaul facilities in British Columbia,
                Canada;




•
            the
                acquisition of inventory from new PBH customers including Aero Contractors
                of Nigeria (“ACN”);




•
            the
                purchase of stock previously provided by third-party consignment
                vendors;




•
            increases
                in safety stock at bases throughout the world to improve aircraft
                serviceability; and




•
            accounts
                receivable has also increased in part due to the build-up of operating
                capability in BHS and significant growth in our international customer
                base where payment terms exceed other jurisdictions in which we
                operate.




55




We
      generated $92.1 million of operating cash flow (before changes in non-cash
      working capital) in fiscal 2005, an increase of $4.7 million from the
      $87.4 million generated for fiscal 2004. This increase is due primarily to
      (i) a $6.0 million decrease in net earnings from continuing
      operations, (ii) $40.0 million change in current and long-term income
      tax assets and liabilities partially offset by (iii) reduced debt
      settlement costs of $17.7 million, (iv) increased net pension plan
      funding of $9.8 million, (v) a $7.7 million decrease in deferred
      revenue, and (vi) increased amortization of $5.5 million of Schreiner
      contract credits. We generated $22.1 million in cash from working capital
      during fiscal 2005, primarily through a $60.5 million increase in accounts
      payable, partially offset by increases in accounts receivable of
      $38.1 million. As a result, cash flow from operations for the year ended
      April 30, 2005 was $114.2 million, an increase of $27.0 million
      from fiscal 2004.




We
      believe that we will be able to generate sufficient cash flow to meet our
      current and future working capital, capital expenditure and debt obligations.
      As
      at April 30, 2006 we had unused borrowing capacity under our credit
      facilities of $147.1 million and cash and cash equivalents of
      $26.3 million, for a total of $173.4 million. We do not expect any
      material changes to its future working capital requirements other than possible
      changes caused by major acquisitions and continued fleet expansion. Our growth
      strategy includes the pursuit of various acquisition targets. It is expected
      that acquisitions would be largely debt financed. We do not expect to use
      sale-leaseback transactions from the sale of long-term owned aircraft as a
      source of liquidity. Sale-leaseback transactions are used as a cost effective
      way to finance new aircraft. Aircraft are often acquired over an extended period
      through deposits and then sold and leased back shortly after
      acquisition.




There
      are no material, legal or practical restrictions on our ability to obtain cash
      from our subsidiaries. There are no material trends and no expected material
      fluctuations in our liquidity position. We are not aware of any balance sheet
      conditions, income items or cash flow items that could have a material impact
      on
      our liquidity. There are also currently no liquidity problems associated with
      our financial instruments. However, changes in our stock price affect the fair
      market value of an equity forward price agreement that we use to hedge our
      stock
      appreciation rights. As well, changes in FX rates affect the fair market value
      of currency swaps into which we have entered in connection with hedging our
      net
      investment in our self-sustaining foreign operations. It is possible that such
      changes in the fair market value of these financial instruments could be
      material. See page 58, “ *Financial
      Instruments* ”.




**Financing
      Activities**




Financing
      activities generated cash of $75.6 million for fiscal 2006, compared to
      $122.9 million generated for fiscal 2005. Total debt decreased by
      $2.1 million in the year from $627.1 million to $625.0 million.
      The $2.1 million decrease was comprised of (i) an increase in debt of
      $96.9 million offset by favourable FX of $99.0 million.




During
      fiscal 2006, we agreed to terms for two operating lease facilities with two
      major European banks to lease finance US $90.0 million and
      US $150.0 million, respectively, of helicopters. These facilities
      provide us more operating flexibility than most previous leases including the
      ability to move aircraft among countries within agreed limits, as long as
      pre-negotiated percentages of facility value are maintained in primary and
      non-primary operating jurisdictions. The Company has entered into lease
      transactions on 14 aircraft under these facilities during the year. We have
      identified additional aircraft that we currently own that will also be financed,
      which will result in significant net cash inflows for us in fiscal
      2007.




To
      minimize the impact of foreign exchange on our cash flows, we have denominated
      our debt in various currencies to more closely match net operating cash flows
      with debt service obligations. See page 58, “ *Financial
      Instruments* ”.
      At
      April 30, 2006 our total net debt was denominated in the following
      currencies:




Currency
            
            
            Debt
                in functional currency
              (millions
            )
            
            Canadian
                equivalent
              (millions
            )UK
                pound sterling
            
            £
            8.0
            
            $
            16.3Euro
            
            €
            46.5
            
            
            65.7Canadian
                dollar
            
            $
            50.1
            
            
            50.1US
                dollar
            US
            $
            440.0
            
            
            492.9Cash
                (various currencies)
            
            
            
            
            
            (26.3
            )Total
                net debt
            
            
            
            
            $
            598.7


56


Total
      debt increased by $113.1 million from $514.0 million at April 30,
      2004 to $627.1 million at April 30, 2005. The $113.1 million
      increase was comprised of (i) an increase in debt of $160.0 million
      offset by (ii) favourable FX of $46.9 million. The increase in debt
      was due primarily to property and equipment additions and acquisitions of new
      businesses in fiscal 2005. During fiscal 2005 we agreed to the terms of revised
      senior credit facilities to replace the existing facilities that were due to
      mature in July 2005. The new senior facilities consist of a revolving facility
      of US $175.0 million, a revolving facility of £ 6.8 million,
      a non-revolving facility of € 66.1 million and a non-revolving
      facility of £ 7.6 million. The terms of the revised senior credit
      facilities provide for increased flexibility in both financial and non-financial
      covenants, extension of the maturity dates for periods of three to five years,
      lower interest rates and increased borrowing limits.




In
      March 2005, we issued $188.5 million (US $150.0 million) of 73⁄8%
      senior subordinated notes. Partial proceeds were used to repay
      CAD $162.4 million of our senior credit facilities.




The
      current portion of long-term debt decreased by $11.2 million, from
      $38.0 million at April 30, 2004 to $26.8 million at
      April 30, 2005. The $11.2 million decrease in the current portion of
      long-term debt was attributable to the redemption of the remaining
      $11.5 million of 113⁄4% senior subordinated notes and $10.4 million
      remaining 8% subordinated debentures, offset by an increase in the current
      portion of debt obligation on the senior credit facilities and other term
      loans.




Debt
      issue costs in fiscal 2005, incurred primarily in connection with the
      aforementioned US $150.0 million debt issuance and the revised senior
      credit facilities, totalled $5.6 million and were recorded as deferred
      financing costs. Also in connection with the debt issuance, we paid cash debt
      settlement costs of $2.0 million to pay down existing debt.




To
      minimize the impact of FX on cash flows, net debt at April 30, 2005 was
      denominated in the following currencies:




Currency
            
            
            Debt
                in functional currency
              (millions
            )
            
            Canadian
                equivalent
              (millions
            )UK
                pound sterling
            
            £
            9.2
            
            $
            22.1Euro
            
            €
            59.7
            
            
            97.0Canadian
                dollar
            
            $
            5.2
            
            
            5.2US
                dollar
            US
            $
            400.0
            
            
            502.8Cash
                (various currencies)
            
            
            
            
            
            (51.4
            )Total
                net debt
            
            
            
            
            $
            575.7




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. Throughout fiscal 2006 we
      were, and continue to be, in compliance with all covenants, all requirements
      for
      the payment of interest and principal and all other conditions imposed by our
      debt and lease agreements.




During
      fiscal 2006 we declared an annual dividend of $0.40 payable quarterly on each
      Class A subordinate voting share and Class B multiple voting share
      (approximately $17.1 million). Of this, dividends totalling
      $8.5 million were paid by April 30, 2006. During fiscal 2005, we
      declared an annual dividend of $12.8 million or $0.30 per share,
      $6.4 million of which was paid in fiscal 2005 with the remaining
      $6.4 million paid in fiscal 2006. During fiscal 2004, we declared an annual
      dividend of $10.5 million or $0.25 per share. There have been no
      defaults or arrears in dividend payments.




Cash
      generated by Class A subordinate voting share issues under the employee
      share purchase plan and the employee stock option plan and share conversions
      was
      $0.5 million during fiscal 2006.




57




At
      April 30, 2006, long-term debt (including current portion) totalled
      $625.0 million and shareholders’ equity totalled $490.7 million. At
      April 30, 2005 long-term debt (including current portion) totalled
      $627.1 million and shareholders’ equity totalled $460.2 million. The
      long-term debt to equity ratio was 1.3:1 at April 30, 2006, compared to
      1.4:1 at April 30, 2005.




**Investing
      Activities**




Cash
      used for investing activities was $129.2 million in fiscal 2006 compared to
      $254.8 million in fiscal 2005. Property and equipment additions of
      $283.6 million were comprised of (i) $177.2 million for the
      purchase of 20 helicopters, including 12 that were subsequently leased through
      sale-leaseback transactions, (ii) $12.6 million for aircraft
      modifications, (iii) $67.1 million for major spares and repairable
      parts, (iv) $3.6 million in connection with the construction of
      buildings and hangars; and (v) $23.1 million for ground equipment,
      vehicles, a simulator and office furniture and fixtures. The aforementioned
      aircraft expenditures of $177.2 million are the net amount of aircraft
      purchases of $264.9 million less the application of deposits on these
      aircraft of $87.7 million. We paid aircraft deposits during the year of
      $125.0 million toward future aircraft purchases to end fiscal 2006 with an
      aircraft deposit balance of $70.9 million.




Capital
      expenditures during fiscal 2006 for helicopter major inspections totalled
      $23.6 million. These expenditures were financed from proceeds received on
      capital asset dispositions and from operating cash flow. Proceeds from disposals
      during fiscal 2006 totalled $315.0 million. These proceeds were composed of
      $209.8 million received in connection with 21 aircraft sale-leaseback
      transactions and the disposal of four additional aircraft, $95.5 million
      received on the sale of long-term investments and $9.7 million received
      from miscellaneous dispositions.




Cash
      used for investing activities was $254.8 million in fiscal 2005 compared to
      $185.9 million in fiscal 2004. Property and equipment additions of
      $236.0 million were comprised of (i) $149.0 million for the
      purchase of 20 helicopters, including four that were subsequently leased through
      sale-leaseback transactions, (ii) $21.6 million for aircraft
      modifications, (iii) $44.4 million for major spares and repairable
      parts, (iv) $10.4 million in connection with the construction of
      buildings and hangars, (v) $10.6 million for ground equipment,
      vehicles, a simulator and office furniture and fixtures. The aforementioned
      aircraft expenditures of $149.0 million are the net amount of aircraft
      purchases of $172.9 million less the application of deposits on these
      aircraft of $23.9 million. We paid aircraft deposits during the year of
      $53.0 million toward future aircraft purchases to end fiscal 2005 with an
      aircraft deposit balance of $43.0 million.




Capital
      expenditures during fiscal 2005 for helicopter major inspections totalled
      $15.5 million. These expenditures were financed from proceeds received on
      capital asset dispositions and from operating cash flow. Proceeds from disposals
      during fiscal 2005 totalled $90.9 million. These proceeds were composed of
      (i) $89.0 million received in connection with five aircraft
      sale-leaseback transactions and the disposal of five additional aircraft,
      (ii) $1.7 million received on an insurance claim for a Bell 212
      helicopter, and (iii) $0.2 million received from other asset
      dispositions.




During
      fiscal 2005, we acquired Multifabs, ATSL and Coulson for a net cash expenditure
      of $18.0 million. These acquisitions were financed through existing
      operating facilities.




We
      had
      no other material capital expenditure commitments at April 30, 2006 other
      than commitments to take delivery of aircraft as discussed previously in the
      MD&A. See page 33, “ *Fleet
      - By Segment - Commitments to Acquire New Aircraft* ”.
      See
      also Note 26 to our fiscal 2006 audited consolidated financial statements.
      Aircraft and other assets required to accommodate future growth will be
      purchased with funding from operations and/or additional debt, or will be leased
      under operating lease arrangements.




**FINANCIAL
      INSTRUMENTS**




**Primary
      Financial Instruments**




The
      carrying values of our primary financial instruments, with the exception of
      our
      senior subordinated notes and subordinated debentures, substantially approximate
      fair value due to the short-term maturity and/or other terms of those
      instruments.




58




The
      fair value of the senior subordinated notes is based on quoted market prices.
      The fair value of these debt instruments is as follows (in millions of Canadian
      dollars):




**April
                30, 2006**
            
            April
                30, 2005FairValue
            
            
            Carrying
                Value
            
            
            FairValue
            
            
            Carrying
                ValueSenior
                subordinated notes (73⁄8%)
            
            **$**
            **454.3**
            
            **$**
            **448.1**
            
            $
            490.8
            
            $
            502.8




**Derivative
      Financial Instruments Used for Risk Management**




We
      regularly enter into forward foreign exchange contracts, equity forward pricing
      agreements and other derivative instruments to hedge our exposure to expected
      future cash flows from foreign operations, anticipated transactions in
      currencies other than the Canadian dollar and stock price volatility. We do
      not
      enter into derivative transactions for speculative or trading
      purposes.




We
      have
      designated our US $400.0 million 73⁄8% senior subordinated notes and
      related forward foreign currency contracts as effective hedges of our net
      investments in certain self-sustaining operations in Canada, the UK, the
      Netherlands, and Norway. We have also designated other pound sterling and euro
      denominated debt as hedges of our net investments in uor self-sustaining
      operations in the UK, the Netherlands, and Canada respectively. As a result
      of
      these effective hedging relationships, revaluation gains and losses on the
      debt,
      net investments and currency swaps are offset in the cumulative translation
      adjustment account in the equity section of the balance sheet in accordance
      with
      Canadian GAAP.




We
      have
      also entered into forward foreign exchange contracts to reduce our exposure
      to
      currency fluctuations on anticipated foreign currency revenues and expenses
      for
      certain of our operations. These relationships also qualified as effective
      hedges under Canadian GAAP.




In
      addition, we have hedged our obligations under our Stock Appreciation Rights
      and
      Performance Units (“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 our
      SARs plans based on a calculation relating the market value of our Class A
      subordinate voting shares on the TSX to the reference price of the SARs. At
      April 30, 2006 the amount recorded in current liabilities related to SARs
      was $11.4 million (April 30, 2005 - $10.4 million).




The
      nature, maturity, notional amount and fair market value of our derivatives
      used
      in risk management activities as at April 30, 2006 are as
      follows:




Hedging
                Item
            
            
            Maturity
            
            
            Notional
              amount
            
            
            Fair
                market value
              (in
                millions
            )Forward
                foreign exchange contractsSell
                pound sterling; buy US dollar
            
            
            October
                2006
            
            
            £
                30.7 million
            
            $
            -Sell
                Norwegian kroner; buy US dollar
            
            
            October
                2006
            
            
            NOK
                895.4 million
            
            
            -Sell
                US
                dollar; buy Canadian dollar
            
            
            Various
            
            
            USD
                $86.4 million
            
            
            9.1Sell
                pound sterling; buy euro
            
            
            Various
            
            
            £
                30.2 million
            
            
            (1.0
            )Equity
                forward price agreement
            
            
            July
                2007
            
            
            1,170,000
                units
            
            
            (1.2
            )$
            6.9




**Other
      Financial Instruments**




We
      have
      a 12% unsecured, subordinated convertible note due to an affiliate of our
      controlling shareholder. The total amount outstanding at April 30, 2006 was
      $4.6 million. Refer to item (b) of “ *Related
      Party Transactions* ”
on
      page 88 for additional details on this convertible debt.  59


**Credit
      Risk on Financial Instruments**




Credit
      risk on financial instruments arises from the potential for counterparties
      to
      default on their contractual obligations and is limited to those contracts
      where
      we would incur a loss in replacing the instrument. We limit our credit risk
      by
      dealing only with counterparties that possess investment grade credit
      ratings.




**Interest
      Rate Risk**




We
      have
      used interest rate swap agreements in the past in order to achieve an
      appropriate mix of fixed and variable interest rate debt. Our current exposure
      to interest rates is such that fixed and variable rates are appropriately
      balanced at April 30, 2006 without the use of interest rate derivative
      instruments.




**OFF-BALANCE
      SHEET ARRANGEMENTS**




In
      addition to the derivatives noted above, we have entered into guarantees and
      leasing arrangements that can broadly be considered as off-balance sheet
      arrangements.




We
      have
      given guarantees to certain lessors in respect of operating leases that provide
      for cross-acceleration rights in the event of our defaulting on certain of
      our
      credit facilities. We have also provided limited guarantees to third parties,
      including guarantees in the form of junior loans, loans receivable and deferred
      payments, in connection with a portion of the aircraft value at the termination
      of aircraft operating leases. We entered into these guarantees to facilitate
      the
      related leasing arrangements which form part of our fleet management strategy.
      Our exposure under these guarantees with respect to aircraft values is
      approximately $60.8 million. The resale market for the aircraft 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.
      For
      additional information regarding these guarantees, see Note 28 to our
      fiscal 2006 audited consolidated financial statements.




At
      April 30, 2006, we operated 19 aircraft under operating leases with seven
      entities that are considered variable interest entities (“VIEs”) under Canadian
      and US GAAP. These leases have terms and conditions similar to those of our
      other aircraft operating leases over periods ranging from fiscal 2007 to fiscal
      2014. We have entered into these leasing arrangements with VIEs because such
      arrangements represent an attractive form of leasing under our overall fleet
      management strategy. In particular, under these leasing arrangements we have
      been able to mitigate certain risks associated with helicopter market values.
      For example, the lessors in these arrangements bear the majority of downside
      risk with respect to any decline in the market values of the leased helicopters
      below their estimated residual value at the end of the lease terms. We have
      completed an analysis of the accounting guidance with respect to VIEs (Canada
      -
      Accounting Guideline 15, US - FASB Interpretations No. 46 and 46-R)
      and has concluded that we are not required to consolidate any of the VIEs with
      which we have aircraft leasing arrangements. Based on independent appraisals,
      the estimated fair market value of the aircraft leased from VIEs was
      $134.1 million at April 30, 2006. We have provided junior loans and
      loans receivable in connection with operating leases with the VIEs, and have
      also entered into remarketing agreements for the aircraft under lease. Our
      maximum exposure to loss related to such junior loans and loans receivable
      as a
      result of our involvement with VIEs is $17.7 million. For additional
      information, see Note 27 to our fiscal 2006 audited consolidated financial
      statements.




**CONTRACTUAL
      OBLIGATIONS**




The
      following table contains a summary of our obligations and commitments to make
      future payments under contracts, including debt, lease and purchase agreements
      at April 30, 2006. Additional information is contained in Notes 13 and
      26 to our fiscal 2006 audited consolidated financial statements.




60


**Payments
      due by period**


**(in
      millions of Canadian dollars)**




Contractual
                obligations
            
            
            Total
            
            
            Less
                than 1 year
            
            
            1-3
                years
            
            
            4-5
                years
            
            
            More
                than 5 yearsLong-term
                debt
            
            $
            176.8
            
            $
            25.7
            
            $
            115.1
            
            $
            18.3
            
            $
            17.7Senior
                subordinated notes (73⁄8%)
            
            
            448.1
            
            
            -
            
            
            -
            
            
            -
            
            
            448.1Operating
                lease (aircraft)
            
            
            388.1
            
            
            75.2
            
            
            134.3
            
            
            106.4
            
            
            72.2Operating
                lease (other)
            
            
            50.2
            
            
            6.4
            
            
            9.8
            
            
            8.3
            
            
            25.7New
                aircraft commitments
            
            
            648.0
            
            
            382.7
            
            
            265.3
            
            
            -
            
            
            -Total
                contractual obligations
            
            $
            1,711.2
            
            $
            490.0
            
            $
            524.5
            
            $
            133.0
            
            $
            563.7







**DEFINED
      BENEFIT PENSION PLANS**




Approximately
      40% of our active employees are covered by defined benefit pension plans. The
      plan in the UK is closed to new members. At April 30, 2006, we had net
      unfunded deficits of $28.0 million relating to defined benefit pension
      plans that are required to be funded, compared to $75.7 million at
      April 30, 2005, a decrease of $47.7 million. Of the $28.0 million
      unfunded deficits at April 30, 2006, $53.3 million and
      $0.8 million were related to plans in the UK and the Netherlands,
      respectively. These deficits were offset by a surplus of $26.1 million in
      the Norwegian plan. In addition, at April 30, 2006, we had a deficit of
      $46.2 million related to plans that do not require funding, compared to a
      deficit of $54.2 million for those plans at April 30,
      2005.




The
      unfunded deficit relating to funded plans decreased during fiscal 2006 primarily
      due to decreases in estimated benefit obligations resulting from reductions
      in
      the discount rates used, changes in expected long-term retirement assets and
      a
      positive FX impact.




Pension
      expense for fiscal 2006 was $27.9 million, compared to $23.2 million
      for fiscal 2005. The primary reasons for the $4.7 million increase in
      pension expense from fiscal 2005 to fiscal 2006 were a $2.1 million
      increase in the amortization of net actuarial and experience losses and a
      $2.6 million increase due primarily to assumption changes.




During
      the years ended April 30, 2006 and April 30, 2005 additional employees
      were added to the plan in Canada resulting in an increase of $0.5 million
      (2005 - $2.6 million) to both unrecognized prior service costs and benefit
      obligations. Also during the current year, the plan in the Netherlands was
      changed to comply with changes to the fiscal regulations related to pensions.
      These changes resulted in a decrease of $0.9 million to both unrecognized
      prior service costs and benefit obligations. In fiscal 2005 the plan in the
      Netherlands was amended from a final pay arrangement to an average pay
      arrangement resulting in a reduction in the accrued benefit obligation of
      $11.5 million.




In
      addition, in 2005 the sale of SAMCO, as well as terminations as part of the
      restructuring initiatives, resulted in a curtailment of the Netherlands pension
      plan. A curtailment gain of $2.8 million from the sale of SAMCO was
      recorded in the results of discontinued operations in fiscal 2005 and a
      curtailment gain of $2.9 million related to our restructuring activities
      was recorded in restructuring costs in fiscal 2005. The curtailment gain for
      both events reflected a reduction in both the benefit obligations and
      unrecognized past service costs.




While
      the asset mix varies in each plan, overall the asset mix was 46% equities,
      38%
      fixed income and 16% money market as at April 30, 2006.




61


**SHARE
      DATA**




Our
      share capital was comprised of the following:




Number
                of Shares
            
            
            Consideration(amounts
                in thousands)
            
            
            **April
                30,****2006**
            
            
            April
                30,2005
            
            
            **April
                30, 2006**
            
            
            April
                30,2005Class
                A subordinate voting shares
            
            
            **36,860**
            
            
            36,833
            
            **$**
            **223,241**
            
            $
            222,727Class
                B multiple voting shares
            
            
            **5,861**
            
            
            5,866
            
            
            **18,413**
            
            
            18,431Ordinary
                shares
            
            
            **22,000**
            
            
            22,000
            
            
            **33,000**
            
            
            33,000Ordinary
                share loan
            
            
            **-**
            
            
            -
            
            
            **(33,000**
            **)**
            
            (33,000
            )Class
                A employee share purchase loan
            
            
            
            
            
            
            
            
            **(1,502**
            **)**
            
            (1,689
            )**$**
            **240,152**
            
            $
            239,469Contributed
                surplus
            
            
            
            
            
            
            
            **$**
            **4,363**
            
            $
            3,291




Class
                A Shares that would be issued upon conversion of the
                following:
            
            **April
                30, 2006**
            
            April
                30,2005Class
                B Shares
            
            
            **5,861**
            
            
            5,866Stock
                options
            
            
            **3,819**
            
            
            2,815Convertible
                debt
            
            
            **1,379**
            
            
            1,379




During
      the year ended April 30, 2004 we adopted without restatement of comparative
      figures the Canadian Emerging Issues Committee Abstract 132, Share Purchase
      Financing (“EIC-132”). Under EIC-132, share purchase loans receivable are to be
      deducted from shareholders’ equity if such loans are not in accordance with
      current arm’s length market terms and conditions including interest rate, terms
      of interest payments and principal repayments and adequacy of security. Our
      Class A subordinate voting employee share purchase loans are non-interest
      bearing, full recourse loans and have, as collateral, a pledge of the related
      shares purchased with a fair market value of $19.9 million as at
      April 30, 2006. As a result, the employee share purchase loans, of
      $1.5 million at April 30, 2006 (2005 - $1.7 million), are
      deducted from shareholders’ equity. Payments equal to 5% of the original loan
      principal are required on each loan anniversary date with the balance payable
      on
      the tenth anniversary. Upon termination of employment, the loans are required
      to
      be repaid within 60 days.




The
      Class A subordinate voting shares carry the right to one vote per share and
      the Class B multiple voting shares carry the right to 10 votes per
      share. Each single Class B multiple voting share may be converted into a
      single Class A subordinate voting share at the option of the shareholder.
      In all other respects the Class A subordinate voting shares rank equally
      and ratably with the Class B multiple voting shares.




We
      have
      issued 22,000,000 ordinary shares to a company owned by our majority shareholder
      for subscriptions of $33.0 million. Concurrently, to fund the subscriptions
      for the ordinary shares, we made a non-interest bearing loan to the purchaser,
      payable on demand and we have a lien on the ordinary shares issued. The ordinary
      shares entitle the holder thereof to (i) one vote for every
      10 ordinary shares held; (ii) dividends equivalent on a per share
      basis to any dividend paid on our Class A subordinate voting shares and
      Class B multiple voting shares, subject to prior minority shareholder
      approval; and (iii) receive a share of the residual of the Company, on a
      liquidation or winding-up, equal, on a share for share basis, to the amount
      received by a holder of a Class A subordinate voting share or a
      Class B multiple voting share. The ordinary shares are redeemable at our
      option at the subscription price thereof in certain circumstances (see
      Note 23 to our fiscal 2006 audited consolidated financial
      statements).




During
      the first two months of fiscal 2007 we issued 8,318 Class A subordinate
      voting shares for total consideration of approximately
      $0.2 million.




62




**APPLICATION
      OF CRITICAL ACCOUNTING POLICIES - ACCOUNTING ESTIMATES**




The
      preparation of our consolidated financial statements requires management to
      make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the dates
      of
      the financial statements and the reported amounts of revenue and expenses during
      the reporting periods. By their nature these estimates are subject to
      measurement uncertainty. The effect on the financial statements of changes
      in
      such estimates in future periods could be material and would be accounted for
      in
      the period the change occurs. The following are significant areas in which
      management makes significant accounting estimates:




(a)
            Recoverability
                of pre-operating expenses




The
      ability to defer pre-operating expenses is dependent on the future
      recoverability of the amounts from cash flows generated by the related
      commercial operations. If operations perform below anticipated recoverable
      levels, the portion of pre-operating expenses that cannot be recovered is
      expensed immediately when known. At April 30, 2006, $3.7 million (2005
      - $6.5 million) in unamortized pre-operating expenses, which are expected
      to be recoverable from the related future cash flows of such contracts and
      the
      development of new businesses, are included in other assets on the balance
      sheet.




(b)
            Flying
                asset amortization




Flying
      assets are amortized to their estimated residual value over their estimated
      service lives. The estimated useful lives and associated residual values are
      based on management estimates. Such estimates could vary materially from actual
      experience.




Major
      airframe inspection costs and modifications are capitalized and amortized over
      the lesser of their estimated useful life and remaining lease term, if
      applicable.




(c)
            Carrying
                value of aircraft




Based
      on independent appraisals, the appraised value of our owned aircraft exceeded
      the carrying value by $46.7 million and $59.1 million as at
      April 30, 2006 and 2005, respectively (both amounts unaudited). The
      recoverability of the book value of these assets is, in part, dependent on
      the
      estimates used in determining the expected period of future benefits over which
      to amortize these aircraft. In addition, such recoverability is dependent on
      market conditions including demand for certain types of aircraft and changes
      in
      technology arising from the introduction of newer, more efficient
      aircraft.




(d)
            Inventory
                obsolescence




An
      allowance for obsolescence is provided for inventory identified as excess or
      obsolete to reduce the carrying costs to the lower of average acquisition cost
      and net realizable value. These allowances are based on management estimates,
      which are subject to change.




(e)
            Defined
                benefit employee pension plans




We
      maintain both funded and unfunded defined benefit employee pension plans in
      the
      UK, Norway, Canada and the Netherlands for approximately 40% of its active
      employees and certain former employees. Several statistical and judgmental
      factors, which attempt to anticipate future events, are used in measuring our
      obligations under the plans and the related periodic pension expense. These
      factors include assumptions about the rate at which the pension obligation
      is
      discounted, the expected long-term rate of return on plan assets and the rate
      of
      future compensation increases. In addition, our actuaries use other assumptions
      such as withdrawal and mortality rates. The estimates and assumptions used
      may
      differ materially from actual results due to changing market and economic
      conditions, changing withdrawal rates, and changing overall life spans of
      participants. These differences may have a material impact on the amount of
      pension expense recorded and on the carrying value of prepaid pension costs
      and
      accrued pension obligations. We review annually the assumptions used in
      measuring the pension plan obligations to determine their appropriateness based
      on actual experience and current and anticipated market conditions.




63




(f)
            Utilization
                of income tax losses




We
      have
      accumulated $117.0 million and $35.9 million in non-capital and
      capital losses, respectively, as at April 30, 2006. As detailed in
      Note 22 to our fiscal 2006 audited consolidated financial statements, some
      of the non-capital losses expire between fiscal 2007 and 2026 and some carry
      forward indefinitely, while the capital losses carry forward indefinitely.
      We
      have determined that it is more likely than not that the benefit of
      $95.6 million of the non-capital losses and all of the capital losses will
      be realized in the future and, accordingly, has recorded future tax assets
      of
      $36.7 million related to these losses. This determination was based on
      assumptions regarding the reversal of existing future tax liabilities and future
      earnings levels in the subsidiaries with accumulated losses, and on an ability
      to implement tax planning measures. If, in the future, it is determined that
      it
      is more likely than not that all or part of the future tax assets will not
      be
      realized, a charge will be made to earnings in the period when such
      determination is made.




(g)
            Lease
                aircraft return costs




Lease
      aircraft return costs are not known with certainty until the end of the lease
      term. This requires us to estimate the lease return obligations beginning
      immediately after the last major maintenance cycle. Such estimates are based
      on
      the time remaining on the lease, planned aircraft usage and the provisions
      included in the lease agreement and could vary materially from actual
      costs.




(h)
            Aircraft
                operating leases




Upon
      entering into a new aircraft leasing arrangement, we evaluate whether
      substantially all of the benefits and risks of ownership related to the aircraft
      have been transferred to the lessor in order to determine if the lease is
      classified and recorded as capital or operating. Currently, all of our aircraft
      leases are classified and recorded as operating leases. One of the criteria
      in
      determining whether the benefits and risks have been transferred is whether
      the
      present value of the minimum lease payments is less than 90% of the fair value
      of the leased aircraft at the inception of the lease. In determining whether
      the
      present value at the beginning of the lease term of the minimum lease payments
      is less than 90% of the fair value of the leased aircraft, we include in our
      minimum lease payments minimum rentals over the lease term (excluding any
      renewal options) and any guarantee by us of the residual value of the leased
      aircraft including junior loans, deferred payments, rebateable advance rentals,
      and asset value guarantees (Note 28 to our fiscal 2006 audited consolidated
      financial statements).




The
      second criteria evaluated is whether there is a bargain purchase option at
      the
      end of the lease compared to the estimated fair market value of the aircraft
      at
      that time. At the time of entering into a new aircraft leasing arrangement
      we
      obtain an independent appraisal from a helicopter valuation company of the
      estimated fair value of the aircraft at the beginning and end of the lease
      term.
      These appraisals involve the use of estimates on the current and future
      condition of, and demand for, the particular aircraft type. Different valuation
      companies may calculate different appraisal values for the same aircraft based
      on different assumptions used.




The
      third criteria evaluated is whether the lease term is greater than or equal
      to
      75% of the economic life of the leased aircraft. The use of different estimates
      of fair market value and the economic life of the aircraft could result in
      different lease classification.




Certain
      of our operating leases have junior loans, deferred payments, rebateable advance
      rentals and loans receivable due from the lessors. Under these lease agreements,
      when the aircraft are sold by the lessors at the end of the lease terms, if
      the
      proceeds received are greater than the unamortized amount under the lease of
      the
      aircraft at that time, these amounts may be fully recoverable, otherwise the
      junior loans, rebateable advance rentals and deferred payments would not be
      recoverable. As at April 30, 2006 no allowance has been recorded on these
      amounts and related accrued interest as we currently believe that the aircraft
      will realize a value upon sale at the end of the lease sufficient to recover
      these amounts.




64




(i)
            Consolidation
                of variable interest entities
                (“VIE”s)




Under
      AcG-15, we are required to assess the variability of outcomes under each entity
      that is considered a VIE to determine whether we are the primary beneficiary
      of
      the VIE and would thus be required to consolidate the VIE. In performing this
      assessment, we are required to make a number of estimates including a range
      of
      possible asset values at the end of the lease term. In addition to developing
      a
      range of possible outcomes, we are required to assign a probability to each
      potential outcome. These estimates can significantly impact whether a particular
      VIE is required to be consolidated by us.




(j)
            General
                tax contingencies




Our
      business and operations are complex and have included a number of significant
      financings, business combinations, acquisitions and dispositions over the course
      of its history. The computation of income, payroll and other taxes involves
      many
      factors including the interpretation of relevant tax legislation in various
      jurisdictions in which we are subject to ongoing tax assessments. When
      applicable, we adjust the previously recorded income tax expense, direct costs,
      interest and the associated assets and liabilities to reflect changes in its
      estimates or assessments. These adjustments could materially increase or
      decrease our results of operations.




**NEW
      ACCOUNTING STANDARDS**




During
      our 2005 fiscal year, the CICA issued new accounting standards relating to
      the
      recognition and measurement of financial instruments, hedges, and comprehensive
      income. These accounting standards are substantially harmonized with US GAAP
      and
      will be effective for our 2008 fiscal year. We are currently assessing the
      impact of these new recommendations on our financial statements.




**PRINCIPAL
      DIFFERENCES BETWEEN CANADIAN GAAP AND US GAAP**




The
      consolidated financial statements have been prepared in accordance with Canadian
      GAAP, which differs in certain respects from US GAAP. Under US GAAP, net
      earnings for the years ended April 30, 2006, 2005 and 2004 were
      $130.6 million, $49.1 million and $34.1 million, respectively,
      compared to net earnings of $90.7 million, $56.5 million and
      $51.9 million, respectively, under Canadian GAAP. These differences result
      primarily from the differing accounting treatments for net investment hedges
      and
      related debt revaluation. A description of the significant differences
      applicable to us and a reconciliation of Canadian GAAP to US GAAP are set out
      in
      Note 32 to our fiscal 2006 audited consolidated financial
      statements.




**SUMMARY
      FINANCIAL DATA - US DOLLARS**




Certain
      summary financial data from our fiscal 2006 audited consolidated financial
      statements, as detailed below, has been translated into US dollars. This
      translation is included solely as supplemental information for the convenience
      of the reader. The data has been translated using the exchange rate at
      April 30, 2006 of $1.1203 = US $1.00.




65


**Financial
      Highlights**




Year
                ended April 30, (in millions of US dollars, except per share
                amounts)
            
            **2006**
            
            2005Revenue
            
            **$**
            **902.9**
            
            $
            863.3Operating
                income
            
            
            **99.5**
            
            
            97.2Net
                earnings from continuing operations
            
            
            **81.0**
            
            
            41.3Net
                loss from discontinued operations
            
            
            **-**
            
            
            9.2Net
                earnings
            
            
            **81.0**
            
            
            50.4**Per
                Share Information**BasicNet
                earnings from continuing operations
            
            **$**
            **1.93**
            
            $
            0.98Net
                loss from discontinued operations
            
            
            **-**
            
            
            0.22Net
                earnings
            
            
            **1.93**
            
            
            1.20DilutedNet
                earnings from continuing operations
            
            **$**
            **1.76**
            
            $
            0.90Net
                loss from discontinued operations
            
            
            **-**
            
            
            0.20Net
                earnings
            
            
            **1.76**
            
            
            1.10




**DISCLOSURE
      CONTROLS AND PROCEDURES**




Our
      management is responsible for establishing and maintaining our disclosure
      controls and procedures to ensure that information used internally and disclosed
      externally is complete and reliable. Our Chief Executive Officer and Chief
      Financial Officer have evaluated the effectiveness of our disclosure controls
      and procedures and have concluded that they are adequate and effective as of
      the
      end of the fiscal year ended April 30, 2006.




Our
      Chief Executive Officer and Chief Financial Officer do not expect that our
      disclosure controls or internal controls will prevent all error and all fraud.
      Although our disclosure controls and procedures were designed to provide
      reasonable assurance of achieving their objectives, a control system, no matter
      how well conceived and operated, can provide only reasonable, not absolute,
      assurance that the objectives of the system are met. Further, the design of
      a
      control system must reflect the fact that there are resource constraints, and
      the benefits of controls must be considered relative to their costs. Because
      of
      the inherent limitations in all control systems, no evaluation of controls
      can
      provide absolute assurance that all control issues and instances of fraud,
      if
      any, within the Company have been detected. These inherent limitations include
      the realities that judgments in decision-making can be faulty, and that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management override of the control. The design of any
      system of controls also is based partly on certain assumptions about the
      likelihood of future events, and there can be no assurance that any design
      will
      succeed in achieving its stated goals under all potential future
      conditions.




ITEM
      6.  DIRECTORS,
      SENIOR MANAGEMENT AND EMPLOYEES




**DIRECTORS
      AND SENIOR MANAGEMENT**




**Board
      of Directors - Nominees**




The
      table and notes
      below set out the name of each person proposed to be nominated for election
      as a
      director, the age of the nominee, the province/state and country of residence,
      the period or periods during which the nominee has served as a director of
      the
      Corporation, the nominee’s principal occupation, business or employment and all
      other positions with the Corporation and any affiliates thereof now held by
      the
      nominee, if any, and the number of Class A Subordinate Voting Shares, Class
      B
      Multiple Voting Shares, Ordinary Shares, Class A Stock Options, and Share
      Appreciation Rights (“SAR’s”) beneficially owned by each nominee or over which
      the nominee exercises control or direction. All of the nominees currently serve
      as directors of the Corporation with the exception of Mark
      Dobbin.


66




**Sylvain
                Allard**,
                M.B.A., 48,
            Director
                since November, 2004. Resident of British Columbia, Canada.
                Mr. Allard is the President and Chief Executive Officer of the
                Corporation. He has been President for seven years and was appointed
                Chief
                Executive Officer in November 2004. Mr. Allard started with the
                Corporation as a helicopter pilot in Eastern Canada in 1982. He earned
                a
                Masters of Business Administration degree (Gold Medalist) from Concordia
                University, Montreal, and has held several key positions in the
                Corporation, including President of Viking Helicopters Ltd., Canadian
                Helicopters (Eastern) and CHC Helicopters International
                Inc.**Donald
                Carty**,****O.C.,****60,
            Director
                since November, 2004. Resident of Texas, United States of America.
                Mr. Carty served as Chairman and Chief Executive Officer of AMR
                Corporation from 1998 to 2003. He served as President and CEO of
                CP Air in Canada from 1985-1987 and spent several years in various
                management positions with Celanese Canada, Ltd., Air Canada, and
                the
                Canadian Pacific Railway. Mr. Carty is a graduate of Queen's
                University in Kingston, Ontario, and of the Harvard Graduate School
                of
                Business Administration. Mr. Carty was appointed as an officer of the
                Order of Canada in 2002. He is a director of Dell Inc., Sears Holdings
                Corporation, Barrick Gold Corp., Hawaiian Holdings Inc. and Gluskin
                Sheff & Associates Inc.**Craig
                L. Dobbin**,****O.C.,
                70,
            Director
                since 1987. Resident of British Columbia, Canada. Mr. Dobbin has
                served as Chairman of the Board since June 1987 and was Chief Executive
                Officer from June 1987 until December 1, 1994 and from April 30,
                1998 to November 2004. He is currently Executive Chairman of the
                Corporation. Mr. Dobbin is the founder of the privately-held
                helicopter companies that formed the basis for the creation of CHC
                in
                1987. Mr. Dobbin was appointed as an officer of the Order of Canada
                in 1992 and has been awarded Honorary Doctorate degrees from Saint
                Mary’s
                University, Memorial University of Newfoundland and the National
                University of Ireland. Mr. Dobbin is also a member of the Board of
                Directors of Newfoundland Capital Corporation Limited.**Craig
                C. Dobbin**,
                41,
            Director
                since 1998. Resident of Newfoundland and Labrador, Canada. From 1999
                to
                January 2002, he was Director of Marketing with CHC Composites Ltd.
                From
                1995 to 1999, he was the President of Seaforest Plantation Co. Ltd.,
                a cod
                aquaculture company. Since 1996, he has been General Manager of Canadian
                Northern Outfitters Ltd., an executive wilderness retreat. From 1991
                to
                1993, he was employed as the marketing director for GPA Helicopters
                Limited (a division of CHC) and from 1993 to 1995 he was Manager
                of
                Corporate Planning for Air Atlantic and subsequently served on the
                Board
                of Directors of Air Atlantic (1995) Limited. From January 2002 until
                March
                2003, he was a Vice-President of CHC Helicopter
                Corporation.**Mark Dobbin**,
                47,
            Resident
                of Newfoundland and Labrador, Canada. Mr. Dobbin is the founder and
                President of Killick Capital Inc., a Newfoundland based private equity
                company. From 1998 to 2003 Mr. Dobbin was the Chair and CEO of Vector
                Aerospace Corporation, a globally recognized aviation repair and
                overhaul
                service. Prior to Vector he was employed for 17 years with the
                Corporation and held increasingly responsible positions with CHC
                culminating in serving as Senior Vice_President. He was a director
                of the
                Corporation from 2001 to 2003. He is currently a director of Plasco
                Energy
                Group, Inc., Consilient Technologies Corporation, Verafin Inc. and
                Greyfirst Corp.





67








**George
                N. Gillett Jr.**,
                67,
            Director
                since October, 2004. Resident of Colorado, United States of America.
                Since
                1996 Mr. Gillett has been Chairman of Booth Creek Management
                Corporation, based in Vail, Colorado, a diversified company with
                interests
                in the recreational, fresh and processed protein products, automotive
                and
                transportation, and landscape and garden industries. Mr. Gillett is
                Chairman of Swift & Company, the Montreal Canadiens hockey club, Booth
                Creek Ski Holdings, and Coleman Natural Foods. He is also a director
                of Steadman Hawkins Research Foundation Inc. and is a member of the
                Board
                of Governors of the National Hockey League.**John
                J. Kelly**,
                B.E., Ph.D., 71,
            Director
                since 1999. Resident of Ireland. He holds both a Bachelor of Engineering
                and a Ph.D. degree from University College, Dublin. On graduation,
                he
                worked for a number of years in the petroleum industry in the UK
                and in
                Ireland, after which he was appointed to the staff of the School
                of
                Engineering in University College, Dublin, where he served as Dean
                of
                Engineering, from 1979 to 1986, from 1986 to 1994 as Registrar/Senior
                Vice-President of the University and since 1994 as Professor of Chemical
                Engineering at the University. He was a Fulbright Scholar to the
                University of Maryland, where he was visiting Professor in its School
                of
                Engineering. He was the director of the Fulbright Scholarship Program
                between Ireland and the United States from 1996 to 2000, and acts
                as
                Executive Director of the Ireland Canada University
                Foundation.**Jack
                M. Mintz**,
                B.A., M.A., Ph.D., 55,
            Director
                since 2004. Resident of Ontario, Canada. He is a Professor of Business
                Economics at the University of Toronto. From 1999 to July 2006 he
                was the
                President and Chief Executive Officer of the C.D. Howe Institute,
                an
                independent policy think-tank. He has published more than 180 books
                and
                articles in the fields of public economics and fiscal federalism.
                He has
                consulted widely with the World Bank, the International Monetary
                Fund, the
                Organization for Economic Co-operation and Development and various
                governments, businesses and non-profit organizations. He serves as
                a
                director of Brookfield Asset Management Inc., Imperial Oil Limited,
                Ontario Financing Authority, the Royal Ontario Museum Foundation
                and the
                National Statistics Council.**Sir
                Bob Reid**,
                72,
            Director
                since 2004. Resident of the United Kingdom. He joined Shell International
                Petroleum Company in 1956 and spent much of his career overseas,
                including
                posts in Brunei, Nigeria, Thailand and Australia. He served as Chairman
                and Chief Executive of Shell UK from 1985 to 1990. He has served
                as
                Chairman of the British Railways Board, London Electricity, British-Borneo
                Oil and Gas plc, The Council of the Industrial Society and Sears
                plc. From
                1997 to 2004 he served as Deputy Governor of the Bank of Scotland.
                He has
                been Chairman of the Petroleum Exchange of London (now ICE Futures)
                since
                1999. He served as Chairman of Avis Europe from 2002 to 2004 and
                as a
                non-executive director for Sun Life Financial Services of Canada
                until
                2004. He also serves as a non-executive director for Intercontinental
                Exchange Service Inc., The Merchants Trust and Siemens,
                plc.**Guylaine
                Saucier**,
                C.M., F.C.A., 60,
            Director
                since 2005. Resident of Quebec, Canada. Ms. Saucier is a Fellow of
                the Institute of Chartered Accountants. She was Chair of the Joint
                Committee on Corporate Governance established in 2000 by the Canadian
                Institute of Chartered Accountants, the Canadian Venture Exchange
                and the
                Toronto Stock Exchange. She was Chair of the Canadian Institute of
                Chartered Accountants from June 1999 to June 2000 and was Chairman
                of the
                Board of the Canadian Broadcasting Corporation from April 1995 to
                December
                2000. In 1989 she was appointed as a member of the Order of Canada.
                Ms. Saucier is currently a member of the board of directors of
                several Canadian corporations including Petro-Canada Inc. and the
                Bank of
                Montreal, and two French companies, Areva and
                Altran.






68




**William
                W. Stinson**,
                72,
            Director
                since 2003. Resident of Ontario, Canada. He is President and Chairman
                of
                the Board of Trustees of Westshore Terminals Income Fund which operates
                a
                bulk terminal facility. He is also a director of Grant Forest Products.
                From 2003 to 2005 he was Chairman of the Board of Sun Life Financial,
                a
                worldwide insurer and wealth management company. He was a director
                of Sun
                Life Financial since 1985. Mr. Stinson spent most of his career with
                Canadian Pacific Ltd., a diversified transportation and industrial
                company, where he was Chief Executive Officer for eleven years and
                Chairman and Chief Executive Officer for six years before retiring
                in
                1996.




**Officers
      of the Corporation**




The
      table and notes below set out the name of each person that currently serves
      as
      an officer of the Corporation including the age of the officer, the
      province/state and country of residence and the position of the officer with
      the
      Corporation.




**Sylvain
                Allard**,
                M.B.A., 48,
            See*“Board
                of Directors- Nominees.”***Rick
                Davis**,
                C.A., 44,
            Resident
                of British Columbia, Canada. Mr. Davis began as the
                Vice-President,
                Internal Audit of the Corporation and in September 2004, was appointed
                as
                Vice-President, Financial Reporting. In May 2006, he was appointed
                Acting
                Chief Financial Officer and in September 2006, he was appointed Senior
                Vice-President and Chief Financial Officer. Prior to his employment
                with
                the Corporation, he was the Corporate Controller for Vector Aerospace
                Corporation, a publicly traded aerospace maintenance, repair and
                overhaul
                service provider.**Craig
                L. Dobbin**,
                O.C., 70,
            See*“Board
                of Directors- Nominees.”***G.
                Blake Fizzard**,
                C.A., 42,
            Resident
                of British Columbia, Canada. Mr. Fizzard began as the Director of
                Taxation of the Corporation and in March 2001 and was appointed
                Vice-President, Financial Structuring in 2003. Prior to his employment
                with the Corporation, he was member of the tax and audit departments
                at
                Deloitte & Touche LLP and served as an Assistant Vice-President of
                International Advisory Services in Hamilton, Bermuda. Mr. Fizzard
                received a Bachelor of Commerce degree from Memorial University of
                Newfoundland in 1986 and became a chartered accountant in
                1988.**Rick
                Green**,
                C.G.A., 49
            Resident
                of British Columbia, Canada. Mr. Green has been employed by us for
                the past 19 years. He began as the Chief Accountant with a predecessor
                company, Sealand Helicopters Limited, and moved through increasingly
                responsible positions within the Corporation. In 1988, he was named
                the
                Assistant Corporate Controller. In 1993, he moved into an Internal
                Audit
                function until 1995 when he was appointed as Vice-President, Finance
                in
                our International division. He remained in this position until 2000
                when
                he was appointed as Vice-President, Planning and Control. In May
                2003, he
                assumed the role of Vice-President, Global Systems and Solutions.
                In May
                2006, he was appointed as Vice-President and Chief Information
                Officer.**John
                Hanbury**,
                C.M.A., 49,
            Resident
                of British Columbia, Canada. Mr. Hanbury was appointed as Corporate
                Treasurer of the Corporation in July 2005. Prior to his employment
                with
                the Corporation, he was the Treasurer of a major company operating
                in the
                forestry sector of British Columbia. Mr. Hanbury has a Bachelor of
                Commerce degree from the University of British
                Columbia.


69




**Martin
              Lockyer**,
              LLB, 46,
            Resident
              of British Columbia, Canada. Mr. Lockyer is the
              Vice-President, Legal Services and Corporate Secretary of the Corporation.
              Prior to his employment with the Corporation, he was a partner of a
              major
              Atlantic Canada law firm and was outside counsel to the Corporation.
              His
              practice included corporate and commercial transactions and securities
              matters. He is former Vice-Chairman of a Canadian airport authority.
              Mr. Lockyer has an honours degree in Commerce from Memorial
              University of Newfoundland and a law degree from Osgoode Hall Law
              School.**Mark
                Stock**,
                MIR, 34,
            Resident
                of British Columbia, Canada. Mr. Stock is the Vice-President, Human
                Resources of the Corporation. Prior to his employment with the
                Corporation, he was the Vice-President, Human Resources and Information
                Technology at TimberWest Forest Corporation. He has also previously
                held
                senior Human Resources positions at Business Objects, BFGoodrich
                Aerospace, and CN Rail. He is currently the Vice-Chairman of Vancouver
                Community College and has an honours degree in Commerce and a Masters
                of
                Industrial Relations degree from Queen’s University.




No
      director or member of senior management of the Corporation was appointed
      pursuant to an arrangement with major shareholders, customers, suppliers etc.




**Nominee**
            **Director
                Since**
            **Class
                A Shares**
            **Class
                B Shares**
            **Ordinary
                Shares**
            **Class
                A Shares Under Options**
            **Share
                Appreciation Rights****Vested**
            **Unvested**Sylvain
                Allard, MBA
            2004
            278,468
            —
            —
            643,932
            —
            —Donald
                Carty, OC
            2004
            20,000
            —
            —
            —
            36,666
            73,334Craig
                L. Dobbin, OC
            1987
            2,513,230*(i)*
            5,555,432*(i)*
            22,000,000*(ii)*
            2,053,912
            —
            —Craig
                C. Dobbin
            1998
            —
            —
            —
            60,000
            —
            —Mark
              D.
              Dobbin
            —
            283,726*(iii)*
            118,172
            —
            —
            —
            —George
                N. Gillett Jr.
            2004
            —
            —
            —
            —
            73,332
            36,668John
                J. Kelly, B.E., Ph.D.
            1999
            6,280
            —
            —
            —
            70,000
            —Jack
                M. Mintz, B.A., M.A., Ph.D.
            2004
            200
            —
            —
            —
            73,332
            36,668Sir
                Bob Reid
            2004
            —
            —
            —
            —
            73,332
            36,668Guylaine
                Saucier, C.M., F.C.A.
            2005
            —
            —
            —
            —
            36,666
            73,334William
                W. Stinson
            2003
            10,000
            —
            —
            —
            73,332
            36,668




(i)
            These
                shares are held by Discovery Helicopters Inc., a holding company,
                all of
                the voting shares of which are owned by Craig L. Dobbin. See “Share
                Ownership”.


(ii)
            These
                shares are held by O.S. Holdings, a holding company wholly owned
                indirectly by Craig L. Dobbin, Chairman and Chief Executive Officer
                of the
                Corporation. See ”Share Ownership”. (iii)
            Of
              these, 251,264 are held by a family education
              trust.




Directors’
      Meeting




The
      Board and its committees met as follows during the year ended April 30,
      2006:




**Regular**
            **Telephone**
            **Total**Board
            3
            1
            4Audit
            3
            5
            8Corporate
                Governance, Compensation and Nominating
            3
            -
            3Pension
            3
            -
            3**Total**
            **12**
            **6**
            **18**







70


The
      following is the record of attendance for each director at Board and committee
      meetings for the year ending April 30, 2006. The overall attendance record
      at Board and committee meetings was 95%.




Name
                of Director
            Board
            CommitteeSylvain
                Allard
            4
                of 4
            N/ADonald
                Carty, O.C.
            4
                of 4
            8
                of 8Craig
                L. Dobbin, O.C.
            4
                of 4
            N/ACraig
                C. Dobbin
            4
                of 4
            3
                of 3George
                N. Gillett Jr.
            4
                of 4
            3
                of 3John
                J. Kelly, B.E., Ph.D.
            4
                of 4
            3
                of 3Jack
                M. Mintz, B.A., M.A., Ph.D.
            4
                of 4
            8
                of 8Sir
                Bob Reid
            4
                of 4
            3
                of 3Guylaine
                Saucier, C.M., F.C.A.
            2
                of 4
            9
                of 11William
                W. Stinson
            4
                of 4
            N/A**Total**
            **38
                of 40**
            **37
                of 39****Overall
                Attendance**
            **95%**
            **95%**




Additional
      Disclosure Relating to Directors




To
      the
      knowledge of the Corporation, no director of the Corporation is, or has been
      in
      the last ten years, a director or executive officer of an issuer that, while
      that person was acting in that capacity, (a) was the subject of a cease
      trade order or similar order or an order that denied the issuer access to any
      exemptions under Canadian securities legislation, for a period of more than
      30
      consecutive days, (b) was subject to an event that resulted, after that
      person ceased to be a director or executive officer, in the issuer being the
      subject of a cease trade or similar order or an order that denied the issuer
      access to any exemption under Canadian securities legislation, for a period
      of
      more than 30 consecutive days, or (c)  within a year of that person ceasing
      to act in that capacity, became bankrupt, made a proposal under any legislation
      relating to bankruptcy or insolvency or was subject to or instituted any
      proceedings, arrangement or compromise with creditors or had a receiver,
      receiver manager or trustee appointed to hold its assets except for Guylaine
      Saucier, a director of the Corporation, who was a director of Nortel Networks
      Corporation, which was subject to a cease trade order dated May 31, 2004
      (the "Cease Trade Order"), each issued by the Ontario Securities Commission
      (the
“OSC”) as a result of Nortel Networks Corporation’s failure to file financial
      statements. The Cease Trade Order was revoked by the OSC on June 21,
      2005.




**STANDING
      BOARD COMMITTEES**




The
      Board has three standing committees, the Audit Committee, the Corporate
      Governance, Compensation and Nominating Committee and the Pension Committee.
      Each committee has a written mandate and reviews its mandate annually. Both
      the
      Audit Committee and the Corporate Governance, Compensation and Nominating
      Committee are entirely composed of independent and unrelated
      directors.




**REPORT
      OF THE CORPORATE GOVERNANCE, COMPENSATION AND NOMINATING
      COMMITTEE**




Statement
      of Corporate Governance Practices




We
      recognize the importance of adhering to superior corporate governance standards.
      We have developed sound corporate governance policies and procedures, which
      are
      monitored and reviewed on a continuous basis, and adapted a ‘‘best practices’’
approach in all of our corporate governance initiatives. The Corporate
      Governance, Compensation and Nominating Committee is responsible for monitoring
      the development of, and compliance with, corporate governance policies and
      procedures.




71




For
      the
      purposes of our NYSE listing, we are considered a “foreign private issuer” which
      means that we are not required to comply with most of the NYSE’s corporate
      governance listing standards. Under NYSE rules, we are required to disclose
      any
      significant ways in which our corporate governance practices differ from those
      followed by US domestic companies under the NYSE’s listing standards. We believe
      that there are no significant differences between our corporate governance
      practices and those required to be followed by US domestic issuers under the
      NYSE listing standards except that we comply with the TSX rules to obtain
      shareholder approval of share compensation arrangements that involve a new
      issue
      of shares. Unlike the NYSE rules, the TSX rules do not require shareholder
      approval for compensation arrangements involving share purchases in the open
      market at fair value. This disclosure can be accessed at
      www.chc.ca.




A
      copy
      of our Statement of Corporate Governance Guidelines is available on our website
      at www.chc.ca and in print from us upon request.




Submitted
      by the Corporate Governance, Compensation and Nominating Committee:




•
            Sir
                Bob Reid (Chair)


•
            George
                Gillett




**Report
      of the Audit Committee**




The
        Audit Committee
        oversees the financial reporting process on behalf of the Board of Directors.
        In
        order to carry out this responsibility, the Audit Committee, which consists
        entirely of “unrelated” and “independent” directors, meets quarterly to review
        the Corporation's financial statements and recommends their approval to the
        Board of Directors. The Audit Committee also reviews, on a continuing basis,
        any
        reports prepared by the Corporation's external auditors relating to the
        Corporation's accounting policies and procedures, as well as its internal
        controls. Financial information prepared for securities commissions and similar
        regulatory bodies is also examined by the Audit Committee before filing.
        The
        Audit Committee meets independently with management and the external and
        internal auditors to review the involvement of each in the financial reporting
        process. These meetings are designed to facilitate any private communication
        with the Audit Committee which may be desired by any party. The Audit Committee
        recommends the appointment and remuneration of the Corporation's external
        auditors, who are elected annually by the Corporation's shareholders. During
        the
        year ended April 30, 2006, the Audit Committee met eight
        times.




In
      carrying out their responsibilities, the Audit Committee has:




•
            met
                with management and the external auditors to review and discuss the
                April 30, 2006 consolidated financial
                statements;




•
            discussed
                with the external auditors the matters required by Canadian regulators
                in
                accordance with Section 5751 of the General Assurance and Auditing
                Standards of the Canadian Institute of Chartered Accountants
                “Communications with Those Having Oversight Responsibility for the
                Financial Reporting Process” and by US regulators in accordance with the
                Statement on Auditing Standards No. 61 “Communication with Audit
                Committee” issued by the American Institute of Certified Public
                Accountants;




•
            received
                written disclosures from the independent auditors required by the
                US
                Securities and Exchange Commission in accordance with the requirements
                of
                the Independence Standards Board;
                and




•
            discussed
                with the external auditors that firm’s
                independence.




Submitted
      by the Audit Committee:




•
            Dr.
                Jack Mintz, Chair


•
            Donald
                Carty


•
            Guylaine
                Saucier




72


**Pension
      Committee**




The
      Pension Committee has the responsibility to monitor and inform the Board
      concerning the issues related to the Corporation’s pension plans.




The
      current members of the Pension Committee are Dr. Kelly (chair),
      Craig C. Dobbin and Mme. Saucier.


**Report
        on Executive Compensation**
 
 The
        Corporate
        Governance, Compensation and Nominating Committee has, as a part of its mandate,
        responsibility for determining the remuneration of the Corporation’s executive
        officers, which, throughout this report, includes the Named Executive Officers,
        including establishing compensation terms and conditions, and the extent
        and
        level of participation in incentive programs. Prior to 2004 these functions
        were
        performed by the Compensation Committee. The Corporate Governance, Compensation
        and Nominating Committee also targets and evaluates the performance of executive
        officers, monitors succession planning and reviews the design and
        competitiveness of incentive compensation programs with the assistance of
        external professional advisors, who are responsible for gathering information
        on
        the policies in effect at companies that are comparable to the
        Corporation.




Composition
      of the Corporate Governance, Compensation and Nominating Committee




None
      of
      the members of the Corporate Governance, Compensation and Nominating Committee
      is, or has been an officer or an employee of the Corporation or any of its
      subsidiaries.The Corporate Governance, Compensation and Nominating Committee
      generally meet quarterly to discuss compensation and governance
      matters.




The
      Corporation's Compensation Policy




The
      Corporation's compensation philosophy for executives continues to follow three
      underlying principles:




(i)
            to
                provide a compensation program that motivates executive officers
                to
                achieve their strategic goals;(ii)
            to
                be competitive with other leading North American and global companies
                so
                as to attract and retain talented executives; and(iii)
            to
                align the interests of its executive officers with the long-term
                interests
                of the Corporation's shareholders through stock-related
                programs.




The
        remuneration of
        the executive officers of the Corporation consists of three components: base
        salary, an annual incentive bonus program, and long-term incentive programs
        which are stock-based. In 2006 total base salary for the Named Executive
        Officers was $2,033,880 and compensation under the annual incentive bonus
        programs was $nil, representing 0% of base salary (0% for the Chief Executive
        Officer). The relative proportion of compensation from base salary and annual
        incentive bonus programs may vary from year to year as compensation from
        the
        annual incentive bonus program can vary depending on the performance of the
        Corporation.
 
 The
        Corporation's pay
        policy is to offer to its executive officers, subject to performance, total
        compensation at or above the 75th percentile of compensation paid by companies
        within a broad comparator group of publicly-traded Canadian and US corporations
        of similar magnitude and scope, including, but not limited to, other oil
        and gas
        services and aerospace companies and to provide additional performance based
        compensation where expectations have been exceeded. The comparator group
        is
        reviewed periodically by the Corporation’s independent compensation consultant
        to ensure it remains relevant for use by the Corporation.
 
 Base
        salaries of the
        CEO and the other Named Executive Officers of the Corporation are established
        between the median or average of salary levels of executive positions of
        similar
        magnitude, scope and complexity in comparable Canadian and US companies,
        taking
        into account the individual executive's responsibilities, experience,
        contribution and performance and are established in conjunction with independent
        compensation consultants.





73




The
      annual incentive bonus and long-term incentive programs of the Corporation
      are
      designed to reward individual performance and overall corporate performance
      and
      to align the economic interests of the officers and executives with those of
      the
      shareholders of the Corporation.




*Annual
      Incentives*




The
        annual bonus plan
        of the Corporation rewards the CEO and other Named Executive Officers for
        the
        achievement by the Corporation of financial performance goals and, in some
        cases, individual objectives. Performance goals are set at the beginning
        of each
        year based on pre-determined financial targets approved by the Board of
        Directors.




*Operations*




During
      fiscal 2005, upon the recommendation of the Corporate Governance, Compensation
      and Nominating Committee (following an independent review), the Board of
      Directors adopted a Short Term Incentive Plan (“STIP”) for senior management
      including the Named Executive Officers. The purpose of the STIP is to reward
      the
      plan participants based on the annual performance of the Corporation with a
      component (10% of the employee’s base salary) based on attaining individual
      goals. Participants receive a bonus based upon the Corporation’s return on
      capital employed (“ROCE”) for the fiscal year as measured against a budgeted
      target, with target and maximum bonuses based upon a percentage of base
      salary. For
      the Named Executive Officers and other plan participants who are not part of
      divisional management, 90% of budgeted ROCE must be achieved for any bonus
      to be
      paid, while maximum bonus is payable when actual ROCE is equal to or greater
      than 110% of budgeted ROCE.




During
      fiscal 2001, upon the recommendation of the Compensation Committee (following
      an
      independent review) the Board adopted a Total Shareholder Return bonus plan
      (the
      "TSR Plan") for the CEO, and the other Named Executive Officers of the
      Corporation. This plan was designed to provide a mechanism that closely aligns
      management incentives with shareholder interests, and to emphasize the creation
      and enhancement of shareholder value. The TSR Plan sets a minimum threshold
      of
      12.5% of the opening shareholders' equity for each fiscal year, which return
      is
      then notionally deducted from net earnings for the fiscal year so that no TSR
      bonus is paid unless this minimum return has been achieved for shareholders;
      the
      TSR Plan bonus is equal to 10% of net earnings for the completed fiscal year
      in
      excess of the minimum 12.5% return on opening shareholders' equity. In respect
      of fiscal 2006, the total TSR Plan bonus was $nil. The TSR Plan bonuses are
      allocated to the Named Executive Officers on the basis of a percentage based
      on
      seniority. The percentage of the total TSR Plan bonuses allocated to the
      Executive Chairman is 50%, the CEO is 30% and the CFO 20%.




*Long
      Term Incentive Plan*




Upon
      recommendation of the Corporate Governance, Compensation and Nominating
      Committee (following an independent review), the Board of Directors has adopted
      a Long Term Incentive Plan (“LTIP”) for senior management including the Named
      Executive Officers. The LTIP is designed to reward the plan participants based
      upon longer term performance of the corporation. Each participant is given
      a
      number of Performance Stock Units (“PSU’s”) calculated by dividing the average
      closing price of the Class A Subordinate Voting Shares on the TSX on the
      five trading days preceding the grant date by the target percentage of his/her
      annual salary. The PSUs vest and are redeemed on the third anniversary of the
      grant date at a price equal to the average closing price of the Class A
      Subordinate Voting Shares on the TSX on the five trading days preceding the
      date
      of vesting. The factor may range from 0 to 2 depending upon whether the target
      return on equity is exceeded or not met.




*Corporate
      Development*




The
      Corporate Governance, Compensation and Nominating Committee may deem certain
      extraordinary circumstances worthy of special recognition where significant
      benefits have accrued to the Corporation. No Corporate Development bonuses
      were
      paid in fiscal 2006. In fiscal 2005 Corporate Development bonuses of $750,000
      were payable to the Named Executive Officers in connection with certain targets
      being met in respect of the Schreiner Aviation Group. In fiscal 2004 Corporate
      Development bonuses of $250,000 were payable to the Named Executive Officers
      in
      connection with the completion of the acquisition of the Schreiner Aviation
      Group.




74




*Share
      Option Plan*




The
      Employee Share Option Plan is intended to serve as a long-term incentive plan
      that will align the interests of management with the interests of shareholders.
      Options do not generally vest fully on the date of grant, with the vesting
      period determined by the Board of Directors. When granting options, the
      Corporate Governance, Compensation and Nominating Committee takes into account
      the number of options already held by a participating executive.




The
      Corporation has guidelines for allocating stock options, which address the
      vesting period, concentration of options, and the maximum number of options
      to
      be granted per year. The Corporation’s policy is to expense stock options in its
      financial statements, using the fair-value method.




*Pension
      Plans*




The
      Corporation maintains a defined contribution retirement plan (the “RPP”) for
      senior executives, excluding our Executive Chairman. The Corporation contributes
      6% of gross earnings up to regulatory maximums on behalf of senior
      executives.




Under
      supplementary retirement plan agreements, the President and Chief Executive
      Officer, Mr. Sylvain Allard, the former Senior Vice-President & Chief
      Financial Officer, Mr. Jo Mark Zurel, and the former Senior
      Vice-President & Corporate Secretary, Mr. O. Noel Clarke, may receive
      supplementary retirement benefits in addition to the retirement benefits
      provided under the RPP. A special retiring allowance has been provided for
      the
      Chairman and Chief Executive Officer. These benefits are described under
“Executive Retirement Plan and Retiring Allowance”.




The
      current members of the Pension Committee are Dr. Kelly (Chair), Craig C.
      Dobbin and Mme. Saucier.




Submitted
      by the Corporate Governance, Compensation and Nominating Committee:




•
            Sir
                Bob Reid (Chair)


•
            George
                Gillett




**Compensation
      of Directors**




During
      fiscal 2006, the directors of the Corporation, other than those employed by
      the
      Corporation, were paid fees (as described below) for each Board and committee
      meeting attended and were reimbursed for their expenses arising in connection
      with such meetings. Effective May 1, 2002, after consideration of a report
      of an external independent compensation consultant and on the recommendation
      of
      the Corporate Governance, Compensation and Nominating committee, the annual
      directors fees were set at $40,000 per annum, the fee payable to Committee
      Chairs was set at $10,000 per annum and fees for attendance were set at $2,000
      per meeting. During 2004 the Board of Directors, with input from an independent
      compensation consultant, approved revised directors fees as follows: (i) an
      annual fee of $150,000 was approved for the Lead Director, effective
      October 28, 2003 (this fee is in lieu of any other board retainer or board
      and committee attendance fees); (ii) effective March 1, 2004 all
      directors fees (other than the Lead Director fees) payable to Board members
      were
      changed from Canadian to US currency, unless the Board member resides in a
      jurisdiction where the currency trades at a premium to the US dollar (in these
      cases the director would be compensated in the local currency), and
      (iii) the annual fee payable to the Audit Committee Chair was increased
      from US $10,000 to US $25,000 to reflect the increased workload of the
      Audit Committee Chair. Effective October 5, 2004, the annual fee of the
      chair of the Corporate Governance, Compensation and Nominating Committee
      increased to US $25,000 to reflect the increased work load of the chair of
      the committee. No options were granted to directors during fiscal year
      2006.




75




During
      fiscal 2001, the Board approved the establishment of a Stock Appreciation Rights
      Plan for non-management directors under which the Corporation could originally
      issue up to a maximum of 400,000 Stock Appreciation Rights (“SARs”). The SARs
      provide a potential payment to the recipient, which may be realized only after
      vesting of the SAR, equal to the increase, if any, in the market value of the
      Corporation’s Class A Subordinate Voting Shares (determined as the weighted
      average of trading prices for the five trading days immediately preceding the
      exercise date) over the share price or “SAR grant value” on the date of the
      original SAR grant. SARs have a maximum exercise period of ten years following
      the date of issuance. The SARs vested in equal amounts on the first, second
      and
      third anniversaries of the grant date.




As
      a
      result of the subdivision of the Corporation’s Class A Subordinate Voting
      Shares during fiscal 2005, the Board has adjusted the grant of SARs to each
      director by doubling the number of SARs granted and halving the SAR grant value.
      This has the effect of keeping the directors whole in light of the stock
      split.




25,000
      SARs were granted on October 19, 2000 to each director at the time (other
      than the CEO) at a grant value of $5.58, and are exercisable up to
      October 19, 2010. Additional SARs were issued on October 19, 2000 to
      certain directors who did not hold any stock options, to fulfill commitments
      to
      such directors, at prices reflecting CHC’s stock price at the time such
      commitment was made, as follows: 60,000 to each of John J. Kelly and
      Steven K. Hudson at a grant value of $2.93 and 20,000 to Craig C.
      Dobbin at a grant value of $4.50. All such additional SARs expire on
      April 25, 2010.




An
      additional 25,000 SARs were granted on August 1, 2001 to each director at
      the time (other than the CEO) at a grant value of $8.47, exercisable up to
      July 31, 2011. On October 10, 2001, upon his joining the Board of
      Directors of the Corporation, 110,000 SARs were granted to Mr. Mark D.
      Dobbin at a grant value of $7.51, exercisable up to October 9, 2011. On
      February 19, 2002, upon his joining the Board of Directors of the
      Corporation, 110,000 SARs were granted to The Honourable Brian V. Tobin at
      a grant value of $10.25, exercisable up to February 18, 2012. In
      each case the SARs granted in fiscal 2002 were at a grant value equal to the
      closing price of the Corporation’s Class A Subordinate Voting Shares on the
      day immediately preceding such grant in accordance with the SARs
      Plan.




During
      fiscal 2004, 73,334 SARs that had not vested expired as these directors did
      not
      stand for re-election. During 2004 the Board approved the granting of 110,000
      SARs to William W. Stinson at a grant value of $13.70, exercisable up to
      October 27, 2013. In addition, the Board approved the grant of 110,000 SARs
      to Sir Bob Reid at a grant value of $16.50, exercisable up to
      February 12, 2014. These new SARs vest one-third each on the first, second
      and third anniversaries of the date of grant. The Board approved an increase
      in
      the cumulative maximum number of SARs that could be granted to Board members
      from 400,000 to 675,000. In each case the SARs granted in fiscal 2004 were
      at a
      grant value equal to the closing price of the Corporation’s Class A
      Subordinate Voting Shares on the day immediately preceding such
      grant.




At
      April 30, 2004 a total of 300,000 SARs had been granted to current
      directors. Of this total issuance, 80,000 SARs were vested at April 30,
      2004, and none had been exercised up to August 15, 2004.




During
      fiscal 2005, the Board of Directors approved the granting of 110,000 SARs to
      each new director, Dr. Jack Mintz, Donald Carty, George Gillett Jr., and
      Guylaine Saucier. These SARs will vest one-third each on the first, second
      and
      third anniversaries of the date of grant. The exercise price of the SARs grant
      is based on the closing price of the Corporation’s Class A Subordinate
      Voting Shares on the day immediately preceding the grant.




At
      April 30, 2006 a total of 730,000 issued and outstanding SARs had been
      granted to current directors. Of this total issuance, 363,332 SARs were vested
      at April 30, 2006. No SARs have been exercised subsequent to April 30,
      2006.




**Minimum
      Share Ownership**




To
        ensure the
        interests of directors and senior management are aligned with those of the
        shareholders, the Corporation has a Minimum Share Ownership Guideline. Directors
        and senior management will be given three years to comply with the following
        ownership guidelines:




(i)
            directors
                are encouraged to maintain minimum share ownership in the Corporation
                equal in value to the annual board fees;
                and




76




(ii)
            the
                Named Executive Officers are encouraged to maintain minimum share
                ownership in the Corporation equal in value to their base
                salary.




PERFORMANCE
      GRAPH


Below
        is a line graph
        which compares (a) the yearly cumulative total shareholder return on the
        Corporation’s Class A Subordinate Voting Shares and Class B Multiple Voting
        Shares (being the only publicly traded equity securities of the Corporation)
        with (b) the cumulative total return of the S&P/TSX Composite Index (TSX 300
        Index prior to May 1, 2002) for the 60-month period to April 30,
        2006.







For
      the
      60-month period ended April 30, 2006 (assuming reinvestment of dividends),
      the cumulative total shareholder return on an investment of $100 in the
      Class A Subordinate Voting Shares of CHC would be $328, and for the
      Class B Multiple Voting Shares of CHC would be $393. The return for the
      same period based on an investment of $100 in the S&P/TSX Composite Index
      (TSX 300 Index prior to May 1, 2002) would be $168.







77





COMPENSATION
      TABLE




The
      remuneration paid to the Executive Chairman, the President and Chief Executive
      Officer and the other most highly compensated executive officer (the “Named
      Executive Officers”) for each of the last three years ended April 30
      is as follows:




**Annual
                compensation**
            
            **Long-term
                compensation awards securities under options/SARs
                granted****Bonus*****(i)*****Name
                and principal position**
            **Year**
            **Salary**
              **$**
            
            **Operations**
              **$***(v)*
            
            **Corporate
                Development**
              **$***(iv)*
            
            **Other
                annual compensation**
              **$***(ii)*
            
            **Class A
                voting shares**
              **#**
            
            **All
                other compensation**
              **$***(iii)*Craig
                L. Dobbin, O.C.
            2006
            948,880
            *(vi)*
            -
            
            -
            
            -
            
            -
            
            -Executive
                Chairman
            2005
            1,016,000
            *(vi)*
            2,856,166
            
            375,000
            
            136,734
            
            -
            
            -2004
            966,408
            *(vi)*
            500,043
            
            125,000
            
            66,140
            
            -
            
            -Sylvain
                A. Allard
            2006
            650,000
            
            -
            
            -
            
            -
            
            200,000
            
            19,000President
                & Chief Executive Officer
            2005
            650,000
            
            1,807,000
            
            225,000
            
            -
            
            -
            
            16,5002004
            583,333
            
            300,026
            
            75,000
            
            -
            
            -
            
            15,500Jo Mark
                Zurel*(vii)*
            2006
            435,000
            
            -
            
            -
            
            -
            
            100,000
            
            19,000Senior
                Vice-President & Chief Financial Officer
            2005
            435,000
            
            1,072,000
            
            150,000
            
            -
            
            -
            
            16,5002004
            365,000
            
            200,017
            
            50,000
            
            -
            
            -
            
            15,500





Notes:


(i)
            Bonuses
                are shown in the fiscal year to which payments
                relate.


78




(ii)
            Other
                compensation and personal benefits amount to less than the lower
                of
                $50,000 and 10% of salary and bonus for all Named Executive Officers
                in
                2006 and for all except the Executive Chairman in each of the previous
                two
                fiscal years. The amounts shown for the Executive Chairman in fiscal
                2004
                and 2005 are the imputed interest benefits on share purchase loans
                and
                vehicle benefits.


(iii)
            This
                consists of Corporation contributions to the RPP made on behalf of
                certain
                of the Named Executive Officers. Entitlements for Craig L. Dobbin
                are
                described under “Executive Retirement Plan and Retiring Allowance".


(iv)
            These
                special transaction bonuses (Corporate Development) are related to
                the
                acquisition of Schreiner Aviation Group. The fiscal 2004 bonuses
                were paid
                in July 2004 in connection with the successful closing of the acquisition
                of Schreiner on February 16, 2004 and the fiscal 2005 bonuses were
                paid in August 2005 upon the attainment of certain financial targets
                by
                Schreiner.


(v)
            These
                amounts include:


(a)
            regular
                performance bonus payments under the STIP, which is also used as
                an
                incentive for other senior managers;
                and


(b)
            the
                TSR Plan.


(vi)
            These
                salary amounts are denominated in US dollars, but paid in Canadian
                dollars. The amounts included in the table are the Canadian dollar
                equivalents paid.


(vii)
            Mr. Zurel
                resigned as an officer of the Company on May 10,
                2006.




79


**LONG
      TERM INCENTIVE PROGRAM**




The
      following table sets out the aggregate number of PSUs awarded under the Long
      Term Incentive Program to each of the Named Executive Officers during the most
      recently completed fiscal year together with other required
      information.




**Performance**
            **Estimated
                Future Payouts Under Non-**
              **Securities-Price-Based
                Plans****Name**
            **PSUs
                (#)**
            **Period
                Until Payout**
            **Threshold**
              **($
                or #)**
            **Target**
              **($
                or #)**
            **Maximum**
              **($
                or #)**Craig
                L. Dobbin, O.C.
            47,430
            April
                30, 2008
            N/A
            N/A
            N/ASylvain
                Allard
            31,047
            April
                30, 2008
            N/A
            N/A
            N/AJo
                Mark Zurel
            16,622
            April
                30, 2008
            N/A
            N/A
            N/A




**Employee
      Share Option Plan**




The
      following table provides information as of April 30, 2006 regarding the
      number of securities to be issued upon the exercise of outstanding options
      and
      the weighted-average exercise price of the outstanding options in connection
      with the equity compensation plan approved by shareholders (the Employee Share
      Option Plan). The Corporation does not have any equity compensation plans that
      have not been approved by shareholders. The options below relate to the
      Corporations Class A Subordinate Voting Shares.




**Plan
                Category**
            **Number
                of securities**
              **to
                be issued upon exercise of outstanding options**
            **Weighted-average**
              **exercise
                price per share of**
              **outstanding
                options**
            **Number
                of securities**
              **remaining
                available for**
              **future
                issuance under equity compensation plans**Employee
                Share Option Plan
            3,819,344
            $
                11.77
            40,462Equity
                compensation plans not
              approved
                by security holders
            -
            -
            -Total
            3,819,344
            $
                11.77
            40,462




As
        at
        August 30, 2006, the number of securities to be issued upon the exercise of
        outstanding options under the Employee Share Option Plan is 3,843,344, being
        9%
        of the aggregate number of Class A and Class B shares
        outstanding.


**Option
      Grants During the Most Recently Completed Fiscal Year**




The
      following table sets out the aggregate number of options granted to each of
      the
      Named Executive Officers during the most recently completed fiscal year together
      with the exercise price and other required information.




**Name**
            **Type
                of Security**
            **Securities
                under Options Granted**
              **#**
            **Per
                cent of Total Options Granted to Employees during the year ended
                April 30,
                2006**
            **Exercise
                Price**
              **($/Security)**
            **Market
                Value of Securities Underlying Options at the Date of Grant
                ($/Security)**
            **Expiration
                Date**Craig
                L. Dobbin, O.C.
            Class
                A
            -
            -
            -
            -
            -Sylvain
                Allard
            Class
                A
            200,000
            19.60%
            $24.80
            $24.80
            June
                29, 2015Jo
                Mark Zurel
            Class
                A
            100,000
            9.80%
            $24.80
            $24.80
            June
                29, 2015







80




**Aggregated
      Option Exercises During the Most Recently Completed Fiscal Year and Fiscal
      Year
      End Stock Option Values**




The
        following table
        sets out the aggregate number of outstanding options held by each of the
        Named
        Executive Officers who held options at any time during the most recently
        completed fiscal year, together with the value of such options at the end
        of the
        fiscal year. Amounts reported under "Value of unexercised in-the-money options"
        represent the difference between (i) the market value as at April 30, 2006
        of
        the Class A Subordinate Voting Shares for which such options were granted
        having
        an exercise price less than such market value, and (ii) the exercise price
        of
        such options. The closing trading price of a Class A Subordinate Voting Share
        on
        the Toronto Stock Exchange (the “TSX”) on April 30, 2006 was
        $28.00.


Name
            Type
                of Security
            Securities
                acquired on exercise
              #
            Aggregate
                value realized
              $
            Options
                exercisable (vested) at April 30, 2006
              #*(i)*
            Options
                not exercisable (unvested) at April 30, 2006
              #*(i)*
            Value
                of all vested unexercised in-the-money options
              April
                30, 2006
              $
            Value
                of all non-vested unexercised in-the-money options
              April
                30, 2006
              $Craig
                L. Dobbin, O.C.
            Class A
            -
            -
            1,026,956
            -
            44,730,931
            -Sylvain
                Allard
            Class A
            -
            -
            221,966
            100,000
            8,917,651
            700,000Jo Mark
                Zurel
            Class A
            -
            -
            70,750
            50,000
            2,447,155
            350,000




(i)
            Each
                option entitles the holder to receive two Class A Subordinate Voting
                Shares.





**Executive
      Retiring Plan and Retiring Allowance**




Under
      supplementary retirement plan agreements ("SRPs") with the Corporation,
      Mr. Sylvain Allard, and former executives, Mr. Jo Mark Zurel and
      Mr. O. Noel Clarke, may be entitled to receive supplementary retirement
      benefits in addition to the retirement benefits provided under the RPP. The
      aggregate target benefit provided through the RPP, the SRPs and Canada Pension
      Plan ("CPP") benefits is 2% of the individual’s highest three years average
      earnings including operations bonuses ("average earnings"), but
      excluding special transaction bonuses (corporate development) multiplied by years of credited service. The SRP benefit
      formula is integrated with the formula under the CPP as well as the estimated
      benefits under the RPP. The SRP provides benefits by multiplying the
      participant’s credited service by the sum of the following:




•
            0.5%
                of average earnings up to the CPP earnings limit at
                retirement;




•
            1%
                of average earnings above such CPP earnings limit up to the earnings
                for
                which the Canada Revenue Agency (the "CRA") maximum contribution
                could be
                made under the RPP in the year of retirement;
                and




•
            2%
                of average earnings in excess of the above CRA earnings
                limits.




In
      addition, the SRP provides indexing on the supplementary benefit equal to 75%
      of
      increases in the Consumer Price Index less 1% (subject to a 4% annual maximum).
      The SRP also provides a 60% spousal death benefit and if retirement occurs
      between ages 55 and 65 a bridge benefit equal to CPP benefits. This SRP bridge
      benefit is also indexed and ceases at age 65 when CPP benefits actually
      commence.




The
        Corporation has decided to partially fund the SRP to the 50% level over a
        five-year period commencing May 1, 2005. However, upon a change in control
        of the Corporation, SRP participants are immediately vested and the Corporation
        is required to establish a retirement compensation arrangement (as defined
        under
        the *Income
        Tax Act* (Canada))
        to secure full funding for all SRP benefits through the issuance of letters
        of
        credit. In the case of Mr. O. Noel Clarke, his employment arrangements with
        the Corporation provided that he be credited with 10 years of continuous
        service for the purpose of his SRP in addition to his actual
        service.
  The
        entitlement to supplementary benefits under the SRP has vested for each of
        Messrs Allard, Zurel and Clarke. The estimated credited years of service
        as of
        August 28, 2006 for Mr. Allard is 23.3 years, Mr. Zurel is
        12.04 years and Mr. Clarke is 14.5 years (inclusive of his
        10 years of additional service discussed
        above).


81




The
      approximate aggregate annual benefits payable to a participant under the RPP
      and
      SRP are as follows:




Years
                of Credited ServiceRemuneration
            
            
            15
            
            
            20
            
            
            25
            
            
            30
            
            
            35$
            
            
            $
            
            
            $
            
            
            $
            
            
            $
            
            
            $800,000
            
            
            240,000
            
            
            320,000
            
            
            400,000
            
            
            480,000
            
            
            560,0001,000,000
            
            
            300,000
            
            
            400,000
            
            
            500,000
            
            
            600,000
            
            
            700,0001,200,000
            
            
            360,000
            
            
            480,000
            
            
            600,000
            
            
            720,000
            
            
            840,0001,400,000
            
            
            420,000
            
            
            560,000
            
            
            700,000
            
            
            840,000
            
            
            980,0001,600,000
            
            
            480,000
            
            
            640,000
            
            
            800,000
            
            
            960,000
            
            
            1,120,0001,800,000
            
            
            540,000
            
            
            720,000
            
            
            900,000
            
            
            1,080,000
            
            
            1,260,0002,000,000
            
            
            600,000
            
            
            800,000
            
            
            1,000,000
            
            
            1,200,000
            
            
            1,400,0002,400,000
            
            
            720,000
            
            
            960,000
            
            
            1,200,000
            
            
            1,440,000
            
            
            1,680,0002,600,000
            
            
            780,000
            
            
            1,040,000
            
            
            1,300,000
            
            
            1,560,000
            
            
            1,820,0002,800,000
            
            
            840,000
            
            
            1,120,000
            
            
            1,400,000
            
            
            1,680,000
            
            
            1,960,0003,000,000
            
            
            900,000
            
            
            1,200,000
            
            
            1,500,000
            
            
            1,800,000
            
            
            2,100,000




Effective
        June 4,
        1991, as amended as of January 19, 1993, the Corporation agreed to provide
        a
        retiring allowance (the "Retiring Allowance") to Craig L. Dobbin, Executive
        Chairman of the Corporation, whereby Mr. Dobbin would be entitled upon
        retirement to receive an annual retiring allowance in an amount equal to
        66 2/3%
        of the average of the three highest fiscal years of annual remuneration,
        including operations bonuses, earned by him from the Corporation during his
        term
        as Chairman and Chief Executive Officer. Performance measured bonuses, including
        bonuses under the CEVA and TSR Plans, are included for calculating annual
        remuneration for purposes of the Retiring Allowance, but special transaction
        bonuses (corporate development) generally are not.


The
      Retiring Allowance will continue during the lifetime of Mr. Dobbin and, in
      the event of his death within 20 years of the commencement of payments
      pursuant to such allowance, the payments shall continue to be made to a
      beneficiary or beneficiaries named by Mr. Dobbin for the remaining balance
      of the 20-year period. The Retiring Allowance may increase based upon annual
      increases in the Consumer Price Index ("CPI"), however, any such increase shall
      be limited to a maximum of 75% of any annual increase in the CPI less 1% and
      further limited to a maximum increase of 4% of the Retiring Allowance in any
      one year. Payment of the Retiring Allowance is subject to compliance by
      Mr. Dobbin with certain non-competition and non-disclosure obligations. If
      Mr. Dobbin were to retire at age 71, the estimated annual benefits payable
      to Mr. Dobbin (based on his total annual remuneration to date) would be
      $2,224,077.




**Indebtedness
      of Directors and Officers**


Effective
        July 30,
        2002, in connection with section 402 of the Sarbanes-Oxley Act of 2002 (“SOX”),
        the Corporation introduced a new policy with regard to loans to directors
        and
        officers. The policy prohibits the Corporation from, directly or indirectly,
        extending or maintaining credit, arranging for the extension of credit, or
        renewing an extension of credit, in the form of a personal loan to or for
        any
        director or officer. Irrevocable extensions of credit made to directors and
        officers outstanding as of July 30, 2002 are exempted under the policy, but
        the
        terms of this credit cannot be materially modified and credit cannot be renewed
        after such date. In conjunction with this policy, the Corporation’s Board on
        March 2, 2003 approved a revision to the Employee Stock Option Plan, to
        eliminate the granting of loans to facilitate the exercising of options.
        The
        Corporation’s Executive Share Purchase and Ordinary Share Loans existed at July
        30, 2002 and are exempt under the policy. No new credit or any modification
        of
        the terms of the credit granted at July 30, 2002 has been
        made.




82




The
      following table provides the aggregate indebtedness outstanding at
      August 31, 2006 to CHC of the current and former directors, officers and
      employees of the Corporation (and its subsidiaries):




**Aggregate
                Indebtedness ($)****Purpose**
            **To
                the Corporation or its subsidiaries**
            **To
                another entity**Executive
                Share Purchase Loans(A
                loan program)
            $1,391,597
            —Ordinary
                share loan
            $33,000,000
            —




Effective
      July 30, 2002 the Corporation had two types of loans outstanding to
      officers of the Corporation that are exempted under the policy and are described
      below.




The
      following table provides details of the indebtedness of individual current
      and
      proposed directors and officers of the Corporation (and their respective
      associates) in connection with the Executive Share Purchase Loan Program and
      the
      Ordinary Share Loan, both of which are described in detail following the
      table.




83




Name
                and principal position
            Involvement
                of Corporation or subsidiary
            Largest
                amount outstanding during fiscal year 2006
              $
            Amount
                outstanding as at August 31, 2006
              $
            Financially
                assisted securities purchases during fiscal 2006
              #
            Security
                for indebtedness
            Amount
                forgiven during fiscal 2006EXECUTIVE
                SHARE PURCHASE LOANS (A loan program)Craig
                L. Dobbin, O.C., Executive Chairman, Proposed Nominee
                Director
            Lender
            1,004,800
            942,000
            —
            An
                assignment of the shares or proceeds of vested options to acquire
                487,086
                Class A shares held by the executive, having an exercise price of
                $6.50 per share.
            —Sylvain
                Allard
              President
                & Chief Executive Officer, Proposed Nominee Director
            Lender
            317,945
            277,067
            —
            An
                assignment of the shares or proceeds of vested options to acquire
                100,000
                Class A shares held by the executive, having an exercise price of
                $2.125 per share.
            —Jo Mark
                Zurel
              Senior
                Vice-President & Chief Financial Officer
            Lender
            137,550
            137,550
            —
            An
                assignment of the shares or proceeds of vested options to acquire
                26,500
                Class A shares held by the executive, having an exercise price of
                $2.125 per share.
            —Christine
                Baird
              President,
              Global
                Operations
            Lender
            41,939
            34,980
            —
            A
                first lien on the Class A shares
            —THE
                ORDINARY SHARE LOANO.S.
                Holdings Inc.
              (a
                corporation indirectly wholly owned by Craig L. Dobbin)
            Lender
            33,000,000
            33,000,000
            —
            A
                lien in CHC’s favour on the purchased Ordinary Shares, together with
                certain other security (see below)
            —









84


**Executive
      Share Purchase Loan Program**




On
      July 21, 2000, the Board, on the recommendation of the Compensation
      Committee and advice from independent compensation consultants, approved a
      long
      term incentive program (the "A loan program") for certain members of senior
      management to permit them to participate in future appreciation of the shares
      of
      the Corporation and to bear the same risks as other shareholders. The A
      loan program enabled eligible senior management to receive interest free loans
      to finance purchases of Class A Subordinate Voting Shares. The maximum
      amount of the loan available was based on a multiple of the employee's base
      salary and ranged from 0.5 times base salary to a maximum of 2.0 times base
      salary, depending on position. The Chief Executive Officer was eligible for
      the
      maximum multiple of 2.0 times base salary. Although indebtedness is remaining
      outstanding under this program, no further loans are being made under it. The
      outstanding loans are secured by the financed shares (except in the case of
      certain executives of the Corporation where the Board, in April 2002, approved
      the assignment of the shares or proceeds arising from certain vested options
      to
      constitute security in the place of shares as security for outstanding A loans,
      as detailed above), require minimum annual loan repayments of 5% of the loan
      principal amount and are fully payable on termination of employment or sale
      of
      the financed shares or the exercise of share options taken as security and
      sale
      of shares arising therefrom, as the case may be.




The
      Ordinary Share Loan




On
      December 9, 1997, the Corporation issued 11,000,000 (now 22,000,000 as a
      result of the stock split) Ordinary Shares to O.S. Holdings Inc. for an
      aggregate consideration of $33,000,000 (the "Ordinary Share Loan"). O.S.
      Holdings Inc. is a corporation wholly owned by 10644 Newfoundland Inc.
      ("Holdco"), which is a corporation wholly owned by Craig L. Dobbin, the
      Executive Chairman. On December 9, 1997, the Corporation made a loan to
      O.S. Holdings Inc. of $33,000,000 to enable it to purchase these Ordinary
      Shares. The loan is repayable upon demand and does not bear interest unless
      the
      principal amount thereof (or the lesser portion demanded) has not been repaid
      within two business days following demand therefore, after which time the
      principal amount thereof (or the portion demanded) would bear interest at a
      rate
      equal to the Canadian "prime rate" plus 5%. These Ordinary Shares were issued
      to
      give effect to an undertaking provided by the Corporation to UK regulatory
      authorities in connection with the foreign ownership requirements of European
      legislation applicable to the Corporation’s then UK operating subsidiary,
      Brintel. The issuance of Ordinary Shares to O.S. Holdings Inc. was intended
      to
      increase the amount of equity share capital of the Corporation held by European
      nationals (Mr. Dobbin, the sole shareholder of Holdco, is a citizen of both
      Canada and Ireland) and to establish that Brintel was entitled to maintain
      its
      operating license. The transaction involving the issuance of the Ordinary Shares
      (including the making of the loan) was approved by shareholders of the
      Corporation at a meeting held on December 9, 1997.




The
      loan is secured by a lien in the Corporation's favour over the Ordinary Shares.
      Further, Holdco has guaranteed the obligations of O.S. Holdings Inc. to the
      Corporation and has pledged the shares of O.S. Holdings Inc. owned by it in
      favour of the Corporation as security for such guarantee. Craig L. Dobbin has
      guaranteed the obligations of each of O.S. Holdings Inc. and Holdco to the
      Corporation and has pledged the shares of Holdco owned by him in favour of
      the
      Corporation as security for such guarantee. The Corporation's recourse against
      Mr. Dobbin in connection with the repayment of the loan and such guarantee
      is limited to the realization of the shares of Holdco held by him.




Indebtedness
      of Directors, Executive Officers and Senior Officers other than under Securities
      Purchase Programs




There
      was no indebtedness other than under securities purchase programs to the
      Corporation by any current and former officers, directors and employees of
      the
      Corporation (and their respective associates) as at August 31,
      2006.




**Directors
      and Officers Insurance**




The
        Corporation has
        purchased and maintains a policy of insurance for the benefit of directors
        and
        officers as permitted by the CBCA and the Corporation’s by-laws. The policy
        insures directors and officers, in their capacities as directors and officers
        of
        the Corporation, or in their capacities as directors and officers of other
        corporations where they have acted in that capacity at the request of the
        Corporation, against certain liabilities incurred by them, except where the
        liability relates to the failure by the director or officer to act honestly,
        in
        good faith and with a view to the best interests of the Corporation or the
        other
        corporation, as the case may be.




85


The
        policy obtained
        provided for US $45 million of coverage for directors and officers of the
        Corporation on an aggregate basis. Such policy is subject to a deductible
        of US
        $100,000 per incident. The cost of coverage for the period ending June 30,
        2006
        on an aggregate basis was $446,841.




Employees




All
      pilots and aircraft maintenance engineers are required to be licensed by
      regulatory authorities in the country in which they work. To obtain a pilot’s
      license, each pilot must complete and pass practical flight and written
      examinations. In addition, IFR pilots must have passed IFR practical flight
      and
      written examinations. To obtain an aircraft maintenance engineer’s license, an
      engineer must have completed a minimum of three to four years of training
      and passed a written examination. The following table provides employee data
      at
      April 30, 2006, 2005 and 2004.







**Year
                ended April 30****2006**
            
            
            2005
            
            
            2004Administrative,
                support and other personnel
            
            
            1,320
            
            
            1,450
            
            
            1,445Pilots
            
            
            836
            
            
            756
            
            
            849Maintenance
                engineers
            
            
            1,010
            
            
            883
            
            
            7753,166
            
            
            3,089
            
            
            3,069




In
      Norway, our pilots have a two-year collective agreement that expired on
      April 30, 2006. Ground staff and engineers had a central agreement that
      expired on March 31, 2006 and a local agreement that expires on
      September 30, 2006. Negotiations are currently being held with each of
      these groups. Repair and overhaul employees had central agreements that expired
      on March 31, 2006. There are also two-year local agreements with the repair
      and overhaul employees that expire on September 30, 2006.




In
      the
      UK, we have a collective agreement with our pilots and a separate agreement
      with
      our engineers and other ground staff, both of which expire on June 30,
      2010.




In
      Denmark, we have a multi-year collective agreement with our pilots that expires
      on June 30, 2007, and separately with our engineers and ground staff that
      expires June 30, 2007.




In
      Ireland, we had collective pay agreements in place with our pilots, aircrew
      and
      engineers that expired on April 30, 2006. Negotiations are currently being
      held with all three groups.




In
      Australia, we have a collective agreement with our pilots that will expire
      on
      May 1, 2008 and a collective agreement with our aircrew which will expire
      on August 21, 2008. Our engineers’ agreement in Australia expired
      August 31, 2005, with negotiations ongoing for a new
      agreement.




In
      the
      Netherlands, we have two collective agreements with our pilots which expire
      on
      April 30, 2009. The ground staff and general administrative staff
      collective agreement expires on April 30, 2008.




We
      also
      have a collective agreement with certain of the employees at Composites that
      expires on October 15, 2006.




Employees
      at our other helicopter operations are not unionized.




**Share
      Ownership**




Share
      ownership information is included under Item 7.







86




ITEM
      7.  MAJOR
      SHAREHOLDERS AND RELATED PARTY TRANSACTIONS




**PRINCIPAL
      SHAREHOLDERS**




As
      at
      August 31, 2006, there were 36,872,884 Class A Subordinate Voting
      Shares, 5,861,488 Class B Multiple Voting Shares and 22,000,000 Ordinary
      Shares issued and outstanding. The Class A Subordinate Voting Shares
      represent 37.7% of the aggregate voting rights attached to the Corporation’s
      voting shares.




The
      following table sets forth information regarding beneficial ownership, as of
      August 31, 2006, of CHC’s Class A Subordinate Voting Shares,
      Class B Multiple Voting Shares and Ordinary Shares by each shareholder we
      know to beneficially own more than 5% of our voting securities and all named
      executives. Information for certain shareholders is based on their latest
      filings with the SEC or information delivered to us. The number of shares
      beneficially owned by each shareholder is determined under SEC rules and the
      information is not necessarily indicative of beneficial ownership for any other
      purpose. Under SEC rules a shareholder beneficially owns any shares as to which
      the shareholder has or shares voting or investment power. Unless otherwise
      indicated, each shareholder has sole voting and investment power (or shares
      such
      powers with his or her spouse) with respect to the shares set forth in the
      following table.







Name
                of Shareholder
            Number
                of voting shares owned,
              controlled
                or directed*(i)*
            
            Percent
                of class*(i)*Subordinate
                Voting
              Shares
            
            Multiple
              Voting
              Shares
            
            Ordinary
                Shares
            
            Subordinate
                Voting Shares
            
            Multiple
                Voting Shares
            
            Ordinary
                SharesDiscovery
                Helicopters Inc.*(ii)
                (iii)*
            2,513,230
            
            5,555,432
            
            -
            
            6.8%
            
            94.8%
            
            -FMR
                Corp.
            4,865,700
            
            -
            
            -
            
            13.2%
            
            -
            
            -O.S.
                Holdings Inc.*(iv)*
            -
            
            -
            
            22,000,000
            
            -
            
            -
            
            100.0%Craig
                L. Dobbin*(i)(v)*
            2,053,912
            
            -
            
            -
            
            5.6%
            
            -
            
            -Sylvain
                Allard*(i)*
            922,400
            
            -
            
            -
            
            2.5%
            
            -
            
            -




(i)
            Includes
                shares beneficially owned by the listed person. If a person has the
                right
                to acquire beneficial ownership of any shares by exercise of options
                or
                otherwise by October 30, 2006, those shares are deemed beneficially
                owned by that person and are deemed to be outstanding solely for
                the
                purpose of determining the percentage of the shares that the person
                owns.
                Those shares are not included in the computations for any other
                person.




(ii)
            Discovery
                Helicopters Inc. is a holding company, all of the voting shares of
                which
                are owned by Craig L. Dobbin, Executive Chairman of the Corporation.
                The
                shares owned by Discovery Helicopters Inc. collectively represent
                59.4% of
                the votes attached to all of our outstanding
                shares.




(iii)
            Includes
                1,379,310 Class A Subordinate Voting Shares that may be acquired upon
                the conversion of a $5,000,000 convertible loan at a price of
                $3.63 per share. Also includes 1,113,230 Class A Subordinate
                Voting Shares that were lent by Discovery to a third party pursuant
                to a
                borrowing agreement. Discovery will not exercise control or direction
                over
                such shares until they are
                returned.




(iv)
            O.S.
                Holdings Inc. is a holding company wholly owned indirectly by Craig
                L.
                Dobbin, Executive Chairman of the Corporation. Mr. Dobbin owns
                directly or indirectly shares of the Corporation that collectively
                carry
                61.7% of the votes attached to all of the outstanding shares of the
                Corporation.




(v)
            These
                shares may be acquired upon the exercise of options granted with
                prices
                ranging from $2.15 to $15.35. The shares granted pursuant to the
                full
                exercise of these options represent 2.1% of the votes attached to
                all our
                outstanding voting securities.




87




**RELATED
      PARTY TRANSACTIONS**




(a)
            In
                the course of its regular business activities, the Company enters
                into
                routine transactions with related companies subject to significant
                influence by the Company (most significantly Aero Contractors of
                Nigeria)
                as well as parties affiliated with the controlling shareholder. These
                transactions are measured at the amounts exchanged, which is the
                amount of
                consideration determined and agreed to by the related parties.
                Transactions with related parties for the years ended April 30 are
                summarized as follows:




**2006**
            
            
            2005Revenues
            
            **$**
            **70,738**
            
            $
            43,518Direct
                costs
            
            
            **446**
            
            
            1,298Inventory
                additions
            
            
            **10,679**
            
            
            -Capital
                asset additions
            
            
            **7,126**
            
            
            8,160Net
                amounts receivable and payable in respect of such revenues, expenses
                and
                additions
            
            
            **21,878**
            
            
            15,044




(b)
            During
                fiscal 2000, in connection with securing tender credit facilities,
                the
                Company received an unsecured, subordinated, convertible 12% loan
                from an
                affiliate of the controlling shareholder in the amount of
                $5.0 million. This loan is subordinated to the Company’s senior
                credit facilities and its senior subordinated notes (Note 13 to the
                Company’s fiscal 2006 audited consolidated financial statements). The loan
                is convertible at the option of the shareholder into Class A
                subordinate voting shares at $3.63 per share. The estimated value of
                the loan proceeds attributable to the conversion feature of
                $1.0 million was allocated to contributed surplus. The equivalent
                reduction in the carrying value of the loan is amortized to earnings
                over
                the term of the loan. Interest expense of $0.6 million (2005 -
                $0.7 million), including amortization of the above noted discount,
                was recorded on the loan during the fiscal year ended April 30,
                2006.




ITEM
      8.  FINANCIAL
      INFORMATION




Financial
      statements are included under Item 18.




ITEM
      9.  THE
      OFFER AND LISTING




**LISTING
      DETAILS**




On
      October 7, 1991, our outstanding Class A Subordinate Voting Shares and
      Class B Multiple Voting Shares were listed on the TSX under the stock
      symbols FLY.A. and FLY.B., respectively. As of August 31, 2006, nine
      registered holders of record in the United States held 5,680,430
      Class A Subordinate Voting Shares (or 15.4% of the Class A Subordinate
      Voting Shares) and one registered holder of record in the United States held
      82,010 Class B Multiple Voting Shares (or 1.4% of the Class B Multiple
      Voting Shares).




At
      a
      special meeting of shareholders on March 28, 2005, the shareholders approved
      the
      subdivision of our Class A Subordinate Voting Shares, Class B Multiple
      Voting Shares and Ordinary Shares on a two-for-one basis. The Class A
      Subordinate Voting Shares and Class B Multiple Voting Shares listed on the
      TSX commenced trading on a post-split basis on April 12, 2005. All
      amounts below have been restated to reflect the stock split.




The
      following table sets forth, for the quarters indicated, the high and low sales
      prices and volumes of trading of our Class A Subordinate Voting Shares and
      our Class B Multiple Voting Shares as reported on the TSX.




88




**Class
                A Subordinate Voting Shares**
            **Class
                B Multiple Voting Shares****High**
            
            
            **Low**
            
            
            **Volume**
            
            
            **High**
            
            
            **Low**
            
            
            **Volume****Fiscal
                2006**First
                quarter
            
            $
            28.08
            
            $
            23.24
            
            
            10,314,800
            
            $
            28.00
            
            $
            23.90
            
            
            4,300Second
                quarter
            
            
            27.34
            
            
            22.11
            
            
            9,896,100
            
            
            25.75
            
            
            24.00
            
            
            1,600Third
                quarter
            
            
            28.48
            
            
            23.39
            
            
            4,743,500
            
            
            28.75
            
            
            24.00
            
            
            3,700Fourth
                quarter
            
            
            31.25
            
            
            24.30
            
            
            8,795,700
            
            
            33.00
            
            
            25.15
            
            
            20,000**Fiscal
                2005**First
                quarter
            
            $
            22.35
            
            $
            18.38
            
            
            5,737,720
            
            $
            21.67
            
            $
            18.58
            
            
            3,502Second
                quarter
            
            
            24.99
            
            
            20.24
            
            
            8,054,606
            
            
            24.88
            
            
            20.88
            
            
            6,966Third
                quarter
            
            
            27.25
            
            
            22.50
            
            
            5,331,792
            
            
            27.00
            
            
            22.87
            
            
            6,610Fourth
                quarter
            
            
            29.71
            
            
            25.22
            
            
            8,031,521
            
            
            29.08
            
            
            25.80
            
            
            4,840







The
      following table sets forth, for the fiscal years indicated, the high and low
      sales prices and volumes of trading of our Class A Subordinate Voting
      Shares and our Class B Multiple Voting Shares as reported on the
      TSX.







**Class
                A Subordinate Voting Shares**
            **Class
                B Multiple Voting Shares****High**
            
            
            **Low**
            
            
            **Volume**
            
            
            **High**
            
            
            **Low**
            
            
            **Volume**2002
            
            $
            15.00
            
            $
            6.13
            
            
            35,488,690
            
            $
            15.00
            
            $
            7.00
            
            
            105,7542003
            
            
            18.03
            
            
            10.82
            
            
            37,426,564
            
            
            18.00
            
            
            10.90
            
            
            94,5022004
            
            
            20.62
            
            
            12.00
            
            
            37,563,400
            
            
            20.50
            
            
            12.41
            
            
            107,0002005
            
            
            29.71
            
            
            18.38
            
            
            27,155,639
            
            
            29.08
            
            
            18.58
            
            
            21,9182006
            
            
            31.25
            
            
            22.11
            
            
            33,750,100
            
            
            33.00
            
            
            23.90
            
            
            29,600







The
      following table sets forth, for the months indicated the high and low sales
      prices and volumes of trading of our Class A Subordinate Voting Shares
      and our Class B Multiple Voting Shares as reported on the TSX.




**Class
                A Subordinate Voting Shares**
            **Class
                B Multiple Voting Shares****High**
            
            
            **Low**
            
            
            **Volume**
            
            
            **High**
            
            
            **Low**
            
            
            **Volume**March
                2006
            
            $
            31.25
            
            $
            25.05
            
            
            4,152,700
            
            $
            33.00
            
            $
            26.26
            
            
            9,900April
                2006
            
            
            29.90
            
            
            26.75
            
            
            3,518,000
            
            
            29.90
            
            
            27.00
            
            
            5,700May
                2006
            
            
            28.12
            
            
            26.21
            
            
            2,208,800
            
            
            28.30
            
            
            26.51
            
            
            700June
                2006
            
            
            27.25
            
            
            24.01
            
            
            2,533,694
            
            
            26.86
            
            
            25.25
            
            
            2,750July
                2006
            
            
            28.40
            
            
            24.50
            
            
            2,543,108
            
            
            28.00
            
            
            24.88
            
            
            3,300August
                2006
            
            
            25.50
            
            
            23.87
            
            
            1,084,196
            
            
            25.74
            
            
            24.20
            
            
            2,100







On
      August 31, 2006 the closing price of our Class A Subordinate Voting
      Shares on the TSX was $24.70.




Effective
      October 11, 2002 our Class A Subordinate Voting Shares commenced
      trading on the New York Stock Exchange (“NYSE”) under the stock symbol FLI.
      Prior to October 11, 2002 our Class A Subordinate Voting Shares traded
      on the Nasdaq National Market (“Nasdaq”). Class A Subordinate Voting Shares
      listed on the NYSE began trading on a post-split basis on April 19, 2005.
      All amounts below have been restated to reflect the stock split.




The
      following table sets forth for the quarters indicated, the high and low sales
      price in US dollars and volumes of trading of our Class A Subordinate
      Voting Shares on the NYSE.




89







**High**
            
            **Low**
            
            **Volume****Fiscal
                2006**First
                quarter
            
            $
            22.37
            
            $
            18.88
            
            
            852,600Second
                quarter
            
            
            22.48
            
            
            18.70
            
            
            743,200Third
                quarter
            
            
            24.66
            
            
            19.84
            
            
            618,900Fourth
                quarter
            
            
            27.00
            
            
            21.02
            
            
            924,400**Fiscal
                2005**First
                quarter
            
            $
            16.83
            
            $
            13.19
            
            
            1,469,400Second
                quarter
            
            
            19.69
            
            
            15.29
            
            
            1,078,000Third
                quarter
            
            
            22.13
            
            
            18.38
            
            
            1,108,800Fourth
                quarter
            
            
            24.13
            
            
            20.20
            
            
            1,234,300







The
      following table sets forth in US dollars for the fiscal years indicated, the
      high and low sales prices and volumes of trading of our Class A Subordinate
      Voting Shares as reported on the NYSE and Nasdaq.




**High**
            
            
            **Low**
            
            
            **Volume**2002
            
            $
            9.63
            
            $
            3.86
            
            
            14,467,8002003
            
            
            11.65
            
            
            7.38
            
            
            6,568,6002004
            
            
            15.23
            
            
            8.65
            
            
            3,930,6002005
            
            
            24.13
            
            
            13.19
            
            
            4,890,5002006
            
            
            27.00
            
            
            18.70
            
            
            3,139,100







**High**
            
            
            **Low**
            
            
            **Volume**March
                2006
            
            $
            27.00
            
            $
            21.71
            
            
            403,300April
                2006
            
            
            26.19
            
            
            23.77
            
            
            392,600May
                2006
            
            
            25.60
            
            
            23.20
            
            
            387,500June
                2006
            
            
            24.52
            
            
            21.42
            
            
            214,300July
                2006
            
            
            25.18
            
            
            21.25
            
            
            186,100August
                2006
            
            
            22.89
            
            
            21.15
            
            
            265,600







The
      closing price of our Class A Subordinate Voting Shares on August 31,
      2006 as reported on the NYSE was US $22.31.






ITEM
      10.ADDITIONAL
      INFORMATION




**ARTICLES
      OF INCORPORATION AND BY-LAWS**




The
      Company was incorporated under the Canada Business Corporations Act and its
      corporation number is 222233-7.




On
      August 23, 2002 the Board of Directors approved certain amendments to
      By-Law No. 1, the by-law relating generally to the transaction of the business
      and affairs of the Corporation (the “Old By-Law”) by adopting Amended and
      Restated By-Law No. 1 (the “New By-Law”). Shareholders confirmed the New By-Law
      at the annual general meeting held on September 26, 2002. The New By-Law
      superceded and replaced the Old By-Law that had been previously enacted on
      February 18, 1987. The Board of Directors made certain additional
      amendments to the New By-law, effective September 4, 2003 to provide that the
      board may, if the articles so provide, appoint one or more additional directors
      (subject to the maximum number authorized by the articles) to hold office for
      a
      term expiring no later than the close of the next annual meeting of
      shareholders, but the total number of directors appointed may not exceed one
      third of the number of directors elected at the previous annual meeting of
      shareholders. The amendments to the New By-law were confirmed by the
      shareholders at the shareholders’ meeting held on October 28, 2003.




90







With
      respect to the directors of the Company, the Canada Business Corporations Act
      and by-laws of the Company require a director to refrain from voting (except
      in
      certain limited cases) on any material contract or transaction whether made
      or
      proposed with the Company to which the director is a party and to disclose
      in
      writing to the Company the nature and extent of his interest in such contract
      or
      transaction. The by-laws of the Company also provide that the directors shall
      be
      compensated for their services as the Board from time to time may authorize.
      The
      Board is given general authority to borrow monies on behalf of the Company
      and
      to pledge assets of the Company, and to delegate such powers from time to time
      to any officer of the Company. The Articles and by-laws of the Company do not
      contain any mandatory age limit requirement for a director's retirement or
      a
      minimum number of shares to be held by a director. Directors may be elected
      for
      terms of up to three years. Cumulative voting is not provided for in the
      Company's Articles or by-laws.




Our
      issued and outstanding shares consist of Class A Subordinate Voting Shares,
      Class B Multiple Voting Shares and Ordinary Shares. By articles of
      amendment dated April 14, 2005, CHC subdivided each issued and unissued
      Class A Subordinate Voting Share, Class B Multiple Voting Share and
      Ordinary Share into two shares of each such class. Our Class A Subordinate
      Voting Shares and our Class B Multiple Voting Shares participate equally in
      the payment of dividends if and when declared by our Board of Directors. The
      Ordinary Shares are entitled to dividends equivalent on a per share basis to
      any
      dividend paid on our Class A Subordinate Voting Shares and Class B
      Multiple Voting Shares, subject to prior minority shareholder approval.
      Class A Subordinate Voting Shares carry the right to one vote per share,
      our Class B Multiple Voting Shares carry the right to 10 votes per share,
      and our Ordinary Shares carry the right to one vote per 10 shares. Our Ordinary
      Shares are also redeemable at the option of the Company at the subscription
      price thereof in certain circumstances. We also have the right, subject to
      the
      approval of the TSX, to purchase the Ordinary Shares at their fair market value.
      Our Class A Subordinate Voting Shares, our Class B Multiple Voting
      Shares and our Ordinary Shares share equally on a share for share basis in
      the
      property and assets of the Company upon liquidation or winding up.




The
      First Preferred Shares rank prior to the Second Preferred Shares, the
      Class B Multiple Voting Shares, the Class A Subordinate Voting Shares
      and the Ordinary Shares and any other shares ranking junior to the First
      Preferred Shares with respect to the payment of dividends and distribution
      of
      assets in the event of the liquidation, dissolution or winding-up of the
      Corporation. The Second Preferred Shares rank prior to the Class B Multiple
      Voting Shares, the Class A Subordinate Voting Shares and the Ordinary
      Shares and any other shares ranking junior to the Second Preferred Shares with
      respect to the payment of dividends and distribution of assets in the event
      of
      the liquidation, dissolution or winding-up of the Corporation.




Other
      than as described above, the rights, privileges, restrictions and conditions
      attaching to the First Preferred Shares and the Second Preferred Shares, as
      classes, are identical. Except as required by law, the holders of the First
      Preferred Shares and the Second Preferred Shares, as classes, are not entitled
      to vote at any meeting of shareholders of the Corporation.




If
      an
      offer is made to purchase Class B Multiple Voting Shares such that under
      the take-over bid provisions of applicable securities legislation, the same
      offer must be made to all or substantially all holders of Class B Multiple
      Voting Shares who are in a Canadian province or territory to which the
      requirements apply and the offeror does not concurrently make an identical
      offer
      to purchase the Class A Subordinate Voting Shares, then each outstanding
      Class A Subordinate Voting Share may be converted into a Class B
      Multiple Voting Share at the option of the holder thereof and sold pursuant
      to
      the offer for the Class B Multiple Voting Shares, except in certain
      circumstances. At any time, a holder of Class B Multiple Voting Shares may
      convert such shares into Class A Subordinate Voting Shares on a one-for-one
      basis.




Generally,
      the articles of our Company would have to be amended to change the rights
      attached to the Company's shares. Such an amendment would have to be approved
      by
      shareholders of the Company by a majority of two-thirds of the votes cast.
      Certain amendments to the articles, such as an amendment that would change
      the
      rights attached to a class of shares, would require that the amendment be
      approved by a majority of two-thirds of the votes cast by holders of that class
      voting separately as a class.




91







Under
      the Company's by-laws, the annual meeting of shareholders shall be held on
      such
      date and time as the Board, or the Chairman of the Board, or the President
      in
      the absence of the Chairman of the Board, may from time to time determine.
      The
      Board shall also have the power to call a special meeting of shareholders at
      any
      time. The only persons entitled to be present at a meeting of shareholders
      are
      those persons entitled to vote at such meetings, the directors and auditors
      of
      the Company and any others who are entitled or required under any provisions
      of
      the Canada Business Corporation Act, the articles or by-laws of the Company
      to
      be present at the meeting. Any other person may be admitted to the shareholder
      meeting only on the invitation of the Chairman of the meeting or with consent
      of
      the meeting.




For
      purposes of complying with the Canada Transportation Act, the Articles include
      a
      provision that allows the directors of the Company to refuse to permit
      registration of any transfer or transfers of voting shares of the Company if
      such transfer would result in persons other than Canadians (as defined in the
      Canada Transportation Act) owning or controlling more than 25% of (a) the
      outstanding voting shares of the Company or (b) the votes attached to all
      outstanding voting shares of the Company.




**TAXATION**




The
      following discussion is a summary of the principal Canadian federal income
      tax
      considerations generally applicable under the Income Tax Act (Canada) (the
      "Canadian Act") to holders of Class A Subordinate Voting Shares who, at all
      relevant times, for purposes of the Canadian Act, deal at arm’s length with us,
      are not resident or deemed to be resident in Canada at any time, hold the
      Class A Subordinate Voting Shares as capital property, do not hold or use,
      and are not deemed to hold or use, Class A Subordinate Voting Shares in
      connection with a trade or business carried on, or deemed to be carried on,
      in
      Canada, and in the case of insurers who carry on an insurance business in Canada
      and elsewhere, do not hold Class A Subordinate Voting Shares that are
      "designated insurance property" as defined in the Canadian Act or that are
      effectively connected with an insurance business carried on in Canada (the
      "Holders"). Certain persons who carry on, or are deemed to carry on, business
      in
      Canada, including certain financial institutions, registered securities dealers
      and corporations controlled by one or more of the foregoing, will generally
      be
      precluded from treating Class A Subordinate Voting Shares as capital
      property under the Canadian Act.




This
      summary is based on the current provisions of the Canadian Act, the regulations
      thereunder in force as of the date of this Annual Report, specific proposals
      (the "Tax Proposals") to amend the Canadian Act or the regulations thereunder
      publicly announced by the Minister of Finance in Canada prior to the date of
      this Annual Report, the current provisions of the Canada-United States Income
      Tax Convention (1980) (the "Treaty"), and on the current administrative
      practices and policies published by the Canada Revenue Agency. This summary
      is
      not exhaustive of all possible Canadian federal income tax consequences and
      does
      not, apart from the Tax Proposals, take into account or anticipate any changes
      in law, whether by legislative, governmental or judicial action, nor does it
      take into account income tax laws or considerations of any province or territory
      of Canada or any jurisdiction other than Canada. Prospective investors and
      holders of subordinate voting shares are urged to consult their own tax advisors
      with respect to the Canadian federal income tax consequences set forth below
      and
      any other federal, provincial, state, local or foreign tax consequences to
      them
      of holding and disposing of subordinate voting shares.




**Disposition
      of a Class A Subordinate Voting Share**




A
      Holder who disposes of a Class A Subordinate Voting Share will not be
      subject to tax pursuant to the Canadian Act on a capital gain realized on the
      disposition unless the Class A Subordinate Voting Share is "taxable
      Canadian property" of the Holder within the meaning of the Canadian Act and
      no
      relief is afforded under any applicable tax treaty. Class A Subordinate
      Voting Shares will generally not be taxable Canadian property to a Holder
      provided such Class A Subordinate Voting Share is listed on a prescribed
      stock exchange within the meaning of the Canadian Act on the date of
      disposition, and provided such Holder, or persons with whom such Holder did
      not
      deal at arm’s length (within the meaning of the Canadian Act), or any
      combination thereof, did not own or have an option or right to acquire 25%
      or
      more of the issued shares of any class or series of the Company at any time
      within five years immediately preceding the date of disposition. As of the
      date of this Annual Report, the Class A Subordinate Voting Shares are
      listed on the TSX, a prescribed stock exchange for purposes of the Canadian
      Act.
      Class A Subordinate Voting Shares may be deemed taxable Canadian property
      of a Holder who receives such Class A Subordinate Voting Shares in exchange
      for other taxable Canadian property.




92







If
      a
      Class A Subordinate Voting Share constitutes or is deemed to constitute
      taxable Canadian property of a Holder, provided such Holder is a resident of
      the
      United States for purposes of the Treaty, the Treaty will generally exempt
      such
      a Holder from Canadian tax in respect of the disposition of a Class A
      Subordinate Voting Share provided its value is not derived principally from
      real
      property (including resource property) situated in Canada. This relief under
      the
      Treaty may not be available to a Holder who had a permanent establishment or
      fixed base available to such Holder in Canada during the 12 months immediately
      preceding the disposition of the Class A Subordinate Voting
      Share.




**Dividends**




Any
      dividends (including stock dividends) paid or credited, or deemed under the
      Canadian Act to be paid or credited, on Class A Subordinate Voting Shares
      will be subject to Canadian withholding tax under the Canadian Act at the rate
      of 25% on the gross amount of the dividends. Generally, the rate of this
      withholding tax will be reduced under applicable tax treaties. In the case
      of
      dividends paid to a Holder who is a resident of the United States and beneficial
      owner of such dividends for purposes of the Treaty, the Canadian withholding
      tax
      rate is generally 15%.




**THE
      FOREGOING DISCUSSION OF CANADIAN FEDERAL INCOME TAXATION IS OF A GENERAL AND
      SUMMARY NATURE ONLY AND IS NOT INTENDED TO BE, NOR SHOULD IT BE CONSTRUED TO
      BE,
      LEGAL OR TAX ADVICE TO ANY PARTICULAR HOLDER OF SUBORDINATE VOTING SHARES.
      ACCORDINGLY, HOLDERS OF SUBORDINATE VOTING SHARES SHOULD CONSULT THEIR OWN
      TAX
      ADVISORS AS TO THE TAX CONSEQUENCES OF RECEIVING DIVIDENDS FROM US OR DISPOSING
      OF THE SUBORDINATE VOTING SHARES.**




The
      documents referenced in this Annual Report may be inspected at our head office
      at:




4740
      Agar Drive


Richmond,
      British Columbia


Canada


V7B
      1A3






ITEM
      11.QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




We
      record our transactions and prepare our financial statements in Canadian
      dollars. For the year ended April 30, 2006, we maintained operations in the
      UK, Norway, the Netherlands, South Africa, Australia and Canada, with business
      also conducted in other countries. These operations are considered financially
      and operationally self-sustaining. Accordingly, our assets and liabilities
      are
      translated into Canadian dollars at the year-end exchange rate. Revenue and
      expense items are translated into Canadian dollars at the average annual
      exchange rate. Because many of our revenues and expenses occur in currencies
      other than Canadian dollars, we are exposed to exchange rate and currency
      risks.




To
      perform sensitivity analysis, we assess the risk of loss in fair values due
      to
      the impact of hypothetical changes in interest rates and foreign currency
      exchange rates on market-sensitive instruments. Information provided by the
      analysis does not necessarily represent the actual changes in fair value that
      we
      would incur under normal market conditions because, of necessity, all variables
      other than the specific market risk factor are held constant. The results of
      sensitivity analysis at April 30, 2006 follow.




93







**FOREIGN
      CURRENCY EXCHANGE RATE RISK**




A
      10%
      change in the exchange rate of the US dollar, euro and pound sterling against
      the Canadian dollar, with all other variables remaining constant, would have
      resulted in a $57.5 million change in the fair market value of our
      long-term debt at April 30, 2006. Our euro and pound sterling debt are
      designated as hedges of our net investments in foreign operations in the UK
      and
      the Netherlands. A portion of our US debt has been designated as a hedge of
      our
      net investment in our Vancouver, Canada-based International operating unit.
      The
      remainder has been converted to euro, pound sterling and Norwegian kroner via
      forward foreign exchange agreements and has been designated as hedges of our
      net
      investments in our euro, pound sterling and Norwegian kroner functional
      operating units. As a result, gains and losses on this debt are offset against
      foreign currency translation adjustments on our net investment in foreign
      operations that are deferred as a separate component of shareholders' equity
      under Canadian GAAP. Under US GAAP, the related translation adjustments and
      the
      foreign currency translation gains and losses of the debt designated as a hedge
      are included in the determination of comprehensive earnings. If the debt were
      not designated as a hedge of our net investment, the impact of a change in
      foreign currency rates would directly impact the current year’s earnings under
      both Canadian and US GAAP. A 1% movement in the foreign currency rates of our
      three major operating currencies (the pound sterling, the Norwegian kroner
      and
      the U.S dollar) against the Canadian dollar would have resulted in a
      $0.3 million change in net earnings from our self-sustaining foreign
      subsidiaries upon the translation of their income statement from their reporting
      currencies to Canadian dollars for the year ended April 30,
      2006.




**INTEREST
      RATE RISK**




We
      are
      also exposed to market risk from changes in interest rates, related primarily
      to
      variable interest rates on long-term debt and on certain helicopter lease
      agreements. During the year ended April 30, 2001, we entered into an
      interest rate swap agreement to fix the interest costs on £40.0 million of
      our senior credit facilities. We terminated this agreement late in fiscal 2004.
      A 1% change in variable interest rates on long-term debt, with all other
      variables remaining constant, would result in a $1.4 million change in
      interest expense for the year ended April 30, 2006. Such a change in
      interest rates would not have a material impact on the fair value of the related
      long-term debt. A 1% change in variable interest rates on our helicopter lease
      agreements, with all other variables remaining constant, would result in a
      $5.0 million change in lease expense for the year ended April 30,
      2006.




**EQUITY
      PRICE RISK**




As
      of
      April 30, 2006, we were not exposed to material market risk from changes in
      the market value of long-term investments, as we did not hold any significant
      publicly traded long-term investments.






ITEM
      12.DESCRIPTION
      OF SECURITIES OTHER THAN EQUITY SECURITIES




Not
      applicable.







94




**PART
      II**






ITEM
      13.DEFAULTS,
      DIVIDEND ARREARAGES AND DELINQUENCIES




None.






ITEM
      14.MATERIAL
      MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
      PROCEEDS




None.






ITEM
      15.CONTROLS
      AND PROCEDURES




As
      of
      April 30, 2006, an evaluation was performed under the supervision and with
      the participation of the Company’s management, including the CEO and CFO, of the
      effectiveness of the design and operation of the Company’s disclosure controls
      and procedures. Based on that evaluation, the Company’s management, including
      the CEO and CFO, concluded that the Company’s disclosure controls and procedures
      were effective as of April 30, 2006. During the annual period covered by
      this Form 20-F, there have been no changes in our internal control over
      financial reporting that have materially affected, or are reasonably likely
      to
      materially affect, our internal control over financial reporting. There have
      been no significant changes in the Company’s internal controls or in other
      factors that could significantly affect internal controls subsequent to
      April 30, 2006.






ITEM
      16A.AUDIT
      COMMITTEE FINANCIAL EXPERT




CHC’s
      Board of Directors has determined that the Chairman of the Audit Committee,
      Dr.
      Jack Mintz, qualifies as an “audit committee financial expert” and that Dr.
      Mintz is independent under the listing standards of the New York Stock
      Exchange.






ITEM
      16B.CODE
      OF
      ETHICS




The
      Corporation amended its Code of Ethics and Business Conduct during fiscal 2004
      to reflect SEC rules and New York Stock Exchange corporate governance listing
      standards. Our Code of Ethics and Business Conduct applies to our directors,
      officers and employees worldwide, including our principal executive officer,
      principal financial officer, principal accounting officer or persons performing
      similar functions. There have been no waivers of our Code of Ethics and Business
      Conduct granted to our principal executive officer, principal financial officer,
      principal accounting officer or controller, or similar persons during the period
      covered by this report. A copy of our Code of Ethics and Business Conduct is
      available on our website at *www.chc.ca* and in
      print from us upon request.




95









ITEM
      16C.PRINCIPAL
      ACCOUNTANT FEES AND SERVICES




For
      the
      years ended April 30, 2006 and 2005, amounts approved by the Audit
      Committee and paid by us in connection with services provided by our auditors,
      Ernst & Young, LLP (“E&Y”), were as follows:







2006
            
            
            2005($ millions)Audit
                Fees
            
            $
            2.4
            
            $
            1.7Audit-Related
                Fees
            
            
            0.1
            
            
            0.1Tax
                Fees
            
            
            0.9
            
            
            1.0All
                Other Fees
            
            
            -
            
            
            0.1Total
            
            $
            3.4
            
            $
            2.9







Audit
      Fees - consists of fees charged for the work necessary for the external auditor
      to render an opinion on our consolidated financial statements and the financial
      statements of our subsidiaries. In both fiscal 2005 and 2006 audit services
      consisted of services provided by E&Y in connection with expressing an
      opinion on our consolidated financial statements and also on the financial
      statements of our subsidiaries in jurisdictions where such audits are required
      by companies legislation or where such audits are required under other
      agreements. In both fiscal 2005 and 2006 fees for audit services also included
      amounts paid in connection with the review of our interim financial statements.
      In 2005 fees for audit services also included amounts related to the provision
      of comfort letters, consents and comment letters in connection with our issue
      of
      U.S. $150 million senior subordinated notes.




Audit-Related
      Fees - consists primarily of fees for assurance and related services that are
      reasonably related to the performance of the audit of our financial
      statements.




Tax
      Fees - consists of fees paid in connection with tax compliance, tax planning,
      tax outsourcing, and tax advice provided to us and our subsidiaries. Tax
      services in both years include fees paid to E&Y in connection with ongoing
      tax planning and other initiatives being considered by us.




All
      Other Fees - includes fees for services that are not audit, audit-related,
      or
      tax services, but which are not prohibited services. In 2006, this included
      fees
      in connection with legal entity restructuring, SOX compliance, French
      translation services, and certain other administrative services.




The
      Audit Committee has considered whether the provision of services other than
      audit services is compatible with maintaining the auditors’ independence and
      concluded that the level of services provided during 2006 would not impact
      the
      independence of the auditors. The Audit Committee has adopted a policy that
      prohibits us from engaging the auditors for “prohibited” categories of non-audit
      services and requires pre-approval of the Audit Committee for other permissible
      categories of non-audit services, such categories as determined by SEC rules.
      To
      facilitate the pre-approval of audit and non-audit services between meetings
      of
      the Committee, the Audit Committee has detailed procedures that permit this
      responsibility to be delegated to the Chair of the Committee, who will present
      any amounts pre-approved at the next meeting of the Committee for
      ratification.






ITEM
      16D.EXEMPTIONS
      FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES




Not
      applicable.






ITEM
      16E.PURCHASE
      OF EQUITY SECURITIES BY ISSUER AND AFFILIATED PURCHASERS




Not
      applicable.







96


**PART
      III**






ITEM
      17.FINANCIAL
      STATEMENTS




Not
      applicable.






ITEM
      18.FINANCIAL
      STATEMENTS




The
      financial statements and supplementary information required to be filed under
      this item are presented on pages 133 through 195 of this Annual Report on Form
      20-F, and are incorporated herein by reference. Such financial statements and
      supplementary information supersede the financial statements contained in
      Exhibit 99.2 to the Company’s report on Form 6-K, furnished on
      August 8, 2006.









**Contents**
            **Page**AUDITORS’
                REPORT
            98CONSOLIDATED
                BALANCE SHEETS
            99CONSOLIDATED
                STATEMENTS OF EARNINGS
            100CONSOLIDATED
                STATEMENTS OF SHAREHOLDERS’ EQUITY
            101CONSOLIDATED
                STATEMENTS OF CASH FLOWS
            102NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS
            103







97


**AUDITORS’
      REPORT**




To
      the
      Directors of CHC Helicopter Corporation




We
      have
      audited the consolidated balance sheets of CHC Helicopter Corporation as at
      April 30, 2006 and 2005 and the consolidated statements of earnings,
      shareholders’ equity and cash flows for each of the years in the three year
      period ended April 30, 2006. These financial statements are the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these financial statements based on our audits.




We
      conducted our audits in accordance with Canadian generally accepted auditing
      standards and the standards of the Public Company Accounting Oversight Board
      (United States). Those standards require that we plan and perform an audit
      to
      obtain reasonable assurance whether the financial statements are free of
      material misstatement. We were not engaged to perform an audit of the Company’s
      internal control over financial reporting. Our audits included consideration
      of
      internal control over financial reporting as a basis for designing audit
      procedures that are appropriate in the circumstances, but not for the purpose
      of
      expressing an opinion on the effectiveness of the Company's internal controls
      over financial reporting. Accordingly we express no such opinion. An audit
      also
      includes examining, on a test basis, evidence supporting the amounts and
      disclosures in the financial statements, assessing the accounting principles
      used and significant estimates made by management, and evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.




In
      our
      opinion, these consolidated financial statements present fairly, in all material
      respects, the financial position of the Company as at April 30, 2006 and
      2005 and the results of its operations and its cash flows for each of the years
      in the three year period ended April 30, 2006 in conformity with Canadian
      generally accepted accounting principles.




The
      consolidated financial statements as at April 30, 2005 and for the years
      ended April 30, 2005 and 2004 have been restated as disclosed in
      Note 3.







Chartered
      Accountants


Vancouver,
      Canada


July 12,
      2006 (except for Note 33 which is as at September 15,
      2006)


98


CHC
      Helicopter Corporation CONSOLIDATED
      BALANCE SHEETS


As
      at April 30 (in
      thousands of Canadian dollars)


Incorporated
      under
      the laws of Canada




**2006**
            
            
            2005
              *(Restated
                Note 4*
            *)***Assets*****(Note
                13)***Current
                assetsCash
                and cash equivalents*(Note 7)*
            
            **$**
            **26,331**
            
            $
            51,391Receivables
            
            
            **241,593**
            
            
            222,265Future
                income tax assets*(Note 22)*
            
            
            **26,859**
            
            
            28,110Inventory
            
            
            **92,522**
            
            
            66,483Prepaid
                expenses
            
            
            **10,729**
            
            
            8,389**398,034**
            
            
            376,638Property
                and equipment, net*(Note
                8)*
            
            
            **926,084**
            
            
            943,206Investments*(Note
                9)*
            
            
            **5,422**
            
            
            58,806Intangible
                assets*(Note
                10)*
            
            
            **4,806**
            
            
            6,499Goodwill
            
            
            **7,803**
            
            
            8,861Other
                assets*(Note
                11)*
            
            
            **296,352**
            
            
            235,016Future
                income tax assets*(Note 22)*
            
            
            **39,848**
            
            
            57,674**$**
            **1,678,349**
            
            $
            1,686,700**Liabilities
                and shareholders’ equity**Current
                liabilitiesPayables
                and
                accruals
            
            **$**
            **221,861**
            
            $
            229,925Deferred
                revenue
            
            
            **2,608**
            
            
            3,180Dividends
                payable
            
            
            **8,548**
            
            
            6,404Income
                taxes payable
            
            
            **8,361**
            
            
            25,126Future
                income tax liabilities*(Note
                22)*
            
            
            **8,852**
            
            
            705Current
                portion of debt obligations*(Note
                13(a))*
            
            
            **25,694**
            
            
            26,812**275,924**
            
            
            292,152Long-term
                debt*(Note
                13(a))*
            
            
            **151,139**
            
            
            97,543Senior
                subordinated notes*(Note
                13(b))*
            
            
            **448,120**
            
            
            502,760Other
                liabilities*(Note
                16)*
            
            
            **132,431**
            
            
            128,712Future
                income tax liabilities*(Note
                22)*
            
            
            **180,001**
            
            
            205,385**Shareholders’
                equity**
            
            
            **490,734**
            
            
            460,148**$**
            **1,678,349**
            
            $
            1,686,700







Commitments,
      Guarantees, and Contingencies *(Notes 13,
      26, 28 and 29)*




On
      behalf of the Board:







dobbinsig
            mintzsigCraig
                L. Dobbin, O.C.
              Director
            Jack
                M. Mintz, Ph.D.
              Director


See
      accompanying notes




99







CHC
      Helicopter Corporation


CONSOLIDATED
      STATEMENTS OF EARNINGS


Year
      ended April 30
      (in thousands of Canadian dollars, except per share amounts)




**2006**
            
            
            2005
              *(Restated
                Note 4*
            *)*
            
            2004
              *(Restated
                Note 4*
            *)***Revenue**
            
            **$**
            **1,011,527**
            
            $
            967,163
            
            $
            771,456Direct
                costs
            
            
            **(797,355**
            **)**
            
            (742,121
            )
            
            (620,279
            )General
                and administration costs
            
            
            **(27,895**
            **)**
            
            (35,279
            )
            
            (18,633
            )Amortization
            
            
            **(58,652**
            **)**
            
            (53,099
            )
            
            (38,536
            )Restructuring
                costs*(Note
                14)*
            
            
            **(16,345**
            **)**
            
            (17,589
            )
            
            (9,181
            )Gain
                on disposals of assets
            
            
            **238**
            
            
            4,104
            
            
            3,307Fair
                value adjustment*(Note
                6)*
            
            
            **-**
            
            
            (14,260
            )
            
            -**Operating
                income**
            
            
            **111,518**
            
            
            108,919
            
            
            88,134Debt
                settlement costs*(Note
                15)*
            
            
            **-**
            
            
            (2,017
            )
            
            (19,716
            )Financing
                charges*(Note
                13(d))*
            
            
            **(53,990**
            **)**
            
            (38,309
            )
            
            (29,824
            )**Earnings
                from continuing operations before income taxes and undernoted
                items**
            
            
            **57,528**
            
            
            68,593
            
            
            38,594Non-controlling
                interest
            
            
            **(66**
            **)**
            
            (288
            )
            
            -Gain
                on sale of long-term investments*(Note
                9)*
            
            
            **37,558**
            
            
            -
            
            
            -Equity
                in earnings of associated companies
            
            
            **6,630**
            
            
            5,480
            
            
            3,925Income
                tax (provision) recovery*(Note
                22)*
            
            
            **(10,940**
            **)**
            
            (27,566
            )
            
            9,703**Net
                earnings from continuing operations**
            
            
            **90,710**
            
            
            46,219
            
            
            52,222Net
                earnings (loss) from discontinued operations*(Note
                6)*
            
            
            **-**
            
            
            10,300
            
            
            (321
            )**Net
                earnings**
            
            **$**
            **90,710**
            
            $
            56,519
            
            $
            51,901Earnings
                per share*(Note
                23)*BasicNet
                earnings from continuing operations
            
            **$**
            **2.16**
            
            $
            1.10
            
            $
            1.26Net
                earnings (loss) from discontinued operations
            
            
            **-**
            
            
            0.25
            
            
            (0.01
            )Net
                earnings
            
            
            **2.16**
            
            
            1.35
            
            
            1.25DilutedNet
                earnings from continuing operations
            
            **$**
            **1.97**
            
            $
            1.01
            
            $
            1.16Net
                earnings (loss) from discontinued operations
            
            
            **-**
            
            
            0.22
            
            
            (0.01
            )Net
                earnings
            
            
            **1.97**
            
            
            1.23
            
            
            1.15




See
      accompanying notes




100


CHC
      Helicopter Corporation


CONSOLIDATED
      STATEMENTS OF SHAREHOLDERS’ EQUITY


Year
      ended April 30
      (in thousands of Canadian dollars, except per share amounts)




**2006**
            
            
            2005
              *(Restated
                Note 4*
            *)*
            
            2004
              *(Restated
                Note 4*
            *)***Retained
                earnings, beginning of year as originally stated**
            
            **$**
            **279,620**
            
            $
            229,866
            
            $
            176,676Restatements*(Note
                3)*
            
            
            **(40,766**
            **)**
            
            (34,726
            )
            
            (22,951
            )**Retained
                earnings, beginning of year as restated**
            
            
            **238,854**
            
            
            195,140
            
            
            153,725Net
                earnings
            
            
            **90,710**
            
            
            56,519
            
            
            51,901Dividends
            
            
            **(17,083**
            **)**
            
            (12,805
            )
            
            (10,486
            )**Retained
                earnings, end of year**
            
            
            **312,481**
            
            
            238,854
            
            
            195,140Capital
                stock*(Note
                17)*
            
            
            **240,152**
            
            
            239,469
            
            
            238,428Contributed
                surplus*(Note
                17)*
            
            
            **4,363**
            
            
            3,291
            
            
            3,291Foreign
                currency translation adjustment*(Note
                20)*
            
            
            **(66,262**
            **)**
            
            (21,466
            )
            
            (17,605
            )**Total
                shareholders’ equity**
            
            **$**
            **490,734**
            
            $
            460,148
            
            $
            419,254**Dividends
                declared per participating voting share**
            
            **$**
            **0.40**
            
            $
            0.30
            
            $
            0.25




See
      accompanying notes




101


CHC
      Helicopter Corporation CONSOLIDATED
      STATEMENTS OF CASH FLOWS


Year
      ended April 30
      (in thousands of Canadian dollars)




**2006**
            
            
            2005
              *(Restated
                Note 4*
            *)*
            
            2004
              *(Restated
                Note 4*
            *)***Operating
                activities**Net
                earnings from continuing operations
            
            **$**
            **90,710**
            
            $
            46,219
            
            $
            52,222Non-operating
                items and items not involving cash:Amortization
            
            
            **58,652**
            
            
            53,099
            
            
            38,536Fair
                value adjustment
            
            
            **-**
            
            
            14,260
            
            
            -Gain
                on
                disposals of assets and long-term investments
            
            
            **(37,796**
            **)**
            
            (4,104
            )
            
            (3,307
            )Equity
                earnings of associated companies
            
            
            **(6,630**
            **)**
            
            (5,480
            )
            
            (3,925
            )Defined
                benefit pension plans
            
            
            **(2,015**
            **)**
            
            (13,280
            )
            
            (3,462
            )Future
                income taxes
            
            
            **4,550**
            
            
            19,010
            
            
            (21,002
            )Non-cash
                financing charges
            
            
            **1,503**
            
            
            1,794
            
            
            4,087Debt
                settlement costs
            
            
            **-**
            
            
            2,017
            
            
            19,716Deferred
                revenue
            
            
            **6,083**
            
            
            (6,618
            )
            
            1,096Amortization
                of
                contract credits and deferred gains
            
            
            **(15,616**
            **)**
            
            (14,103
            )
            
            (5,405
            )Amortization
                of
                advance aircraft rental payments
            
            
            **2,177**
            
            
            3,285
            
            
            1,737Other
            
            
            **(6,190**
            **)**
            
            (3,987
            )
            
            7,072**95,428**
            
            
            92,112
            
            
            87,365Change
                in non-cash working capital*(Note
                24)*
            
            
            **(56,093**
            **)**
            
            22,087
            
            
            (159
            )Cash
                flow from operations
            
            
            **39,335**
            
            
            114,199
            
            
            87,206**Financing
                activities**Long-term
                debt proceeds
            
            
            **595,499**
            
            
            384,684
            
            
            496,862Long-term
                debt repayments
            
            
            **(498,600**
            **)**
            
            (243,582
            )
            
            (342,001
            )Dividends
                paid
            
            
            **(14,939**
            **)**
            
            (11,596
            )
            
            (5,291
            )Capital
                stock issued
            
            
            **496**
            
            
            907
            
            
            1,428Deferred
                financing costs
            
            
            **-**
            
            
            (5,598
            )
            
            (13,200
            )Debt
                settlement
            
            
            **-**
            
            
            (1,765
            )
            
            (37,883
            )Other
            
            
            **(6,888**
            **)**
            
            (125
            )
            
            1,861**75,568**
            
            
            122,925
            
            
            101,776**Investing
                activities**Property
                and equipment additions
            
            
            **(283,562**
            **)**
            
            (236,013
            )
            
            (161,320
            )Helicopter
                major inspections
            
            
            **(23,612**
            **)**
            
            (15,539
            )
            
            (9,237
            )Proceeds
                from disposal of assets and long-term investments
            
            
            **315,044**
            
            
            90,940
            
            
            126,898Aircraft
                deposits
            
            
            **(124,990**
            **)**
            
            (52,983
            )
            
            (23,574
            )Restricted
                cash
            
            
            **(5,565**
            **)**
            
            (5,323
            )
            
            (9,826
            )Advances
                to BHS - Brazilian Helicopter Services Taxi Aereo Ltda.
                ("BHS")
            
            
            **(3,892**
            **)**
            
            -
            
            
            -Investments
                in subsidiaries, net of cash acquired
            
            
            **(1,123**
            **)**
            
            (17,984
            )
            
            (97,540
            )Prepaid
                aircraft rental
            
            
            **(3,630**
            **)**
            
            (10,798
            )
            
            (14,335
            )Other
            
            
            **2,088**
            
            
            (7,105
            )
            
            3,019**(129,242**
            **)**
            
            (254,805
            )
            
            (185,915
            )Effect
                of exchange rate changes on cash and cash equivalents
            
            
            **(10,721**
            **)**
            
            (3,821
            )
            
            1,747Cash
                (used in) provided by continuing operations
            
            
            **(25,060**
            **)**
            
            (21,502
            )
            
            4,814Cash
                provided by (used in) discontinued operations*(Note
                6)*
            
            
            **-**
            
            
            11,814
            
            
            (1,839
            )Change
                in cash and cash equivalents during the year
            
            
            **(25,060**
            **)**
            
            (9,688
            )
            
            2,975**Cash
                and cash equivalents, beginning of year**
            
            
            **51,391**
            
            
            61,079
            
            
            58,104**Cash
                and cash equivalents, end of year**
            
            **$**
            **26,331**
            
            $
            51,391
            
            $
            61,079




See
      accompanying notes *(Supplemental
      cash flow information, Note 19)*




102


CHC
      Helicopter Corporation


NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)





**1.**
            **DESCRIPTION
                OF THE BUSINESS**




CHC
      Helicopter Corporation (“CHC”) is a leading provider of helicopter
      transportation services to the global oil and gas industry. CHC currently
      operates in over 30 countries, with major operating units in Europe (Norway,
      the
      Netherlands and the United Kingdom), South Africa, Australia and Canada. CHC
      principally provides helicopter transportation services to the oil and gas
      industry for production and exploration activities as well as emergency medical
      and search and rescue services. The Company also provides repair and overhaul
      and other helicopter support services including aircraft leasing, parts sales
      and distribution and inventory management.




**2.**
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING
                POLICIES**




*Basis
      of presentation*




The
      consolidated financial statements (“financial statements”) include the accounts
      of CHC Helicopter Corporation and its directly and indirectly controlled
      subsidiaries (collectively, the “Company”). All inter-company transactions and
      balances have been eliminated upon consolidation. The consolidated financial
      statements have been prepared by management in accordance with Canadian
      generally accepted accounting principles (“Canadian GAAP”) and are in accordance
      with generally accepted accounting principles in the United States (“US
      GAAP”) except as described in Note 32.




In
      the
      opinion of management, all adjustments necessary for a fair presentation are
      reflected in the financial statements.




Certain
      prior period amounts have been reclassified to conform to the current period’s
      presentation. The most significant changes are as a result of certain
      restatements as outlined in Note 3, the reclassification of CHC Composites
      Inc. (“Composites”) to continuing operations outlined in Note 6 and the
      restructuring of the Company’s segments as outlined in
      Note 25.




*Foreign
      currency translation*




Balance
      sheet and income statement transactions denominated in other than the functional
      currency of the operating divisions are translated into the divisions’
functional currency at the rate of exchange at the beginning of the month in
      which the transaction occurred except for material transactions which are
      translated at the spot foreign exchange rate. At each balance sheet date foreign
      currency denominated monetary assets and liabilities are revalued at the foreign
      exchange rate in effect at such date.




The
      Company’s foreign subsidiaries are financially and operationally
      self-sustaining. Accordingly, the current rate method is used for the
      translation of their financial statements to Canadian dollars upon
      consolidation. Under this method, the assets and liabilities of these
      subsidiaries are translated at the rate of exchange in effect at the balance
      sheet date. Revenue and expense items are translated at the average exchange
      rate in effect during the period. Exchange gains or losses arising from the
      current rate method of translation are deferred in a separate component of
      shareholders’ equity. Such gains or losses are included in the determination of
      net earnings when there is a reduction in the net investment in the foreign
      subsidiary as a result of a dilution or sale of part or all of the Company’s
      interest in the foreign subsidiary or as a result of capital transactions
      including dividend distributions and capital restructuring.




The
      Company has certain foreign currency denominated long-term debt that has been
      designated as effective hedges of certain of its self-sustaining foreign
      subsidiaries. Upon translation of such debt into Canadian dollars, any gains
      or
      losses are also deferred in a separate component of shareholders’ equity to be
      recognized in net earnings when there is a reduction in the net investment
      in
      the subsidiaries.




*Cash
      and cash equivalents*




Cash
      and cash equivalents consist of cash on hand, with banks and investments in
      money market instruments with original maturities of less than 90 days that
      are readily convertible to known amounts of cash and that are subject to an
      insignificant risk of a material change in value.




103


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







*Inventory*




Inventory
      consists of consumable parts and supplies relating to flying assets, which
      are
      carried at average acquisition cost, less an allowance for obsolescence, and
      are
      charged to direct costs when used in operations.




*Property
      and equipment*




Property
      and equipment includes flying assets, facilities and equipment that are
      amortized over their estimated useful lives under the following
      methods:




(a)
            *Flying
                assets*




*(i)*
            *Aircraft,
                components and spares are recorded at cost and are amortized to their
                estimated residual value on a straight-line basis to amortization
                expense
                over their estimated service life of 15-25 years. At pre-determined
                intervals, as specified by the original manufacturer and aviation
                regulatory authorities, airframes require major inspections. The
                cost of
                these major airframe inspections and modifications for both owned
                and
                leased aircraft is capitalized and amortized to amortization expense
                over
                the lesser of their estimated useful life and remaining lease term, if
                applicable.*




*(ii)*
            *Repairable
                parts are recorded at cost and are amortized to their estimated residual
                value on a declining balance basis. When components are retired or
                otherwise disposed of in the ordinary course of business, their original
                cost, net of salvage or sale proceeds, is charged to accumulated
                amortization and cost.*




(b)
            *Facilities
                and equipment*




Facilities
      are composed of hangars, heliports and other buildings housing base operations
      and administrative support. Equipment includes training, repair and overhaul,
      manufacturing and base equipment and vehicles. Such facilities and equipment
      are
      recorded at cost and are amortized to their estimated residual value on a
      declining balance basis at 5% and 20%, respectively. Leasehold improvements
      associated with leased facilities and equipment are capitalized and amortized
      on
      a straight-line basis over the respective lease term.




*Investments*




Long-term
      investments through which the Company exerts significant influence over the
      investee are accounted for by the equity method. Under this method, the
      investment is initially recorded at cost and the carrying value is adjusted
      thereafter to include the Company’s pro-rata share of post acquisition earnings
      of the investee. All other long-term investments are carried at cost and income
      on these investments is recognized only to the extent of dividends received.
      When there has been a decline in the value of an investment that is other than
      temporary, the investment is written down to estimated net realizable
      value.




*Joint
      ventures*




Joint
      ventures are accounted for using the proportionate consolidation method in
      which
      the Company includes the proportionate share of revenues, expenses, assets
      and
      liabilities of the joint venture in the financial statements.




*Intangible
      assets*




The
      Company amortizes its intangible assets on a straight-line basis over their
      estimated useful lives ranging from 4 to 10 years. Intangible
      assets are reviewed for valuation on an annual basis. When events and
      circumstances indicate that carrying amounts may not be recoverable, a writedown
      to fair value is charged to income in the period that such a determination
      is
      made.




*Goodwill*




Goodwill
      represents the excess of the cost of investments in subsidiaries over the fair
      value of the net identifiable assets acquired. The Company reviews the goodwill
      of all its reporting units on at least an annual basis to ensure its fair value
      is in excess of its carrying value. Any impairment in the value of goodwill
      is
      charged to income in the period such impairment is determined.




104


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







*Deferred
      financing costs*




Costs
      incurred in connection with securing debt financing have been deferred and
      are
      amortized over the terms of the related debt.




*Pre-operating
      expenses*




The
      Company defers expenses net of incremental revenues related to the operations
      of
      new businesses and customer contracts in the period prior to the new business
      or
      contract being capable of consistently providing its intended product and/or
      service. Deferral occurs where the expenses are related directly to placing
      the
      new business or new contract into commercial service, are incremental in nature
      and are considered by the Company to be recoverable from the future operations
      and conditions of the new business or contract. Deferral ceases at the earlier
      of the achievement of a specified commercial activity level, the passage of
      a
      specified period of time or at the start of the new contract. Amortization
      of
      the deferred expenses related to the operations of new businesses is based
      on
      their expected period of benefit, not exceeding five years. Amortization of
      deferred expenses related to new contracts is amortized over the contract term.
      The Company periodically evaluates the recoverability of the deferred expenses
      from future cash flows from operations to determine whether any writedown of
      such deferred expenses to net recoverable amounts is required.




*Impairment
      of long-lived assets*




The
      Company recognizes an impairment loss on long-lived assets when their carrying
      value exceeds the total expected undiscounted cash flows from their use or
      disposition. The Company’s long-lived assets are tested for impairment when an
      event or change in circumstances indicates that their carrying value may not
      be
      recoverable.




*Lease
      aircraft return costs*




Lease
      aircraft return costs may arise under the terms of the Company’s lease
      agreements, which require that an aircraft be returned with its major components
      in a specified condition. Lease return obligations estimated to be payable
      on
      the return of leased aircraft are accrued beginning immediately after the last
      major maintenance cycle prior to the scheduled aircraft return date based on
      the
      time remaining on the lease, planned aircraft usage and the provisions included
      in the lease agreement.




*Government
      assistance*




Government
      assistance relating to the acquisition of facilities and equipment is deferred
      and amortized over the life of the assets to which it relates. Government
      assistance relating to operations is recorded as income in the same period
      as
      the related expense.




*Revenue
      recognition*




Revenue
      from helicopter operations is recognized based on the terms of customer
      contracts that generally provide for revenue on the basis of hours flown at
      contract rates or fixed monthly charges or a combination of both.




Training
      revenue is recognized based on the terms of customer contracts that generally
      provide for revenue on the basis of training hours provided.




Revenue
      from customer owned engine and component repair and overhaul and composites
      manufacturing operations is recognized on the percentage of completion basis
      and
      is measured on the basis of the sales value of the actual costs incurred and
      work performed. Customers are usually invoiced in advance for repair and
      overhaul services performed under power-by-the-hour (“PBH”) contracts.
      Typically, a portion of this revenue is recognized on a monthly basis to reflect
      ongoing services provided, with the balance recognized when the major repair
      and
      overhaul activities are completed. Any loss on repair and overhaul and
      composites manufacturing contracts is recognized in earnings immediately when
      known.




105


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







*Maintenance
      and repair costs*




Maintenance
      and repairs for owned and leased major components, spares and repairable parts
      are charged to direct costs as incurred. Certain major aircraft components
      are
      maintained by third-party vendors under PBH contractual arrangements. The
      maintenance costs incurred in relation to PBH contracts are expensed on the
      basis of hours flown.




*Pension
      costs and obligations*




The
      Company has defined contribution and defined benefit pension plans covering
      substantially all of its employees. In valuing accrued obligations for its
      defined benefit plans, because future salary levels affect the amount of
      employee future benefits, the Company uses the projected benefit method prorated
      on service and best estimate assumptions. Pension plan assets are carried at
      fair values. For purposes of calculating the expected return on assets, the
      Company uses the fair value of the plan assets. The excess of unrecognized
      net
      actuarial gains and losses over 10% of the greater of the benefit obligation
      and
      the fair value of plan assets is amortized over the average remaining service
      life of the plan participants. Prior service costs, plan amendments and
      transition amounts are amortized on a straight-line basis over the expected
      average remaining service life of the plan participants.




*Income
      taxes*




The
      Company uses the liability method of accounting for income taxes. Under the
      liability method, future income tax assets and liabilities are determined based
      on temporary differences between the financial reporting and tax bases of assets
      and liabilities and are measured using tax rates substantively enacted at the
      balance sheet date. The effect of changes in income tax rates on future income
      tax assets and liabilities is recognized in income in the period that the change
      becomes substantively enacted.




*Earnings
      per share*




Basic
      earnings per share is based on the weighted average number of common shares
      outstanding for the year. Diluted earnings per share is computed in accordance
      with the treasury stock method and based on the weighted average number of
      common shares and dilutive common share equivalents.




*Stock-based
      compensation plans*




Effective
      May 1, 2003, for new stock option compensation awards, the Company expenses
      stock option costs using the fair value method resulting in the recording of
      compensation expense based upon grade vesting of share options.




The
      Company uses the fair value method to account for specified stock-based
      compensation awards issued under the Company’s Stock Appreciation Rights Plan
      and Performance Units Plan (“SARs”) (Note 12). Compensation expense related
      to SARs is recognized, based on grade vesting, as the amount by which the quoted
      market value of the Company’s Class A subordinate voting shares on the
      Toronto Stock Exchange (“TSX”) exceeds the value as specified under the SARs
      plans.




106


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







*Financial
      instruments*




The
      Company periodically enters into derivative financial instruments such as
      foreign forward exchange contracts and equity forward price agreements to manage
      foreign exchange risks and stock price volatility. The Company does not enter
      into derivative instruments for trading or speculative purposes. To qualify
      for
      hedge accounting the financial instrument is identified as a hedge of the item
      to which it relates and there is reasonable assurance that it is and will
      continue to be an effective hedge. The Company’s policy is to formally assess
      and document, both at the hedge’s inception and on a quarterly basis, whether
      the hedging relationships have been highly effective over the period and if
      there have been any changes in the credit risk of the counterparty. Gains and
      losses on financial instruments designated as hedges of self-sustaining foreign
      operations are recorded in the foreign currency translation adjustment in
      shareholders’ equity. Gains and losses on financial instruments designated as
      cash flow or fair value hedges are recognized in earnings in the same period
      as
      the underlying transactions. Changes in the fair value of financial instruments
      not designated in hedge relationships are recognized in earnings immediately.
      Payments and receipts under the equity forward price agreement associated with
      the hedged units granted but unvested under the Company’s SARs plans are
      recognized as a deferred gain (loss) to be recorded as an offset to the related
      expense as the units grade vest.




Gains
      or losses associated with financial instruments that have been terminated or
      cease to be effective prior to maturity are deferred and recognized in earnings
      in the period in which the underlying hedged item is recognized. In the event
      a
      designated hedged item is sold, extinguished or matures prior to termination
      of
      the related financial instrument, gains or losses on such instrument are
      recognized in earnings in the current period.




**3.**
            **RESTATEMENTS**




(a)
            Maintenance,
                classification and amortization of major components, spares and repairable
                parts




The
      Company has reviewed its accounting policies and their application relating
      to
      the maintenance, classification and amortization of major components, spares
      and
      repairable parts. As a result of this review, which identified the requirement
      to record additional amortization on these assets and other matters, the
      following restatements have been implemented retroactively:




(i)
            Maintenance,
                repair and overhaul costs incurred on major components previously
                accounted for using the built-in overhaul method (owned aircraft)
                and the
                accrual method (leased aircraft) are now expensed as incurred using
                the
                direct expense method of accounting for both owned and leased
                aircraft.




(ii)
            Repairable
                parts are now classified entirely as capital assets and amortized
                over
                their estimated useful lives.




The
      Company believes the direct expense method is preferable because it eliminates
      the judgement and estimations needed to determine capital versus expense
      allocations of maintenance activities; it results in a consistent accounting
      policy for maintenance of both owned and leased aircraft major components;
      it is
      the predominant method used in the North American aviation industry,
      particularly among companies with large fleets of aircraft; and it better aligns
      the Company’s policies with emerging guidance for the US aviation
      industry.




107


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







The
      impact of these changes on reported prior period financial statements is as
      follows:




*Consolidated
      Statements of Earnings*




Year
              Ended
            
            
            Year
              EndedApril
                30, 2005
            
            
            April
                30, 2004Direct
                costs
            
            $
            24,596
            
            $
            12,001Amortization
            
            
            (22,128
            )
            
            (12,852
            )**Operating
                income**
            
            
            2,468
            
            
            (851
            )Income
                tax provision (recovery)
            
            
            (437
            )
            
            601**Net
                earnings (loss) from continuing operations**
            
            $
            2,031
            
            $
            (250
            )**Earnings
                per share***Basic*Net
                earnings (loss) from continuing operations
            
            $
            0.05
            
            $
            (0.01
            )*Diluted*Net
                earnings (loss) from continuing operations
            
            
            0.04
            
            
            (0.01
            )




*Consolidated
      Balance Sheet*




As
                atApril
                30,
                2005**Assets**Inventory
            
            $
            (156,834
            )Property
                and equipment
            
            
            88,501$
            (68,333
            )**Liabilities
                and shareholders' equity**Deferred
                revenue
            
            
            (18,346
            )Other
                liabilities
            
            
            (17,288
            )Future
                income tax liabilities
            
            
            (11,104
            )Foreign
                currency translation adjustment
            
            
            (5,474
            )Retained
                earnings, end of year*(i)*
            
            
            (16,121
            )$
            (68,333
            )




(i)
            Previously
                reported retained earnings at May 1, 2004 and May 1, 2003 were
                reduced by $18.2 million and $17.9 million,
                respectively.





(b)
            Payroll
                and corporate taxes




The
      Company has restated certain previously issued financial information to record
      additional payroll taxes and related penalties, interest and other costs
      associated with activities in various foreign jurisdictions. As a result, net
      earnings from continuing operations for the fiscal years ended April 30,
      2005 and 2004 decreased by $3.3 million and $2.3 million,
      respectively.




In
      connection with a review of future income tax balances the Company has corrected
      certain future and current income tax balances in the fiscal year ended
      April 30, 2005 and, as a result, recorded additional income tax expenses of
      $4.8 million. In addition, the Company determined that it was necessary to
      restate certain previously issued financial information to correct a
      $21 million future income tax recovery recorded in the fiscal year ended
      April 30, 2004 related to the disposition of certain of the Company’s
      European fleet and the reversal of other tax liabilities. This non-cash tax
      recovery has been reduced by $9.2 million for fiscal 2004.




108


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







The
      combined impact of the payroll and income tax adjustments and related costs
      on
      the Consolidated Statements of Earnings for the fiscal years ended
      April 30, 2005 and 2004 and the Consolidated Balance Sheet as at
      April 30, 2005 is as follows:




*Consolidated
      Statements of Earnings*


Year
                Ended
            
            
            Year
              EndedApril
                30,
                2005
            
            
            April
                30, 2004Direct
                costs
            
            $
            (4,359
            )
            $
            (2,822
            )**Operating
                income**
            
            
            (4,359
            )
            
            (2,822
            )Financing
                charges
            
            
            (418
            )
            
            (522
            )Income
                tax provision
            
            
            (3,294
            )
            
            (8,181
            )**Net
                earnings (loss) from continuing operations**
            
            $
            (8,071
            )
            $
            (11,525
            )**Earnings
                per share***Basic*Net
                loss from continuing operations
            
            $
            (0.19
            )
            $
            (0.28
            )*Diluted*Net
                loss from continuing operations
            
            
            (0.18
            )
            
            (0.25
            )




*Consolidated
      Balance Sheet*


As
                atApril
                30, 2005**Assets**Future
                income tax assets
            
            $
            11,798**Liabilities
                and shareholders' equity**Payables
                and accruals
            
            
            13,759Income
                taxes payable
            
            
            1,498Future
                income tax liabilities
            
            
            20,797Foreign
                currency translation adjustment
            
            
            389Retained
                earnings, end of year*(i)*
            
            
            (24,645
            )$
            11,798




(i)
            Previously
                reported retained earnings at May 1, 2004 and May 1, 2003 were
                reduced by $16.5 million and $5.0 million,
                respectively.





(c)
            Reimbursables




Prior
      periods have been restated to conform to the current period's classification
      of
      certain fuel, landing fees and other costs recovered from customers as revenue
      rather than as cost reductions. As a result, revenue and direct costs have
      increased by $54.9 million and $44.5 million in the fiscal years ended
      April 30, 2005 and 2004, respectively. This reclassification has had no
      impact on operating income, net earnings, retained earnings, or earnings per
      share.




**4.**
            **COMPARATIVE
                FIGURES**




Certain
      comparative figures have been reclassified and restated to conform to the
      current year’s presentation. The most significant changes include:




(a)
            The
                restatements as outlined in
                Note 3;


(b)
            The
                comparative consolidated balance sheet, statements of earnings and
                cash
                flows have been reclassified to reflect the results of Composites
                in
                continuing operations, consistent with the current year’s presentation
                (Note 6); and


109


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)





(c)
            The
                comparative segment information for fiscal 2005 has been restated
                to
                reflect segment results as if certain lease, PBH and associated
                transactions between the Company’s segments had occurred for the
                comparative period. The restatement is based on management’s best
                estimates of how these transactions would have been recorded if the
                operational and management restructuring had been effective on May 1,
                2004. These restatements relate only to internal and eliminated
                transactions. Comparative fiscal 2004 segment information has not
                been
                restated (Note 25).





**5.**
            **ACCOUNTING
                ESTIMATES AND MEASUREMENT
                UNCERTAINTY**




The
      preparation of these consolidated financial statements requires management to
      make estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the dates
      of
      the financial statements and the reported amounts of revenue and expenses during
      the reporting periods. By their nature these estimates are subject to
      measurement uncertainty. The effect on the financial statements of changes
      in
      such estimates in future periods could be material and would be accounted for
      in
      the period the change occurs. The following are significant areas in which
      management makes significant accounting estimates:




(a)
            Recoverability
                of pre-operating expenses




The
      ability to defer pre-operating expenses is dependent on the future
      recoverability of the amounts from cash flows generated by the related
      commercial operations. If operations perform below anticipated recoverable
      levels, the portion of pre-operating expenses that cannot be recovered is
      expensed immediately when known. At April 30, 2006, $3.7 million (2005
      - $6.5 million) in unamortized pre-operating expenses, which are expected
      to be recoverable from the related future cash flows of such contracts and
      the
      development of new businesses, are included in other assets on the balance
      sheet.




(b)
            Flying
                asset amortization




Flying
      assets are amortized to their estimated residual value over their estimated
      service lives. The estimated useful lives and associated residual values are
      based on management estimates. Such estimates could vary materially from actual
      experience.




Major
      airframe inspection costs and modifications are capitalized and fully amortized
      over the lesser of their estimated useful life and remaining lease term, if
      applicable.




(c)
            Carrying
                value of flying assets




Based
      on independent appraisals, the appraised value of the Company’s owned aircraft
      exceeded the carrying value by $46.7 million and $59.1 million as at
      April 30, 2006 and 2005, respectively (both amounts unaudited). The
      recoverability of the book value of these assets is, in part, dependent on
      the
      estimates used in determining the expected period of future benefits over which
      to amortize aircraft. In addition, such recoverability is dependent on market
      conditions including demand for certain types of aircraft and changes in
      technology arising from the introduction of newer, more efficient
      aircraft.




(d)
            Inventory
                obsolescence




An
      allowance for obsolescence is provided for inventory identified as excess or
      obsolete to reduce the carrying costs to the lower of average acquisition cost
      and net realizable value. These allowances are based on management estimates,
      which are subject to change.




110


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







(e)
            Defined
                benefit employee pension plans




The
      Company maintains both funded and unfunded defined benefit employee pension
      plans in the U.K., Norway, Canada and the Netherlands for approximately
      one-third of its active employees and certain former employees. Several
      statistical and judgmental factors, which attempt to anticipate future events,
      are used in measuring the Company’s obligations under the plans and the related
      periodic pension expense. These factors include assumptions about the rate
      at
      which the pension obligation is discounted, the expected long-term rate of
      return on plan assets and the rate of future compensation increases. In
      addition, the Company’s actuaries use other assumptions such as withdrawal and
      mortality rates. The estimates and assumptions used may differ materially from
      actual results due to changing market and economic conditions, changing
      withdrawal rates, and changing overall life spans of participants. These
      differences may have a material impact on the amount of pension expense recorded
      and on the carrying value of prepaid pension costs and accrued pension
      obligations. The Company reviews annually the assumptions used in measuring
      the
      pension plan obligations to determine their appropriateness based on actual
      experience and current and anticipated market conditions.




(f)
            Utilization
                of income tax losses




The
      Company has accumulated $117.0 million and $35.9 million in
      non-capital and capital losses, respectively, as at April 30, 2006. As
      detailed in Note 22, some of the non-capital losses expire between fiscal
      2007 and 2026 and some carry forward indefinitely, while the capital losses
      carry forward indefinitely. The Company has determined that it is more likely
      than not that the benefit of $95.6 million of the non-capital losses and
      all of the capital losses will be realized in the future and, accordingly,
      has
      recorded future tax assets of $36.7 million related to these losses. This
      determination was based on assumptions regarding the reversal of existing future
      tax liabilities and future earnings levels in the subsidiaries with accumulated
      losses, and on an ability to implement tax planning measures. If, in the future,
      it is determined that it is more likely than not that all or part of the future
      tax assets will not be realized, a charge will be made to earnings in the period
      when such determination is made.




(g)
            Lease
                aircraft return costs




Lease
      aircraft return costs are not known with certainty until the end of the lease
      term. This requires the Company to estimate the lease return obligations
      beginning immediately after the last major maintenance cycle. Such estimates
      are
      based on the time remaining on the lease, planned aircraft usage and the
      provisions included in the lease agreement and could vary materially from actual
      costs.




(h)
            Aircraft
                operating leases




Upon
      entering into a new aircraft leasing arrangement, the Company evaluates whether
      substantially all of the benefits and risks of ownership related to the aircraft
      have been transferred to the lessor in order to determine if the lease is
      classified and recorded as capital or operating. Currently, all of the Company’s
      aircraft leases are classified and recorded as operating leases. One of the
      criteria in determining whether the benefits and risks have been transferred
      is
      whether the present value of the minimum lease payments is less than 90% of
      the
      fair value of the leased aircraft at the inception of the lease. In determining
      whether the present value at the beginning of the lease term of the minimum
      lease payments is less than 90% of the fair value of the leased aircraft, the
      Company includes in its minimum lease payments minimum rentals over the lease
      term (excluding any renewal options) and any guarantee by the Company of the
      residual value of the leased aircraft including junior loans, deferred payments,
      rebateable advance rentals, and asset value guarantees
      (Note 28).




The
      second criteria evaluated is whether there is a bargain purchase option at
      the
      end of the lease compared to the estimated fair market value of the aircraft
      at
      that time. At the time of entering into a new aircraft leasing arrangement
      the
      Company obtains an independent appraisal from a helicopter valuation company
      of
      the estimated fair value of the aircraft at the beginning and end of the lease
      term. These appraisals involve the use of estimates on current and future
      condition of, and demand for, the particular aircraft type. Different valuation
      companies may calculate different appraisal values for the same aircraft based
      on different assumptions used.




The
      third criteria evaluated is whether the lease term is greater than or equal
      to
      75% of the economic life of the leased aircraft. The use of different estimates
      of fair market value and the economic life of the aircraft could result in
      a
      different lease classification.




111


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







Certain
      of the Company’s operating leases have junior loans, deferred payments,
      rebateable advance rentals and loans receivable due from the lessors. Under
      these lease agreements, when the aircraft are sold by the lessors at the end
      of
      the lease terms, if the proceeds received are greater than the unamortized
      amount under the lease of the aircraft at that time, these amounts may be fully
      recoverable, otherwise the junior loans, rebateable advance rentals and deferred
      payments would not be recoverable. As at April 30, 2006 no allowance has
      been recorded on these amounts and related accrued interest as the Company
      currently believes that the aircraft will realize a value upon sale at the
      end
      of the lease sufficient to recover these amounts.




(i)
            Consolidation
                of variable interest entities
                (“VIE”s)




Under
      AcG-15, the Company is required to assess the variability of outcomes under
      each
      entity that is considered a VIE to determine whether the Company is the primary
      beneficiary of the VIE and would thus be required to consolidate the VIE. In
      performing this assessment, the Company is required to make a number of
      estimates including a range of possible asset values at the end of the lease
      term. In addition to developing a range of possible outcomes, the Company is
      required to assign a probability to each potential outcome. These estimates
      can
      significantly impact whether a particular VIE is required to be consolidated
      by
      the Company.




**6.**
            **DISCONTINUED
                OPERATIONS**




The
      Company reclassified Composites to continuing operations in the Heli-One segment
      for the years ended April 30, 2005 and 2004 as it did not receive an
      acceptable offer for Composites while this business was held for sale. During
      the period that Composites was held for sale, the assets and liabilities of
      this
      business were measured using discounted future cash flows at the lower of their
      carrying amounts and their estimated fair value, less costs to sell. As a
      result, a fair value adjustment of $14.3 million was recorded in the 2005
      fiscal year and allocated to property and equipment ($11.4 million) and
      other long-term assets ($2.9 million). This fair value adjustment is now
      reflected in operating income.




During
      fiscal 2005 the Company sold two non-core components of the Schreiner group
      of
      companies legally operating as Schreiner Canada Ltd. (“Schreiner Canada”) and
      Schreiner Aircraft Maintenance B.V. (“SAMCO”) and realized an after-tax gain on
      sale of $8.6 million. Operating results from discontinued businesses have
      been recorded in earnings from discontinued operations up to the date of
      disposition. Operating results from discontinued businesses included imputed
      interest on debt assumed by the buyer or required to be repaid as a result
      of
      the proposed disposal transaction where appropriate.


**Year
                Ended April 30,****2006**
            
            
            2005
            
            
            2004Revenue
                from discontinued operations
            
            **$**
            **-**
            
            $
            12,698
            
            $
            6,675Earnings
                (loss) from discontinued operations before income taxes*(i)*
            
            **$**
            **-**
            
            $
            15,559
            
            $
            (489
            )Net
                earnings (loss) from discontinued operations*(i)*
            
            **$**
            **-**
            
            $
            10,300
            
            $
            (321
            )




(i)
            Includes
                a
                gain on sale of discontinued operations of $13.3 million
                ($8.6 million after-tax) for the year ended April 30,
                2005.





**7.**
            **CASH
                AND CASH EQUIVALENTS**




At
      April 30, 2006 cash includes funds restricted for current taxes withheld
      and payable and other current obligations totalling $6.3 million (2005 -
      $6.8 million).




112


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**8.**
            **PROPERTY
                AND EQUIPMENT**




The
      capital cost and related accumulated amortization of the Company’s flying
      assets, facilities and equipment are as follows:


**Cost**
            
            
            **Accumulated
                Amortization**
            
            
            **Net
                Book Value****2006**Flying
                Assets
            
            **$**
            **990,067**
            
            **$**
            **158,931**
            
            **$**
            **831,136**Facilities
            
            
            **88,668**
            
            
            **39,852**
            
            
            **48,816**Equipment
            
            
            **129,563**
            
            
            **83,431**
            
            
            **46,132****$**
            **1,208,298**
            
            **$**
            **282,214**
            
            **$**
            **926,084**2005*(Restated
                Note 4)*Flying
                Assets
            
            $
            990,267
            
            $
            161,868
            
            $
            828,399Facilities
            
            
            105,445
            
            
            44,644
            
            
            60,801Equipment
            
            
            123,448
            
            
            69,442
            
            
            54,006$
            1,219,160
            
            $
            275,954
            
            $
            943,206




Amortization
      of property and equipment totalled $56.1 million in fiscal 2006 (2005 -
      $52.3 million).




**9.**
            **INVESTMENTS**




**2006**
            
            
            2005Long-term
                investments, at equityCanadian
                Helicopters Limited ("CHL") (2006 - nil%, 2005 - 41.75%)
            
            **$**
            **-**
            
            $
            11,611Inversiones
                Aereas S.L. (“Inaer”) (2006 - nil%, 2005 - 38%)
            
            
            **-**
            
            
            20,776Luchthaven
                Den
                Helder C.V. (2006 - 50%, 2005 - 50%)
            
            
            **3,545**
            
            
            4,140Long-term
                investments, at costCanadian
                Helicopters Limited, preferred shares
            
            
            **-**
            
            
            15,000Other
            
            
            **1,877**
            
            
            7,279**$**
            **5,422**
            
            $
            58,806




During
      fiscal 2006 the Company sold its remaining interest in CHL and its interest
      in
      Inaer for a total gain on sale of $37.5 million.




**10.**
            **INTANGIBLE
                ASSETS**




**2006**
            
            
            2005Customer
                contracts and relationships, less accumulated amortization of $0.6
                million
                (2005 - $0.3 million)
            
            **$**
            **2,492**
            
            $
            3,666Patents
                and registered designs, less accumulated amortization of $0.4 million
                (2005 - $0.2 million)
            
            
            **1,707**
            
            
            2,071Other,
                less accumulated amortization of $0.3 million (2005 - $0.1
                million)
            
            
            **607**
            
            
            762**$**
            **4,806**
            
            $
            6,499




The
      intangible assets were acquired as part of the acquisitions of Aero Turbine
      Support Ltd. (“ATSL”), Multifabs Survival Ltd. and Coulson Aero Technologies
      Ltd. in the year ended April 30, 2005. During the year ended April 30,
      2006, the Company acquired the remaining 40% non-controlling interest in
      ATSL.




113


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**11.**
            **OTHER
                ASSETS**




**2006**
            
            
            2005Prepaid
                pension costs*(i)*
            
            **$**
            **100,101**
            
            $
            104,816Prepaid
                aircraft rentals*(ii)*
            
            
            **21,042**
            
            
            23,168Aircraft
                operating lease junior loans*(iii)*
            
            
            **40,502**
            
            
            15,052Deferred
                charges, less accumulated amortization of $0.7 million (April 30,
                2005 -
                $nil)*(iv)*
            
            
            **6,245**
            
            
            -Deferred
                financing costs, less accumulated amortization of $4.4 million
                (April 30, 2005 - $2.9 million)*(v)*
            
            
            **6,769**
            
            
            8,261Loans
                receivable*(vi)*
            
            
            **20,326**
            
            
            11,990Pre-operating
                expenses*(vii)*
            
            
            **3,657**
            
            
            6,530Aircraft
                deposits*(viii)*
            
            
            **70,872**
            
            
            42,975Norway
                public pension scheme prepayments
            
            
            **6,324**
            
            
            6,993Restricted
                cash*(ix)*
            
            
            **19,705**
            
            
            15,083Other
            
            
            **809**
            
            
            148**$**
            **296,352**
            
            $
            235,016







(i)
            Prepaid
                pension costs represent accumulated contributions paid by the Company
                into
                its defined benefit employee pension plans in excess of the accumulated
                current and prior years’ benefit pension expense
                (Note 30).




(ii)
            The
                prepaid aircraft rentals are up-front rental payments made on aircraft
                leased under operating leases. These rentals are being amortized
                over the
                related lease terms.




(iii)
            The
                aircraft junior loans include junior loans, deferred payments and
                rebateable advance rentals, which are loans with lessors for the
                financing
                of 44 aircraft under operating leases as at April 30, 2006. Such
                loans bear interest at 2.5% to 7.0% (2005 - 5.2% to 8.0%) with principal
                and accrued interest due at maturity. These loans mature between
                fiscal
                2007 and 2014. As at April 30, 2006, no allowance has been recorded
                on these loans and accrued interest as the Company currently believes
                that
                the aircraft will realize a value upon sale at the end of the lease
                terms
                sufficient to recover these loans.




(iv)
            Deferred
                charges (net of accumulated amortization) at April 30, 2006 include
                legal and arrangement fees directly related to lease financing activities.
                These costs are being amortized to aircraft lease costs over the
                term of
                the related lease.




(v)
            Deferred
                financing costs (net of accumulated amortization) at April 30, 2006
                include $10.9 million (2005 - $12.8 million) in legal, bank and
                other fees directly related to long-term financing activities net
                of
                $4.0 million of debt premium (2005 - $4.5 million) related to
                the Company’s US dollar denominated senior subordinated notes. The fiscal
                2004 amount also included $1.9 million of debt discount related to
                the Company’s euro denominated senior subordinated notes. These costs are
                being amortized to financing charges over the term of the related
                debt
                obligations with $1.6 million amortized in fiscal 2006 (2005 -
                $3.0 million). In addition, during the fiscal year ended
                April 30, 2005 $1.0 million in deferred financing costs were
                written off upon the settlement of certain debt obligations
                (Note 13).




(vi)
            The
                loans receivable are non-interest bearing loans with lessors for
                the
                financing of 25 aircraft under operating leases as at April 30, 2006.
                Such loans mature between fiscal 2010 and 2014, at the end of the
                lease
                terms. As at April 30, 2006, no allowance has been recorded on these
                loans as the Company currently believes that the aircraft will realize
                a
                value upon sale at the end of the lease terms sufficient to recover
                these
                loans. The loans receivable balance also includes a $3.9 million
                (2005 - $nil) loan advanced to BHS to support its operations. This
                loan
                bears interest at US LIBOR plus 5.0% and is due in equal instalments
                over
                five years.




(vii)
            The
                pre-operating expense balance as of April 30, 2006 consists of costs
                incurred in the start-up phase of new contract awards and new businesses.
                These costs are being amortized on a straight-line basis over the
                lesser
                of five years or the terms of the related contracts from one to five
                years. The Company has determined that the pre-operating expenses
                are
                recoverable from future cash flows to be generated from the contracts
                and
                new businesses.


During
                  the fiscal year ended April 30, 2006, the Company expensed
                  $2.7 million (2005 - $2.7 million) related to the amortization
                  of pre-operating expenses.




(viii)
            Aircraft
                deposits are paid to manufacturers to secure deliveries at future
                dates,
                as described in Note 26.




114


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







(ix)
            The
                restricted cash balance consists of cash that is subject to restrictions
                that prevent its use for current purposes, primarily cash that the
                Company’s reinsurance subsidiary must retain to fund its required claims
                reserves, cash held by the bank for the SARs hedge and deposits held
                as
                security for guarantees and bid
                bonds.




**12.**
            **STOCK
                APPRECIATION RIGHTS, PERFORMANCE UNITS****AND LONG-TERM INCENTIVE
                PLANS**




At
      April 30, 2006 the Company had 413,333 (2005 - 209,334) stock appreciation
      rights vested and unexercised at reference prices ranging from $2.93 to
      $24.55 per unit. At the date of exercise, cash payments are made to the
      holders based on the difference between the market value of the Company’s
      Class A subordinate voting shares on the TSX and the reference price. The
      Company also had an additional 366,668 units that had been granted but not
      vested at April 30, 2006 (2005 - 586,666) at reference prices ranging from
      $13.70 to $24.55. It is anticipated that these units will vest from fiscal
      2007
      to 2008. The units granted under the stock appreciation rights plan vest equally
      over a three-year period with one-third vesting on each of the three subsequent
      anniversary dates.




Stock
      appreciation rights granted by the Company must be exercised within
      10 years of the date of grant. The stock appreciation rights that vested in
      fiscal 2006 have expiry dates ranging from fiscal 2014 to 2015.




At
      April 30, 2006 the Company had 92,412 (2005 - 80,616) performance units
      vested and unexercised at reference prices ranging from $4.30 to $26.11 per
      unit. At the date of exercise, cash payments are made to the holders based
      on
      the difference between double the market value of the Company’s Class A
      subordinate voting shares on the TSX and the reference price. The payments
      are
      made based on double the market value of the shares in order to compensate
      for
      the April 2005 stock split since all of the performance units outstanding at
      April 30, 2005 were issued prior to the stock split. The Company had no
      performance units that had been granted but not vested at April 30, 2006
      (2005 - 34,876 at a reference price of $26.11). The performance units vest
      annually if the financial performance of certain of the Company’s operating
      divisions meets or exceeds pre-determined financial benchmarks.




Performance
      units granted by the Company must be exercised within 10 years of the date
      of grant. The performance units that have vested at April 30, 2006 have
      expiry dates ranging from fiscal 2014 to 2016.




During
      the year ended April 30, 2006 the Company initiated a long-term incentive
      plan (“LTIP”) for executives and senior management employees. The plan is
      designed to reward the participants based upon long-term performance of the
      Company. Under the plan, executives and senior management are granted
      performance stock units (“LTIP units”), which are a notional Class A
      subordinate voting share. These LTIP units have a three-year vesting term after
      which the holder is entitled to a cash award calculated on the basis of the
      market value of the Company’s shares at the end of the vesting term adjusted by
      a performance factor. At April 30, 2006, the Company had 140,363 LTIP
      units that had been granted but were not vested.




Compensation
      expense with respect to these plans, with the inclusion of the associated
      hedging instrument, in respect of SARs (Note 21) for the year ended
      April 30, 2006 was $2.8 million (2005 - $0.7 million; 2004 -
      $2.4 million). At April 30, 2006 the Company’s liability with respect
      to SARs was $11.4 million (2005 - $10.4 million), which is recorded in
      current liabilities. The Company’s liability, with respect to LTIP, is
      $1.9 million and is recorded in other liabilities
      (Note 16).




115


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**13.**
            **DEBT
                OBLIGATIONS**




(a)
            Long-term
                debt




Interest
                rates
            
            
            Principal
              repayment
                terms
            
            
            Maturity
                dates
            
            
            **2006**
            
            
            2005**Senior
                credit facilities**Non-revolving
                credit facilitiesGBP
                LIBOR + margin
            
            
            Quarterly
            
            
            December
                2009
            
            **$**
            **10,846**
            
            $
            16,420Euro
                LIBOR + margin
            
            
            Quarterly
            
            
            December
                2009
            
            
            **65,451**
            
            
            96,617Revolving
                credit facilityCAD
                B.A. + margin
            
            
            At
                maturity
            
            
            December
                2007
            
            
            **15,000**
            
            
            -US
                LIBOR + margin
            
            
            At
                maturity
            
            
            December
                2007
            
            
            **44,812**
            
            
            -**Other
                term loans**12%
                unsecured, subordinated,convertible
                note*(Note 31)*
            
            
            At
                maturity
            
            
            January
                2008
            
            
            **4,695**
            
            
            4,5512.50%
            
            
            At
                maturity
            
            
            December
                2010
            
            
            **1,733**
            
            
            1,9055.75%
            
            
            At
                maturity
            
            
            January
                2008
            
            
            **1,008**
            
            
            1,121UK
                Base rate + margin
            
            
            Monthly
            
            
            June
                2007
            
            
            **903**
            
            
            1,916UK
                Base rate + margin
            
            
            Monthly
            
            
            October
                2010
            
            
            **-**
            
            
            719Non-interest
                bearing
            
            
            Monthly
            
            
            December
                2010
            
            
            **405**
            
            
            719Non-interest
                bearing
            
            
            At
                maturity
            
            
            April
                2012
            
            
            **1,799**
            
            
            -Non-interest
                bearing
            
            
            Semi-annually
            
            
            April
                2009
            
            
            **248**
            
            
            387B.A.
                CDOR rate + margin
            
            
            Semi-annually
            
            
            June
                2014
            
            
            **9,223**
            
            
            -B.A.
                CDOR rate + margin
            
            
            Semi-annually
            
            
            April
                2018
            
            
            **20,710**
            
            
            -Total
                long-term debt
            
            
            
            
            
            
            
            
            **176,833**
            
            
            124,355Less:
                current portion
            
            
            
            
            
            
            
            
            **(25,694**
            **)**
            
            (26,812
            )**$**
            **151,139**
            
            $
            97,543





The
      applicable variable interest rates were: 30-day GBP LIBOR - 4.63% (2005 -
      4.87%), 30-day Euro LIBOR - 2.67% (2005 - 2.10%), 30-day CAD B.A. - 4.09% (2005
      - 2.56%), 30-day UK base rate - 4.50% (2005 - 4.75%), and six-month B.A. CDOR
      -
      4.26% (2005 - 4.27%). Margins range from 0.80% to 1.75%.




The
      terms of certain of the Company’s debt agreements and helicopter lease
      agreements impose operating and financial limitations on the Company. Such
      agreements limit the extent to which the Company may, among other things, incur
      additional indebtedness, create liens, make capital expenditures, sell or
      sublease assets, engage in mergers or acquisitions and make dividend and other
      payments. During the years ended April 30, 2006 and 2005 the Company was in
      compliance with all material covenants and other conditions imposed by its
      debt
      and helicopter lease agreements.




During
      the year ended April 30, 2005 the Company agreed to the terms of revised
      senior credit facilities to replace the existing facilities that were due to
      mature in July 2005. The new senior facilities consisted of a revolving facility
      of US $175.0 million, a revolving facility of £ 6.8 million,
      a non-revolving facility of € 66.1 million and a non-revolving
      facility of £ 7.6 million. The terms of the revised senior credit
      facilities provided for increased flexibility in both financial and
      non-financial covenants, extension of the maturity dates for periods of three
      to
      five years, lower interest rates and increased borrowing
      limits.




*Collateral*




As
      collateral for the senior credit facilities, the Company has provided a
      $750.0 million debenture, providing a fixed charge over all material
      freehold and leasehold real property and all aircraft, a floating charge over
      all other property and a general assignment of book debts.




116


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







(b)
            Senior
                subordinated notes




The
      US $400.0 million (2005 - US $400.0 million)
      ($448.1 million at April 30, 2006; $502.8 million at
      April 30, 2005) senior subordinated notes bear interest at 73⁄8% per annum
      (“the 73⁄8% notes”), payable semi-annually on May 1 and November 1, and
      are due May 1, 2014.




The
      73⁄8%
      notes are unsecured senior subordinated obligations and are subordinated to
      all
      of the Company’s existing and future senior indebtedness, including borrowings
      under the Company’s senior credit facility. The notes will rank equally with the
      Company’s existing and future senior subordinated indebtedness and rank senior
      to all of the Company’s existing and future subordinated indebtedness. Each of
      the Company’s subsidiaries which guarantees borrowings under the Company’s
      senior credit facility jointly and severally guarantee the 73⁄8% notes on an
      unsecured senior subordinated basis. The Company’s subsidiaries incorporated in
      Norway and Denmark do not guarantee the notes or the senior credit facilities.
      Each subsidiary guarantee is an unsecured senior subordinated obligation of,
      and
      will rank equally with, all of the existing and future senior subordinated
      obligations of such guarantor. The 73⁄8% notes and the subsidiary guarantees are
      subordinated to all existing and future secured indebtedness of the Company
      and
      the subsidiary guarantors to the extent of the value of the assets securing
      such
      indebtedness.




The
      Company may redeem all or a part of the 73⁄8% notes on or prior to May 1,
      2009 by paying 100% of the principal amount of the notes plus a make-whole
      premium. Thereafter, the Company may redeem in whole or in part the 73⁄8% notes at
      any time at a redemption price ranging from 100% to 103.688% of the principal
      amount of the senior subordinated notes being redeemed. In addition, at any
      time
      before May 1, 2007, the Company may redeem up to 35% of the aggregate
      principal amount of the 73⁄8% notes with the net proceeds of equity offerings at
      107.375% of the principal amount of the notes, plus accrued interest, if at
      least 65% of the originally issued aggregate principal amount of the notes
      remains outstanding. The Company may also redeem all of the notes at 100% of
      their principal amount plus accrued interest if at any time the Company becomes
      obligated to pay withholding taxes on interest payments on the 73⁄8% notes as a
      result of a change in law. Upon the occurrence of certain change of control
      events, the Company will be required to make an offer to repurchase all of
      the
      notes.




(c)
            Foreign
                currency




Total
      debt obligations denominated in foreign currencies and the Canadian dollar
      equivalent are as follows:




**2006**
            
            
            2005Debt
                  in
                original
                  currency
            
            
            Canadian
                equivalent
            
            
            Debt
                in
              original
                currency
            
            
            Canadian
                equivalentEuro
            
            **€**
            **46,454**
            
            **$**
            **65,700**
            
            €
            59,739
            
            $
            97,004Pound
                sterling
            
            **£**
            **7,980**
            
            
            **16,287**
            
            £
            9,189
            
            
            22,081US
                dollar
            
            **USD**
            **440,000**
            
            
            **492,932**
            
            USD
            400,000
            
            
            502,760**$**
            **574,919**
            
            
            
            
            $
            621,845







(d)
            Financing
                charges




2006
            
            
            2005
              *(Restated
                Note 4*
            *)*
            
            2004
              *(Restated
                Note 4*
            *)*Interest
                on debt obligations
            
            **$**
            **43,935**
            
            $
            32,945
            
            $
            30,636Amortization
                of deferred financing costs
            
            
            **1,560**
            
            
            3,176
            
            
            3,538Foreign
                exchange losses (gains)
            
            
            **6,234**
            
            
            (1,200
            )
            
            (6,063
            )Release
                of currency translation adjustment*(i)*
            
            
            **2,612**
            
            
            -
            
            
            -Interest
                income
            
            
            **(4,587**
            **)**
            
            (464
            )
            
            (1,364
            )Other
                interest and banking expenses
            
            
            **4,236**
            
            
            3,852
            
            
            3,077**$**
            **53,990**
            
            $
            38,309
            
            $
            29,824




(i)
            During
                the year ended April 30, 2006, the Company settled $20.0 million
                of inter-company debts denominated in foreign currencies, which were
                designated as part of the Company’s net investments in self-sustaining
                foreign subsidiaries, giving rise to the recognition of a portion
                of the
                Company’s currency translation adjustment account as financing
                charges.




117


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







(e)
            Repayment
                requirements




Principal
      repayment requirements related to the total debt obligations over the next
      five
      years are as follows:


2007
            
            $
            25,6942008
            
            
            90,4622009
            
            
            24,6802010
            
            
            13,7102011
            
            
            4,544







**14.**
            **RESTRUCTURING
                COSTS**




During
      the year ended April 30, 2006 the Company expensed restructuring costs of
      $16.3 million (2005 - $17.6 million; 2004 - $9.2 million) in
      connection with restructuring activities. Restructuring costs were primarily
      comprised of voluntary retirement and involuntary severance costs and
      professional and consulting fees. Of the $16.3 million expensed in the year
      ended April 30, 2006, $5.4 million relates to severance and
      termination costs.




The
      following table provides a reconciliation of the Company’s restructuring cost
      accrual for the years ended April 30:


**2006**
            
            
            2005
            
            
            2004Restructuring
                costs accrued, beginning of year
            
            **$**
            **7,678**
            
            $
            1,833
            
            $
            -Expensed
                during the year
            
            
            **16,345**
            
            
            17,589
            
            
            9,181Restructuring
                costs paid during the year
            
            
            **(18,147**
            **)**
            
            (11,744
            )
            
            (7,348
            )Restructuring
                costs accrued, end of year
            
            **$**
            **5,876**
            
            $
            7,678
            
            $
            1,833







**15.**
            **DEBT
                SETTLEMENT COSTS**




During
      the year ended April 30, 2005, the Company expensed $2.0 million of
      debt settlement costs in connection with a senior credit facility revision
      and
      the redemption of its remaining 113⁄4% senior subordinated notes and 8%
      subordinated debentures.




During
      the year ended April 30, 2004 the Company expensed $19.7 million of
      debt settlement costs in connection with the retirement, in April 2004, of
      $140.6 million (€87.3 million) of its 113⁄4% notes and
      $143.3 million in senior credit facilities and term loans. The debt
      settlement costs expensed in fiscal 2005 and 2004 were comprised of premiums,
      professional fees, write-off of deferred financing costs and other incremental
      costs directly associated with debt settlement activities.




**16.**
            **OTHER
                LIABILITIES**




**2006**
            
            
            2005
              *(Restated
                Note 4*
            *)*Deferred
                revenue and lease aircraft return costs*(i)*
            
            **$**
            **8,884**
            
            $
            8,643Deferred
                government assistance*(ii)*
            
            
            **3,323**
            
            
            3,493Accrued
                pension obligation*(iii)*
            
            
            **34,040**
            
            
            35,504Deferred
                gains on sale-leasebacks of aircraft*(iv)*
            
            
            **60,405**
            
            
            53,690Deferred
                gain on SARs hedge*(v)*
            
            
            **666**
            
            
            1,783Insurance
                claims accrual*(vi)*
            
            
            **13,655**
            
            
            10,864Future
                employee benefits
            
            
            
            
            
            -Long-term
                incentive plan*(vii)*
            
            
            **1,935**
            
            
            -Unfavourable
                contract credits*(viii)*
            
            
            **6,722**
            
            
            14,207Other
            
            
            **2,801**
            
            
            528**$**
            **132,431**
            
            $
            128,712







118


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







(i)
            Deferred
                revenue at April 30, 2006 includes $6.8 million (2005 -
                $6.5 million) of billings to customers for repair and overhaul
                services to be performed in future periods under PBH contracts. A
                significant number of the Company’s repair and overhaul contracts require
                customers to pay for services on an hourly flying basis. A portion
                of this
                PBH revenue is recognized on a monthly basis to reflect ongoing services
                being provided, with the current balance deferred and included in
                deferred
                revenue and lease aircraft return costs and the long-term balance
                deferred
                in other liabilities to be recognized in earnings when the services
                are
                performed. Lease aircraft return costs are obligations that arise
                under
                the terms of the Company’s operating lease agreements, which require that
                an aircraft be returned with major components in a specified condition.
                At
                April 30, 2006 the Company had provided $2.1 million (2005 -
                $2.1 million) in respect of these
                obligations.




(ii)
            The
                Government of Newfoundland and Labrador has provided Composites with
                financial assistance to partially offset construction costs of plant
                and
                equipment. The assistance for construction costs is not repayable
                but is
                subject to specified conditions that, if not met, could result in
                the
                conversion of the assistance to fully paid common shares of Composites.
                This assistance is being amortized over the life of the related assets
                on
                the same basis as such assets are themselves amortized. At April 30,
                2006 government assistance of $3.3 million (April 2005 -
                $3.5 million) relating to plant and equipment has been deferred to
                other liabilities.




(iii)
            The
                Company has entered into supplementary retirement pension plan agreements
                in Canada with certain of its executives. This plan had accrued benefit
                obligations at April 30, 2006 of $20.6 million (2005
                - $20.4 million). The Company also has an unfunded early
                retirement pension plan in Norway. The accrued pension obligation
                related
                to this unfunded plan and related amounts included in other liabilities
                at
                April 30, 2006 was $5.7 million (2005 - $5.3 million).
                Included in the accrued pension obligation at April 30, 2006 was
                $7.7 million (2005 - $9.8 million) related to funded defined
                benefit pension plans in the Netherlands that had a funding deficit
                upon
                acquisition on February 16, 2004
                (Note 30).




(iv)
            The
                deferred gains arising from certain aircraft sale-leaseback and lease-out
                lease-in transactions are being amortized over the lease terms.The
                Company
                has disposed of aircraft at amounts greater than book value resulting
                in
                deferred gains of $22.1 million for fiscal 2006 (2005 -
                $4.5 million). Deferred gain amortization of $8.9 million (2005
                - $7.1 million) was recorded as a reduction of operating lease
                expense during fiscal 2006. On certain leases a portion of the proceeds
                are deferred as part of the sale-leaseback transaction agreement
                and have
                been netted against the deferred gains for the purpose of calculating
                the
                amount of the gain to be amortized. Under these lease agreements,
                if the
                aircraft are sold by the lessors at the termination of the leases
                for
                proceeds greater than the unamortized amount under the lease for
                such
                aircraft, the deferred payments may be fully payable to the Company
                and
                recorded as a gain at that time.




(v)
            The
                deferred gain on the SARs hedge is related to the Company’s hedge of the
                unvested units. The gain will be recognized as these units grade
                vest.




(vi)
            The
                insurance claims accrual relates solely to the Company’s reinsurance
                subsidiary, CHC Reinsurance S.A. The amount represents reinsurance
                premiums received but unearned, accruals for losses that have been
                reported but not yet paid and accruals for losses that have been
                incurred
                but not yet reported. The reinsurance subsidiary reinsures death
                and
                disability benefits and loss of license insurance for the Company’s
                Norwegian helicopter and repair and overhaul operations and for certain
                other external parties.




(vii)
            See
                discussion in Note 12.




(viii)
            As
                part of the acquisition of Schreiner, the Company valued the long-term
                contracts of Schreiner and recorded unfavourable contract credits
                for
                those contracts for which the return is below market. The unfavourable
                contract credits are being amortized over the term of the contract,
                for a
                maximum of five years, on a declining balance basis. During fiscal
                2006
                amortization of these unfavourable contract credits of $5.7 million
                (2005 -$6.7 million) was recorded as a reduction of operating
                expenses.




119


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**17.**
            **CAPITAL
                STOCK AND CONTRIBUTED
                SURPLUS**




*Capital
      stock*




**Authorized:**




Unlimited
      number of each of the following:


First
      preferred shares, issuable in series


Second
      preferred shares, issuable in series


Class A
      subordinate voting shares, no par value


Class B
      multiple voting shares, no par value


Ordinary
      shares, no par value




**Issued:**




Number
                of Shares
            
            
            Consideration**2006**
            
            
            2005
            
            
            2004
            
            
            **2006**
            
            
            2005
            
            
            2004Class
                A subordinate voting shares
            
            
            **36,860**
            
            
            36,833
            
            
            36,756
            
            **$**
            **223,241**
            
            $
            222,727
            
            $
            221,532Class
                B multiple voting shares
            
            
            **5,861**
            
            
            5,866
            
            
            5,877
            
            
            **18,413**
            
            
            18,431
            
            
            18,719Ordinary
                shares
            
            
            **22,000**
            
            
            22,000
            
            
            22,000
            
            
            **33,000**
            
            
            33,000
            
            
            33,000Ordinary
                share loan
            
            
            **-**
            
            
            -
            
            
            -
            
            
            **(33,000**
            **)**
            
            (33,000
            )
            
            (33,000
            )Class
                A subordinate voting employee share purchase loans
            
            
            
            
            
            
            
            
            
            
            
            **(1,502**
            **)**
            
            (1,689
            )
            
            (1,823
            )**$**
            **240,152**
            
            $
            239,469
            
            $
            238,428Contributed
                surplus
            
            
            
            
            
            
            
            
            
            
            **$**
            **4,363**
            
            $
            3,291
            
            $
            3,291







*Class A
      subordinate voting shares that would be*


*issued
      upon conversion of the following:*




**2006**
            
            
            2005
            
            
            2004Class
                B multiple voting shares
            
            
            **5,861**
            
            
            5,866
            
            
            5,877Share
                options*(Note 18)*
            
            
            **3,819**
            
            
            2,815
            
            
            2,850Convertible
                debt*(Notes
                13 and 31)*
            
            
            **1,379**
            
            
            1,379
            
            
            1,379







120


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)




*Capital
      stock transactions*




Number
                of Shares
            
            
            Class
                A subordinate
              voting
                shares
            
            
            Class
                B multiple
              voting
                shares
            
            
            Ordinary
                Shares**Balance,
                April 30, 2003**
            
            
            35,836
            
            
            5,907
            
            
            22,000Shares
                issued to employees for cashShare
                option plan
            
            
            874
            
            
            -
            
            
            -Share
                purchase plan
            
            
            16
            
            
            -
            
            
            -Share
                conversions
            
            
            30
            
            
            (30
            )
            
            -**Balance,
                April 30, 2004**
            
            
            36,756
            
            
            5,877
            
            
            22,000Shares
                issued to employees for cashShare
                option plan
            
            
            55
            
            
            -
            
            
            -Share
                purchase plan
            
            
            11
            
            
            -
            
            
            -Share
                conversions
            
            
            11
            
            
            (11
            )
            
            -**Balance,
                April 30, 2005**
            
            
            36,833
            
            
            5,866
            
            
            22,000Share
                issued to employees for cashShare
                purchase plan
            
            
            22
            
            
            -
            
            
            -Share
                conversions
            
            
            5
            
            
            (5
            )
            
            -**Balance,
                April 30, 2006**
            
            
            36,860
            
            
            5,861
            
            
            22,000






Stated
                value
            
            
            Class
                A subordinate voting shares
            
            
            Class
                B multiple
              voting
                shares
            
            
            Contributed
              surplus**Balance,
                April 30, 2003**
            
            $
            218,147
            
            $
            18,815
            
            $
            3,291Shares
                issued to employees for cashShare
                option plan
            
            
            3,083
            
            
            -
            
            
            -Share
                purchase plan
            
            
            206
            
            
            -
            
            
            -Share
                conversions
            
            
            96
            
            
            (96
            )
            
            -**Balance,
                April 30, 2004**
            
            $
            221,532
            
            $
            18,719
            
            $
            3,291Shares
                issued to employees for cashShare
                option plan
            
            
            668
            
            
            -
            
            
            -Share
                purchase plan
            
            
            239
            
            
            -
            
            
            -Share
                conversions
            
            
            288
            
            
            (288
            )
            
            -**Balance,
                April 30, 2005**
            
            
            222,727
            
            
            18,431
            
            
            3,291Shares
                  issued to employees for cashShare
              purchase
              plan
            
            
            496
            
            
            -
            
            
            -Share
                conversions
            
            
            18
            
            
            (18
            )
            
            -Stock
                based compensation expense
            
            
            -
            
            
            -
            
            
            1,072**Balance,
                April 30, 2006**
            
            $
            223,241
            
            $
            18,413
            
            $
            4,363







121


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







During
      the year ended April 30, 2004 the Company adopted without restatement of
      comparative figures the Canadian Emerging Issues Committee Abstract 132,
      Share Purchase Financing (“EIC-132”). Under EIC-132, share purchase loans
      receivable are to be deducted from shareholders’ equity if such loans are not in
      accordance with current arm’s length market terms and conditions including
      interest rate, terms of interest payments and principal repayments and adequacy
      of security. The Company’s Class A subordinate voting employee share
      purchase loans are non-interest bearing, full recourse loans and have as
      collateral a pledge of the related shares purchased with a fair market value
      of
      $19.9 million as at April 30, 2006. As a result, the employee share
      purchase loans of $1.5 million on April 30, 2006 (2005 -
      $1.7 million) are deducted from shareholders’ equity. Payments equal to 5%
      of the original loan principal are required on each loan anniversary date with
      the balance payable on the tenth anniversary. Upon termination of employment,
      the loans are required to be repaid within 60 days.




The
      Class A subordinate voting shares carry the right to one vote per share and
      the Class B multiple voting shares carry the right to 10 votes per
      share. Each single Class B multiple voting share may be converted into a
      single Class A subordinate voting share at the option of the shareholder.
      In all other respects the Class A subordinate voting shares rank equally
      and ratably with the Class B multiple voting shares.




The
      Company has issued 22,000,000 ordinary shares to a company owned by its majority
      shareholder for subscriptions of $33.0 million. Concurrently, to fund the
      subscriptions for the ordinary shares, the Company made a non-interest bearing
      loan to the purchaser, payable on demand and the Company has a lien on the
      ordinary shares issued. The ordinary shares entitle the holder thereof to
      (i) one vote for every 10 ordinary shares held; (ii) dividends
      equivalent on a per share basis to any dividend paid on the Company’s
      Class A subordinate voting shares and Class B multiple voting shares,
      subject to prior minority shareholder approval; and (iii) receive a share
      of the residual of the Company, on a liquidation or winding-up, equal, on a
      share for share basis, to the amount received by a holder of a Class A
      subordinate voting share or a Class B multiple voting share. The ordinary
      shares are redeemable at the option of the Company at the subscription price
      thereof in certain circumstances (Note 23).




Declaration
      of dividends is restricted by covenants contained in certain of the Company’s
      debt agreements. The declaration of dividends during fiscal 2006 at $0.40 (2005
      - $0.30) per participating voting share totalling $17.1 million (2005 -
      $12.8 million) was in compliance with these covenants.




**18.**
            **SHARE
                OPTION PLAN**




Effective
      May 1, 2003, the Company began expensing share-option awards using the fair
      value method. This accounting change was applied prospectively in fiscal 2004
      relating to share options issued on or after May 1, 2003. For the year
      ended April 30, 2006, the Company recorded stock based compensation of
      $1.1 million in the consolidated statement of earnings and as contributed
      surplus. There was no impact on the financial results for the years ended
      April 30, 2005 and 2004 as no new options were granted during fiscal 2005
      or 2004. The Black Scholes option pricing model was used to estimate the fair
      value of options using the following estimates and assumptions:


Expected
                life
            4
                yearsExpected
                dividend yield
            1.2%Risk-free
                interest rate
            3.2%Stock
                volatility
            31%




As
      at
      April 30, 2006, 1,909,672 (2005 - 1,407,672) options to purchase a total of
      3,819,344 (2005 - 2,815,344) shares of common stock were outstanding, of which
      1,407,672 options to purchase a total of 2,815,344 shares of common stock were
      then exercisable at prices ranging from $2.13 to $15.35 per share and a
      weighted average exercise price of $14.25 per option. All outstanding
      options have exercise prices ranging from $2.13 to $24.80 per share and a
      weighted average exercise price of $23.54 per option (2005 - $14.25). All
      outstanding options expire between 2007 and 2015, ten years after the date
      of
      each respective grant. Each option is convertible into two Class A
      subordinated voting shares to reflect the April 2005 two-for-one stock
      split.




122


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







A
      summary of recent share option activities is as follows:




**2006**Number
                  of options - Exercise price range $4.26 - $4.30
            
            
            Weighted
                average exercise price
            
            
            Number
                of options - Exercise price range $7.35 - $9.00
            
            
            Weighted
                average exercise price
            
            
            Number
                of options - Exercise price range $26.11 - $30.70
            
            
            Weighted
                average exercise price
            
            
            Number
                of options - Exercise price
              $49.60
            
            
            Weighted
                average exercise price
            
            
            Total
                number of options
            
            
            Total
                weighted average exercise priceClass
                A subordinate voting share optionsBeginning
                of year
            
            
            **485**
            
            **$**
            **4.28**
            
            
            **470**
            
            **$**
            **8.96**
            
            
            **452**
            
            **$**
            **30.44**
            
            
            **-**
            
            **$**
            **-**
            
            
            **1,407**
            
            **$**
            **14.25**Granted
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **510**
            
            
            **49.60**
            
            
            **510**
            
            
            **49.60**Forfeited
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **(8**
            **)**
            
            **(49.60**
            **)**
            
            **(8**
            **)**
            
            **(49.60**
            **)**End
                of year
            
            
            **485**
            
            **$**
            **4.28**
            
            
            **470**
            
            **$**
            **8.96**
            
            
            **452**
            
            **$**
            **30.44**
            
            
            **502**
            
            **$**
            **49.60**
            
            
            **1,909**
            
            **$**
            **23.54**Weighted
                average contractual life of options outstanding
            
            
            **2.5
                years**
            
            
            
            
            
            **1.4
                years**
            
            
            
            
            
            **6.0
                years**
            
            
            
            
            
            **9.2
                years**
            
            
            
            
            
            **4.8
                years**




**2005**Number
                of options - Exercise price range $4.26 - $4.30
            
            
            Weighted
                average exercise price
            
            
            Number
                of options - Exercise price range $7.35 - $9.00
            
            
            Weighted
                average exercise price
            
            
            Number
                of options - Exercise price range $26.11 - $30.70
            
            
            Weighted
                average exercise price
            
            
            Total
                number of options
            
            
            Total
                weighted average exercise priceClass
                A subordinate voting share optionsBeginning
                of year
            
            
            485
            
            $
            4.28
            
            
            470
            
            $
            8.96
            
            
            470
            
            $
            30.27
            
            
            1,425
            
            $
            14.40Exercised
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (18
            )
            
            26.11
            
            
            (18
            )
            
            26.11End
                of year
            
            
            485
            
            $
            4.28
            
            
            470
            
            $
            8.96
            
            
            452
            
            $
            30.44
            
            
            1,407
            
            $
            14.25Weighted
                average contractual life of options outstanding
            
            
            3.5
                years
            
            
            
            
            
            2.4
                years
            
            
            
            
            
            7.0
              years
            
            
            
            
            
            4.3
                years







**19.**
            **SUPPLEMENTAL
                CASH FLOW INFORMATION**




**2006**
            
            
            2005
            
            
            2004Cash
                interest paid
            
            **$**
            **39,929**
            
            $
            24,252
            
            $
            35,875Cash
                taxes paid
            
            **$**
            **13,779**
            
            $
            11,225
            
            $
            8,486







The
      adjustment to net earnings related to future income taxes to arrive at cash
      flow
      on the statements of cash flows is calculated as the income tax (provision)
      recovery adjusted for cash taxes paid. Accordingly, it includes the impact
      of
      changes in current as well as long-term income tax assets and
      liabilities.




123


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**20.**
            **FOREIGN
                CURRENCY**




(a)
            Foreign
                currency translation adjustment




2005
            
            
            2004**2006**
            
            
            *(Restated
                Note 4*
            *)*
            
            *(Restated
                Note 4*
            *)*Balance,
                beginning of year as originally stated
            
            **$**
            **(16,381**
            **)**
            $
            (9,873
            )
            $
            (3,884
            )Restatements*(Note
                3)*
            
            
            **(5,085**
            **)**
            
            (7,732
            )
            
            (9,652
            )Balance,
                beginning of year
            
            **$**
            **(21,466**
            **)**
            $
            (17,605
            )
            $
            (13,536
            )Release
                of currency translation adjustment*(Note
                13(d))*
            
            
            **2,612**
            
            
            -
            
            
            -Translation
                adjustment during year
            
            
            **(47,408**
            **)**
            
            (3,861
            )
            
            (4,069
            )Balance,
                end of year
            
            **$**
            **(66,262**
            **)**
            $
            (21,466
            )
            $
            (17,605
            )




The
      foreign currency translation adjustment represents the unrealized gain or loss
      on the Company’s net investment in self-sustaining foreign operations net of the
      hedging effect. The change in the foreign currency translation adjustment during
      the year results primarily from fluctuations in the Canadian dollar against
      other foreign currencies and changes in the size of the Company’s net investment
      in foreign operations.




Throughout
      the 2006 fiscal year the Company had designated its US$150.0 million
      ($168.0 million) 73⁄8% senior subordinated note issue as a hedge of the
      Company’s net investments as follows (i) US$40.0 million designated as
      a hedge of the net investment in the Company’s self-sustaining operations in
      Canada whose functional currency is the US dollar and (ii) an aggregate of
      US$110.0 million converted to Norwegian kroner via forward foreign exchange
      agreements designated as hedges of the net investment in the Company’s
      self-sustaining Norwegian operations. Throughout the 2006 and 2005 fiscal years
      the Company had also designated its US$250.0 million ($280.1 million
      at April 30, 2006; $314.2 million at April 30, 2005) 73⁄8% senior
      subordinated note issue as a hedge of the Company’s various net investments as
      follows: (i) US$100.0 million designated as a hedge of the net
      investment in the Company’s self-sustaining operations in Canada whose
      functional currency is the US dollar, (ii) US$93.5 million converted
      to pound sterling via a forward foreign exchange agreement designated as a
      hedge
      of the net investment in the Company’s self-sustaining operations in the UK,
      (iii) US$29.7 million converted to euro via a forward foreign exchange
      agreement designated as a hedge of the net investment in the Company’s
      self-sustaining operations in the Netherlands, and
      (iv) US$26.8 million converted to Norwegian kroner via a forward
      foreign exchange agreement designated as a hedge of the net investment in the
      Company’s self-sustaining operations in Norway. The Company had also designated
      its pound sterling and remaining outstanding euro denominated debt as hedges
      of
      its net investments in its self-sustaining operations in the UK and the
      Netherlands, respectively. Included in the foreign currency translation
      adjustment in shareholders’ equity at April 30, 2006 was a net foreign
      exchange gain of $57.0 million, net of taxes of $12.4 million (2005 -
      gain of $19.4 million, net of taxes of $4.2 million) related to the
      revaluation and repayment of the debt during the period of hedge
      effectiveness.




The
      Company reviews the effectiveness of these hedges quarterly by monitoring the
      relative changes in the amounts of the hedged items relative to the notional
      amounts of the hedging instruments.




(b)
            Year-end
                exchange rates




Balance
      sheet accounts denominated in foreign currencies and translated at year-end
      exchange rates have been translated to Canadian dollars at the following
      rates:





**2006**
            
            
            2005US
                dollar
            
            **$**
            **1.12**
            
            $
            1.26UK
                pound sterling
            
            
            **2.04**
            
            
            2.40Norwegian
                kroner
            
            
            **0.18**
            
            
            0.20South
                African rand
            
            
            **0.19**
            
            
            0.21Australian
                dollar
            
            
            **0.85**
            
            
            0.98Euro
            
            
            **1.41**
            
            
            1.62







124


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)




Income
      statement accounts denominated in foreign currencies have been translated at
      the
      following year to date annual average exchange rates:




**2006**
            
            
            2005US
                dollar
            
            **$**
            **1.19**
            
            $
            1.27UK
                pound sterling
            
            
            **2.11**
            
            
            2.35Norwegian
                kroner
            
            
            **0.18**
            
            
            0.19South
                African rand
            
            
            **0.19**
            
            
            0.20Australian
                dollar
            
            
            **0.89**
            
            
            0.94Euro
            
            
            **1.44**
            
            
            1.61







**21.**
            **FINANCIAL
                INSTRUMENTS**




(a)
            Primary
                Financial Instruments




The
      carrying values of the primary financial instruments of the Company, with the
      exception of the Company’s senior subordinated notes, substantially approximate
      fair value due to the short-term maturity and/or other terms of those
      instruments.




The
      fair value of the senior subordinated notes is based on quoted market prices.
      The fair value of these debt instruments, including the current portion, is
      as
      follows:




**April
                30, 2006**
            
            
            April
                30, 2005Fair
                value
            
            
            **Carrying
                value**
            
            
            Fair
              value
            
            
            Carrying
              value73⁄8%
                Senior subordinated notes
            
            **$**
            **454,282**
            
            **$**
            **448,120**
            
            $
            490,819
            
            $
            502,760







(b)
            Derivative
                Financial Instruments Used for Risk
                Management




The
      Company regularly enters into forward foreign exchange contracts, equity forward
      pricing agreements and other derivative instruments to hedge the Company’s
      exposure to fluctuations in the Company’s net investment in self-sustaining
      foreign operations, expected future cash flows from foreign operations,
      anticipated transactions in currencies other than the Canadian dollar and stock
      price volatility. The Company does not enter into derivative transactions for
      speculative or trading purposes.




The
      nature, maturity, notional amount and fair market value of the Company’s
      derivatives used in risk management activities as at April 30, 2006 are as
      follows:





Hedging
                item
            
            
            Maturity
            
            
            Notional
              amount
            
            
            Fair
                market valueForward
                foreign exchange contractsSell
                pound sterling; buy US dollar
            
            
            October
                2006
            
            
            £
                30,683
            
            $
            -Sell
                Norwegian kroner; buy US dollar
            
            
            October
                2006
            
            
            NOK
                895,443
            
            
            -Sell
                US
                dollar; buy Canadian dollar
            
            
            Various
            
            
            USD
                86,396
            
            
            9,068Sell
                pound sterling; buy euro
            
            
            Various
            
            
            £
                30,236
            
            
            (964
            )Equity
                forward price agreement
            
            
            July
                2007
            
            
            1,170
                units
            
            
            (1,230
            )$
            6,874







125


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







Throughout
      the year ended April 30, 2006, the Company continued its designation of its
      US $400.0 million ($448.1 million) 73⁄8% senior subordinated notes
      and related forward foreign currency contracts as effective hedges of the
      Company’s net investments in certain self-sustaining operations in Canada, the
      UK, the Netherlands, and Norway. The Company has also designated other pound
      sterling and euro denominated debt as hedges of its net investments in its
      self-sustaining operation in the UK, the Netherlands, and Canada respectively.
      As a result of these effective hedging relationships, revaluation gains and
      losses on the debt, net investments and forward foreign exchange contracts
      are
      offset in the cumulative translation adjustment account in the equity section
      of
      the balance sheet in accordance with Canadian GAAP. When the forward foreign
      exchange contracts on these hedges expired at the end of fiscal 2006, the
      Company entered into new contracts to continue its net investment hedge
      program.




The
      Company has also entered into forward foreign exchange contracts to reduce
      its
      exposure to currency fluctuations on anticipated foreign currency revenues
      and
      expenses for certain of its operations. These relationships also qualified
      as
      effective hedges under Canadian GAAP.




In
      addition, the Company has hedged its obligations under the SARs plans using
      an
      equity forward price agreement to reduce volatility in cash flow and earnings
      due to possible future increases in the Company’s share price. The Company
      accrues the liability and related expense associated with SARs based on the
      difference between the reference price and the hedged price. At April 30,
      2006 the amount recorded in current liabilities related to SARs was
      $11.4 million (April 30, 2005 - $10.4 million).




(c)
            Credit
                Risk on Financial Instruments




Credit
      risk on financial instruments arises from the potential for counterparties
      to
      default on their contractual obligations and is limited to those contracts
      where
      the Company would incur a loss in replacing the instrument. The Company limits
      its credit risk by dealing only with counterparties that possess investment
      grade credit ratings.




(d)
            Interest
                Rate Risk




The
      Company has used interest rate swap agreements in the past in order to achieve
      an appropriate mix of fixed and variable interest rate debt. The Company’s
      current exposure to interest rates is such that fixed and variable rates are
      appropriately balanced at April 30, 2006 without the use of interest rate
      derivative instruments.




(e)
            Trade
                Credit Risk




Trade
      receivables consist primarily of amounts due from multinational companies
      operating in the oil and gas industry. Credit risk on these receivables is
      reduced by the large and diversified customer base. Included in accounts
      receivable is an allowance for doubtful accounts of $3.4 million at
      April 30, 2006 (2005 - $7.5 million).




**22.**
            **INCOME
                TAXES**




Future
      income taxes reflect the net tax effects of temporary differences between the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amounts used for income tax purposes.




126


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







The
      tax
      effects of temporary differences that give rise to significant portions of
      future income tax assets and future income tax liabilities are presented
      below:


2005**2006**
            
            
            *(Restated
                Note 4*
            *)***Future
                income tax (liabilities) assets**Property
                and equipment
            
            **$**
            **(100,519**
            **)**
            $
            (119,644
            )Long-term
                investments
            
            
            **(11,306**
            **)**
            
            (22,833
            )Pension
                and other employee benefits
            
            
            **(10,504**
            **)**
            
            (15,030
            )Deferred
                capital gains and deferred revenue
            
            
            **(30,699**
            **)**
            
            (15,457
            )Losses
                carried forward
            
            
            **41,463**
            
            
            39,505Deferred
                costs
            
            
            **348**
            
            
            3,717Long-term
                debt
            
            
            **(19,380**
            **)**
            
            (4,555
            )Current
                accounts payable and receivable
            
            
            **11,486**
            
            
            17,312Other
            
            
            **4,348**
            
            
            3,728Total
                future income tax liabilities
            
            
            **(114,763**
            **)**
            
            (113,257
            )Valuation
                allowance
            
            
            **(7,383**
            **)**
            
            (7,049
            )Net
                future income tax liabilities
            
            **$**
            **(122,146**
            **)**
            $
            (120,306
            )Distributed
                as follows:Current
                future income tax assets
            
            
            **26,859**
            
            
            28,110Current
                future income tax liabilities
            
            
            **(8,852**
            **)**
            
            (705
            )Long-term
                future income tax assets
            
            
            **39,848**
            
            
            57,674Long-term
                future income tax liabilities
            
            
            **(180,001**
            **)**
            
            (205,385
            )**$**
            **(122,146**
            **)**
            $
            (120,306
            )







The
      Company has recorded a $7.4 million valuation allowance in respect of its
      net future income tax asset in Composites, of which $4.7 million relates to
      losses carried forward. The prior period amounts relating to the valuation
      allowance have been reclassified to continuing operations as outlined in
      Note 6.




The
      Company’s income tax (provision) recovery is comprised as
      follows:


2005
            
            
            2004**2006**
            
            
            *(Restated
                Note 4*
            *)*
            
            *(Restated
                Note 4*
            *)*Current
                income tax (provision) recoveryCanada
            
            **$**
            **(2,800**
            **)**
            $
            (3,810
            )
            $
            (2,518
            )Foreign
            
            
            **5,552**
            
            
            (26,169
            )
            
            (7,858
            )**2,752**
            
            
            (29,979
            )
            
            (10,376
            )Future
                income tax (provision) recoveryCanadaRecovery
                related to origination and reversal of temporary
                differences
            
            
            **14,646**
            
            
            9,022
            
            
            15,574Foreign(Provision)
                recovery related to origination and reversal of temporary
                differences
            
            
            **(28,338**
            **)**
            
            (6,609
            )
            
            4,505**(13,692**
            **)**
            
            2,413
            
            
            20,079Income
                tax (provision) recovery
            
            **$**
            **(10,940**
            **)**
            $
            (27,566
            )
            $
            9,703







127


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







As
      the
      Company operates in several tax jurisdictions, its income is subject to various
      rates of taxation. The income tax (provision) recovery differs from the amount
      that would have resulted from applying the Canadian statutory income tax rates
      to earnings before taxes as follows:


2005
            
            
            2004**2006**
            
            
            *(Restated
                Note 4*
            *)*
            
            *(Restated
                Note 4*
            *)*Earnings
                from continuing operations before income taxes
            
            **$**
            **101,650**
            
            $
            73,785
            
            $
            42,519Combined
                Canadian federal and provincial statutory income tax rate
            
            
            **34**
            **%**
            
            35
            %
            
            37
            %Income
                tax provision calculated at statutory rate
            
            
            **(34,561**
            **)**
            
            (25,825
            )
            
            (15,732
            )(Increase)
                decrease in income tax (provision) recovery resulting
                from:Reversal
                of tax
                liability
            
            
            **-**
            
            
            -
            
            
            11,759Rate
                differences in various jurisdictions
            
            
            **13,572**
            
            
            16,017
            
            
            15,126Effect
                of change in tax legislation
            
            
            **(220**
            **)**
            
            (4,224
            )
            
            -Non-deductible
                items
            
            
            **(1,187**
            **)**
            
            (3,193
            )
            
            (2,392
            )Large
                corporations tax
            
            
            **(470**
            **)**
            
            (457
            )
            
            (230
            )Other
                foreign taxes paid
            
            
            **(3,471**
            **)**
            
            (1,745
            )
            
            (1,567
            )Non-taxable
                portion of capital gains
            
            
            **13,617**
            
            
            1,154
            
            
            2,544Non-taxable
                income
            
            
            **2,669**
            
            
            1,274
            
            
            2Valuation
                allowance
            
            
            **(334**
            **)**
            
            (7,049
            )
            
            -Other
            
            
            **(555**
            **)**
            
            (3,518
            )
            
            193Income
                tax (provision) recovery
            
            **$**
            **(10,940**
            **)**
            $
            (27,566
            )
            $
            9,703







During
      fiscal 2005, legislation was substantively enacted in the Netherlands to reduce
      the corporate income tax rate from 34.5% to 30.0%. As a result, the Company
      adjusted the value of its future income tax assets related to losses carried
      forward and other temporary differences in the Netherlands by
      $4.2 million.




During
      fiscal 2004, the Company recorded an $11.8 million future income tax
      recovery, which is attributable to the reversal of a previously recorded tax
      liability as a result of the disposition of certain of the Company’s European
      fleet.




(a)
            Tax
                losses




The
      Company has accumulated approximately $117.0 million in non-capital losses,
      of which $78.1 million is available to reduce future Canadian income taxes
      otherwise payable, $28.7 million is available to reduce future Dutch income
      taxes otherwise payable and the remainder is available to reduce future income
      taxes otherwise payable in other foreign jurisdictions. If unused, these losses
      will expire as follows:




(in
                millions of Canadian dollars)2007
            
            $
            5,0492008
            
            
            5,2192009
            
            
            9,9472014
            
            
            12,8852015
            
            
            17,1612026
            
            
            27,816Indefinitely
            
            
            38,949$
            117,026




The
      Company has also accumulated approximately $35.9 million in capital losses,
      which carry forward indefinitely and are available to reduce future capital
      gains realized in Canada.




128


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







The
      Company has provided a valuation allowance in respect of $21.4 million of
      the non-capital losses. The benefit anticipated from the utilization of the
      remaining non-capital losses and the full amount of the capital losses has
      been
      recorded as a future income tax asset.




**23.**
            **PER
                SHARE INFORMATION**




Net
      earnings have been calculated based on the sum of the weighted average number
      of
      Class A subordinate voting shares and Class B multiple voting shares
      outstanding of 42,708,378 for the fiscal year ended April 30, 2006 (2005 -
      42,673,079; 2004 - 42,191,906).




**2006**


Net
                earnings
            
            Weighted
                average
            
            Net
                earnings
              per
                shareCont.
                ops.
            
            
            Disc.
              ops.
            
            
            Total
            
            number
                of shares
            
            
            Cont.
              ops.
            
            
            Disc.
              ops.
            
            
            Total$
            90,710
            
            $
            -
            
            $
            90,710
            
            42,708Shares
                as
                security for Class A subordinate voting employee share  purchase
                loans
                *(Note 17)*
            
            
            -
            
            
            -
            
            
            -
            
            (709
            )**Basic**
            
            $
            90,710
            
            $
            -
            
            $
            90,710
            
            41,999
            
            $
            2.16
            
            $
            -
            
            $
            2.16**Effect
                of potential dilutive securities:**Share
                options
            
            
            
            
            
            
            
            
            
            
            2,076Convertible
                debt
            
            
            386
            
            
            -
            
            
            386
            
            1,379Shares
                as security for Class A subordinate voting employee share   purchase loans *(Note
                17)*
            
            
            
            
            
            
            
            
            
            
            709**Diluted**
            
            $
            91,096
            
            $
            -
            
            $
            91,096
            
            46,163
            
            $
            1.97
            
            $
            -
            
            $
            1.97







2005


Net
                earnings
            
            Weighted
                average
            
            Net
                earnings
              per
                shareCont.
                ops.
            
            
            Disc.
              ops.
            
            
            Total
            
            number
                of shares
            
            
            Cont.
              ops.
            
            
            Disc.
              ops.
            
            
            Total$
            46,219
            
            $
            10,300
            
            $
            56,519
            
            42,673Shares
                as security for Class A subordinate voting employee share  purchase
                loans*(Note
                17)*
            
            
            -
            
            
            -
            
            
            -
            
            (736
            )**Basic**
            
            $
            46,219
            
            $
            10,300
            
            $
            56,519
            
            41,937
            
            $
            1.10
            
            $
            0.25
            
            $
            1.35**Effect
                of potential dilutive securities:**Share
                options
            
            
            
            
            
            
            
            
            
            
            1,975Convertible
                debt
            
            
            386
            
            
            -
            
            
            386
            
            1,379Shares
                as security for Class A subordinate voting employee share   purchase
                loans*(Note
                17)*
            
            
            
            
            
            
            
            
            
            
            736**Diluted**
            
            $
            46,605
            
            $
            10,300
            
            $
            56,905
            
            46,027
            
            $
            1.01
            
            $
            0.22
            
            $
            1.23







129


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







2004


Net
                earnings (loss)
            
            average
            
            
            Net
                earnings (loss)Cont.
              ops.
            
            
            Disc.
              ops.
            
            
            Total
            
            number
                of shares
            
            
            Cont.
              ops.
            
            
            Disc.
              ops.
            
            
            Total$
            52,222
            
            $
            (321
            )
            $
            51,901
            
            42,122
            
            $
            1.24
            
            $
            (0.01
            )
            $
            1.23Shares
                as security for Class A subordinate voting employee share  purchase
                loans*(Note
                17)*
            
            
            -
            
            
            -
            
            
            -
            
            (776
            )**Basic**
            
            $
            52,222
            
            $
            (321
            )
            $
            51,901
            
            41,346
            
            $
            1.26
            
            $
            (0.01
            )
            $
            1.25**Effect
                of potential dilutive securities:**Share
                options
            
            
            
            
            
            
            
            
            
            
            1,842Convertible
                debt
            
            
            493
            
            
            -
            
            
            493
            
            1,379Shares
                as security for Class A subordinate voting employee share   purchase
                loans*(Note
                17)*
            
            
            
            
            
            
            
            
            
            
            776$
            52,715
            
            $
            (321
            )
            $
            52,394
            
            45,343Add
                back share options anti-dilutive impact
            
            
            -
            
            
            -
            
            
            -
            
            24**Diluted**
            
            $
            52,715
            
            $
            (321
            )
            $
            52,394
            
            45,367
            
            $
            1.16
            
            $
            (0.01
            )
            $
            1.15




Per
      share amounts are calculated using the treasury stock method. Under this method,
      the proceeds from the exercise of options are assumed to be used to repurchase
      the Company’s shares on the open market. The difference between the number of
      shares assumed purchased and the number of options assumed exercised is added
      to
      the actual number of shares outstanding to determine diluted shares outstanding
      for purposes of calculating diluted earnings per share. Therefore, the number
      of
      shares in the diluted earnings per share calculation will increase as the
      average share price increases. There were 22 million ordinary shares
      outstanding at April 30, 2006 and at April 30, 2005, all of which are
      owned by the Company’s majority shareholder (Note 17). The payment of
      dividends on these ordinary shares requires minority shareholder approval.
      The
      shares also have no conversion rights in the hands of their holder. Therefore,
      these ordinary shares have not been included in the calculation of basic and
      diluted earnings per share.




**24.**
            **CHANGE
                IN NON-CASH WORKING
                CAPITAL**




2005
            
            
            2004**2006**
            
            
            *(Restated
                Note 4*
            *)*
            
            *(Restated
                Note 4*
            *)*Receivables
            
            **$**
            **(37,743**
            **)**
            $
            (38,105
            )
            $
            26,872Inventory
            
            
            **(30,028**
            **)**
            
            (2,184
            )
            
            6,017Prepaid
                expenses
            
            
            **(6,047**
            **)**
            
            1,887
            
            
            (17,658
            )Payables
                and accruals
            
            
            **17,725**
            
            
            60,489
            
            
            (15,390
            )**$**
            **(56,093**
            **)**
            $
            22,087
            
            $
            (159
            )







**25.**
            **SEGMENT
                INFORMATION**




On
      May 1, 2005, as a result of restructuring, the Company’s operating segments
      were revised to reflect the current operating and management structure. The
      Company now operates under the following segments:




•
            Global
                Operations;


•
            European
                Operations;


•
            Heli-One;
                and


•
            Corporate
                and other.




130


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







This
      new segment classification is representative of the Company’s revised internal
      reporting and management structure. The Company has provided information on
      segment revenues, segment EBITDAR (ii) and
      segment operating income because these are the financial measures used by the
      Company’s key decision makers in making operating decisions and assessing
      performance. Transactions between operating segments are at standard industry
      rates.




The
      Company has restated comparative figures for the year ended April 30, 2005
      to reflect the new operational structure as if certain lease, PBH and associated
      transactions between the Company’s operating segments had occurred for that
      period as well. This restatement is based on management’s best estimate of how
      these transactions would have been recorded if the operational and management
      restructuring had been effect on May 1, 2004. These restatements relate
      only to internal and eliminated transactions.




Comparative
      figures for the year ended April 30, 2004 have not been restated to reflect
      the new operational structure as accurate estimates to reflect certain lease,
      PBH and associated transactions between the Company’s operating segments could
      not be made. The consolidated results of the Company are not impacted by these
      items as they relate only to internal and eliminated transactions. The Company
      has included segmented information for the years ended April 30, 2005 and
      2004 under its former organizational structure. All comparative figures under
      the current and former organizational structures have been restated for various
      restatements and adjustments as outlined in Notes 3 and 4.




The
      Company provides services across different geographic areas to many customers.
      Approximately 69% (2005 - 69% and 2004 - 73%) of the Company’s revenues in
      fiscal 2006 were derived from customers involved in oil and gas production
      and
      exploration. In fiscal 2006 and 2005 no single customer represented greater
      than
      10% of revenue.




The
      primary factors considered in identifying segments are geographic coverage,
      which also impacts the nature of the Company’s operations, the type of contracts
      that are entered into, the type of aircraft that are utilized and segments
      used
      by management to evaluate the business. The Company includes four reporting
      segments in its financial statements: European Operations, Global Operations,
      Heli-One, and Corporate and other.




European
      Operations - includes oil and gas flying operations in the UK, the Netherlands,
      Norway, Ireland and Denmark, as well as emergency medical services and search
      and rescue services throughout Europe.




Global
      Operations - includes flying operations in Australia, Africa, the Middle East,
      the Americas and Asia.




Heli-One
      - includes helicopter lease and repair and overhaul operations based in Norway,
      the UK and Canada, the survival suit and safety equipment supply and
      manufacturing businesses and Composites.




Corporate
      and other - includes corporate office costs in various
      jurisdictions.




The
      accounting policies of the segments and the basis of accounting for transactions
      between segments are the same as those described in the summary of significant
      accounting policies (Note 2).




131


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)










**Year
                Ended April 30, 2006**Global
                  operations
            
            
            European operations
            
            
            Heli-One
            
            
            Corporate
              and
                other
            
            
            Inter-segment eliminations
            
            
            Consolidated**Revenue
                from external customers**
            
            $
            330,877
            
            $
            520,367
            
            $
            160,108
            
            $
            175
            
            $
            -
            
            **$**
            **1,011,527**Add:
                Inter-segment revenues
            
            
            350
            
            
            12,773
            
            
            355,013
            
            
            58
            
            
            (368,194
            )
            
            **-****Total
                revenue**
            
            
            331,227
            
            
            533,140
            
            
            515,121
            
            
            233
            
            
            (368,194
            )
            
            **1,011,527**Direct
                costs*(i)*
            
            
            (240,305
            )
            
            (425,659
            )
            
            (280,060
            )
            
            -
            
            
            214,145
            
            
            **(731,879**
            **)**General
                and administration
            
            
            -
            
            
            -
            
            
            -
            
            
            (27,895
            )
            
            -
            
            
            **(27,895**
            **)****Segment
                EBITDAR*****(ii)***
            
            
            90,922
            
            
            107,481
            
            
            235,061
            
            
            (27,662
            )
            
            (154,049
            )
            
            **251,753**Aircraft
                lease and associated costs-
                Internal
            
            
            (76,447
            )
            
            (74,408
            )
            
            (3,194
            )
            
            -
            
            
            154,049
            
            
            **-**-
                External
            
            
            (6,769
            )
            
            (1,216
            )
            
            (57,491
            )
            
            -
            
            
            -
            
            
            **(65,476**
            **)****Segment
                EBITDA*****(iii)***
            
            
            7,706
            
            
            31,857
            
            
            174,376
            
            
            (27,662
            )
            
            -
            
            
            **186,277**Amortization
            
            
            (4,113
            )
            
            (5,946
            )
            
            (47,545
            )
            
            (1,048
            )
            
            -
            
            
            **(58,652**
            **)**Restructuring
                costs
            
            
            (975
            )
            
            (1,597
            )
            
            (7,640
            )
            
            (6,133
            )
            
            -
            
            
            **(16,345**
            **)**Gain
                (loss) on disposals of assets
            
            
            295
            
            
            407
            
            
            (442
            )
            
            (22
            )
            
            -
            
            
            **238****Operating
                income (loss)**
            
            $
            2,913
            
            $
            24,721
            
            $
            118,749
            
            $
            (34,865
            )
            $
            -
            
            
            **111,518**Financing
                charges
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            **(53,990**
            **)****Earnings
                from continuing operations before income taxes and undernoted
                items**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            **57,528**Non-controlling
                interest
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            **(66**
            **)**Gain
                on sale of long-term investments
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            **37,558**Equity
                in earnings of associated companies
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            **6,630**Income
                tax provision
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            **(10,940**
            **)****Net
                earnings from continuing operations**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            **90,710****Net
                earnings**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            **$**
            **90,710**Segment
                assets
            
            $
            167,268
            
            $
            235,158
            
            $
            1,116,370
            
            $
            159,553
            
            
            
            
            **$**
            **1,678,349**Segment
                capital asset expenditures
            
            
            4,477
            
            
            2,281
            
            
            276,346
            
            
            458
            
            
            
            
            
            **283,562**Segment
                helicopter major inspections
            
            
            -
            
            
            -
            
            
            23,612
            
            
            -
            
            
            
            
            
            **23,612**










132


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**Year
                Ended April 30, 2005****(iv)**Global operations
            
            
            European operations
            
            
            Heli-One
            
            
            Corporate
                and other
            
            
            Inter-segment
                eliminations
            
            
            Consolidated**Revenue
                from external customers**
            
            $
            292,066
            
            $
            530,897
            
            $
            143,765
            
            $
            435
            
            $
            -
            
            $
            967,163Add:
                Inter-segment revenues
            
            
            -
            
            
            10,697
            
            
            381,124
            
            
            2,741
            
            
            (394,562
            )
            
            -**Total
                revenue**
            
            
            292,066
            
            
            541,594
            
            
            524,889
            
            
            3,176
            
            
            (394,562
            )
            
            967,163Direct
                costs*(i)*
            
            
            (204,782
            )
            
            (430,802
            )
            
            (290,040
            )
            
            -
            
            
            241,335
            
            
            (684,289
            )General
                and administration
            
            
            -
            
            
            -
            
            
            -
            
            
            (35,279
            )
            
            -
            
            
            (35,279
            )**Segment
                EBITDAR*****(ii)***
            
            
            87,284
            
            
            110,792
            
            
            234,849
            
            
            (32,103
            )
            
            (153,227
            )
            
            247,595Aircraft
                lease and associated costs-
                Internal
            
            
            (64,411
            )
            
            (88,816
            )
            
            -
            
            
            -
            
            
            153,227
            
            
            --
                External
            
            
            (6,984
            )
            
            -
            
            
            (50,848
            )
            
            -
            
            
            -
            
            
            (57,832
            )**Segment
                EBITDA*****(iii)***
            
            
            15,889
            
            
            21,976
            
            
            184,001
            
            
            (32,103
            )
            
            -
            
            
            189,763Amortization
            
            
            (3,632
            )
            
            (5,539
            )
            
            (42,680
            )
            
            (1,248
            )
            
            -
            
            
            (53,099
            )Restructuring
                costs
            
            
            (1,358
            )
            
            (2,864
            )
            
            (3,307
            )
            
            (10,060
            )
            
            -
            
            
            (17,589
            )Gain
                on disposals of assets
            
            
            -
            
            
            -
            
            
            4,104
            
            
            -
            
            
            -
            
            
            4,104Fair
                value adjustment
            
            
            -
            
            
            -
            
            
            (14,260
            )
            
            -
            
            
            -
            
            
            (14,260
            )**Operating
                income (loss)**
            
            $
            10,899
            
            $
            13,573
            
            $
            127,858
            
            $
            (43,411
            )
            $
            -
            
            
            108,919Debt
                settlement costs
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,017
            )Financing
                charges
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (38,309
            )**Earnings
                from continuing operations before income taxes and undernoted
                items**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            68,593Non-controlling
                interest
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (288
            )Equity
                in earnings of associated companies
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,480Income
                tax provision
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (27,566
            )**Net
                earnings from continuing operations**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            46,219**Net
                earnings from discontinued operations**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            10,300**Net
                earnings**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            56,519Segment
                assets
            
            $
            175,169
            
            $
            288,460
            
            $
            1,048,865
            
            $
            174,206
            
            
            
            
            $
            1,686,700Segment
                capital asset expenditures
            
            
            13,021
            
            
            2,829
            
            
            219,780
            
            
            383
            
            
            
            
            
            236,013Segment
                helicopter major inspections
            
            
            -
            
            
            -
            
            
            15,539
            
            
            -
            
            
            
            
            
            15,539







133


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)





**Year
                Ended April 30, 2005****(iv)**European
                flying
            
            
            Int’l
              flying
            
            
            Schreiner
            
            
            Repair
                and overhaul
            
            
            Composites
            
            
            Corporate
                and other
            
            
            Inter-segment
                eliminations
            
            
            Consolidated**Revenue
                from external customers**
            
            $
            482,520
            
            $
            234,049
            
            $
            164,349
            
            $
            77,303
            
            $
            8,942
            
            $
            -
            
            $
            -
            
            $
            967,163Add:
                Inter-segment revenues
            
            
            22,710
            
            
            11,916
            
            
            -
            
            
            145,919
            
            
            -
            
            
            17,398
            
            
            (197,943
            )
            
            -**Total
                revenue**
            
            
            505,230
            
            
            245,965
            
            
            164,349
            
            
            223,222
            
            
            8,942
            
            
            17,398
            
            
            (197,943
            )
            
            967,163Direct
                costs
            
            
            431,172
            
            
            204,129
            
            
            126,685
            
            
            158,950
            
            
            14,792
            
            
            4,688
            
            
            (198,295
            )
            
            742,121General
                and administration
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            35,279
            
            
            -
            
            
            35,279**Segment
                EBITDA*****(iii)***
            
            
            74,058
            
            
            41,836
            
            
            37,664
            
            
            64,272
            
            
            (5,850
            )
            
            (22,569
            )
            
            352
            
            
            189,763Amortization
            
            
            (14,281
            )
            
            (11,332
            )
            
            (7,703
            )
            
            (17,591
            )
            
            (438
            )
            
            (1,754
            )
            
            
            
            
            (53,099
            )Restructuring
                costs
            
            
            (2,864
            )
            
            (1,358
            )
            
            (5,623
            )
            
            (3,307
            )
            
            -
            
            
            (4,437
            )
            
            
            
            
            (17,589
            )Gain
                (loss) on disposals of assets
            
            
            2,212
            
            
            1,493
            
            
            509
            
            
            (110
            )
            
            
            
            
            
            
            
            
            
            
            4,104Fair
                value adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (14,260
            )
            
            
            
            
            
            
            
            (14,260
            )**Operating
                income (loss)**
            
            $
            59,125
            
            $
            30,639
            
            $
            24,847
            
            $
            43,264
            
            $
            (20,548
            )
            $
            (28,760
            )
            $
            352
            
            
            108,919Debt
                settlement costs
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,017
            )Financing
                charges
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (38,309
            )**Earnings
                from continuing operations before income taxes and undernoted
                items**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            68,593Non-controlling
                interest
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (288
            )Equity
                in earnings of associated companies
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,480Income
                tax provision
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (27,566
            )**Net
                earnings from continuing operations**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            46,219**Net
                earnings from discontinued operations**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            10,300**Net
                earnings**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            56,519










**Year
                Ended April 30, 2004****(iv)**European
                flying
            
            
            Int’l
              flying
            
            
            Schreiner
            
            
            Repair
                and overhaul
            
            
            Composites
            
            
            Corporate
                and other
            
            
            Inter-segment
                eliminations
            
            
            Consolidated**Revenue
                from external customers**
            
            $
            482,112
            
            $
            191,773
            
            $
            32,490
            
            $
            58,119
            
            $
            6,962
            
            $
            -
            
            $
            -
            
            $
            771,456Add:
                Inter-segment revenues
            
            
            16,157
            
            
            11,047
            
            
            -
            
            
            135,490
            
            
            -
            
            
            13,577
            
            
            (176,271
            )
            
            -**Total
                revenue**
            
            
            498,269
            
            
            202,820
            
            
            32,490
            
            
            193,609
            
            
            6,962
            
            
            13,577
            
            
            (176,271
            )
            
            771,456Direct
                costs
            
            
            426,165
            
            
            179,470
            
            
            29,111
            
            
            138,188
            
            
            9,006
            
            
            14,627
            
            
            (176,288
            )
            
            620,279General
                and administration
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            18,633
            
            
            -
            
            
            18,633**Segment
                EBITDA*****(iii)***
            
            
            72,104
            
            
            23,350
            
            
            3,379
            
            
            55,421
            
            
            (2,044
            )
            
            (19,683
            )
            
            17
            
            
            132,544Amortization
            
            
            (12,948
            )
            
            (7,490
            )
            
            (1,512
            )
            
            (10,700
            )
            
            (496
            )
            
            (5,390
            )
            
            
            
            
            (38,536
            )Restructuring
                costs
            
            
            (7,114
            )
            
            -
            
            
            -
            
            
            (849
            )
            
            -
            
            
            (1,218
            )
            
            
            
            
            (9,181
            )Gain
                (loss) on disposals of assets
            
            
            2,245
            
            
            1,333
            
            
            (199
            )
            
            -
            
            
            
            
            
            (72
            )
            
            
            
            
            3,307**Operating
                income (loss)**
            
            $
            54,287
            
            $
            17,193
            
            $
            1,668
            
            $
            43,872
            
            $
            (2,540
            )
            $
            (26,363
            )
            $
            17
            
            
            88,134Debt
                settlement costs
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (19,716
            )Financing
                charges
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (29,824
            )**Earnings
                from continuing operations before income taxes and undernoted
                items**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            38,594Equity
                in earnings of associated companies
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            3,925Income
                tax recovery
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            9,703**Net
                earnings from continuing operations**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            52,222**Net
                loss from discontinued operations**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (321
            )**Net
                earnings**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            51,901




(i)
            Direct
                costs in the segment information presented under the current
                organizational structure excludes aircraft lease and associated costs.
                In
                the consolidated income statement and segment information presented
                under
                the former organizational structure, these costs are
                combined.




(ii)
            Segment
                EBITDAR is defined as segment EBITDA before aircraft lease and associated
                costs.




(iii)
            Segment
                EBITDA is defined as operating income before amortization, restructuring
                costs, gain (loss) on disposals of assets and fair value
                adjustment.




(iv)
            Comparative
                information has been reclassified to reflect the restatements and
                reclassifications as described in Notes 3 and 4, except that the
                segment information for the year ended April 30, 2004 has not been
                presented under the current organizational
                structure.




134


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







*Geographic
      Information*




Revenues
            
            
            Property
                and equipment
            
            
            Goodwill2005
            
            
            2004
            
            
            
            
            
            2005**2006**
            
            
            *(Restated
                Note 4*
            *)*
            
            *(Restated
                Note 4*
            *)*
            
            **2006**
            
            
            *(Restated
                Note 4*
            *)*
            
            **2006**
            
            
            2005Canada
            
            **$**
            **32,911**
            
            $
            23,974
            
            $
            21,758
            
            **$**
            **87,912**
            
            $
            114,973
            
            **$**
            **1,224**
            
            $
            1,079United
                Kingdom
            
            
            **221,225**
            
            
            248,206
            
            
            237,022
            
            
            **77,950**
            
            
            31,154
            
            
            **6,579**
            
            
            7,782Norway
            
            
            **207,139**
            
            
            183,089
            
            
            184,805
            
            
            **341,683**
            
            
            339,165
            
            
            **-**
            
            
            -Africa
            
            
            **150,110**
            
            
            124,396
            
            
            55,954
            
            
            **140,875**
            
            
            155,528
            
            
            **-**
            
            
            -Australia
            
            
            **64,582**
            
            
            62,207
            
            
            52,489
            
            
            **73,349**
            
            
            66,256
            
            
            **-**
            
            
            -Denmark
            
            
            **28,144**
            
            
            35,473
            
            
            28,199
            
            
            **25,452**
            
            
            31,157
            
            
            **-**
            
            
            -The
                Netherlands
            
            
            **67,212**
            
            
            65,958
            
            
            15,753
            
            
            **32,338**
            
            
            56,436
            
            
            **-**
            
            
            -Other
                Asian countries
            
            
            **52,701**
            
            
            88,489
            
            
            73,962
            
            
            **79,419**
            
            
            75,096
            
            
            **-**
            
            
            -Other
                European countries
            
            
            **109,059**
            
            
            90,011
            
            
            80,180
            
            
            **36,144**
            
            
            31,949
            
            
            **-**
            
            
            -Other
                countries
            
            
            **78,444**
            
            
            45,360
            
            
            21,334
            
            
            **30,962**
            
            
            41,492
            
            
            **-**
            
            
            -Consolidated
                total
            
            **$**
            **1,011,527**
            
            $
            967,163
            
            $
            771,456
            
            **$**
            **926,084**
            
            $
            943,206
            
            **$**
            **7,803**
            
            $
            8,861







Revenues
      are attributed to countries based on the location of the customer for repair
      and
      overhaul services and the location of service for flying revenue.




**26.**
            **COMMITMENTS**




The
      Company had entered into aircraft operating leases with 25 lessors in respect
      of
      82 aircraft included in the Company’s fleet at April 30, 2006. At inception
      the Company’s aircraft leases had terms not exceeding 8.5 years. At
      April 30, 2006 these leases had expiry dates ranging from fiscal 2007 to
      2015. The Company has options to purchase the aircraft at fair market value
      or
      agreed amounts that do not constitute bargain purchase options, but has no
      commitments to do so. With respect to such leased aircraft, substantially all
      of
      the costs of major inspections of airframes and the costs to perform
      inspections, major repairs and overhauls of major components are at the
      Company’s expense. The Company either performs this work internally through its
      own repair and overhaul facility or has the work performed by an external repair
      and overhaul service provider.




At
      April 30, 2006, the Company also had commitments with respect to operating
      leases for buildings, land and equipment. During the year ended April 30,
      2006 the Company incurred aircraft operating lease and related costs of
      $65.5 million (2005 - $57.8 million) and other operating lease costs
      of $6.4 million (2005 - $4.1 million). The minimum lease rentals
      required under such leases were $438.2 million as at April 30, 2006
      and are payable in the following amounts over the following fiscal
      years:




Aircraft
                operating
                  leases
            
            
            Building,
                land
              and
                equipment
              operating
                leases
            
            
            Total
              operating
                leases2007
            
            $
            75,171
            
            $
            6,357
            
            $
            81,5282008
            
            
            69,842
            
            
            5,038
            
            
            74,8802009
            
            
            64,460
            
            
            4,738
            
            
            69,1982010
            
            
            57,432
            
            
            4,293
            
            
            61,7252011
            
            
            48,962
            
            
            4,036
            
            
            52,998and
                thereafter
            
            
            72,204
            
            
            25,715
            
            
            97,919$
            388,071
            
            $
            50,177
            
            $
            438,248







As
      at
      April 30, 2006, the Company had ordered and made deposits (Note 11)
      for a number of aircraft. At April 30, 2006, the Company had committed to
      purchase 13 heavy and 38 medium aircraft. Total capital committed to these
      purchases is approximately $648.0 million (US $578.4 million).
      These aircraft are expected to be delivered in fiscal 2007 and beyond and will
      be deployed in the Company’s European Operations and Global
      Operations.




Where
      possible, the Company intends to finance these aircraft through operating
      leases.




135


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**27.**
            **VARIABLE
                INTEREST ENTITIES**




At
      April 30, 2006 the Company operated 19 aircraft (2005 - 19 aircraft) under
      operating leases with seven entities that would be considered variable interest
      entities (“VIEs”) under Canadian and US GAAP. These leases have terms and
      conditions similar to those of the Company’s other operating leases over periods
      ranging from fiscal 2007 to 2014. The Company has concluded that it is not
      the
      primary beneficiary of any of the aforementioned VIEs and that it is not
      required to consolidate any of these VIEs in its consolidated financial
      statements.




Based
      on appraisals by independent helicopter valuation companies as at April 30,
      2006, the unaudited estimated fair market value of the aircraft leased from
      VIEs
      is $134.1 million (2005 - $169.6 million). The Company has provided
      junior loans and loans receivable in connection with operating leases with
      these
      VIEs. The Company’s maximum exposure to loss related to the junior loans and
      loans receivable as a result of its involvement with the VIEs is
      $17.7 million (2005 - $13.0 million).




**28.**
            **GUARANTEES**




The
      Company has provided guarantees to certain lessors in respect of operating
      leases. If the Company fails to meet the senior credit facilities' financial
      ratios or breaches any of the covenants of those facilities and, as a result,
      the senior lenders accelerate debt repayment, the leases provide for a
      cross-acceleration that could enable the lessors and financial institutions
      that
      are lenders to those lessors 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 obligations due to those lessors in respect of
      the
      present value of the future lease payments, those lessors’ lenders could obtain
      payment of that deficiency from the Company under these guarantees.




The
      Company has provided limited guarantees to third parties under some of its
      operating leases relating to a portion of the aircraft values at the termination
      of the leases. The leases have terms expiring between fiscal 2007 and 2014.
      The
      Company’s exposure under the asset value guarantees including guarantees in the
      form of junior loans, loans receivable and deferred payments is approximately
      $60.8 million (2005 - $51.9 million). The resale market for the
      aircraft types for which the Company has provided guarantees remains strong,
      and
      as a result, the Company does not anticipate incurring any liability or loss
      with respect to these guarantees.




**29.**
            **CONTINGENCIES**




(a)
            Contingent
                liabilities




Petitions
      have been filed against subsidiaries for unspecified damages concerning
      helicopter accidents in prior years. It is management’s opinion that damages for
      which the Company may become responsible, if any, will be covered by the
      Company’s insurance and will therefore not have a material effect on the
      financial condition or results of operations of the Company.




(b)
            General
                tax contingencies




The
      business and operations of the Company are complex and have included a number
      of
      significant financings, business combinations, acquisitions and dispositions
      over the course of its history. The computation of income, payroll and other
      taxes involves many factors including the interpretation of relevant tax
      legislation in various jurisdictions in which the Company is subject to ongoing
      tax assessments. When applicable, the Company adjusts the previously recorded
      income tax expense, direct costs, interest and the associated assets and
      liabilities to reflect changes in its estimates or assessments. These
      adjustments could materially increase or decrease the Company’s results of
      operations.




**30.**
            **EMPLOYEE
                PENSION PLANS**




The
      Company maintains defined contribution employee pension plans in Canada, the
      UK,
      the Netherlands, Denmark, Australia and South Africa for approximately 50%
      of the Company’s active employees and certain former employees. The Company’s
      contributions to the defined contribution plans are based upon percentages
      of
      gross salaries. The Company’s contributions to the defined contribution plans
      expensed during fiscal 2006 were $5.9 million (2005 -
      $5.7 million).




136


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







The
      Company also maintains both funded and unfunded and both flat-benefit and
      final-pay defined benefit plans in Canada, the UK, Norway and the Netherlands
      for approximately 40% of the Company’s active employees. Funded plans require
      the Company to make cash contributions to the plan in order that there will
      be
      sufficient assets to discharge the plans’ benefit obligations as they become
      due. Unfunded plans do not require contributions to be paid into the plan by
      the
      Company. Rather, the Company pays the benefit obligations directly as they
      are
      due.




For
      the
      defined benefit pension plan in the UK the investment policy requires that
      the
      plan assets held under this plan be invested as follows:




Category
            Percentage
                maximumUK
                equities
            42%
                to 48%Overseas
                equities
            27%
                to 33%UK
                bonds
            22%
                to 28%







The
      assets held in the Norwegian plans are to be diversified as
      follows:




Category
            Percentage
                maximumNorwegian
                equities
            15%International
                equities
            35%Total
                equities
            35%Norwegian
                bonds
            70%High
                yield bonds
            25%Emerging
                market bonds
            25%International
                bonds
            40%Total
                bonds
            100%Money
                market
            80%Property
                funds
            15%







For
      the
      assets held in the plan in the Netherlands, 80% must be invested in fixed rate
      investments and the remaining 20% invested in shares with a maximum deviation
      of
      5% upwards or downwards.




While
      the asset mix varies in each plan, overall the asset mix at April 30, 2006
      was 46% equities, 38% fixed income and 16% money market.




For
      all
      the defined benefit pension plans the overall expected long-term rates of return
      on plan assets have been determined in part by assessing current and expected
      asset allocations as well as historical and expected returns on various
      categories of the assets. Such expected rates of return ignore short-term
      fluctuations.




For
      the
      UK plans it is expected that the rate of return on the plan assets will be
      between 4% and 5% in excess of price inflation. For the plans in Norway and
      the
      Netherlands the expected long-term rate of return is considered in reference
      to
      the longest stated bond rates in each country.




The
      Company retains actuaries to measure the assets, accrued benefit obligations
      and
      funding requirements of each defined benefit plan on an annual basis at
      April 30 and obtains quarterly updates.




During
      the years ended April 30, 2006 and April 30, 2005, additional
      employees were added to the plan in Canada resulting in an increase of
      $0.5 million (2005 - $2.6 million) to both unrecognized prior service
      costs and benefit obligations. Also during the year, the plan in the Netherlands
      was changed to comply with changes to the fiscal regulations related to
      pensions. These changes resulted in a decrease of $0.9 million to both
      unrecognized prior service costs and benefit obligations.




During
      the year ended April 30, 2005 the plan in the Netherlands was amended from
      a final pay arrangement to an average pay arrangement resulting in a reduction
      in the accrued benefit obligation of $11.5 million at that
      date.




137


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







In
      2005
      the sale of SAMCO (Note 6), as well as terminations as part of the
      restructuring initiatives (Note 14), resulted in a curtailment of the
      Netherlands pension plan. A curtailment gain of $2.8 million from the sale
      of SAMCO was recorded in the results of discontinued operations in fiscal 2005
      and a curtailment gain of $2.9 million related to the Company’s
      restructuring activities was recorded in restructuring costs in fiscal 2005.
      The
      curtailment gain for both events reflected a reduction in both the benefit
      obligations and unrecognized past service costs.




The
      consolidated changes in the benefit obligations and fair values of assets for
      the defined benefit plans during fiscal 2006 and 2005 are as
      follows:


2006
            
            
            2005**Change
                in benefit obligations**Benefit
                obligations, beginning of year
            
            $
            620,398
            
            $
            543,906Current
                service cost
            
            
            19,328
            
            
            19,508Interest
                cost
            
            
            28,702
            
            
            29,015Amendments
            
            
            (354
            )
            
            (8,933
            )Net
                actuarial and experience losses
            
            
            18,450
            
            
            56,970Benefits
                paid
            
            
            (15,726
            )
            
            (16,144
            )Curtailment
                gain
            
            
            -
            
            
            (2,785
            )Foreign
                exchange rate changes
            
            
            (71,637
            )
            
            (1,139
            )Benefit
                obligations, end of year
            
            $
            599,161
            
            $
            620,398**Change
                in plan assets**Fair
                value of plan assets, beginning of year
            
            $
            490,501
            
            $
            440,222Actual
                return on plan assets
            
            
            75,408
            
            
            29,936Employer
                contributions
            
            
            30,775
            
            
            32,898Participant
                contributions
            
            
            2,638
            
            
            3,595Benefits
                paid
            
            
            (14,977
            )
            
            (15,309
            )Foreign
                exchange rate changes
            
            
            (59,335
            )
            
            (841
            )Fair
                value of plan assets, end of year
            
            $
            525,010
            
            $
            490,501**Funded
                status**
            
            $
            (74,151
            )
            $
            (129,897
            )Unrecognized
                net actuarial and experience losses
            
            
            134,938
            
            
            196,830Unrecognized
                prior service costs
            
            
            (620
            )
            
            (1,084
            )Unrecognized
                transition amounts
            
            
            715
            
            
            762Pension
                guarantee deposits
            
            
            5,179
            
            
            2,701Total
                recognized net pension asset
            
            $
            66,061
            
            $
            69,312







138


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)





The
      tables below detail as at April 30, 2006 by funded and unfunded plans, the
      funded status and net amount recognized on the Company’s balance sheet as
      prepaid pension costs reported in other assets of $100.1 million
      (Note 11) (2005 - $104.8 million) and accrued benefit obligations
      included in other liabilities of $34.0 million (Note 16) (2005 -
      $35.5 million).




As
                at April 30, 2006


Funded
                plans
            
            
            SERP
                &
            
            
            
            
            
            
            
            
            OtherSurplus
            
            
            Deficit
            
            
            Unfunded
                Plans
            
            
            Total
            
            
            Other
                assets
              *(Note
                11*
            *)*
            
            liabilities*(Note
                16*
            *)*Benefit
                obligations
            
            $
            195,556
            
            $
            351,679
            
            $
            51,926
            
            $
            599,161
            
            $
            486,569
            
            $
            112,592Fair
                value of plan assets
            
            
            223,018
            
            
            296,264
            
            
            5,728
            
            
            525,010
            
            
            459,442
            
            
            65,568Funded
                status
            
            
            27,462
            
            
            (55,415
            )
            
            (46,198
            )
            
            (74,151
            )
            
            (27,127
            )
            
            (47,024
            )Unrecognized
                net actuarial and experience losses
            
            
            45,661
            
            
            92,149
            
            
            14,636
            
            
            152,446
            
            
            138,077
            
            
            14,369Unrecognized
                prior service costs
            
            
            1,126
            
            
            (6,701
            )
            
            5,426
            
            
            (149
            )
            
            1,126
            
            
            (1,275
            )Unrecognized
                transition amounts
            
            
            (12,442
            )
            
            (4,712
            )
            
            (110
            )
            
            (17,264
            )
            
            (17,154
            )
            
            (110
            )Pension
                guarantee deposits
            
            
            4,402
            
            
            777
            
            
            -
            
            
            5,179
            
            
            5,179
            
            
            -$
            66,209
            
            $
            26,098
            
            $
            (26,246
            )
            $
            66,061
            
            $
            100,101
            
            $
            (34,040
            )







As
                at
                April 30, 2005Funded
                plans
            
            
            SERP
              &
            
            
            
            
            
            Other
              assets
            
            
            Other
              liabilitiesSurplus
            
            
            Deficit
            
            
            UnfundedPlans
            
            
            Total
            
            
            *(Note
                11*
            *)*
            
            *(Note
                16*
            *)*Benefit
                obligations
            
            $
            205,943
            
            $
            360,254
            
            $
            54,201
            
            $
            620,398
            
            $
            495,615
            
            $
            124,783Fair
                value of plan assets
            
            
            214,614
            
            
            275,887
            
            
            -
            
            
            490,501
            
            
            427,087
            
            
            63,414Funded
                status
            
            
            8,671
            
            
            (84,367
            )
            
            (54,201
            )
            
            (129,897
            )
            
            (68,528
            )
            
            (61,369
            )Unrecognized
                net actuarialand
                experience losses
            
            
            53,217
            
            
            120,921
            
            
            22,692
            
            
            196,830
            
            
            169,392
            
            
            27,438Unrecognized
                prior service costs
            
            
            1,251
            
            
            (7,590
            )
            
            5,255
            
            
            (1,084
            )
            
            1,251
            
            
            (2,335
            )Unrecognized
                transition amounts
            
            
            -
            
            
            -
            
            
            762
            
            
            762
            
            
            -
            
            
            762Pension
                guarantee deposits
            
            
            2,296
            
            
            405
            
            
            -
            
            
            2,701
            
            
            2,701
            
            
            -$
            65,435
            
            $
            29,369
            
            $
            (25,492
            )
            $
            69,312
            
            $
            104,816
            
            $
            (35,504
            )







The
      significant weighted average actuarial assumptions adopted in measuring the
      Company’s defined benefit pension plan obligations as at April 30 are as
      follows:




**2006**
            
            
            2005
            
            
            2004Discount
                rate
            
            
            **4.94**
            **%**
            
            5.15
            %
            
            5.64
            %Rate
                of compensation increase
            
            
            **3.50**
            **%**
            
            3.38
            %
            
            3.38
            %







The
      significant weighted average actuarial assumptions adopted in measuring the
      Company’s net defined benefit pension plan expense during the year are as
      follows:




**2006**
            
            
            2005
            
            
            2004Discount
                rate
            
            
            **5.08**
            **%**
            
            5.74
            %
            
            5.86
            %Expected
                long-term rate of return on plan assets
            
            
            **6.66**
            **%**
            
            6.70
            %
            
            6.72
            %







139


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







The
      Company’s net defined benefit pension plan expense, which excludes the impact of
      the curtailment gain, as noted above, is as follows:




**2006**
            
            
            2005
            
            
            2004Current
                service cost
            
            **$**
            **19,328**
            
            $
            19,508
            
            $
            17,050Interest
                cost
            
            
            **28,702**
            
            
            29,015
            
            
            24,233Actual
                return on plan assets
            
            
            **(75,408**
            **)**
            
            (29,936
            )
            
            (45,507
            )Excess
                of actual return over expected return
            
            
            **47,769**
            
            
            347
            
            
            23,450Amortization
                of net actuarial and experience losses
            
            
            **10,114**
            
            
            7,985
            
            
            9,773Amortization
                of prior service costs
            
            
            **(1**
            **)**
            
            (376
            )
            
            603Amortization
                of transition amounts
            
            
            **48**
            
            
            268
            
            
            395Participant
                contributions
            
            
            **(2,638**
            **)**
            
            (3,595
            )
            
            (2,899
            )Net
                defined benefit pension plan expense
            
            **$**
            **27,914**
            
            $
            23,216
            
            $
            27,098







Benefits
      expected to be paid under the defined benefit pension plans in each of the
      next
      five fiscal years and in aggregate for the five fiscal years thereafter is
      as
      follows:




2007
            
            $
            14,5752008
            
            
            16,3362009
            
            
            17,6862010
            
            
            19,3762011
            
            
            23,2512012-2016
            
            
            142,594







Employer
      contributions expected to be paid to the defined benefit pension plans during
      fiscal 2007 as required by funding regulations and law are
      $24.9 million.




**31.**
            **RELATED
                PARTY TRANSACTIONS**




(a)
            In
                the course of its regular business activities, the Company enters
                into
                routine transactions with companies subject to significant influence
                by
                the Company (most significantly Aero Contractors of Nigeria) as well
                as
                parties affiliated with the controlling shareholder. These transactions
                are measured at the amounts exchanged, which is the amount of
                consideration determined and agreed to by the related parties.
                Transactions with related parties for the years ended April 30 are
                summarized as follows:




**2006**
            
            
            2005Revenues
            
            **$**
            **70,738**
            
            $
            43,518Direct
                costs
            
            
            **446**
            
            
            1,298Inventory
                additions
            
            
            **10,679**
            
            
            -Capital
                asset additions
            
            
            **7,126**
            
            
            8,160Net
                amounts receivable and payable in respect of such revenues, expenses
                and
                additions
            
            
            **21,878**
            
            
            15,044




(b)
            During
                fiscal 2000, in connection with securing tender credit facilities,
                the
                Company received an unsecured, subordinated, convertible 12% loan
                from an
                affiliate of the controlling shareholder in the amount of
                $5.0 million. This loan is subordinated to the Company’s senior
                credit facilities and its senior subordinated notes (Note 13). The
                loan is convertible at the option of the shareholder into Class A
                subordinate voting shares at $3.63 per share. The estimated value of
                the loan proceeds attributable to the conversion feature of
                $1.0 million was allocated to contributed surplus. The equivalent
                reduction in the carrying value of the loan is amortized to earnings
                over
                the term of the loan. Interest expense of $0.6 million (2005 -
                $0.7 million), including amortization of the above noted discount,
                was recorded on the loan during the fiscal year ended April 30,
                2006.




140


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**32.**
            **RECONCILIATION
                TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED
                STATES****OF AMERICA**




The
      Company’s consolidated financial statements have been prepared in accordance
      with Canadian GAAP. In certain respects, Canadian GAAP differs from US GAAP.
      The
      effects of significant differences are described below.




(a)
            Consolidated
                statements of earnings and comprehensive
                earnings




**Year
                Ended April 30,**2005
            
            
            2004**2006**
            
            
            *(Restated
                Notes 4 and 32(a)(iv)*)**
            
            
            *(Restated
                Notes 4 and 32(a)(iv)*)****Net
                earnings according to Canadian GAAP**
            
            **$**
            **90,710**
            
            $
            56,519
            
            $
            51,901Pre-operating
                expenses*(i)*
            
            
            **3,261**
            
            
            (3,515
            )
            
            1,473Tax
                impact of pre-operating expenses
            
            
            **(1,065**
            **)**
            
            1,168
            
            
            (486
            )Unrealized
                gain (loss) on ineffective hedges*(ii)*
            
            
            **43,803**
            
            
            (4,796
            )
            
            (23,366
            )Tax
                impact of unrealized gain (loss) on ineffective hedges
            
            
            **(7,256**
            **)**
            
            778
            
            
            4,704Amortization
                of guarantees recognized*(iii)*
            
            
            **(1,365**
            **)**
            
            (827
            )
            
            (101
            )Tax
                impact of amortization of guarantees recognized
            
            
            **533**
            
            
            225
            
            
            30Proportionate
                foreign currency translation loss due to partial reduction in subsidiary
                net investments*(iv)*
            
            
            **2,612**
            
            
            -
            
            
            -Tax
                impact of CTA loss
            
            
            **(891**
            **)**
            
            -
            
            
            -Other,
                net of tax
            
            
            **277**
            
            
            (448
            )
            
            (109
            )**Net
                earnings according to US GAAP**
            
            
            **130,619**
            
            
            49,104
            
            
            34,046Other
                comprehensive earningsForeign
                currency translation*(v)*
            
            
            **(79,713**
            **)**
            
            8,588
            
            
            8,487Minimum
                pension liability*(vi)*
            
            
            **23,702**
            
            
            (78,117
            )
            
            39,178Tax
                impact of minimum pension liability
            
            
            **(7,242**
            **)**
            
            23,412
            
            
            (11,606
            )Foreign
                currency cash flow hedges*(vii)*Unrealized
                holding gains arising during the period
            
            
            **8,166**
            
            
            7,052
            
            
            -Less:
                reclassification adjustment for gains included in net
                earnings
            
            
            **(3,857**
            **)**
            
            (4,487
            )
            
            -Tax
                impact on foreign currency cash flow hedges
            
            
            **(1,575**
            **)**
            
            (1,052
            )
            
            -Unrealized
                gains on securities*(viii)*Unrealized
                holding gains arising during the period
            
            
            **2,319**
            
            
            1,688
            
            
            -Less:
                reclassification adjustment for gains included in net
                earnings
            
            
            **(4,007**
            **)**
            
            -
            
            
            -Tax
                impact on unrealized gains on securities
            
            
            **301**
            
            
            (301
            )
            
            -**Comprehensive
                earnings according to US GAAP**
            
            **$**
            **68,713**
            
            $
            5,887
            
            $
            70,105**Net
                earnings per share according to US GAAP**Basic
            
            **$**
            **3.11**
            
            $
            1.17
            
            $
            0.82Diluted
            
            **$**
            **2.84**
            
            $
            1.06
            
            $
            0.74




(i)
            Pre-operating
                expenses




Under
      Canadian GAAP, pre-operating expenses related to the operations of new
      businesses and customer contracts meeting certain criteria are deferred and
      amortized over the expected period of benefit, not exceeding five years. Under
      US GAAP, these pre-operating expenses are charged to earnings as
      incurred.




(ii)
            Unrealized
                gain (loss) on ineffective hedges




Certain
      hedging transactions that qualify for deferral under Canadian GAAP do not meet
      the deferral criterion under US GAAP and are required to be recognized in
      earnings. Under US GAAP, derivatives are required to be recorded on the balance
      sheet at fair value with the changes in fair value recognized in
      earnings.




141


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







(iii)
            Amortization
                of guarantees recognized




Under
      US
      GAAP, the provisions of Financial Interpretation 45, Guarantor’s Accounting
      and Disclosure Requirements for Guarantees, including Indirect Guarantees of
      Indebtedness of Others (“FIN 45”), requires the Company to recognize a
      liability for the fair value of the obligation undertaken in issuing the
      guarantee, regardless of whether or not the liability is probable.




(iv)
            Proportionate
                foreign currency translation loss due to partial reduction in subsidiary
                net investment




Under
      Canadian GAAP, a proportionate amount of CTA is recognized in earnings when
      a
      net investment is partially sold or reduced. Under US GAAP, CTA is only released
      when a net investment is substantially or completely liquidated.




(v)
            Foreign
                currency cash flow hedges




Under
      US
      GAAP, changes in the fair value of foreign currency contracts qualifying as
      effective cash flow hedges are recorded in other comprehensive earnings net
      of
      income taxes. These amounts are recognized in net earnings as the hedged
      transactions occur.




(vi)
            Minimum
                pension liability




Under
      US
      GAAP, if the accrued benefit obligation related to defined benefit pension
      plans
      exceeds the fair value of plan assets, an additional minimum liability shall
      be
      recognized with an equal amount to be recognized as an intangible asset,
      provided that the intangible asset recognized shall not exceed the amount of
      unrecognized prior service cost. Any excess of the additional minimum liability
      over the unrecognized prior service cost is recorded as a separate component
      of
      other comprehensive earnings net of income taxes as a minimum pension liability
      adjustment.




(vii)
            Foreign
                currency cash flow hedges




Under
      US
      GAAP, changes in the fair value of foreign currency contracts qualifying as
      effective cash flow hedges are recorded in other comprehensive earnings net
      of
      income taxes. These amounts are recognized in net earnings as the hedged
      transactions occur.




(viii)
            Unrealized
                gains on securities




Under
      US
      GAAP, unrealized holding gains and losses on available-for-sale securities
      are
      recorded in other comprehensive earnings net of income taxes. These amounts
      are
      recognized in net earnings as they are realized.




(ix)
            Restatements




In
      accordance with US GAAP, the restatements described in Note 3 are recorded
      as prior period adjustments in accordance with Accounting Principles Board
      Opinion No. 20, Accounting Changes.




142


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







(b)
            Consolidated
                balance sheets




**April 30,
                2006**
            April
                30, 2005
              *(Restated
                Notes 4 and 32(a)(ix))***Canadian
                GAAP**
            
            
            **US
              GAAP**
            
            
            Canadian
              GAAP
            
            
            US
                GAAPCurrent
                future income tax assets
            
            **$**
            **26,859**
            
            **$**
            **25,648**
            
            $
            28,110
            
            $
            25,731Other
                current assets
            
            
            **371,175**
            
            
            **372,252**
            
            
            348,528
            
            
            347,909Property
                and equipment, net
            
            
            **926,084**
            
            
            **927,333**
            
            
            943,206
            
            
            944,190Long-term
                future income tax assets
            
            
            **39,848**
            
            
            **53,783**
            
            
            57,674
            
            
            82,826Other
                assets
            
            
            **314,383**
            
            
            **300,799**
            
            
            309,182
            
            
            285,152**$**
            **1,678,349**
            
            **$**
            **1,679,815**
            
            $
            1,686,700
            
            $
            1,685,808Current
                future income tax liabilities
            
            **$**
            **8,852**
            
            **$**
            **10,177**
            
            $
            705
            
            $
            730Other
                current liabilities
            
            
            **267,072**
            
            
            **263,704**
            
            
            291,447
            
            
            291,449Long-term
                debt
            
            
            **151,139**
            
            
            **151,444**
            
            
            97,543
            
            
            97,992Senior
                subordinated notes
            
            
            **448,120**
            
            
            **448,120**
            
            
            502,760
            
            
            502,760Other
                liabilities
            
            
            **132,431**
            
            
            **183,454**
            
            
            128,712
            
            
            200,977Long-term
                future income tax liabilities
            
            
            **180,001**
            
            
            **173,624**
            
            
            205,385
            
            
            195,993Shareholders’
                equityClass
                A
                subordinate voting shares
            
            
            **223,241**
            
            
            **223,241**
            
            
            222,727
            
            
            222,727Class
                A
                subordinate voting employee share purchase loans
            
            
            **(1,502**
            **)**
            
            **(1,502**
            **)**
            
            (1,689
            )
            
            (1,689
            )Class
                B
                multiple voting shares
            
            
            **18,413**
            
            
            **18,413**
            
            
            18,431
            
            
            18,431Contributed
                surplus
            
            
            **4,363**
            
            
            **3,412**
            
            
            3,291
            
            
            2,340Foreign
                currency translation adjustment
            
            
            **(66,262**
            **)**
            
            **-**
            
            
            (21,466
            )
            
            -Accumulated
                other comprehensive earnings
            
            
            **-**
            
            
            **(136,039**
            **)**
            
            -
            
            
            (74,133
            )Retained
                earnings
            
            
            **312,481**
            
            
            **341,767**
            
            
            238,854
            
            
            228,231**$**
            **1,678,349**
            
            **$**
            **1,679,815**
            
            $
            1,686,700
            
            $
            1,685,808







(c)
            Other
                required disclosures




**2006**
            
            
            2005*(Restated
                Note 4*
            *)*Receivables
                - trade
            
            **$**
            **188,928**
            
            $
            175,803Allowance
                for doubtful accounts
            
            
            **(3,399**
            **)**
            
            (7,501
            )Net
                trade receivables
            
            **$**
            **185,529**
            
            $
            168,302Payables
                - trade
            
            **$**
            **140,941**
            
            $
            130,317Accruals
            
            
            **71,827**
            
            
            92,876Interest
                accrual
            
            
            **16,881**
            
            
            13,227Total
                payables and accruals
            
            **$**
            **229,649**
            
            $
            236,420







**33.**
            **SUPPLEMENTAL
                GUARANTOR FINANCIAL
                INFORMATION**




Certain
      of our subsidiaries (collectively the “Guarantors”) have guaranteed our
      obligations to pay principal and interest with respect to the senior
      subordinated notes. Separate financial statements of the Guarantors are not
      presented as we believe the summarized financial information which follows
      is
      more meaningful in understanding the financial position of the Guarantors.
      There
      are no significant restrictions on the ability of the Guarantors to make
      distributions to us.




We
      account for our investments in subsidiaries by the cost method for internal
      financial statement purposes and by the equity method in the following
      summarized financial information. U.S. GAAP was employed in the preparation
      of
      the summarized financial information.




143


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**2006****As
                at April 30**
            
            
            **CHC
                Helicopter**
              **Corporation**
            
            
            **Guarantor**
              **subsidiaries**
            
            
            **Non-Guarantor**
              **subsidiaries**
            
            
            **Eliminations**
            
            
            **Consolidated****Assets**Current
                assetsCash
                and cash equivalents
            
            $
            (39,320
            )
            $
            60,022
            
            $
            5,629
            
            $
            -
            
            $
            26,331Receivables
            
            
            63,848
            
            
            674,441
            
            
            254,636
            
            
            (751,848
            )
            
            241,077Inventory
            
            
            -
            
            
            22,208
            
            
            70,314
            
            
            -
            
            
            92,522Other
                current assets
            
            
            (1,108
            )
            
            9,752
            
            
            5,815
            
            
            23,511
            
            
            37,97023,420
            
            
            766,423
            
            
            336,394
            
            
            (726,337
            )
            
            397,900Property
                and equipment, net
            
            
            7
            
            
            530,103
            
            
            405,810
            
            
            (8,587
            )
            
            927,333Investments
            
            
            646,499
            
            
            225,649
            
            
            105,928
            
            
            (972,654
            )
            
            5,422Long-term
                intercompany
            
            
            539,816
            
            
            -
            
            
            42,985
            
            
            (582,801
            )
            
            -Other
                long-term assets
            
            
            39,933
            
            
            194,075
            
            
            115,212
            
            
            (60
            )
            
            349,160$
            1,249,675
            
            $
            1,716,250
            
            $
            1,006,329
            
            $
            (2,292,439
            )
            $
            1,679,815**Liabilities
                and shareholders' equity**Current
                liabilitiesPayables
                and accruals
            
            $
            67,775
            
            $
            623,644
            
            $
            274,965
            
            $
            (733,883
            )
            $
            232,501Other
                current liabilities
            
            
            24,539
            
            
            4,603
            
            
            1,365
            
            
            10,873
            
            
            41,38092,314
            
            
            628,247
            
            
            276,330
            
            
            (723,010
            )
            
            273,881Long-term
                debt
            
            
            101,620
            
            
            49,732
            
            
            92
            
            
            -
            
            
            151,444Senior
                subordinated notes
            
            
            448,120
            
            
            -
            
            
            -
            
            
            -
            
            
            448,120Long-term
                intercompany
            
            
            761
            
            
            257,432
            
            
            181,877
            
            
            (440,070
            )
            
            -Other
                liabilities
            
            
            6,886
            
            
            123,904
            
            
            108,439
            
            
            (55,775
            )
            
            183,454Future
                income tax liabilities
            
            
            13,902
            
            
            32,246
            
            
            71,229
            
            
            56,247
            
            
            173,624Shareholders'
                equityCapital
                stock
            
            
            240,152
            
            
            88,157
            
            
            42,118
            
            
            (130,275
            )
            
            240,152Contributed
                surplus
            
            
            3,412
            
            
            30,782
            
            
            48,934
            
            
            (79,716
            )
            
            3,412Accumulated
                other comprehensive earnings
            
            
            741
            
            
            (166,699
            )
            
            54,729
            
            
            (24,810
            )
            
            (136,039
            )Retained
                earnings
            
            
            341,767
            
            
            672,499
            
            
            222,581
            
            
            (895,030
            )
            
            341,767$
            1,249,675
            
            $
            1,716,250
            
            $
            1,006,329
            
            $
            (2,292,439
            )
            $
            1,679,815












144


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**2006****For
                the year ended April 30**
            
            
            **CHC
                Helicopter**
              **Corporation**
            
            
            **Guarantor**
              **subsidiaries**
            
            
            **Non-Guarantor**
              **subsidiaries**
            
            
            **Eliminations**
            
            
            **Consolidated****Revenue**
            
            $
            -
            
            $
            711,030
            
            $
            475,807
            
            $
            (175,310
            )
            $
            1,011,527Direct
                costs
            
            
            (670
            )
            
            (629,466
            )
            
            (387,343
            )
            
            220,353
            
            
            (797,126
            )General
                and administration costs
            
            
            -
            
            
            (27,895
            )
            
            -
            
            
            -
            
            
            (27,895
            )Amortization
            
            
            -
            
            
            (29,819
            )
            
            (27,156
            )
            
            (1,413
            )
            
            (58,388
            )Restructuring
                costs
            
            
            -
            
            
            (12,099
            )
            
            (4,246
            )
            
            -
            
            
            (16,345
            )Gain
                on disposals of assets
            
            
            -
            
            
            12,646
            
            
            8,258
            
            
            (20,666
            )
            
            238**Operating
                income**
            
            
            (670
            )
            
            24,397
            
            
            65,320
            
            
            22,964
            
            
            112,011Financing
                charges
            
            
            23,228
            
            
            (11,237
            )
            
            (18,249
            )
            
            494
            
            
            (5,764
            )**Earnings
                from continuing operations before undernoted**
            
            
            22,558
            
            
            13,160
            
            
            47,071
            
            
            23,458
            
            
            106,247Non-controlling
                interest
            
            
            -
            
            
            -
            
            
            (66
            )
            
            -
            
            
            (66
            )Gain
                on sale of long-term investments
            
            
            -
            
            
            37,558
            
            
            -
            
            
            -
            
            
            37,558Equity
                in earnings of associated companies
            
            
            108,422
            
            
            25,084
            
            
            -
            
            
            (126,876
            )
            
            6,630Intercompany
                charges
            
            
            -
            
            
            20,690
            
            
            (20,690
            )
            
            -
            
            
            -Income
                taxes
            
            
            (361
            )
            
            (13,405
            )
            
            (7,861
            )
            
            1,877
            
            
            (19,750
            )**Net
                earnings from continuing operations**
            
            
            130,619
            
            
            83,087
            
            
            18,454
            
            
            (101,541
            )
            
            130,619**Net
                loss from discontinued operations**
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -**Net
                earnings**
            
            
            130,619
            
            
            83,087
            
            
            18,454
            
            
            (101,541
            )
            
            130,619Retained
                earnings, beginning of year
            
            
            228,231
            
            
            589,362
            
            
            204,127
            
            
            (793,489
            )
            
            228,231Dividends
            
            
            (17,083
            )
            
            -
            
            
            -
            
            
            -
            
            
            (17,083
            )**Retained
                earnings, end of year**
            
            $
            341,767
            
            $
            672,449
            
            $
            222,581
            
            $
            (895,030
            )
            $
            341,767












145


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**2006****For
                the year ended April 30**
            
            
            **CHC
                Helicopter**
              **Corporation**
            
            
            **Guarantor**
              **subsidiaries**
            
            
            **Non-Guarantor**
              **subsidiaries**
            
            
            **Eliminations**
            
            
            **Consolidated****Operating
                activities**Cash
                flow from operations
            
            $
            (31,754
            )
            $
            150,858
            
            $
            (79,769
            )
            $
            -
            
            $
            39,335**Financing
                activities**Long-term
                debt proceeds
            
            
            289,636
            
            
            175,419
            
            
            152,236
            
            
            (21,792
            )
            
            595,499Long-term
                debt repayments
            
            
            (372,562
            )
            
            (147,517
            )
            
            (313
            )
            
            21,792
            
            
            (498,600
            )Dividends
                paid
            
            
            (14,939
            )
            
            -
            
            
            -
            
            
            -
            
            
            (14,939
            )Capital
                stock issued
            
            
            496
            
            
            -
            
            
            -
            
            
            -
            
            
            496Other
            
            
            (6,888
            )
            
            -
            
            
            -
            
            
            -
            
            
            (6,888
            )(104,257
            )
            
            27,902
            
            
            151,923
            
            
            -
            
            
            75,568**Investing
                activities**Additions
                to property and equipment
            
            
            -
            
            
            (168,941
            )
            
            (114,621
            )
            
            
            
            
            (283,562
            )Helicopter
                major inspections
            
            
            -
            
            
            (7,354
            )
            
            (16,258
            )
            
            
            
            
            (23,612
            )Proceeds
                from disposal
            
            
            -
            
            
            259,833
            
            
            55,211
            
            
            
            
            
            315,044Aircraft
                deposits
            
            
            -
            
            
            (124,990
            )
            
            
            
            
            
            
            
            (124,990
            )Restricted
                cash
            
            
            
            
            
            16
            
            
            (5,581
            )
            
            -
            
            
            (5,565
            )Advances
                to BHS
            
            
            -
            
            
            (3,892
            )
            
            
            
            
            -
            
            
            (3,892
            )Investment
                in subsidiaries, net of cash acquired
            
            
            -
            
            
            (1,123
            )
            
            -
            
            
            -
            
            
            (1,123
            )Prepaid
                aircraft rental
            
            
            
            
            
            (2,988
            )
            
            (642
            )
            
            
            
            
            (3,630
            )Other
            
            
            
            
            
            1,044
            
            
            1,044
            
            
            
            
            
            2,088-
            
            
            (48,395
            )
            
            (80,847
            )
            
            -
            
            
            (129,242
            )Effect
                of exchange rate changes on cash and cash equivalents
            
            
            -
            
            
            (11,487
            )
            
            766
            
            
            -
            
            
            (10,721
            )**Change
                in cash and cash equivalents during the year**
            
            
            (136,011
            )
            
            118,878
            
            
            (7,927
            )
            
            -
            
            
            (25,060
            )**Cash
                and cash equivalents, beginning of year**
            
            
            96,691
            
            
            (58,856
            )
            
            13,556
            
            
            -
            
            
            51,391**Cash
                and cash equivalents, end of year**
            
            $
            (39,320
            )
            $
            60,022
            
            $
            5,629
            
            $
            -
            
            $
            26,331







146


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**2005
                (Restated Note 4)****As
                at April 30**
            
            
            **CHC
                Helicopter**
              **Corporation**
            
            
            **Guarantor**
              **subsidiaries**
            
            
            **Non-Guarantor**
              **subsidiaries**
            
            
            **Eliminations**
            
            
            **Consolidated****Assets**Current
                assetsCash
                and cash equivalents
            
            $
            96,691
            
            $
            (58,856
            )
            $
            13,556
            
            $
            -
            
            $
            51,391Receivables
            
            
            63,422
            
            
            650,760
            
            
            208,594
            
            
            (702,361
            )
            
            220,415Inventory
            
            
            -
            
            
            25,972
            
            
            40,511
            
            
            -
            
            
            66,483Other
                current assets
            
            
            3,529
            
            
            22,755
            
            
            9,935
            
            
            (868
            )
            
            35,351163,642
            
            
            640,631
            
            
            272,596
            
            
            (703,229
            )
            
            373,640Property
                and equipment, net
            
            
            8
            
            
            613,533
            
            
            351,017
            
            
            (20,368
            )
            
            944,190Investments
            
            
            541,418
            
            
            252,695
            
            
            98,424
            
            
            (833,731
            )
            
            58,806Long-term
                intercompany
            
            
            409,371
            
            
            -
            
            
            73,639
            
            
            (483,010
            )
            
            -Other
                long-term assets
            
            
            39,105
            
            
            185,109
            
            
            116,166
            
            
            (31,208
            )
            
            309,172$
            1,153,544
            
            $
            1,691,968
            
            $
            911,842
            
            $
            (2,071,546
            )
            $
            1,685,808**Liabilities
                and shareholders' equity**Current
                liabilitiesPayables
                and accruals
            
            $
            51,540
            
            $
            656,383
            
            $
            242,163
            
            $
            (692,232
            )
            
            257,854Other
                current liabilities
            
            
            24,625
            
            
            (3,828
            )
            
            (4,330
            )
            
            17,858
            
            
            34,32576,165
            
            
            652,555
            
            
            237,833
            
            
            (674,374
            )
            
            292,179Long-term
                debt
            
            
            92,917
            
            
            5,742
            
            
            405
            
            
            (1,072
            )
            
            97,992Senior
                subordinated notes
            
            
            502,760
            
            
            -
            
            
            -
            
            
            -
            
            
            502,760Long-term
                intercompany
            
            
            -
            
            
            198,428
            
            
            157,269
            
            
            (355,697
            )
            
            -Other
                liabilities
            
            
            26,618
            
            
            129,486
            
            
            81,806
            
            
            (36,933
            )
            
            200,977Future
                income tax liabilities
            
            
            4,541
            
            
            110,242
            
            
            75,568
            
            
            5,642
            
            
            195,993Shareholders'
                equityCapital
                stock
            
            
            239,469
            
            
            97,058
            
            
            48,073
            
            
            (145,131
            )
            
            239,469Contributed
                surplus
            
            
            2,340
            
            
            35,089
            
            
            53,382
            
            
            (88,471
            )
            
            2,340Accumulated
                other comprehensive earnings
            
            
            (19,497
            )
            
            (125,994
            )
            
            53,379
            
            
            17,979
            
            
            (74,133
            )Retained
                earnings
            
            
            228,231
            
            
            589,362
            
            
            204,127
            
            
            (793,489
            )
            
            228,231$
            1,153,544
            
            $
            1,691,968
            
            $
            911,842
            
            $
            (2,071,546
            )
            $
            1,685,808







147


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**2005
                (Restated Note 4)****For
                the year ended April 30**
            
            
            **CHC
                Helicopter**
              **Corporation**
            
            
            **Guarantor**
              **subsidiaries**
            
            
            **Non-Guarantor**
              **subsidiaries**
            
            
            **Eliminations**
            
            
            **Consolidated****Revenue**
            
            $
            -
            
            $
            686,861
            
            $
            387,296
            
            $
            (106,994
            )
            $
            967,163Direct
                costs
            
            
            471
            
            
            (548,015
            )
            
            (308,995
            )
            
            109,345
            
            
            (747,194
            )General
                and administration costs
            
            
            -
            
            
            (35,279
            )
            
            -
            
            
            -
            
            
            (35,279
            )Amortization
            
            
            123
            
            
            (27,228
            )
            
            (25,705
            )
            
            (221
            )
            
            (53,031
            )Restructuring
                costs
            
            
            -
            
            
            (15,309
            )
            
            (2,280
            )
            
            -
            
            
            (17,589
            )Gain
                on disposals of assets
            
            
            -
            
            
            (248
            )
            
            4,101
            
            
            251
            
            
            4,104Fair
                value adjustment
            
            
            -
            
            
            -
            
            
            (14,260
            )
            
            -
            
            
            (14,260
            )**Operating
                income**
            
            
            594
            
            
            60,782
            
            
            40,157
            
            
            2,381
            
            
            103,914Debt
                settlement costs
            
            
            (1,043
            )
            
            (974
            )
            
            -
            
            
            -
            
            
            (2,017
            )Financing
                charges
            
            
            (9,903
            )
            
            (13,538
            )
            
            (19,402
            )
            
            (262
            )
            
            (43,105
            )**Earnings
                from continuing operations before undernoted**
            
            
            (10,352
            )
            
            46,270
            
            
            20,755
            
            
            2,119
            
            
            58,792Non-controlling
                interest
            
            
            -
            
            
            -
            
            
            (288
            )
            
            -
            
            
            (288
            )Equity
                in earnings of associated companies
            
            
            57,056
            
            
            31,261
            
            
            -
            
            
            (82,837
            )
            
            5,480Intercompany
                charges
            
            
            -
            
            
            9,451
            
            
            (9,451
            )
            
            -
            
            
            -Income
                taxes
            
            
            2,400
            
            
            (14,590
            )
            
            (9,726
            )
            
            (3,264
            )
            
            (25,180
            )**Net
                earnings from continuing operations**
            
            
            49,104
            
            
            72,392
            
            
            1,290
            
            
            (83,982
            )
            
            38,804**Net
                loss from discontinued operations**
            
            
            -
            
            
            10,300
            
            
            -
            
            
            -
            
            
            10,300**Net
                earnings**
            
            
            49,104
            
            
            82,692
            
            
            1,290
            
            
            (83,982
            )
            
            49,104Retained
                earnings, beginning of year
            
            
            191,932
            
            
            506,670
            
            
            202,837
            
            
            (709,507
            )
            
            191,932Dividends
            
            
            (12,805
            )
            
            -
            
            
            -
            
            
            -
            
            
            (12,805
            )**Retained
                earnings, end of year**
            
            $
            228,231
            
            $
            589,362
            
            $
            204,127
            
            $
            (793,489
            )
            $
            228,231







148


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**2005
                (Restated Note 4)****For
                the year ended April 30**
            
            
            **CHC
                Helicopter**
              **Corporation**
            
            
            **Guarantor**
              **subsidiaries**
            
            
            **Non-Guarantor**
              **subsidiaries**
            
            
            **Eliminations**
            
            
            **Consolidated****Operating
                activities**Cash
                flow from operations
            
            $
            (151
            )
            $
            126,164
            
            $
            (12,545
            )
            $
            -
            
            $
            113,468**Financing
                activities**Long-term
                debt proceeds
            
            
            356,258
            
            
            (24
            )
            
            32,209
            
            
            (3,759
            )
            
            384,684Long-term
                debt repayments
            
            
            (242,588
            )
            
            (3,959
            )
            
            (794
            )
            
            3,759
            
            
            (243,582
            )Debt
                settlement
            
            
            (1,765
            )
            
            -
            
            
            -
            
            
            -
            
            
            (1,765
            )Deferred
                financing costs
            
            
            (5,598
            )
            
            -
            
            
            -
            
            
            -
            
            
            (5,598
            )Dividends
                paid
            
            
            (11,596
            )
            
            -
            
            
            -
            
            
            -
            
            
            (11,596
            )Capital
                stock issued
            
            
            907
            
            
            -
            
            
            -
            
            
            -
            
            
            907Other
            
            
            -
            
            
            -
            
            
            (125
            )
            
            -
            
            
            (125
            )95,618
            
            
            (3,983
            )
            
            31,290
            
            
            -
            
            
            122,925**Investing
                activities**Additions
                to property and equipment
            
            
            -
            
            
            (167,545
            )
            
            (67,737
            )
            
            -
            
            
            (235,282
            )Helicopter
                major inspections
            
            
            -
            
            
            (11,939
            )
            
            (3,600
            )
            
            -
            
            
            (15,539
            )Proceeds
                from disposal
            
            
            -
            
            
            39,813
            
            
            51,127
            
            
            -
            
            
            90,940Aircraft
                deposits
            
            
            -
            
            
            (53,360
            )
            
            377
            
            
            -
            
            
            (52,983
            )Long-term
                receivables repaid (advanced)
            
            
            -
            
            
            309
            
            
            686
            
            
            -
            
            
            995Restricted
                cash
            
            
            -
            
            
            (1,985
            )
            
            (3,338
            )
            
            -
            
            
            (5,323
            )Investment
                in subsidiaries, net of cash acquired
            
            
            -
            
            
            (17,984
            )
            
            -
            
            
            -
            
            
            (17,984
            )Prepaid
                aircraft rental
            
            
            -
            
            
            -
            
            
            (10,798
            )
            
            -
            
            
            (10,798
            )Other
            
            
            56
            
            
            (7,500
            )
            
            (656
            )
            
            -
            
            
            (8,100
            )56
            
            
            (220,191
            )
            
            (33,939
            )
            
            -
            
            
            (254,074
            )Effect
                of exchange rate changes on cash and cash equivalents
            
            
            -
            
            
            (4,109
            )
            
            288
            
            
            -
            
            
            (3,821
            )Change
                provided by (used in)continuing operations
            
            
            95,523
            
            
            (102,119
            )
            
            (14,906
            )
            
            -
            
            
            (21,502
            )Cash
                used in discontinued operations
            
            
            -
            
            
            -
            
            
            11,814
            
            
            -
            
            
            11,814**Change
                in cash and cash equivalents during the year**
            
            
            95,523
            
            
            (102,119
            )
            
            (3,092
            )
            
            -
            
            
            (9,688
            )**Cash
                and cash equivalents, beginning of year**
            
            
            1,168
            
            
            43,263
            
            
            16,648
            
            
            -
            
            
            61,079**Cash
                and cash equivalents, end of year**
            
            $
            96,691
            
            $
            (58,856
            )
            $
            13,556
            
            $
            -
            
            $
            51,391







149


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**2004
                (Restated Note 4)****For
                the year ended April 30**
            
            
            **CHC
                Helicopter**
              **Corporation**
            
            
            **Guarantor**
              **subsidiaries**
            
            
            **Non-Guarantor**
              **subsidiaries**
            
            
            **Eliminations**
            
            
            **Consolidated****Revenue**
            
            $
            853
            
            $
            487,570
            
            $
            373,587
            
            $
            (90,554
            )
            $
            771,456Direct
                costs
            
            
            18,976
            
            
            (440,004
            )
            
            (304,086
            )
            
            106,064
            
            
            (619,050
            )General
                and administration costs
            
            
            (18,633
            )
            
            -
            
            
            -
            
            
            -
            
            
            (18,633
            )Amortization
            
            
            (3
            )
            
            (18,749
            )
            
            (19,598
            )
            
            (186
            )
            
            (38,536
            )Restructuring
                costs
            
            
            (15,168
            )
            
            (10,281
            )
            
            (3,448
            )
            
            -
            
            
            (28,897
            )Gain
                on disposals of assets
            
            
            -
            
            
            3,288
            
            
            20
            
            
            (1
            )
            
            3,307**Operating
                income**
            
            
            (13,975
            )
            
            21,824
            
            
            46,475
            
            
            15,323
            
            
            69,647Financing
                charges
            
            
            (4,357
            )
            
            (20,343
            )
            
            (27,137
            )
            
            (1,353
            )
            
            (53,190
            )**Earnings
                from continuing operations before undernoted**
            
            
            (18,332
            )
            
            1,481
            
            
            19,338
            
            
            13,970
            
            
            16,457Equity
                in earnings of associated companies
            
            
            44,244
            
            
            18,891
            
            
            -
            
            
            (59,210
            )
            
            3,925Intercompany
                charges
            
            
            -
            
            
            7,268
            
            
            (7,268
            )
            
            -
            
            
            -Income
                taxes
            
            
            8,134
            
            
            4,956
            
            
            (2,943
            )
            
            3,838
            
            
            13,985**Net
                earnings from continuing operations**
            
            
            34,046
            
            
            32,596
            
            
            9,127
            
            
            (41,402
            )
            
            34,367**Net
                loss from discontinued operations**
            
            
            -
            
            
            (321
            )
            
            -
            
            
            -
            
            
            (321
            )**Net
                earnings**
            
            
            34,046
            
            
            32,275
            
            
            9,127
            
            
            (41,402
            )
            
            34,046Retained
                earnings, beginning of year
            
            
            168,372
            
            
            474,395
            
            
            193,710
            
            
            (668,105
            )
            
            168,372Dividends
            
            
            (10,486
            )
            
            -
            
            
            -
            
            
            -
            
            
            (10,486
            )**Retained
                earnings, end of year**
            
            $
            191,932
            
            $
            506,670
            
            $
            202,837
            
            $
            (709,507
            )
            $
            191,932







150


CHC
      Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2006, 2005 and 2004


(Tabular
      amounts in thousands unless otherwise noted, except per share
      amounts)







**2004
                (Restated Note 4)****For
                the year ended April 30**
            
            
            **CHC
                Helicopter**
              **Corporation**
            
            
            **Guarantor**
              **subsidiaries**
            
            
            **Non-Guarantor**
              **subsidiaries**
            
            
            **Eliminations**
            
            
            **Consolidated****Operating
                activities**Cash
                flow from operations
            
            $
            (21,082
            )
            $
            79,286
            
            $
            28,899
            
            $
            -
            
            $
            87,103**Financing
                activities**Long-term
                debt proceeds
            
            
            512,010
            
            
            1,088
            
            
            28,496
            
            
            (44,732
            )
            
            496,862Long-term
                debt repayments
            
            
            (315,378
            )
            
            (44,797
            )
            
            (26,558
            )
            
            44,732
            
            
            (342,001
            )Debt
                settlement
            
            
            (37,883
            )
            
            -
            
            
            -
            
            
            -
            
            
            (37,883
            )Deferred
                financing costs
            
            
            (13,200
            )
            
            -
            
            
            -
            
            
            -
            
            
            (13,200
            )Dividends
                paid
            
            
            (5,291
            )
            
            -
            
            
            -
            
            
            -
            
            
            (5,291
            )Capital
                stock issued
            
            
            3,289
            
            
            -
            
            
            -
            
            
            -
            
            
            3,289143,547
            
            
            (43,709
            )
            
            1,938
            
            
            -
            
            
            101,776**Investing
                activities**Additions
                to property and equipment
            
            
            -
            
            
            (143,978
            )
            
            (17,239
            )
            
            -
            
            
            (161,217
            )Helicopter
                major inspections
            
            
            -
            
            
            (5,623
            )
            
            (3,614
            )
            
            -
            
            
            (9,237
            )Proceeds
                from disposal
            
            
            -
            
            
            110,505
            
            
            16,393
            
            
            -
            
            
            126,898Aircraft
                deposits
            
            
            -
            
            
            (18,091
            )
            
            (5,483
            )
            
            -
            
            
            (23,574
            )Long-term
                receivables repaid (advanced)
            
            
            -
            
            
            (1,147
            )
            
            -
            
            
            -
            
            
            (1,147
            )Restricted
                cash
            
            
            -
            
            
            (6,014
            )
            
            (3,812
            )
            
            -
            
            
            (9,826
            )Investment
                in subsidiaries, net of cash acquired
            
            
            (92,668
            )
            
            -
            
            
            (4,872
            )
            
            -
            
            
            (97,540
            )Prepaid
                aircraft rental
            
            
            -
            
            
            -
            
            
            (14,335
            )
            
            -
            
            
            (14,335
            )Other
            
            
            2,012
            
            
            391
            
            
            1,763
            
            
            -
            
            
            4,166(90,656
            )
            
            (63,957
            )
            
            (31,199
            )
            
            -
            
            
            (185,812
            )Effect
                of exchange rate changes on cash and cash equivalents
            
            
            -
            
            
            2,119
            
            
            (372
            )
            
            -
            
            
            1,747Change
                provided by (used in)continuing operations
            
            
            31,809
            
            
            (26,261
            )
            
            (734
            )
            
            -
            
            
            4,814Cash
                used in discontinued operations
            
            
            -
            
            
            (3,060
            )
            
            1,221
            
            
            -
            
            
            (1,839
            )**Change
                in cash and cash equivalents during the year**
            
            
            31,809
            
            
            (29,321
            )
            
            487
            
            
            -
            
            
            2,975**Cash
                and cash equivalents, beginning of year**
            
            
            (30,641
            )
            
            72,584
            
            
            16,161
            
            
            -
            
            
            58,104**Cash
                and cash equivalents, end of year**
            
            $
            1,168
            
            $
            43,263
            
            $
            16,648
            
            $
            -
            
            $
            61,079







151





**ITEM
                19.**
            **EXHIBITS**





1.1
            Articles
                of Incorporation - filed as Exhibit 3.1 to the Company's Amendment
                #1 to
                Registration Statement on Form F-1 dated October 20, 1993 and
                incorporated herein by reference.1.2
            Bylaws,
                as amended - filed as Exhibit 1.2 to the Company’s Form 20-F for fiscal
                2002 dated September 17, 2002 and incorporated herein by
                reference.2.1
            Indenture
                dated as of April 27, 2004 among the Company, each of the Subsidiary
                Guarantors named therein, and The Bank of New York, as Trustee, relating
                to the 7 3/8% Senior Subordinated Notes due 2014 filed as Exhibit
                4.5 to
                the Company’s Registration Statement on Form F-4 dated June 30, 2004
                and incorporated herein by reference.2.2
            First
                Supplemental Indenture dated as of December 23, 2004 among the Company,
                each of the Additional Guarantors named therein and The Bank of New
                York,
                as Trustee, to the Indenture dated as of April 27, 2004 among the
                Company,
                each of the Subsidiary Guarantors named therein and the Trustee.2.3
            Form
                of 7 3/8% Senior Subordinated Notes due 2014 filed as Exhibit 4.6
                to the
                Company’s Registration Statement on Form F-4 dated June 30, 2004 and
                incorporated herein by reference.4.3
            Purchase
                Agreement dated April 21, 2004 among the Company, each of the
                Subsidiary Guarantors named therein, Merrill Lynch & Co., Merrill
                Lynch, Pierce, Fenner & Smith Incorporated and Scotia Capital (USA)
                Inc. - filed as Exhibit 4.7 to the Company’s Registration Statement on
                Form F-4 dated June 30, 2004 and incorporated herein by
                reference.4.4
            Amended
                and Restated U.S. $225,000,000 Senior Credit Agreement dated as of
                July 5,
                2000 among The Bank of Nova Scotia, as Administrative Agent, The
                Lenders
                from time to time party to this Agreement and the Company, as amended
                by
                the amending agreements dated as of October 11, 2000, October 31,
                2000,
                December 15, 2000, July 16, 2001, March 29, 2002, April 29, 2002,
                July 4,
                2002, July 31, 2002, March 6, 2003, February 13, 2004, April 21,
                2004 and
                April 22, 2004,filed as Exhibit 10.2 to the Company’s Registration
                Statement on Form F-4 dated June 30, 2004 and incorporated herein by
                reference.4.6
            Employee
                Share Option Plan, as amended March 3, 2003 filed as exhibit 4.6 to
                the Company’s Form 20-F for fiscal 2003 dated September 17, 2003 and
                incorporated herein by reference.4.7
            Supplemental
                Executive Retirement Plan Agreement, filed as Exhibit 4.7 to the
                Company’s
                Form 20-F for fiscal 2001 dated September 13, 2001 and incorporated
                herein by reference.4.8
            Long-term
                Incentive Plan, filed as Exhibit 4.8 to the Company’s Form 20-F for fiscal
                2001 dated September 13, 2001 and incorporated herein by
                reference.4.9
            Employee
                Share Purchase Plan, filed as Exhibit 4.9 to the Company’s Form 20-F for
                fiscal 2001 dated September 13, 2001 and incorporated herein by
                reference.4.10
            Share
                Appreciation Rights Plan, filed as Exhibit 4.10 to the Company’s Form 20-F
                for fiscal 2001 dated September 13, 2001 and incorporated herein by
                reference.4.11
            Executive
                Retiring Allowance, filed as Exhibit 4.11 to the Company’s Form 20-F for
                fiscal 2001 dated September 13, 2001 and incorporated herein by
                reference.7.1
            Statement
                Regarding Computation of Ratio of Earnings to Fixed
                Charges8.1
            Significant
                Subsidiaries12.1
            Section
                302 Certification by Chief Executive
                Officer


152







12.2
            Section
                302 Certification by Chief Financial Officer13.1
            Section 906
                Certification by Chief Executive Officer13.2
            Section
                906 Certification by Chief Financial
                Officer








Pursuant
      to the requirements of Section 12 of the Securities Exchange Act of 1934,
      the registrant certifies that it meets all of the requirements for filing on
      Form 20-F and has duly caused this Annual Report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.




Dated:
                September 15, 2006
            **CHC
              HELICOPTER CORPORATION****BY:**
            [signed]
                Rick Davis
              Rick
                Davis, CA
              Senior
                Vice-President & Chief Financial
                Officer







153