UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549




FORM
      20-F




£
            REGISTRATION
                STATEMENT PURSUANT TO SECTION 12(b) OR 12(g)OF
                THE SECURITIES EXCHANGE ACT OF 1934ORS
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THESECURITIES
                EXCHANGE ACT OF 1934For
                the fiscal year ended April 30, 2007OR£
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934OR£
            SHELL
                COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934


Date
      of
      event requiring this shell company report _____


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 or to be 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)




Indicate
      the number of outstanding shares of each of the issuer’s classes of capital or
      common stock as of the close of the period covered by the annual
      report.




39,858,497
      Class A Subordinate Voting Shares




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.




Yes
                S
            No
                £


















If
      this
      report is an annual or transition report, indicate by check mark if the
      registrant is not required to file reports pursuant to Section 13 or 15(d)
      of the Securities Exchange Act of 1934.




Yes
                £
            No
                S




Note
      -
      Checking the box above will not relieve any registrant required to file reports
      pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from
      their obligations under those Sections.




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




Yes
                S
            No
                £




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
      (Check one):




Large
                Accelerated Filer S
            Accelerated
                Filer £
            Non-Accelerated
                Filer £




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




Item 17
                S
            Item 18
                £




If
      this
      is an annual report, indicate by check mark whether the registrant is a shell
      company (as defined in Rule 12b-2 of the Exchange Act).




Yes
                £
            No
                S




(APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
      YEARS.)




Indicate
      by check mark whether the registrant has filed all documents and reports
      required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange
      Act of 1934 subsequent to the distribution of securities under a plan confirmed
      by a court.




Yes
                £
            No
                £














TABLE
      OF CONTENTS




Item
            
            Page**PART
                I**
            
            **5**ITEM
                1.
            IDENTITY
                OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
            5ITEM
                2.
            OFFER
                STATISTICS AND EXPECTED TIMETABLE
            5ITEM
                3.
            KEY
                INFORMATION
            5ITEM
                4.
            INFORMATION
                ON THE COMPANY
            17ITEM
                5.
            OPERATING
                AND FINANCIAL REVIEW AND PROSPECTS
            33ITEM
                6.
            DIRECTORS,
                SENIOR MANAGEMENT AND EMPLOYEES
            72ITEM
                7.
            MAJOR
                SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
            91ITEM
                8.
            FINANCIAL
                INFORMATION
            93ITEM
                9.
            THE
                OFFER AND LISTING
            93ITEM
                10.
            ADDITIONAL
                INFORMATION
            95ITEM
                11.
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            97ITEM
                12.
            DESCRIPTION
                OF SECURITIES OTHER THAN EQUITY SECURITIES
            98**PART
                II**
            
            **99**ITEM
                13.
            DEFAULTS,
                DIVIDEND ARREARAGES AND DELINQUENCIES
            99ITEM
                14.
            MATERIAL
                MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
                PROCEEDS
            99ITEM
                15.
            CONTROLS
                AND PROCEDURES
            99ITEM
                16A.
            AUDIT
                COMMITTEE FINANCIAL EXPERT
            100ITEM
                16B.
            CODE
                OF ETHICS
            100ITEM
                16C.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            100ITEM
                16D.
            EXEMPTIONS
                FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
            101ITEM
                16E.
            PURCHASE
                OF EQUITY SECURITIES BY ISSUER AND AFFILIATED PURCHASERS
            101**PART
                III**
            
            **102**ITEM
                17.
            FINANCIAL
                STATEMENTS
            102ITEM
                18.
            FINANCIAL
                STATEMENTS
            162ITEM
                19.
            EXHIBITS
            163





*All
      defined terms under Rule 4-10(a) of Regulation S-X shall have their
      statutorily-prescribed meanings when used in this Annual Report on
      Form 20-F.*













*For
      purposes of this Annual Report, all references to dollar amounts are expressed
      in Canadian dollars unless otherwise specified. On September 10, 2007, 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
      $0.9495 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, conclusions,
      forecasts and other statements represent our best current judgement, the actual
      results could differ materially from the conclusion, forecast or projection
      contained in the forward-looking information. Certain material factors or
      assumptions were applied in drawing a conclusion or making a forecast or
      projection in forward-looking information contained herein. Such factors
      include, but are not limited to, the following: exchange rate fluctuations,
      inherent risk, trade credit risk, industry exposure, inflation, contract loss,
      inability to maintain government issued licenses, inability to obtain necessary
      aircraft or insurance, competition, political, economic and regulatory
      uncertainty, loss of key personnel, pension risk, work stoppages due to labour
      disputes, international uncertainty and future material acquisitions are further
      detailed in this Annual Report and in other filings with the United States
      Securities and Exchange Commission and Canadian securities regulatory
      authorities. Should one or more of these risks or uncertainties materialize,
      or
      should underlying assumptions prove incorrect, actual outcomes may vary
      materially from those indicated. CHC Helicopter Corporation disclaims any
      intentions or obligations to update or revise any forward-looking information,
      whether as a result of new information, future events 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, 2007, 2006, 2005, 2004, and 2003 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.







5





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,****2007**
            
            
            **2006**
            
            
            **2005**
            
            
            **2004**
            
            
            **2003***(i)*
            
            
            *(i)*(in millions
                of Canadian dollars except per share amounts)**Amounts
                under Canadian GAAP****Operating
                Data:**Revenue
            
            $
            1,149.1
            
            
            $
            997.1
            
            
            $
            954.2
            
            
            $
            771.4
            
            
            $
            762.9Direct
                costs
            
            
            (924.7
            )
            
            
            (788.5
            )
            
            
            (732.7
            )
            
            
            (620.3
            )
            
            
            (579.2
            )General
                and administration costs
            
            
            (43.4
            )
            
            
            (27.9
            )
            
            
            (35.3
            )
            
            
            (18.6
            )
            
            
            (31.1
            )Amortization
            
            
            (65.3
            )
            
            
            (55.5
            )
            
            
            (50.1
            )
            
            
            (38.5
            )
            
            
            (32.1
            )Restructuring
                (costs) recovery
            
            
            2.3
            
            
            
            (16.1
            )
            
            
            (17.4
            )
            
            
            (9.2
            )
            
            
            -Gain
                (loss) on disposals of assets
            
            
            (3.0
            )
            
            
            -
            
            
            
            4.1
            
            
            
            3.3
            
            
            
            2.4Fair
                value adjustment
            
            
            -
            
            
            
            -
            
            
            
            (14.3
            )
            
            
            -
            
            
            
            (12.8
            )*Operating
                income*
            
            
            115.0
            
            
            
            109.1
            
            
            
            108.5
            
            
            
            88.1
            
            
            
            110.1Debt
                settlement costs
            
            
            -
            
            
            
            -
            
            
            
            (2.0
            )
            
            
            (19.7
            )
            
            
            (12.5
            )Financing
                chargesInterest
                expense
            
            
            (51.8
            )
            
            
            (43.5
            )
            
            
            (32.4
            )
            
            
            (30.6
            )
            
            
            (31.1
            )Other
            
            
            (6.5
            )
            
            
            (9.5
            )
            
            
            (5.0
            )
            
            
            0.8
            
            
            
            (4.5
            )Earnings
                from continuing operations before taxes and undernoted
                items
            
            
            56.7
            
            
            
            56.1
            
            
            
            69.1
            
            
            
            38.6
            
            
            
            62.0Gain
                on sale of long-term investments
            
            
            -
            
            
            
            37.5
            
            
            
            -
            
            
            
            -
            
            
            
            -Equity
                in earnings of associated companies and non-controlling
                interest
            
            
            1.1
            
            
            
            6.6
            
            
            
            5.2
            
            
            
            3.9
            
            
            
            2.3Income
                tax (provision) recovery
            
            
            (16.8
            )
            
            
            (10.5
            )
            
            
            (27.4
            )
            
            
            9.7
            
            
            
            2.2*Net
                earnings from continuing operations*
            
            
            41.0
            
            
            
            89.7
            
            
            
            46.9
            
            
            
            52.2
            
            
            
            66.5Net
                earnings (loss) from discontinued operations
            
            
            2.2
            
            
            
            1.0
            
            
            
            9.6
            
            
            
            (0.3
            )
            
            
            -Extraordinary
                item
            
            
            0.8
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -*Net
                earnings*
            
            $
            44.0
            
            
            $
            90.7
            
            
            $
            56.5
            
            
            $
            51.9
            
            
            $
            66.5**Per
                Share Data:**BasicNet
                earnings from continuing operations
            
            $
            0.97
            
            
            $
            2.14
            
            
            $
            1.12
            
            
            $
            1.26
            
            
            $
            1.60Net
                earnings (loss) from discontinued operations
            
            
            0.05
            
            
            
            0.02
            
            
            
            0.23
            
            
            
            (0.01
            )
            
            
            -Extraordinary
                item
            
            
            0.02
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Net
                earnings
            
            
            1.04
            
            
            
            2.16
            
            
            
            1.35
            
            
            
            1.25
            
            
            
            1.60DilutedNet
                earnings from continuing operations
            
            
            0.90
            
            
            
            1.95
            
            
            
            1.03
            
            
            
            1.16
            
            
            
            1.48Net
                earnings (loss) from discontinued operations
            
            
            0.05
            
            
            
            0.02
            
            
            
            0.20
            
            
            
            (0.01
            )
            
            
            -Extraordinary
                item
            
            
            0.02
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Net
                earnings
            
            
            0.97
            
            
            
            1.97
            
            
            
            1.23
            
            
            
            1.15
            
            
            
            1.48Dividends
                per participating voting share
            
            
            0.50
            
            
            
            0.40
            
            
            
            0.30
            
            
            
            0.25
            
            
            
            0.10Dividends
                (in US $) per share *(ii)*
            
            
            0.44
            
            
            
            0.34
            
            
            
            0.24
            
            
            
            0.19
            
            
            
            0.06Weighted
                average shares outstanding in (000)
            
            
            42,819
            
            
            
            42,708
            
            
            
            42,673
            
            
            
            42,122
            
            
            
            41,456**Other
                Financial Data *(iii)*:**Revenue
                - 2007, 2006 and 2005Operating
                segmentsGlobal
                Operations
            
            $
            428.0
            
            
            $
            330.9
            
            
            $
            292.1European
                Operations
            
            
            539.9
            
            
            
            520.4
            
            
            
            530.9Heli-One
            
            
            180.6
            
            
            
            145.7
            
            
            
            130.81,148.5
            
            
            
            997.0
            
            
            
            953.8Corporate
                and
                other
            
            
            0.6
            
            
            
            0.1
            
            
            
            0.4Total
                revenue
            
            $
            1,149.1
            
            
            $
            997.1
            
            
            $
            954.2










6










**As
                at and for the fiscal year ended April 30,****2007**
            
            
            **2006**
            
            
            **2005**
            
            
            **2004**
            
            
            **2003***(i)*
            
            
            *(i)*(in millions
                of Canadian dollars except per share amounts)**Other
                Financial Data *(iii)*(cont’d):**Revenue
                - 2004 and 2003Helicopter
                operationsEurope
            
            
            
            
            
            
            
            
            
            
            $
            482.1
            
            
            $
            508.7International
            
            
            
            
            
            
            
            
            
            
            
            191.8
            
            
            
            184.8Schreiner
                *(iv)*
            
            
            
            
            
            
            
            
            
            
            
            32.4
            
            
            
            -Composites
            
            
            
            
            
            
            
            
            
            
            
            7.0
            
            
            
            6.4713.3
            
            
            
            699.9Repair
                and overhaul
            
            
            
            
            
            
            
            
            
            
            
            58.1
            
            
            
            63.0Total
                revenue
            
            
            
            
            
            
            
            
            
            
            $
            771.4
            
            
            $
            762.9Segment
                EBITDAR - 2007, 2006 and 2005 *(v)*Operating
                segmentsGlobal
                Operations
            
            $
            135.1
            
            
            $
            90.9
            
            
            $
            87.3European
                Operations
            
            
            95.3
            
            
            
            107.5
            
            
            
            110.8Heli-One
            
            
            273.2
            
            
            
            229.5
            
            
            
            231.0503.6
            
            
            
            427.9
            
            
            
            429.1Corporate
                and other
            
            
            (41.3
            )
            
            
            (27.7
            )
            
            
            (32.1
            )Inter-segment
              eliminations
            
            
            (180.8
            )
            
            
            (154.0
            )
            
            
            (153.2
            )$
            281.5
            
            
            $
            246.2
            
            
            $
            243.8Segment
                EBITDA - 2004 and 2003 *(vi)*Helicopter
                operationsEurope
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            72.1
            
            
            $
            89.3International
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            23.4
            
            
            
            35.3Schreiner
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            3.4
            
            
            
            -Composites
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2.0
            )
            
            
            (3.2
            )96.9
            
            
            
            121.4Repair
                and overhaul
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            55.4
            
            
            
            52.8Corporate
                and other
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (19.7
            )
            
            
            (21.5
            )$
            132.6
            
            
            $
            152.7Total
                property and equipment additions *(vii)*
            
            $
            423.3
            
            
            $
            304.3
            
            
            $
            250.3
            
            
            $
            170.6
            
            
            $
            58.1Ratio
                of earnings to fixed charges *(viii)*
            
            
            1.5x
            
            
            
            1.9x
            
            
            
            1.9x
            
            
            
            1.7x
            
            
            
            1.9x**Balance
                Sheet Data:**Working
                capital *(ix)*
            
            $
            210.3
            
            
            $
            147.1
            
            
            $
            110.2
            
            
            $
            127.7
            
            
            $
            131.6Total
                assets
            
            
            2,102.2
            
            
            
            1,686.1
            
            
            
            1,686.7
            
            
            
            1,527.6
            
            
            
            1,106.7Total
                debt
            
            
            840.6
            
            
            
            624.1
            
            
            
            624.5
            
            
            
            514.0
            
            
            
            321.3Total
                liabilities
            
            
            1,550.9
            
            
            
            1,195.4
            
            
            
            1,226.6
            
            
            
            1,108.3
            
            
            
            726.3Capital
                stock
            
            
            252.5
            
            
            
            240.2
            
            
            
            239.5
            
            
            
            238.4
            
            
            
            237.0Shareholders’
                equity
            
            
            551.3
            
            
            
            490.7
            
            
            
            460.1
            
            
            
            419.3
            
            
            
            380.4**Amounts
                under US GAAP****Operating
                Data:**Revenue
            
            $
            1,149.1
            
            
            $
            997.1
            
            
            $
            954.2
            
            
            $
            771.4
            
            
            $
            762.9Direct
                and general and administrative costs
            
            
            970.5
            
            
            
            816.2
            
            
            
            773.1
            
            
            
            637.7
            
            
            
            613.8Amortization
            
            
            65.1
            
            
            
            55.2
            
            
            
            50.1
            
            
            
            38.5
            
            
            
            32.1Financing
                charges
            
            
            70.2
            
            
            
            4.7
            
            
            
            42.2
            
            
            
            53.2
            
            
            
            18.9Net
                earnings
            
            
            32.9
            
            
            
            130.6
            
            
            
            49.1
            
            
            
            34.0
            
            
            
            87.6










7










**As
                at and for the fiscal year ended April 30,****2007**
            
            
            **2006**
            
            
            **2005**
            
            
            **2004**
            
            
            **2003***(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
            
            $
            0.78
            
            
            $
            3.11
            
            
            $
            1.17
            
            
            $
            0.82
            
            
            $
            2.11Diluted
                earnings per share
            
            
            0.72
            
            
            
            2.84
            
            
            
            1.06
            
            
            
            0.74
            
            
            
            1.95Dividends
                per participating voting share
            
            
            0.50
            
            
            
            0.40
            
            
            
            0.30
            
            
            
            0.25
            
            
            
            0.10Dividends
                (in US $) per share *(ii)*
            
            
            0.44
            
            
            
            0.34
            
            
            
            0.24
            
            
            
            0.19
            
            
            
            0.06Weighted
                average shares outstanding in (000)
            
            
            42,819
            
            
            
            42,708
            
            
            
            42,673
            
            
            
            42,122
            
            
            
            41,456**Balance
                Sheet Data:**Working
                capital *(ix)*
            
            $
            32.7
            
            
            $
            148.9
            
            
            $
            107.2
            
            
            $
            128.8
            
            
            $
            145.9Total
                assets
            
            
            2,299.5
            
            
            
            1,687.5
            
            
            
            1,685.8
            
            
            
            1,528.5
            
            
            
            1,073.9Total
                debt
            
            
            840.6
            
            
            
            624.3
            
            
            
            625.0
            
            
            
            515.0
            
            
            
            322.2Total
                liabilities
            
            
            1,844.3
            
            
            
            1,245.1
            
            
            
            1,296.7
            
            
            
            1,113.6
            
            
            
            724.0Capital
                stock
            
            
            251.7
            
            
            
            240.2
            
            
            
            239.5
            
            
            
            238.4
            
            
            
            237.0Shareholders’
                equity
            
            
            455.2
            
            
            
            442.4
            
            
            
            389.1
            
            
            
            414.9
            
            
            
            349.9







(i)
            See
                Note 2 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)
            Prior
                to May 1, 2005, the Company reported under a different structure.
                Segment information for the years ended April 30, 2004 and 2003 has
                not been presented under the current organizational structure as
                accurate
                estimates to reflect certain lease, power-by-the-hour (“PBH”) 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
                property and equipment 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" are 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,****2007**
              **US$**
            
            
            **2006**
              **US$**
            
            
            **2005**
              **US$**
            
            
            **2004**
              **US$**
            
            
            **2003**
              **US$**Exchange
                rate at the end of period
            
            
            0.9035
            
            
            
            0.8926
            
            
            
            0.7957
            
            
            
            0.7293
            
            
            
            0.6975Average
                exchange rate during period
            
            
            0.8818
            
            
            
            0.8499
            
            
            
            0.7891
            
            
            
            0.7445
            
            
            
            0.6498High
                exchange rate during period
            
            
            0.9100
            
            
            
            0.8926
            
            
            
            0.8493
            
            
            
            0.7880
            
            
            
            0.6975Low
                exchange rate during period
            
            
            0.8437
            
            
            
            0.7872
            
            
            
            0.7158
            
            
            
            0.7032
            
            
            
            0.6264










8










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, 2007**
              **US$**
            
            
            **July
                31, 2007**
              **US$**
            
            
            **June
                30, 2007**
              **US$**
            
            
            **May
                31, 2007**
              **US$**
            
            
            **April
                30, 2007**
              **US$**
            
            
            **March
                31, 2007**
              **US$**High
            
            
            0.9527
            
            
            
            0.9641
            
            
            
            0.9453
            
            
            
            0.9345
            
            
            
            0.9035
            
            
            
            0.8673Low
            
            
            0.9470
            
            
            
            0.9355
            
            
            
            0.9322
            
            
            
            0.8980
            
            
            
            0.8633
            
            
            
            0.8467




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, 2007 noon buying rate for cable transfers of the Canadian
      dollar in New York City of US $0.9035 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 10, 2007 the noon buying rate for a Canadian
      dollar was US $0.9495.




**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.




**Dependent
      on the Level of Activity in the Oil and Gas Industry**




We
      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, 2007 revenue
      generated by helicopter transportation services for the oil and gas industry
      was
      70% of our total revenue.




**Cost
      Reduction Methods Undertaken by Oil and Gas Companies**




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.







9





**Competitive
      Markets**




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 91% of our helicopter
      fleet at April 30, 2007 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.




**Competition
      from Original Equipment Manufacturers/Suppliers**




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 the
      inability to obtain parts in a timely manner in required quantities at
      competitive prices.




**Long-Term
      Contracts**




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 pricing for the bidding process for both power-by-the-hour (“PBH”) and
      flying contracts requires cost estimates. Unanticipated costs or cost increases
      could materially affect the profitability of these long-term contracts. 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.




**Acquisition
      of Aircraft**




If
      we
      are unable to acquire the necessary aircraft, we may not be able to take
      advantage of growth opportunities. There are lead times of approximately
      18 months to obtain the primary new heavy and medium aircraft types most
      often required by our customers. Although we have been able to acquire
      sufficient aircraft to date, 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.




**Insurance**




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




We
      operate, through a wholly owned subsidiary, a reinsurance business that we
      use
      to place insurance coverages that are not available in the market or, if they
      are available, their cost is prohibitive or excessive. Our reinsurance
      subsidiary covers the following risks:




(i)
            Loss
                of license insurance for our pilots in Europe, Africa and
                Australia.


(ii)
            Death
                and disability insurance for employees of our Norwegian
                operations.


(iii)
            Valuation
                rate protection for the pension plan for employees of our Norwegian
                operations.


(iv)
            Benefit
                plans of various operating
                subsidiaries.





We
      have
      not been exposed to any significant losses in connection with our reinsurance
      business.







10





**Inherent
      Risk**




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 the 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 the 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.




**Government
      Regulations**




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




Approximately
      45% of our revenue for the fiscal year ended April 30, 2007 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.
      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
      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. This
      is because the Estate of Craig L. Dobbin (the “Estate”), all of the
      beneficiaries of which are citizens 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
      ours
      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 a corporation controlled
      by
      Craig L. Dobbin (now controlled by the Estate) in December 1997 allowed us
      to
      satisfy the nationality requirements, this will not necessarily preclude further
      challenges of Scotia's right to maintain our operating license on this or any
      other basis. Further, Scotia's eligibility to maintain its license could be
      adversely affected if the Estate were to dispose of the shares it holds in
      the
      Company or if our percentage ownership of the Company were to otherwise
      decrease.







11





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 BV (“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 acquisition. In accordance with Dutch Civil Aviation procedures,
      we
      are required to submit certain information regarding ownership and control
      to
      the Dutch Civil Aviation Authority following the acquisition of Schreiner to
      formally demonstrate that our flying subsidiary in the Netherlands, CHC
      Helicopter Netherlands B.V., continues to meet the European ownership and
      control requirements. We have submitted the required information to the Dutch
      Civil Aviation Authority.




Our
      Norwegian flying subsidiary, CHC Helikopter Service AS, 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 Helicopter Services Group AS (“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.




We
      have
      met with the civil aviation authority in each of the United Kingdom, Ireland,
      the Netherlands, Denmark and Norway following the death of Craig L. Dobbin
      and the transmission, by operation of law, of the shares formerly controlled
      by
      him to the Estate and have provided such authorities with all requested
      documentation to substantiate our continued compliance with applicable licensing
      requirements.




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.




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
      Certificate of Airworthiness must be obtained, be valid and in effect. The
      operation of an aircraft for a commercial purpose into, out of, or within
      Australian territory can only be undertaken as authorized by an Air Operators'
      Certificate. Our ability to offer our helicopter transportation services in
      Australia is dependent on maintaining these certificates.







12





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, there is no assurance regarding 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.




The
      revocation of any of the licenses discussed above or the termination of any
      of
      the relationships with local parties discussed above could have a material
      adverse effect on our business, financial condition and results of
      operations.




**International
      Uncertainty**




Our
      international operations may suffer due to political, economic and regulatory
      uncertainty. A substantial portion of revenue in recent years has been
      attributable to operations outside North America and Europe. For the fiscal
      year
      ended April 30, 2007, approximately 35% of revenue was generated from these
      operations. Risks associated with some of our international operations include
      war and civil disturbances or other events that may limit or disrupt markets,
      expropriation, 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 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 provide assurance that
      these limitations will not affect our ability to allocate resources in the
      future.




**Foreign
      Exchange Rate Risk**




Fluctuations
      in currencies may make it more costly for us to pay our debt. The consolidated
      financial statements are prepared in Canadian dollars. However, a significant
      portion of revenue and operating expenses are denominated in the reporting
      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 reporting 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 reporting currencies of the subsidiaries
      (“transaction impact”).




The
      total unfavourable FX impact on revenue for fiscal 2007 was $11.0 million.
      This consisted of an unfavourable translation impact of $17.4 million
      partially offset by a $6.4 million favourable transaction
      impact.




The
      total unfavourable FX impact on operating income for fiscal 2007 was
      $0.3 million. This consisted of a favourable translation impact of
      $1.6 million and an unfavourable transaction impact of
      $1.9 million.







13





Our
      overall approach to managing foreign currency exposures includes identifying
      and
      quantifying our 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
      fluctuating currencies could have on operating cash flows, we have entered
      into
      forward foreign exchange contracts.




**Loss
      of key personnel**




The
      loss of key personnel could affect our growth and future success. Our success
      has been dependent on the quality of key management personnel, including
      Craig L. Dobbin, our former Executive Chairman, and Sylvain A. Allard,
      President and Chief Executive Officer. Mr. Dobbin died in October 2006. Our
      Board of Directors elected Mr. Dobbin’s son and the executor of the Estate
      as non-executive Chairman in October 2006. While the loss of Craig L.
      Dobbin is felt by all who knew him, we believe that the death of Craig L.
      Dobbin has not had a material adverse effect on our business. The loss of
      Mr. Allard, due to time constraints, illness, death or any other reason
      could have a material adverse effect on the 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.




**Labour
      disruptions**




We
      may
      experience work stoppages that could cause disruptions in
      operations.




Our
      workforce in Europe and Australia is unionized as is the workforce at CHC
      Composites Inc. While we have renewed all collective agreements and are
      satisfied with our labour relations, there is no assurance that labour
      disruptions will not occur in the future. During fiscal 2007, we experienced
      a
      pilot work-to-rule job action in Denmark that had a negative impact on operating
      income.




With
      the exception of Australia noted above, the workforce of the Global Operations
      segment is not unionized. A group of the Global Operations pilots have formed
      an
      association that has made an application to the Canadian Industrial Relations
      Board (the “Board”) to unionize the Global Operations pilots. Among other
      grounds, we believe that the Board does not have jurisdiction over these pilots
      and have made a submission to the Board that the application for certification
      should be denied. We cannot guarantee the success of our position before the
      Board. If the Global Operations pilots are unionized we will have to negotiate
      a
      first collective agreement. We cannot predict the consequences of negotiating
      such an agreement.




Our
      operations in the Netherlands are subject to the Netherlands Work Council Act
      and we must seek the advice of the Netherlands Work Council prior to
      implementing a variety of decisions. We cannot provide assurance that we will
      not experience strikes, lockouts or other significant work stoppages in the
      future or that our relationship with employees will continue to be good, either
      of which may adversely affect our business, financial condition and results
      of
      operations.




**Voting
      Control**




We
      are
      controlled by our principal shareholder, the Estate, which can determine the
      outcome of matters to be decided by our shareholders. As of April 30, 2007,
      the Estate, directly and indirectly through Discovery Helicopters Inc.
      (“Discovery”) and O.S. Holdings Inc., beneficially owned 13.6% 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 62.8% of the voting power
      on
      matters put before our shareholders.







14





The
      Estate has advised us that if we issue additional shares of voting securities,
      it intends to purchase, through Discovery, sufficient voting shares to enable
      it
      to maintain control of more than 50% of the voting power attached to all
      outstanding voting shares. As a result, the Estate would, subject to certain
      exceptions, continue to (i) 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, (ii) be able to prevent the approval
      of any matter requiring shareholder approval and (iii) 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.




**Norwegian
      Law**




If
      our
      Norwegian operating subsidiaries incur substantial operating losses, they may
      be
      subject to liquidation under Norwegian law. The corporate law under which the
      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 the 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




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




**Safety
      records**




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 customers, our ability to retain current
      customers and attract new customers may be adversely affected.




**Management
      resources**




Assimilating
      our recent acquisitions or any future material acquisitions into our corporate
      structure may strain our resources and have an adverse impact on the business.
      The assimilation of recent acquisitions and any future material acquisitions
      we
      may make will require substantial time, effort, attention and dedication of
      management resources and may distract management in unpredictable ways from
      ordinary operations. The transition process could create a number of potential
      challenges and adverse consequences, 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 the 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 acquisitions.




**Pension
      Risk**




If
      the
      assets in our defined benefit 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 partially
      funded defined benefit pension plans for our employees principally in Canada,
      the UK, the Netherlands and Norway. As of April 30, 2007, there was a
      $23.6 million funding deficit related to our various defined benefit
      pension plans which require ongoing funding by us and a $53.6 million
      obligation related to the various partially funded plans.







15





Our
      estimate of liabilities and expenses for pensions incorporates significant
      assumptions, including the interest rate used to discount future liabilities
      and
      expected long-term rates of return on plan assets. Our pension contributions
      and
      expenses, 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 pension
      expense. Changing economic conditions, poor pension investment returns or other
      factors may require us to make substantial cash contributions to the pension
      plans in the future, preventing the use of such cash for other purposes and
      adversely affecting our liquidity.




**Customer
      Base**




Our
      customers are concentrated in the oil and gas industry and, as a result, the
      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 the 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.




**Fuel
      Prices**




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.




**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 $8.4 million at
      April 30, 2007 (fiscal 2006 - $24.5 million).




**Environmental**




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 acts that were in compliance with all
      applicable laws at the time these acts were performed. We believe that 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 or the impact of any such change, or
      discovery of previously unknown conditions, which may require unanticipated
      costs on our financial position.




**Taxes**




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. Tax law and
      administration is extremely complex and often requires us to make subjective
      determinations. 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
      for tax, interest and penalties, which could have a material effect on our
      results of operations.







16





Our
      estimate of our 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 tax expenses and liabilities including
      interest and penalties.




**Inflation**




Although
      we believe that inflation has not had any material effect on our operating
      results, our business may be affected by inflation in the future.




**Interest
      Deductibility**




In
      May
      2007, the Canadian Federal Government released revisions to measures contained
      in its March 2007 budget to eliminate the deductibility of interest on certain
      debt incurred to finance foreign affiliates. Although the revised measures
      were
      named the “Anti-Tax-Haven Initiative,” they apply to situations involving any
      foreign jurisdiction, not only those generally considered to be tax havens.
      The
      measures would be applicable to interest paid or payable in respect of a period
      that begins after 2011. Although the impact of these measures on us is not
      currently known, our tax provision could be materially affected in the
      future.






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, 5th 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, 13th 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, the former Executive Chairman
      of the Company and principal shareholder through the Estate) 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**




On
      March 8, 2007, following regulatory approval, we acquired an equity
      position in BHS - Brazilian Helicopter Services Taxi Aereo Ltda., subsequently
      named BHS - Brazilian Helicopter Services Taxi Aereo S.A. (“BHS”). 100% of the
      voting common shares were acquired through a jointly owned subsidiary BHH -
      Brazilian Helicopters Holdings S.A. (“BHH”). BHS is one of the largest operators
      in the Brazilian offshore sector.




On
      November 30, 2006, we acquired 100% of the issued and outstanding shares of
      Heli-Dyne Systems Inc. (“Heli-Dyne”), subsequently named Heli-One USA Inc., a
      helicopter completion and maintenance centre based in Hurst, Texas.







17





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 supported Heli-One’s strategic
      expansion objectives for global helicopter support.




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.




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.




**Discontinued
      operations**




During
      the fiscal year ended April 30, 2007, we classified Survival-One Limited
      (“Survival-One”) as discontinued operations as a result of the decision by
      management to divest of this business. The assets and liabilities of
      Survival-One were measured at the lower of their carrying amount and their
      estimated fair value using discounted cash flows less costs to sell. No fair
      value adjustment was recorded when Survival-One was classified as discontinued
      operations at January 31, 2007. We have recorded imputed interest in the
      results of discontinued operations. The results of operations of Survival-One
      have been reported in discontinued operations for the year ended April 30,
      2007 and the prior period comparative figures have been reclassified.
      Previously, these amounts were included in continuing operations in the Heli-One
      segment.




Subsequent
      to the year ended April 30, 2007, the sale of Survival-One was completed
      for gross proceeds of approximately $37 million. An after-tax gain on sale
      of Survival-One of $16.4 million was recorded in the first quarter of
      fiscal 2008. Accordingly, commencing on May 1, 2007, the operations and
      cash flows of Survival-One have been eliminated from our ongoing
      operations.




We
      reclassified CHC Composites Inc. (“Composites”) to continuing operations in the
      Heli-One segment for the year ended April 30, 2005 as we did not receive an
      acceptable offer for Composites while the business was held for sale. The impact
      of reclassifying Composites to continuing operations resulted in a decrease
      in
      net earnings from continuing operations of $21.3 million, consisting of a
      $7.0 million net loss from operations and a $14.3 million fair value
      adjustment. The fair value adjustment was originally recorded when Composites
      was classified as held for sale and the assets and liabilities of the business
      were valued at the lower of their carrying amounts and their estimated fair
      value, less costs to sell. The 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).




During
      fiscal 2005 we 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.







18





**Capital
      Expenditures**




Total
      property and equipment additions include all asset acquisitions, including
      aircraft, as well as helicopter major inspection expenditures. Property and
      equipment additions of $393.2 million during the year ended April 30,
      2007 comprised of (i) $245.3 million for the purchase of
      35 helicopters (five aircraft purchased off-lease), including 24 that were
      subsequently leased through sale-leaseback transactions,
      (ii) $18.1 million for aircraft modifications,
      (iii) $39.4 million related to buildings and other equipment; and
      (iv) $90.4 million related to investments in spare parts (rotables) to
      support the Company’s existing fleet and additional aircraft and new aircraft
      types. We also spent $30.1 million on helicopter major inspections.
      Proceeds on 28 sale-leaseback transactions and the disposal of
      13 aircraft and other dispositions were $318.3 million for the year
      ended April 30, 2007.




During
      fiscal 2007, we announced the establishment of a new helicopter maintenance,
      repair and overhaul facility at Boundary Bay Airport in Delta, BC, Canada.
      Heli-One will establish a 240,000 square-foot facility including aircraft
      hangar, workshops and office space, with completion anticipated in the fourth
      quarter of fiscal 2008. 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.




Property
      and equipment additions of $280.7 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) $20.2 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
      assets and long-term investments were $209.8 million for the year ended
      April 30, 2006.




Property
      and equipment additions of $234.7 million during the year ended
      April 30, 2005 comprised of (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) $19.7 million related to other property and equipment.
      We also spent $15.5 million on helicopter major inspections. Proceeds on
      disposal of assets were $90.9 million for the year ended April 30,
      2005.




**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, scheduled service, 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, 2007, approximately 70% of our total revenue was derived from oil
      and gas activity (fiscal 2006 - 70%). Technology improvements allow oil and
      gas
      exploration and production companies to push production into deeper waters.
      This
      translates into longer trips, more flying hours and the need for larger new
      technology helicopters, which generally have an improved 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. There are 133 deep-water
      installations forecast for the period from 2007 to 2011 compared to 93
      installations in the preceding five-year period. Demand for new offshore
      helicopters is forecast to increase by 100 aircraft between 2006 and
      2010.







19





The
      North Sea is the largest producing offshore oil and gas region in the world
      and continues to experience growth in rig demand. Rig utilization in the
      North Sea rose above 95% in June 2007 for a new high in recent history.
      Projected utilization rates have also risen, indicating that the market will
      likely remain strong in the future. 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
      throughout the world continues to increase from current levels.




We
      expect further increased demand for helicopter services as a result of
      government momentum towards civil search and rescue services in the UK,
      Australia and throughout Europe. The UK government intends to privatize ten
      to
      thirteen additional coastguard bases commencing in 2012 for a period of
      20-30 years. We have already entered into the bidding process for this
      contract.




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 that we possess all of these characteristics.




**BUSINESS
      OVERVIEW**




**General**




We
      are
      the world’s largest global commercial helicopter operator. Through our
      subsidiaries, we have been providing helicopter services for more than
      60 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.
      We
      also provide helicopter transportation services for emergency medical services
      (“EMS”) and search and rescue (“SAR”) activities and ancillary services such as
      flight training. Our Heli-One segment is the world’s largest non-original
      equipment manufacturer helicopter support company, providing repair and overhaul
      (“R&O”) services, aircraft leasing, integrated logistics support, helicopter
      parts sales and distribution, and other related services to our flight
      operations and third-party customers around the world.




We
      provide helicopter transportation services to a broad base of independent and
      state-owned oil and gas companies transporting personnel 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 and a global operator servicing the oil and gas industry in Brazil, Africa,
      Australia, Asia and Canada. For the fiscal years ended April 30, 2007 and
      2006, revenue generated by helicopter transportation services for the oil and
      gas industry was approximately 70% of our total revenue.




We
      believe that our R&O 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.







20





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
            ExxonMobil
            PremierApache
            Ireland
            Royal
                Dutch/Shell GroupBp
            Maersk
            StatoilChevron
            Marathon
            TotalFinaElfCommonwealth
                of Australia
            Nexen
            UnocalConocoPhillips
            Petrobras





**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 and base start-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.




•
            ***Focus
                on Safety******.*** In over 60 years
                of operations, we have developed sophisticated safety and training
                programs and practices that have resulted in a strong safety record.
                We
                have implemented a single Safety Management System worldwide and
                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 and expanding these advanced training services in Aberdeen
                and
                Vancouver 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, lower
                insurance costs related to our industry leading safety record and
                in-house
                R&O and training capabilities give us a cost advantage over
                competitors who must incorporate higher third-party R&O 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 improved speed, range, passenger capacity, comfort and
                general
                superior performance. As of April 30, 2007, we operated
                255 aircraft, comprised of 86 heavy helicopters, 146 medium
                helicopters, three light helicopters and twenty fixed-wing
                aircraft. The helicopter fleet consists of more than a dozen types
                of
                helicopters manufactured primarily by Eurocopter, Sikorsky, AgustaWestland
                and Bell. During the year we added an additional four Sikorsky S92
                aircraft for a total of ten S92 aircraft to complement our fleet
                of twenty
                Super Puma MkIIs. These two aircraft types represent the most advanced
                civilian heavy helicopter types in service today. In addition, we
                have six
                AgustaWestland AW139 in our fleet. The AgustaWestland AW139 is a
                new
                aircraft type, which we have added to the fleet along with the Sikorsky
                S92. During the year, we signed a contract with Eurocopter for the
                purchase of 16 new EC225 helicopters to be delivered between fiscal
                2008
                and fiscal 2012. The EC225 aircraft is also a new heavy aircraft
                type.







21










•
            ***Retention
                of Asset Value******.*** Based on
                independent appraisals as of April 30, 2007 the estimated fair market
                value of our owned aircraft fleet was $628.2 million, exceeding our
                net book value by approximately $33.1 million. 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 R&O 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 R&O capability and have
                the only licensed commercial engine and major component R&O facility
                in the world for the Eurocopter Super Puma and EC225 helicopters,
                other
                than the original equipment manufacturers, and have the capability
                to
                support several other helicopter types including Eurocopter Dauphin,
                Sikorsky S61 and S76 and Bell 212/412. This capability allows us to
                control the quality and cost of our helicopter maintenance, repair
                and
                refurbishment. The development of the Boundary Bay R&O facility,
                acquisition of Heli-Dyne and the expansion of in-house capabilities
                may
                result in our exit from third-party PBH maintenance programs in the
                future.




**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, earnings 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
                ideally positions us to service increased demand from existing customers
                and new entrants to the
                marketplace.




•
            ***Growth
                Through Acquisition******.*** During the
                year we acquired an equity position in BHS, one of the largest helicopter
                operators in the Brazilian offshore sector. We also acquired Heli-Dyne,
                a
                helicopter completion and maintenance centre based in Hurst, Texas.
                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 continue to
                expand our R&O business by further penetrating the Eurocopter (Super
                Puma and EC225) major component and engine overhaul market and pursuing
                new opportunities in heavy and medium aircraft maintenance and military
                helicopter support through the development of facilities in
                North America, including the acquisition of Heli-Dyne in fiscal 2007.
                During the year, we began construction of a 240,000 square foot
                R&O facility at Boundary Bay Airport in Delta, BC, Canada, which is
                expected to be completed in the fourth quarter of fiscal 2008. Heli-One
                has the capability to support, on a nose-to-tail basis, our entire
                fleet
                of over 150 Sikorsky S61 and S76 and Eurocopter Super Puma aircraft
                and to
                compete for helicopter work for a worldwide fleet of 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; and


-
            Inventory
                management.







22










•
            ***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 both the oil and gas and EMS/SAR industries. 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.




During
      the year we were awarded a new EMS contract with the Ambulance Service of New
      South Wales for the provision of five AW139 and EC145 aircraft in the Greater
      Sydney area. This contract commenced during the third quarter of fiscal 2007.
      The seven-year contract is the largest helicopter EMS contract ever awarded
      in
      Australia and includes three years of extension options.




During
      the first quarter of fiscal 2008, we will commence operations on the five-year,
      £ 106 million contract with the United Kingdom Maritime and Coastguard
      Agency to provide commercial SAR helicopter service from four bases in the
      UK.




•
            ***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 67% of our revenue
                during the year, compared to 66% in the prior
                year.




**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. During fiscal 2007, we sold an additional six light aircraft and
      at
      April 30, 2007, only have three light helicopters remaining in our
      fleet.




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, their limited
      availability, and long lead time on orders tends to lessen competition from
      smaller operators. We operated 232 helicopters in this category (86 heavy
      and 146 medium helicopters) as at April 30, 2007.




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 is installed to provide
      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 is required.







23





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 five 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
      45% of our fiscal 2007 flying revenue (fiscal 2006 - 51%) was derived from
      hourly charges and the remaining 55% (fiscal 2006 - 49%) 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
      eight 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, TotalFinaElf, Chevron, Maersk, Nexen and Unocal.
      Many of these companies have been our customers for more than
      30 years.




**Revenue
                by Industry Sector**
            
            **2007**
            
            
            
            
            
            **2006*(i)***
            
            
            
            
            
            **2005*(i)***(in
                millions)
            
            
            %
            
            
            (in
                millions)
            
            
            %
            
            
            (in
                millions)
            
            
            %Oil
                and Gas
            
            
            803.4
            
            
            
            69.9
            %
            
            
            696.7
            
            
            
            69.9
            %
            
            
            667.6
            
            
            
            70.0
            %Repair
                and Overhaul
            
            
            159.3
            
            
            
            13.9
            %
            
            
            131.5
            
            
            
            13.2
            %
            
            
            112.2
            
            
            
            11.7
            %EMS/SAR
            
            
            80.7
            
            
            
            7.0
            %
            
            
            82.7
            
            
            
            8.3
            %
            
            
            84.8
            
            
            
            8.9
            %Other
            
            
            73.3
            
            
            
            6.4
            %
            
            
            61.4
            
            
            
            6.1
            %
            
            
            57.5
            
            
            
            6.0
            %Passenger
                Transportation
            
            
            26.8
            
            
            
            2.3
            %
            
            
            18.0
            
            
            
            1.8
            %
            
            
            24.7
            
            
            
            2.6
            %Training
            
            
            5.6
            
            
            
            0.5
            %
            
            
            6.8
            
            
            
            0.7
            %
            
            
            7.4
            
            
            
            0.8
            %Total
            
            $
            1,149.1
            
            
            
            100.0
            %
            
            $
            997.1
            
            
            
            100.0
            %
            
            $
            954.2
            
            
            
            100.0
            %










24










**Revenue
                by Geographic Area**
            
            **2007**
            
            
            
            
            
            **2006*(i)***
            
            
            
            
            
            **2005*(i)***(in
                millions)
            
            
            %
            
            
            (in
                millions)
            
            
            %
            
            
            (in
                millions)
            
            
            %Canada
            
            **$**
            **48.2**
            
            
            
            4.2
            %
            
            $
            32.9
            
            
            
            3.3
            %
            
            $
            24.0
            
            
            
            2.5
            %United
                Kingdom
            
            ****
            **248.8**
            
            
            
            21.7
            %
            
            
            209.4
            
            
            
            21.0
            %
            
            
            237.7
            
            
            
            24.9
            %Norway
            
            ****
            **202.0**
            
            
            
            17.6
            %
            
            
            206.7
            
            
            
            20.7
            %
            
            
            182.9
            
            
            
            19.2
            %Africa
            
            ****
            **189.9**
            
            
            
            16.5
            %
            
            
            150.1
            
            
            
            15.1
            %
            
            
            124.3
            
            
            
            13.0
            %Australia
            
            ****
            **74.6**
            
            
            
            6.5
            %
            
            
            64.5
            
            
            
            6.5
            %
            
            
            62.2
            
            
            
            6.5
            %Denmark
            
            ****
            **29.1**
            
            
            
            2.5
            %
            
            
            28.1
            
            
            
            2.8
            %
            
            
            35.5
            
            
            
            3.7
            %The
                Netherlands
            
            ****
            **72.1**
            
            
            
            6.3
            %
            
            
            67.2
            
            
            
            6.7
            %
            
            
            65.9
            
            
            
            7.0
            %Other
                Asian countries
            
            ****
            **68.1**
            
            
            
            5.9
            %
            
            
            52.7
            
            
            
            5.3
            %
            
            
            88.5
            
            
            
            9.3
            %Other
                European countries
            
            ****
            **120.9**
            
            
            
            10.5
            %
            
            
            108.0
            
            
            
            10.8
            %
            
            
            88.7
            
            
            
            9.3
            %Other
                countries
            
            ****
            **95.4**
            
            
            
            8.3
            %
            
            
            77.5
            
            
            
            7.8
            %
            
            
            44.5
            
            
            
            4.6
            %Consolidated
                total
            
            **$**
            **1,149.1**
            
            
            
            100.0
            %
            
            $
            997.1
            
            
            
            100.0
            %
            
            $
            954.2
            
            
            
            100.0
            %




(i)
            See
                Note 2 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, 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 76 aircraft in this
      segment, consisting of 48 heavy and 28 medium aircraft. Included in the heavy
      aircraft were 34 Super Pumas, nine Sikorsky S61N and five Sikorsky S92
      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, Norsk Hydro and bp.




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, Perenco UK Limited 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 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 their oil and gas operations in the Danish sector of the
      North Sea that began in July 2007.




In
      Ireland SAR services are performed as well as oil and gas support. The Irish
      SAR
      contract was extended for two years to July 2007. During fiscal 2007, 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 S92 helicopters to reach more remote regions.







25





During
      and subsequent to fiscal 2007, we were awarded three new contracts in Norway
      with TOTAL E&P Norge AS and Statoil ASA, Norway. These contracts begin in
      2008 and 2009. In addition, we were awarded contract renewals with Statoil
      in
      Norway and GDF Production Nederland BV in Den Helder.




Future
      opportunities within the SAR sector in the UK exist. During fiscal 2006, we
      were
      awarded a five-year, £ 106 million contract with the United Kingdom
      Maritime and Coastguard Agency to provide commercial SAR helicopter service
      from
      four bases in the UK. In addition, we have entered into the bidding process
      for
      a 20-30 year contract with the UK government, which intends to privatize
      ten to thirteen additional coastguard bases commencing in 2012.




Global
      Operations




Our
      Global Operations segment provides helicopter and fixed-wing flying services
      in
      Africa, Asia, Australia, the Middle East, the Americas and other locations
      around the world, except Europe, to customers in oil and gas, EMS/SAR and other
      industries. We believe that the collective international experience we have
      gained over the last 60 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 consists 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
      145 aircraft in this segment, consisting of 27 heavy, 97 medium,
      and one light aircraft as well as 20 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 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 conducts business with major oil and gas companies
      including operating subsidiaries of Shell, bp, ExxonMobil, Unocal, Chevron,
      United Helicharters 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 ExxonMobil.
      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 ExxonMobil.
      We
      also maintain contracts for ongoing work in such countries such as Ecuador
      and
      Georgia. 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 helicopters in India. Subsequent to fiscal 2006, we were awarded,
      through BHS, a five-year contract for the provision of eight Sikorsky S76C+
      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. During fiscal 2007, we
      were awarded a seven-year (plus three years of extension options) EMS contract
      with the Ambulance Service of New South Wales for the provision of five
      aircraft in the Greater Sydney area. The contract commenced in late fiscal
      2007.




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







26





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, Asia, Brazil and other developing oil
      and gas regions.




Competition
      - Flying Operations




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 64% 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, oil companies are going
      further offshore to develop deep-water reserves. Our global presence, long-term
      customer relationships and modern fleet of aircraft, including new
      technologically advanced 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
      Eurocopter Super Puma MkII, Sikorsky S92, Sikorsky S76C++, AgustaWestland AW139
      and new Eurocopter EC225 aircraft are the aircraft of choice for major oil
      and
      gas companies due to their superior flying range, passenger capacity and cabin
      crew comfort. At present, together with our major competitor, 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 EC225 or S92 is in excess
      of two years and the next available delivery slot for heavy aircraft (S92
      or EC225) is the fall of 2009. During the year, we added four Sikorsky
      S92 aircraft and four AgustaWestland AW139 aircraft to our fleet. In
      addition, during the year, we announced the signing of a contract with
      Eurocopter for the purchase of 16 new EC225 helicopters, expected to be
      delivered between fiscal 2008 and fiscal 2012. We plan to use these aircraft
      in
      support of new offshore oil and gas contracts and potentially as SAR aircraft
      to
      meet the unprecedented demand from various customers in both the offshore oil
      and gas industry and government sponsored SAR.




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 Aero
      Contractors Company of Nigeria Limited (“ACN”) (a 40% owned equity investment),
      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. The majority of the fixed-wing aircraft are
      used to provide an integrated service to our oil and gas customers. We had
      20 fixed-wing aircraft in our fleet as at April 30, 2007.




Repair
      and Overhaul




All
      aircraft airframes, engines and components are required by their manufacturers
      and government regulations to be serviced and overhauled based on flight hours,
      cycles or the actual condition of parts. The R&O process includes the
      disassembly, cleaning, inspection, repair and reassembly of engines, components
      and accessories, and 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 R&O 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.







27





Our
      Heli-One segment is the world’s largest independent helicopter support company.
      We will continue to grow this segment with the development of the new R&O
      facility at Boundary Bay Airport which is currently under construction. Heli-One
      provides comprehensive capability for repair, overhaul, modification and testing
      of dynamic components, including Sikorsky S61 and S76, Bell 206, 205, 212
      and 412 and all Eurocopter Super Puma AS332/532 models in North America and
      Norway.




Heli-One
      is also able to provide its customers with integrated logistics support,
      providing 24-hour service, covering all scheduled and unscheduled R&O for
      engines, dynamic components, all repairable 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 utilizing 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
      - Repair and Overhaul




Heli-One’s
      main competitors within the R&O 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 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 our extensive operational experience.
      We
      believe 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
      its inception, this facility has trained more than 30,000 pilots, engineers
      and
      helideck landing officers from over 40 countries. We are currently building
      in-house flight training capability in Vancouver and Aberdeen.




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.




Seasonality




See
      page 39, *“Results of Operations - Quarterly Information”* for
      discussion on the impacts of seasonality.




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.







28










On
      December 27, 2006, we suffered the loss of one medium AS365N aircraft in a
      helicopter accident off the west coast of England. Five passengers and two
      crew
      members perished in the accident. The cause of this unfortunate accident has
      not
      yet been ascertained as it is still under investigation by the Air Accidents
      Investigation Branch. This aircraft had a net book value of $3.2 million
      which has been fully recovered through insurance proceeds. All other incurred
      or
      outstanding liabilities relating to this incident are expected to be covered
      by
      our insurance providers.




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.







29





**ORGANIZATIONAL
      STRUCTURE**




Refer
      to Exhibit 8.1 for a list of our principal subsidiaries, their jurisdiction
      of
      incorporation and the percentage of votes attached to voting securities held
      directly or indirectly by us.




**PROPERTY
      AND EQUIPMENT**




**Fleet
      - By Type of Aircraft**




The
      composition of our fleet at April 30, 2007, and some of the characteristics
      of the individual types of aircraft we own or lease are as follows:




**Number
                in Fleet**
            
            
            
            **Passenger**
              **Capacity
                *(i)*****Fleet
                Composition**
            **Owned**
            **Leased**
            
            **Type
                of Engine****Light
                Helicopters**Eurocopter
                AS350 Series
            1
            -
            
            Turbine
            
            5Eurocopter
                AS355 Twin Star
            1
            -
            
            Twin
                Turbine
            
            4MD
                902
            1
            -
            
            Twin
                Turbine
            
            7**Total
                Light Helicopters**
            3
            -**Medium
                Helicopters**AgustaWestland
                AW139
            2
            4
            
            Twin
                Turbine
            
            15Bell
                212 Series
            9
            1
            
            Twin
                Turbine
            
            14Bell
                214
            1
            -
            
            Twin
                Turbine
            
            19Bell
                412
            8
            9
            
            Twin
                Turbine
            
            14Eurocopter
                155B
            -
            2
            
            Twin
                Turbine
            
            12Eurocopter
                365
                Series
            19
            13
            
            Twin
                Turbine
            
            10Sikorsky
                S76
                Series
            48
            30
            
            Twin
                Turbine
            
            9**Total
                Medium Helicopters**
            87
            59**Heavy
                Helicopters**Eurocopter
                Super Puma 332L/L1
            17
            15
            
            Twin
                Turbine
            
            20Eurocopter
                Super Puma 332 MkII
            1
            19
            
            Twin
                Turbine
            
            19Sikorsky
                S61N
            22
            2
            
            Twin
                Turbine
            
            26Sikorsky
                S92
                Series
            -
            10
            
            Twin
                Turbine
            
            19**Total
                Heavy Helicopters**
            40
            46**Fixed-Wing
                Aircraft**ATR
                42-500
            -
            1
            
            Twin
                Turboprop
            
            48Boeing
                737-300
            -
            2
            
            Twin
                Jet
            
            149Convair
                580
            2
            -
            
            Twin
                Turboprop
            
            55Dash
                8
            6
            2
            
            Twin
                Turboprop
            
            47Learjet
                45
            1
            -
            
            Twin
                Jet
            
            9Twin
                Otter
            5
            1
            
            Twin
                Turboprop
            
            19**Total
                Fixed-Wing Aircraft**
            14
            6**TOTAL**
            144
            111




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





30








**Fleet
      - By Segment**




Our
      fleet at April 30, 2007 was comprised of the following aircraft by
      segment:




Aircraft
                Type
            
            Global
              Operations
            
            
            European
              Operations
            
            
            Heli-One
            
            
            **Total**
            
            
            Owned
            
            
            LeasedHeavyEurocopter
                Super Puma
            
            
            9
            
            
            
            18
            
            
            
            5
            
            
            ****
            **32**
            
            
            
            17
            
            
            
            15Eurocopter
                Super Puma MkII
            
            
            4
            
            
            
            16
            
            
            
            -
            
            
            ****
            **20**
            
            
            
            1
            
            
            
            19Sikorsky
                S61N
            
            
            12
            
            
            
            9
            
            
            
            3
            
            
            ****
            **24**
            
            
            
            22
            
            
            
            2Sikorsky
                S92 series
            
            
            2
            
            
            
            5
            
            
            
            3
            
            
            ****
            **10**
            
            
            
            -
            
            
            
            1027
            
            
            
            48
            
            
            
            11
            
            
            ****
            **86**
            
            
            
            40
            
            
            
            46MediumAgustaWestland
                AW139
            
            
            2
            
            
            
            4
            
            
            
            -
            
            
            ****
            **6**
            
            
            
            2
            
            
            
            4Bell
                212
            
            
            10
            
            
            
            -
            
            
            
            -
            
            
            ****
            **10**
            
            
            
            9
            
            
            
            1Bell
                412
            
            
            15
            
            
            
            -
            
            
            
            2
            
            
            ****
            **17**
            
            
            
            8
            
            
            
            9Eurocopter
                365 Series
            
            
            15
            
            
            
            8
            
            
            
            9
            
            
            ****
            **32**
            
            
            
            19
            
            
            
            13Sikorsky
                S76 Series
            
            
            55
            
            
            
            13
            
            
            
            10
            
            
            ****
            **78**
            
            
            
            48
            
            
            
            30Other
            
            
            -
            
            
            
            3
            
            
            
            -
            
            
            ****
            **3**
            
            
            
            1
            
            
            
            297
            
            
            
            28
            
            
            
            21
            
            
            ****
            **146**
            
            
            
            87
            
            
            
            59LightEurocopter
                AS350/355
            
            
            1
            
            
            
            -
            
            
            
            1
            
            
            ****
            **2**
            
            
            
            2
            
            
            
            -Other
            
            
            -
            
            
            
            -
            
            
            
            1
            
            
            ****
            **1**
            
            
            
            1
            
            
            
            -1
            
            
            
            -
            
            
            
            2
            
            
            ****
            **3**
            
            
            
            3
            
            
            
            -Total
                Helicopters
            
            
            125
            
            
            
            76
            
            
            
            34
            
            
            ****
            **235**
            
            
            
            130
            
            
            
            105Fixed-wing
            
            
            20
            
            
            
            -
            
            
            
            -
            
            
            ****
            **20**
            
            
            
            14
            
            
            
            6Total
                Aircraft
            
            
            145
            
            
            
            76
            
            
            
            34
            
            
            ****
            **255**
            
            
            
            144
            
            
            
            111




During
      fiscal 2007, we completed 28 sale-leaseback transactions, entered into new
      operating leases for ten aircraft, returned four aircraft to lessors and
      purchased five aircraft off-lease. As a result of the foregoing transactions,
      the number of leased aircraft in our fleet increased by 29 during fiscal 2007,
      from 82 leased aircraft as at April 30, 2006 to 111 leased aircraft as at
      April 30, 2007. We also purchased 30 aircraft, disposed of 13 aircraft
      and lost one aircraft in a helicopter accident. As a result of these purchases,
      disposals and the aforementioned leasing transactions, the number of owned
      aircraft in our fleet decreased from 151 as at April 30, 2006 to 144 as at
      April 30, 2007.




Based
      on independent appraisals, the estimated fair market value of our owned aircraft
      fleet was $628.2 million as at April 30, 2007, exceeding its book
      value by approximately $33.1 million. See page 22, “*Competitive
      Strengths - Retention of Asset Value*”. The appraisal surplus has declined
      from $46.7 million at April 30, 2006 to $33.1 million at
      April 30, 2007. This decline is attributable primarily to the impact of
      foreign exchange fluctuations on the translation of the aircrafts’ appraised
      values.




**Lease
      Obligations**




We
      had
      entered into aircraft operating leases with 27 lessors on 111 aircraft included
      in our fleet at April 30, 2007. At inception, our aircraft leases had terms
      not exceeding 8.5 years. At April 30, 2007, these leases had expiry
      dates ranging from fiscal 2008 to 2016. The total minimum lease payments under
      these aircraft operating leases totalled $556.3 million at April 30,
      2007. We have options to purchase the aircraft at fair market value or agreed
      amounts that do not constitute bargain purchase options, but have 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 R&O service provider. We had also given
      guarantees to certain lessors in connection with these aircraft leases. See
      page 62, “*Off-Balance Sheet Arrangements*”.




In
      addition to payment under aircraft operating leases, we had minimum lease
      payments of $44.6 million for the same periods related to operating lease
      commitments for buildings, land and other equipment.


For
        additional details see page 63, “*Contractual Obligations*” and also
        Notes 26 and 28 to our fiscal 2007 audited consolidated financial
        statements.





31




**Commitments
      to Acquire New Aircraft**




As
      at
      April 30, 2007, we had ordered and made deposits for a number of aircraft.
      At April 30, 2007, we had committed to purchase 34 heavy and 37 medium
      aircraft, most of which are expected to be delivered by the end of fiscal 2009.
      Total capital committed to these purchases is approximately $837.1 million
      (US $756.4 million). We also have options to purchase up to 12
      additional aircraft over the next five years. We expect that most of these
      aircraft will be used internally to support continued growth.




Depending
      on market conditions, we intend to obtain the use of these aircraft through
      operating leases.




**Facilities**




We
      currently operate from approximately 90 bases worldwide, including 17 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(i)
            Leased
              April
                20, 2010
            OwnedCape
                Town,
              South
                Africa
            CHC
                Africa;
              Helicopter
                Operations
            142,884
            Leased
              April
                30, 2010
            OwnedAdelaide,
                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, 2008Delta,
                British Columbia, Canada(ii)
            Future
                Headquarters for Heli-One and future Repair and Overhaul
                facilities
            240,000
            Leased
            OwnedHurst,
                Texas
            Heli-One
                USA Inc.
            30,000
            Owned
            Owned


(i)
              Sub-leased
                  from CHC Helikopter Service AS who leases from Heliwest AS and
                  included
                  within the 199,000 square feet shown in the table above for that
                  company.
 (ii)
              The
                  building on this property is under construction with occupation
                  expected
                  in February 2008.





32




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.*




**OVERVIEW**




Revenue
      for the fiscal year ended April 30, 2007 was $1,149.1 million, up
      $152.0 million from revenue of $997.1 million in fiscal 2006 and up
      $194.9 million from revenue of $954.2 million in fiscal 2005. Net
      earnings from continuing operations for fiscal 2007 were $41.0 million
      ($0.90 per share, diluted) compared to $89.7 million ($1.95 per
      share, diluted) in fiscal 2006 and $46.9 million ($1.03 per share,
      diluted) in fiscal 2005. Net earnings from continuing operations in fiscal
      2006
      includes gains from the sale of various long-term investments totalling
      $32.3 million after-tax.




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**




**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 2007 was approximately $11.0 million. 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. Operating income was still
      negatively impacted by FX of approximately $0.3 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. Company policy
      specifically prohibits the use of derivatives for speculative purposes. See
      page 59, “*Liquidity and Capital Resources - Financing Activities*”,
      page 61, “*Financial Instruments*” and page 13, “*Risk
      Factors - Foreign Exchange Rate Risk.*”







33





**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 2007 audited consolidated financial
      statements.




We
      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 and EMS/SAR customers in Australia,
                Africa, the Middle East, the Americas, Asia 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,
                the UK,
                the US, Australia and Africa. Heli-One also performs composite aerospace
                component manufacturing.


•
            The
                Corporate and other segment includes corporate head office and other
                corporate costs in various
                jurisdictions.




Comparative
      figures for April 30, 2006 and April 30, 2005 have been reclassified
      as a result of the classification of Survival-One as discontinued operations
      as
      outlined in Note 2 to our fiscal 2007 audited consolidated financial
      statements and on page 18, “*Discontinued operations.*”




**YEAR
      ENDED APRIL 30, 2007 COMPARED TO YEAR ENDED APRIL 30,
      2006**




**Revenue**




Total
      revenue for fiscal 2007 was $1,149.1 million, an increase of
      $152.0 million from revenue of $997.1 million for fiscal 2006. The
      increase of $152.0 million from fiscal 2006 includes revenue growth of
      $163.0 million offset by unfavourable FX of $11.0 million. The
      following are the primary reasons for the change in revenue:




(i)
            Excluding
                the impact of FX, there was a $108.1 million increase in revenue in
                fiscal 2007 in Global Operations primarily due to increased flying
                revenue
                from new and expanded contracts in Australia, South America, Africa
                and
                Southeast Asia, as well as increased fixed-wing activity in Nigeria
                and
                rate increases on a number of existing
                contracts.


(ii)
            European
                Operations’ revenue increased by $17.1 million, excluding FX, over
                fiscal 2006 due to new and renewed contracts and rate increases earned
                on
                new aircraft types. These increases were partially offset by the
                loss of
                the ConocoPhillips contract in late fiscal 2006 and the impact of
                aircraft
                availability issues in fiscal 2007.


(iii)
            An
                increase in external revenue in fiscal 2007 in Heli-One of
                $37.4 million, excluding FX. This increase was due to increases in
                both external fleet and R&O revenues. External fleet revenue increased
                due to incremental lease revenue on a larger third-party leased fleet,
                including new aircraft lease contracts in Mexico and the US. R&O
                revenue increased due to an increase in customer flying hours, new
                PBH
                contracts in Malaysia and Mexico, part sales increases and an increase
                in
                base maintenance activities. Base maintenance activities increased
                primarily as a result of the consolidation of Heli-Dyne in the US,
                which
                was acquired during fiscal 2007, as well as increases in third party
                base
                maintenance work performed in Norway and
                Europe.





34











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 302007
            
            
            2006
            
            
            Change
            
            
            2007
            
            
            2006
            
            
            Change
                *(i)*Industry
                Sector
            
            (percentage
                of total revenue)
            
            
            (in millions
                of CDN dollars)Oil
                and Gas
            
            
            69.9
            %
            
            
            69.9
            %
            
            
            -
            
            
            $
            803.4
            
            
            $
            696.7
            
            
            $
            106.7Repair
                and Overhaul
            
            
            13.9
            %
            
            
            13.2
            %
            
            
            0.7
            %
            
            
            159.3
            
            
            
            131.5
            
            
            
            27.8EMS/SAR
            
            
            7.0
            %
            
            
            8.3
            %
            
            
            (1.3
            )%
            
            
            80.7
            
            
            
            82.7
            
            
            
            (2.0
            )Other
            
            
            6.4
            %
            
            
            6.1
            %
            
            
            0.3
            %
            
            
            73.3
            
            
            
            61.4
            
            
            
            11.9Passenger
                Transportation
            
            
            2.3
            %
            
            
            1.8
            %
            
            
            0.5
            %
            
            
            26.8
            
            
            
            18.0
            
            
            
            8.8Training
            
            
            0.5
            %
            
            
            0.7
            %
            
            
            (0.2
            )%
            
            
            5.6
            
            
            
            6.8
            
            
            
            (1.2
            )Total
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            -
            
            
            $
            1,149.1
            
            
            $
            997.1
            
            
            $
            152.0




(i)
            The
                $106.7 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 $27.8 million increase in repair
                and overhaul revenue was primarily due to an increase in customer
                flying
                hours, increased base maintenance activities in Norway and Europe
                and the
                acquisition of Heli-Dyne in the US during the year, partially offset
                by
                unfavourable FX.





The
      table below provides a summary of segment revenue by quarter for fiscal 2007
      and
      2006:




Revenue
      Summary by Quarter


(in
      millions of Canadian dollars)




Period
            
            
            Global
              Operations
            
            
            European
                Operations
            
            
            Total
                Flying Segments
            
            
            Heli-One
            
            
            Corporate
              &
                Other
            
            
            TotalFiscal
                2007
            Q1
            
            $
            91.8
            
            
            $
            132.9
            
            
            $
            224.7
            
            
            $
            38.4
            
            
            $
            -
            
            
            $
            263.1Q2
            
            
            97.8
            
            
            
            131.7
            
            
            
            229.5
            
            
            
            43.3
            
            
            
            0.2
            
            
            
            273.0Q3
            
            
            119.7
            
            
            
            135.5
            
            
            
            255.2
            
            
            
            45.5
            
            
            
            0.1
            
            
            
            300.8Q4
            
            
            118.7
            
            
            
            139.8
            
            
            
            258.5
            
            
            
            53.5
            
            
            
            0.2
            
            
            
            312.2$
            428.0
            
            
            $
            539.9
            
            
            $
            967.9
            
            
            $
            180.7
            
            
            $
            0.5
            
            
            $
            1,149.1Fiscal
                2006
            Q1
            
            $
            76.0
            
            
            $
            133.6
            
            
            $
            209.6
            
            
            $
            33.4
            
            
            $
            -
            
            
            $
            243.0Q2
            
            
            79.5
            
            
            
            138.5
            
            
            
            218.0
            
            
            
            34.5
            
            
            
            (0.1
            )
            
            
            252.4Q3
            
            
            86.6
            
            
            
            126.0
            
            
            
            212.6
            
            
            
            40.8
            
            
            
            0.1
            
            
            
            253.5Q4
            
            
            88.8
            
            
            
            122.3
            
            
            
            211.1
            
            
            
            37.0
            
            
            
            0.1
            
            
            
            248.2$
            330.9
            
            
            $
            520.4
            
            
            $
            851.3
            
            
            $
            145.7
            
            
            $
            0.1
            
            
            $
            997.1




We
      derive our flying revenue from both fixed and variable charges. Approximately
      45% of our fiscal 2007 flying revenue (fiscal 2006 - 51%) 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 2007 and 2006, in each case
      by segment.







35





Flying
      Hours




Flying
                Hours
            
            
            Number
                of Aircraft at Period EndPeriod
            
            
            Global
              Operations
            
            
            European
              Operations
            
            
            Total
            
            
            Global
              Operations
            
            
            European
              Operations
            
            
            Heli-One
            
            
            TotalFiscal
                2007
            Q1
            
            
            19,502
            
            
            
            24,240
            
            
            
            43,742
            
            
            
            132
            
            
            
            76
            
            
            
            44
            
            
            
            252Q2
            
            
            20,981
            
            
            
            23,256
            
            
            
            44,237
            
            
            
            128
            
            
            
            77
            
            
            
            43
            
            
            
            248Q3
            
            
            21,547
            
            
            
            21,556
            
            
            
            43,103
            
            
            
            128
            
            
            
            75
            
            
            
            47
            
            
            
            250Q4
            
            
            22,177
            
            
            
            21,956
            
            
            
            44,133
            
            
            
            145
            
            
            
            76
            
            
            
            34
            
            
            
            25584,207
            
            
            
            91,008
            
            
            
            175,215Fiscal
                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
            
            
            
            165,330




Flying
      Revenue Mix - Hourly vs. Fixed


(in
      millions of Canadian dollars)




Hourly
            
            
            Fixed
            
            
            TotalSegment
            
            Fiscal
                2007
            
            
            Fiscal
                2006
            
            
            Fiscal
                2007
            
            
            Fiscal
                2006
            
            
            Fiscal
                2007
            
            
            Fiscal
                2006Global
                Operations
            
            $
            114.1
            
            
            $
            97.2
            
            
            $
            260.6
            
            
            $
            210.7
            
            
            $
            374.7
            
            
            $
            307.9European
                Operations
            
            
            282.4
            
            
            
            311.0
            
            
            
            231.9
            
            
            
            186.2
            
            
            
            514.3
            
            
            
            497.2$
            396.5
            
            
            $
            408.2
            
            
            $
            492.5
            
            
            $
            396.9
            
            
            $
            889.0
            
            
            $
            805.1




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 2006 to fiscal 2007.




Flying
      Revenue Mix - Aircraft Type


(in
      millions of Canadian dollars)




Fiscal
                2007
            
            
            Fiscal
                2006Segment
            
            Heavy
            
            
            Medium
            
            
            Light
            
            
            Fixed
              Wing
            
            
            Total
            
            
            Heavy
            
            
            Medium
            
            
            Light
            
            
            Fixed
              Wing
            
            
            TotalGlobal
                Operations
            
            $
            87.8
            
            
            $
            242.1
            
            
            $
            0.9
            
            
            $
            43.9
            
            
            $
            374.7
            
            
            $
            70.0
            
            
            $
            204.8
            
            
            $
            2.5
            
            
            $
            30.6
            
            
            $
            307.9European
                Operations
            
            
            378.2
            
            
            
            136.1
            
            
            
            -
            
            
            
            -
            
            
            
            514.3
            
            
            
            369.7
            
            
            
            127.5
            
            
            
            -
            
            
            
            -
            
            
            
            497.2Total
                FlyingRevenue
            
            $
            466.0
            
            
            $
            378.2
            
            
            $
            0.9
            
            
            $
            43.9
            
            
            $
            889.0
            
            
            $
            439.7
            
            
            $
            332.3
            
            
            $
            2.5
            
            
            $
            30.6
            
            
            $
            805.1Total
                %
            
            
            52.5
            %
            
            
            42.5
            %
            
            
            0.1
            %
            
            
            4.9
            %
            
            
            100.0
            %
            
            
            54.6
            %
            
            
            41.3
            %
            
            
            0.3
            %
            
            
            3.8
            %
            
            
            100.0
            %




Aberdeen
      Airport Ltd. in the UK no longer reports monthly passenger traffic for all
      helicopter operations in Aberdeen, Scotland. Therefore, we are no longer able
      to
      provide this information.




**Direct
      Costs**




Direct
      costs for fiscal 2007 increased by $136.2 million to $924.7 million
      from $788.5 million in fiscal 2006. The increase from fiscal 2006 is
      primarily due to an increase in variable costs incurred to support revenue
      growth.







36





**General
      and Administration Costs**




General
      and administration costs for fiscal 2007 increased by $15.5 million to
      $43.4 million from $27.9 million for fiscal 2006. The increase of
      $15.5 million from fiscal 2006 is due primarily to $8.9 million
      incurred during fiscal 2007 relating to our SOX Section 404 project. In
      addition, contract settlement costs of $3.1 million were incurred during
      the year and there was an increase in professional fees of $7.4 million
      relating to external audit, consulting and other fee increases. These increases
      are partially offset by a reduction in variable compensation costs of
      $1.7 million and a reduction in claim reserves for various insured risks of
      $1.3 million compared to fiscal 2006.




**Amortization**




Amortization
      expense increased $9.8 million to $65.3 million in fiscal 2007 from
      $55.5 million in fiscal 2006. The increase in amortization is due to an
      increase in spares (rotables), base maintenance capitalized cost and the
      increased value of aircraft in the fleet.




**Restructuring
      Costs**




During
      the year ended April 30, 2007, we reversed $2.3 million of previously
      expensed restructuring costs as the liability was determined no longer
      necessary. During the year ended April 30, 2006, we expensed
      $16.2 million in connection with restructuring activities. Restructuring
      costs were comprised of severance, termination, relocation, planning, consulting
      and benefit adjustments.




**Loss
      on Disposal of Assets**




During
      fiscal 2007 we disposed of property and equipment, primarily aircraft (see
      page 30, “*Property and Equipment*” and page 60, “*Liquidity
      and Capital Resources - Investing Activities*”), and received net proceeds
      of $318.3 million, resulting in a net loss of $3.0 million and a
      deferred gain of $29.5 million. The latter related primarily to the
      28 aircraft sale-leaseback transactions that occurred during the year. The
      $3.0 million loss primarily related to the sale of seven helicopters during
      the second quarter at a combined loss of $1.6 million. The majority of this
      loss related to one heavy helicopter. As well, during the second quarter, we
      divested of a small non-core parts trading business originally acquired as
      part
      of the Schreiner acquisition, for a loss of approximately
      $0.7 million.




**Operating
      Income**




Operating
      income increased by $6.0 million to $115.1 million in fiscal 2007 from
      $109.1 million in fiscal 2006. The increase from fiscal 2006 was due
      primarily to a $28.3 million (excluding FX) increase in the Global
      Operations segment and an $8.2 million (net of FX) increase in the Heli-One
      segment. These increases are partially offset by a decrease in the European
      Operations segment of $22.3 million (excluding FX) and an increase in
      Corporate costs of $15.1 million (net of FX).




**Financing
      Charges**




Financing
      charges for the fiscal year ended April 30, 2007 totalled
      $58.3 million compared to $53.0 million in fiscal 2006. The increase
      in financing charges from fiscal 2006 is primarily due to an increase in
      interest on debt obligations of $8.4 million, partially offset by other
      interest income of $2.9 million in fiscal 2007.




(in
                millions of Canadian dollars)
            
            **2007**
            
            
            2006Interest
                on debt obligations
            
            **$**
            **51.9**
            
            
            $
            43.5Amortization
                of deferred financing costs
            
            ****
            **1.4**
            
            
            
            1.6Foreign
                exchange losses
            
            ****
            **8.2**
            
            
            
            6.2Release
                of currency translation adjustment
            
            ****
            **(0.3**
            **)**
            
            
            2.6Other
                interest income
            
            ****
            **(2.9**
            **)**
            
            
            (0.9
            )Total
            
            **$**
            **58.3**
            
            
            $
            53.0










37










The
      average rate on our variable-rate senior credit facilities during fiscal 2007
      was 5.8% compared to 4.4% in fiscal 2006. In addition to higher effective
      interest rates on the senior credit facility borrowings, interest on long-term
      debt increased due to higher average borrowings primarily for capital
      expenditures and increased working capital in fiscal 2007 compared to fiscal
      2006.




**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
      Earnings of Associated Companies and Non-Controlling
      Interest**




Equity
      earnings of associated companies and non-controlling interest decreased by
      $5.5 million to $1.1 million in fiscal 2007 from $6.6 million in
      fiscal 2006. The decrease is due to the sale of our 38% equity ownership in
      Inaer and our 41.75% interest in CHL during fiscal 2006.




**Income
      Taxes**




We
      had
      an income tax provision of $16.8 million in fiscal 2007 compared to
      $10.5 million in fiscal 2006. This provision was comprised of the
      following:




(in
                millions of Canadian dollars)
            
            **2007**
            
            
            2006Earnings
                from continuing operations before income taxes
            
            **$**
            **57.8**
            
            
            $
            100.2Combined
                Canadian federal and provincial statutory income tax rate
            
            ****
            **34**
            **%**
            
            
            34
            %Income
                tax provision calculated at statutory rate
            
            ****
            **(19.7**
            **)**
            
            
            (34.1
            )(Increase)
                decrease in income tax provision resulting from:Rate
                differences in various jurisdictions
            
            ****
            **12.9**
            
            
            
            13.5Effect
                of change in tax law
            
            ****
            **(1.3**
            **)**
            
            
            (0.2
            )Non-deductible
                items
            
            ****
            **(0.6**
            **)**
            
            
            (1.2
            )Large
                corporations tax
            
            ****
            **-**
            
            
            
            (0.5
            )Other
                foreign taxes
            
            ****
            **(7.8**
            **)**
            
            
            (3.5
            )Non-taxable
                portion of capital gains
            
            ****
            **0.6**
            
            
            
            13.6Non-taxable
                income
            
            ****
            **1.9**
            
            
            
            2.7Valuation
                allowance
            
            ****
            **0.7**
            
            
            
            (0.3
            )Other
            
            ****
            **(3.5**
            **)**
            
            
            (0.5
            )Income
                tax provision
            
            **$**
            **(16.8**
            **)**
            
            $
            (10.5
            )




During
      fiscal 2007, legislation was enacted in Canada to reduce the federal corporate
      income tax rate from 22.12% to 19% in phased reductions over the period 2008
      to
      2010. As a result, we adjusted the value of our future income tax assets related
      to losses carried forward and other temporary differences in Canada by
      $1.2 million.




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.







38





We
      have
      accumulated approximately $153.7 million in non-capital tax losses of which
      $72.9 million is available to reduce future Canadian income taxes otherwise
      payable and $80.8 million 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)2008
            
            $
            5.12009
            
            
            8.92014
            
            
            3.02015
            
            
            19.32026
            
            
            33.02027
            
            
            4.2Indefinitely
            
            
            80.2$
            153.7




**Net
      Earnings from Continuing Operations**




Net
      earnings from continuing operations for fiscal 2007 were $41.0 million
      ($0.90 per share, diluted), a decrease of $48.7 million from
      $89.7 million ($1.95 per share, diluted) in fiscal 2006. The
      decrease from fiscal 2006 was primarily the result of the gains on sale of
      long-term investments during fiscal 2006 of $37.5 million and a reduction
      in equity earnings of associated companies of $5.5 million. In addition, a
      higher tax provision of $6.3 million and increased financing charges of
      $5.3 million contributed to the overall decrease.




**Net
      Loss from Discontinued Operations**




Net
      earnings from discontinued operations for fiscal 2007 were $2.2 million
      ($0.05 per share, diluted) compared to $1.0 million for fiscal 2006
      ($0.02 per share, diluted). The increase is primarily due to an increase in
      survival suit sales and repairs for Survival-One during fiscal
      2007.




**Extraordinary
      Item**




During
      fiscal 2007, we acquired Heli-Dyne. See page 17, *“Acquisitions“*.
      The purchase price was allocated based on the fair value of the net identifiable
      assets acquired. This allocation resulted in negative goodwill, which was
      allocated to the fair value of the long-term assets acquired and the remaining
      excess of $0.8 million ($0.02 per share, diluted) was recorded as an
      extraordinary gain.




**Net
      Earnings**




Net
      earnings decreased by $46.7 million to $44.0 million ($0.97 per share,
      diluted) in fiscal 2007 compared to $90.7 million ($1.97 per share,
      diluted) in fiscal 2006. This reflects a $48.7 million decrease in net
      earnings from continuing operations, partially offset by an increase of
      $1.2 million in net earnings from discontinued operations and an
      extraordinary gain of $0.8 million recognized in fiscal 2007.




**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 2007 and 2006. All information
      has been reclassified for the classification of Survival-One as discontinued
      operations as outlined in Note 2 to our fiscal 2007 audited consolidated
      financial statements.







39










Fiscal
                2007
            
            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
                share(in millions
                of Canadian dollars)
            
            
            declared
            
            
            Basic
            
            
            Diluted
            
            
            Basic
            
            
            DilutedQ1
            
            $
            263.1
            
            
            $
            9.0
            
            
            $
            8.8
            
            
            $
            1,838.2
            
            
            $
            1,043.4
            
            
            $
            -
            
            
            $
            0.21
            
            
            $
            0.20
            
            
            $
            0.21
            
            
            $
            0.19Q2
            
            
            273.0
            
            
            
            8.3
            
            
            
            8.9
            
            
            
            1,839.0
            
            
            
            1,018.2
            
            
            
            0.50
            
            
            
            0.20
            
            
            
            0.18
            
            
            
            0.21
            
            
            
            0.20Q3
            
            
            300.8
            
            
            
            12.0
            
            
            
            12.8
            
            
            
            2,012.6
            
            
            
            877.6
            
            
            
            -
            
            
            
            0.28
            
            
            
            0.26
            
            
            
            0.30
            
            
            
            0.28Q4
            
            
            312.2
            
            
            
            11.7
            
            
            
            13.5
            
            
            
            2,102.2
            
            
            
            842.7
            
            
            
            -
            
            
            
            0.28
            
            
            
            0.26
            
            
            
            0.32
            
            
            
            0.30Total
            
            $
            1,149.1
            
            
            $
            41.0
            
            
            $
            44.0
            
            
            
            
            
            
            
            
            
            
            $
            0.50
            
            
            $
            0.97
            
            
            $
            0.90
            
            
            $
            1.04
            
            
            $
            0.97Fiscal2006Q1
            
            $
            243.0
            
            
            $
            18.8
            
            
            $
            19.2
            
            
            $
            1,669.8
            
            
            $
            975.2
            
            
            $
            -
            
            
            $
            0.45
            
            
            $
            0.41
            
            
            $
            0.46
            
            
            $
            0.42Q2
            
            
            252.4
            
            
            
            39.2
            
            
            
            39.2
            
            
            
            1,675.1
            
            
            
            939.1
            
            
            
            0.40
            
            
            
            0.93
            
            
            
            0.85
            
            
            
            0.93
            
            
            
            0.85Q3
            
            
            253.5
            
            
            
            21.4
            
            
            
            21.5
            
            
            
            1,685.6
            
            
            
            945.8
            
            
            
            -
            
            
            
            0.51
            
            
            
            0.47
            
            
            
            0.51
            
            
            
            0.47Q4
            
            
            248.2
            
            
            
            10.3
            
            
            
            10.8
            
            
            
            1,686.1
            
            
            
            911.7
            
            
            
            -
            
            
            
            0.25
            
            
            
            0.22
            
            
            
            0.26
            
            
            
            0.23Total
            
            $
            997.1
            
            
            $
            89.7
            
            
            $
            90.7
            
            
            
            
            
            
            
            
            
            
            $
            0.40
            
            
            $
            2.14
            
            
            $
            1.95
            
            
            $
            2.16
            
            
            $
            1.97




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




Foreign
      exchange has had a significant impact on quarterly revenue levels on a
      year-over-year basis. Quarterly revenues in fiscal 2007, in comparison to
      quarterly revenues for fiscal 2006, have been impacted by foreign exchange
      in
      the following amounts: Q1-$(22.3) million, Q2-$(9.3) million,
      Q3-$3.4 million and Q4-$17.2 million.




Quarterly
      revenue, net earnings from continuing operations and net earnings in the table
      above were impacted by the following significant items that affect their
      comparability (not all variances are listed, including variances from
      restructuring and debt settlement costs):




(i)
            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.


(ii)
            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.


(iii)
            Results
                for Q1 of fiscal 2007 included aircraft introduction costs of
                approximately $5.5 million in support of future
                growth.


(iv)
            Results
                for Q2 of fiscal 2007 included foreign exchange losses of approximately
                $6.6 million relating to various items including repatriation of cash
                to Canada, internal financing arrangements between subsidiaries of
                the
                Company in currencies other than their functional currencies, and
                short-term imbalances in third-party trade and other balances in
                the
                Company’s Norwegian and South African
                subsidiaries.


(v)
            Results
                for Q3 of fiscal 2007 included revenue on the sale of an aircraft
                of
                approximately $13.0 million.


(vi)
            Results
                for Q4 of fiscal 2007 included aircraft introduction costs of
                $5.1 million in support of continued
                growth.








40





**REVIEW
      BY SEGMENT**




The
      following table provides annual external revenue, segment EBITDAR(iv), segment
      EBITDA(iv) and
      operating income variance analysis between fiscal 2007 and 2006 for our
      segments. The numbers in this analysis are referred to in the review of each
      operating segment that follows the table.




**Segment
      Revenue 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, 2006 *(i)*
            
            $
            330,877
            
            
            $
            520,367
            
            
            $
            145,668
            
            
            $
            175
            
            N/A
            
            $
            997,087Foreign
                exchange impact *(ii)*
            
            
            (11,007
            )
            
            
            2,468
            
            
            
            (2,453
            )
            
            
            13
            
            N/A
            
            
            (10,979
            )Revenue
                increase (decrease)
            
            
            108,086
            
            
            
            17,086
            
            
            
            37,398
            
            
            
            429
            
            N/A
            
            
            162,999**Year
                ended April 30, 2007**
            
            **$**
            **427,956**
            
            
            **$**
            **539,921**
            
            
            **$**
            **180,613**
            
            
            **$**
            **617**
            
            **N/A**
            
            **$**
            **1,149,107***Total
                revenue increase*
            
            *$*
            *97,079*
            
            
            *$*
            *19,554*
            
            
            *$*
            *34,945*
            
            
            *N/A*
            
            *N/A*
            
            *$*
            *152,020**%
                increase*
            
            **
            *29.3*
            *%*
            
            **
            *3.8*
            *%*
            
            **
            *24.0*
            *%*
            
            *N/A*
            
            *N/A*
            
            **
            *15.2*
            *%**%
                increase excluding FX*
            
            **
            *32.7*
            *%*
            
            **
            *3.3*
            *%*
            
            **
            *25.7*
            *%*
            
            *N/A*
            
            *N/A*
            
            **
            *16.3*
            *%*





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


**(in
      thousands of Canadian dollars)**





**Global
                Operations**
            
            
            **European
                Operations**
            
            
            **Heli-One**
            
            
            **Corporate
                & Other**
            
            
            **Inter-segment
                Eliminations**
            
            
            **Total**Year
                ended April 30, 2006 *(i)*
            
            $
            90,922
            
            
            $
            107,481
            
            
            $
            229,475
            
            
            $
            (27,662
            )
            
            $
            (154,049
            )
            
            $
            246,167Foreign
                exchange impact *(ii)*
            
            
            (3,183
            )
            
            
            (3,679
            )
            
            
            1,302
            
            
            
            1,428
            
            
            
            -
            
            
            
            (4,132
            )Segment
                EBITDAR increase (decrease)
            
            
            47,392
            
            
            
            (8,460
            )
            
            
            42,397
            
            
            
            (15,104
            )
            
            
            (26,808
            )
            
            
            39,417**Year
                ended April 30, 2007**
            
            **$**
            **135,131**
            
            
            **$**
            **95,342**
            
            
            **$**
            **273,174**
            
            
            **$**
            **(41,338**
            **)**
            
            **$**
            **(180,857**
            **)**
            
            **$**
            **281,452***Segment
                EBITDAR margin (iii)**-
                Last year*
            
            **
            *27.5*
            *%*
            
            **
            *20.7*
            *%*
            
            **
            *45.8*
            *%*
            
            *N/A*
            
            
            *N/A*
            
            
            **
            *24.7*
            *%**-
                This year*
            
            **
            *31.6*
            *%*
            
            **
            *17.7*
            *%*
            
            **
            *47.7*
            *%*
            
            *N/A*
            
            
            *N/A*
            
            
            **
            *24.5*
            *%**Total
                Segment EBITDAR increase (decrease)*
            
            *$*
            *44,209*
            
            
            *$*
            *(12,139*
            *)*
            
            *$*
            *43,699*
            
            
            *$*
            *(13,676*
            *)*
            
            *$*
            *(26,808*
            *)*
            
            *$*
            *35,285**%
                increase (decrease)*
            
            **
            *48.6*
            *%*
            
            **
            *(11.3*
            *%)*
            
            **
            *19.0*
            *%*
            
            **
            *(49.4*
            *%)*
            
            *N/A*
            
            
            **
            *14.3*
            *%**%
                increase (decrease) excluding FX*
            
            **
            *52.1*
            *%*
            
            **
            *(7.9*
            *%)*
            
            **
            *18.5*
            *%*
            
            **
            *(54.6*
            *%)*
            
            *N/A*
            
            
            **
            *16.0*
            *%*





**Segment
      EBITDA*(iv)*
      Variance
      Analysis**


**(in
      thousands of Canadian dollars)**





**Global
                Operations**
            
            
            **European
                Operations**
            
            
            **Heli-One**
            
            
            **Corporate
                & Other**
            
            
            **Inter-segment
                Eliminations**
            
            
            **Total**Year
                ended April 30, 2006 *(i)*
            
            $
            7,706
            
            
            $
            31,857
            
            
            $
            168,790
            
            
            $
            (27,662
            )
            
            $
            -
            
            
            $
            180,691Foreign
                exchange impact *(ii)*
            
            
            (1,366
            )
            
            
            (3,792
            )
            
            
            4,266
            
            
            
            1,416
            
            
            
            -
            
            
            
            524Segment
                EBITDA increase (decrease)
            
            
            27,811
            
            
            
            (25,830
            )
            
            
            12,901
            
            
            
            (15,092
            )
            
            
            -
            
            
            
            (210
            )**Year
                ended April 30, 2007**
            
            **$**
            **34,151**
            
            
            **$**
            **2,235**
            
            
            **$**
            **185,957**
            
            
            **$**
            **(41,338**
            **)**
            
            **$**
            **-**
            
            
            **$**
            **181,005***Segment
                EBITDA margin (iii)**-
                Last year*
            
            **
            *2.3*
            *%*
            
            **
            *6.1*
            *%*
            
            **
            *33.7*
            *%*
            
            *N/A*
            
            
            *N/A*
            
            
            **
            *18.1*
            *%**-
                This year*
            
            **
            *8.0*
            *%*
            
            **
            *0.4*
            *%*
            
            **
            *32.5*
            *%*
            
            *N/A*
            
            
            *N/A*
            
            
            **
            *15.8*
            *%**Total
                Segment EBITDA increase (decrease)*
            
            *$*
            *26,445*
            
            
            *$*
            *(29,622*
            *)*
            
            *$*
            *17,167*
            
            
            *$*
            *(13,676*
            *)*
            
            *$*
            *-*
            
            
            *$*
            *314**%
                increase (decrease)*
            
            **
            *343.2*
            *%*
            
            **
            *(93.0*
            *%)*
            
            **
            *10.2*
            *%*
            
            **
            *(49.4*
            *%)*
            
            *N/A*
            
            
            **
            *0.2*
            *%**%
                increase (decrease) excluding FX*
            
            **
            *360.9*
            *%*
            
            **
            *(81.1*
            *%)*
            
            **
            *7.6*
            *%*
            
            **
            *(54.6*
            *%)*
            
            *N/A*
            
            
            **
            *(0.1*
            *%)*





**Segment
      Operating Income Variance Analysis**


**(in
      thousands of Canadian dollars)**





**Global
                Operations**
            
            
            **European
                Operations**
            
            
            **Heli-One**
            
            
            **Corporate
                & Other**
            
            **Inter-segment**
              **Eliminations**
            
            **Total**Year
                ended April 30, 2006 *(i)*
            
            $
            2,913
            
            
            $
            24,721
            
            
            $
            116,297
            
            
            $
            (34,865
            )
            N/A
            
            $
            109,066Foreign
                exchange impact *(ii)*
            
            
            (1,133
            )
            
            
            (3,736
            )
            
            
            3,196
            
            
            
            1,391
            
            N/A
            
            
            (282
            )Operating
                income increase (decrease)
            
            
            28,271
            
            
            
            (22,275
            )
            
            
            8,212
            
            
            
            (7,936
            )
            N/A
            
            
            6,272**Year
                ended April 30, 2007**
            
            **$**
            **30,051**
            
            
            **$**
            **(1,290**
            **)**
            
            **$**
            **127,705**
            
            
            **$**
            **(41,410**
            **)**
            **N/A**
            
            **$**
            **115,056***Total
                operating income increase (decrease)*
            
            *$*
            *27,138*
            
            
            *$*
            *(26,011*
            *)*
            
            *$*
            *11,408*
            
            
            *$*
            *(6,545*
            *)*
            *N/A*
            
            *$*
            *5,990**%
                increase (decrease)*
            
            **
            *931.6*
            *%*
            
            **
            *(105.2*
            *%)*
            
            **
            *9.8*
            *%*
            
            **
            *(18.8*
            *%)*
            *N/A*
            
            **
            *5.5*
            *%**%
                increase (decrease) excluding FX*
            
            **
            *970.5*
            *%*
            
            **
            *(90.1*
            *%)*
            
            **
            *7.1*
            *%*
            
            **
            *(22.8*
            *%)*
            *N/A*
            
            **
            *5.8*
            *%*




(i)
            Comparative
                figures have been reclassified for the classification of Survival-One
                as
                discontinued operations as outlined in Note 2 to our fiscal 2007
                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 and segment EBITDA 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 2007 audited consolidated financial
                  statements.


41








**Global
      Operations**




The
      Global Operations segment consists of flying operations in Australia, Africa,
      the Middle East, the Americas, Asia and in other locations around the world,
      serving offshore oil and gas, EMS/SAR and other industries.









Revenue
      for fiscal 2007 was $428.0 million, an increase of $97.1 million from
      revenue of $330.9 million in fiscal 2006. The increase included revenue
      growth of $108.1 million, partially offset by an unfavourable FX impact of
      $11.0 million. The $108.1 million revenue increase was due to
      increased flying activity from new and expanded contracts in Australia, South
      America, Africa and Southeast Asia for both oil and gas and EMS/SAR customers,
      increased fixed-wing activity in Nigeria, additional ad hoc work in Africa
      and
      rate increases on a number of existing contracts. Total flying hours increased
      from 69,859 in fiscal 2006 to 84,207 in fiscal 2007, representing growth of
      14,348 hours or 21%. During the second quarter of fiscal 2007, Global
      Operations purchased an aircraft with the intention of selling the aircraft
      to a
      third party. The sale of the aircraft occurred in the third quarter and
      generated revenue of approximately $13.0 million.




Segment
      EBITDAR for fiscal 2007 was $135.1 million, which is an increase of
      $44.2 million from segment EBITDAR of $90.9 million in fiscal 2006.
      This increase included segment EBITDAR growth of $47.4 million, partially
      offset by an unfavourable FX impact of $3.2 million. The segment EBITDAR
      increase is due to an increase in revenue and segment EBITDAR margins. Segment
      EBITDAR margins for Global Operations increased from 27.5% in fiscal 2006 to
      31.6% in fiscal 2007 due to rate increases on a number of contracts as a result
      of the introduction of new aircraft and a net decrease of $15.6 million in
      provisions on trade receivables that have been collected.




Global
      Operations has added 26 aircraft to its fleet since fiscal 2006, which is
      partially offset by aircraft returned to Heli-One for re-deployment and the
      sale
      of light aircraft in the second quarter of fiscal 2007. During fiscal 2007,
      Global Operations expensed $3.6 million (fiscal 2006 - $3.8 million)
      in aircraft introduction costs. This is significantly lower than the aircraft
      introduction costs incurred by European Operations. The cost of introducing
      aircraft is not as significant for Global Operations as it is for European
      Operations for numerous reasons including the fact that most of these new
      aircraft are Sikorsky S76C++ aircraft, which are an advancement from previous
      S76 models but do not represent completely new aircraft types like the Sikorsky
      S92 and AgustaWestland AW139. New aircraft types require significant
      introduction costs primarily due to the training of personnel and serviceability
      issues related to unplanned maintenance and modification requirements. Global
      Operations experienced less aircraft down-time due to training as new crews
      were
      hired specifically to operate these new aircraft types. Global Operations’
contracts typically result in lower utilization of aircraft, reducing the
      frequency of maintenance requirements. Global Operations’ aircraft flew an
      average of 581 hours per aircraft during fiscal 2007, while European
      Operations flew an average of 1,197 hours per aircraft in the same period.
      As such, Global Operations has been able to introduce numerous aircraft during
      the year without a significant financial impact.







42










Operating
      income for fiscal 2007 was $30.0 million, an increase of $27.1 million
      from operating income of $2.9 million in fiscal 2006. This increase was due
      primarily to a an increase in segment EBITDAR, partially offset by an
      unfavourable FX impact of $1.1 million and an increase in lease costs of
      $17.8 million due to an increased number and higher value aircraft used by
      Global Operations on new and expanded contracts.




At
      April 30, 2007, there were 145 aircraft in this segment, consisting of
      27 heavy, 97 medium, one light and 20 fixed-wing aircraft. This
      represents an increase of 14 aircraft since the start of the fiscal year,
      which is related to increased activity in the Global Operations segment in
      fiscal 2007. The fleet deployed in this segment consists primarily of medium
      aircraft such as Sikorsky S76 models and AgustaWestland AW139 aircraft, but
      also
      includes a number of heavy aircraft, including the Eurocopter Super Puma, the
      Sikorsky S61N and the Sikorsky S92.




Approximately
      87% of flying revenue in the segment was derived from long-term contracts.
      The
      major customers in this segment included Amerada Hess, ExxonMobil, Unocal,
      Chevron, bp, Shell, Premier, Phillips, Soekor, Sonair, the Ambulance Service
      of
      New South Wales, the Royal Australian Air Force, Victoria Police, the United
      Nations, Encana and United Helicharters.




During
      and subsequent to fiscal 2007 Global Operations was awarded the following new
      contracts and contract renewals:




•
            through
                BHS, a five-year contract for the provision of eight Sikorsky S76C+
                helicopters in support of Petrobras’ operations in the Brazilian offshore
                sector.


•
            a
                seven-year (plus three years of extension options) EMS contract with
                the
                Ambulance Service of New South Wales for the provision of five aircraft
                in
                the Greater Sydney area. The contract commenced in late fiscal 2007
                and
                calls for AgustaWestland AW139 and Eurocopter EC145
                aircraft.




**European
      Operations**




The
      European Operations segment consists primarily of flying operations in the
      UK,
      Norway, Ireland, the Netherlands and Denmark, mainly serving the helicopter
      transportation requirements of the offshore oil and gas industry in the North
      Sea, as well as EMS/SAR services throughout Europe.











Revenue
      for fiscal 2007 was $539.9 million, an increase of $19.5 million from
      revenue of $520.4 million earned in fiscal 2006. This increase was
      attributable to an increase of $17.1 million in revenue and a favourable FX
      impact of $2.4 million. Revenue increased due to new contracts with
      Marathon, Nexen, Perenco UK Limited, Total E&P Nederland BV, Wintershall
      Noordszee BV, PetroCanada Netherlands BV and Tullow Oil, as well as an increase
      in flying hours on existing contracts and increased ad hoc work. In addition,
      rate increases on new aircraft types have contributed to increased revenue.
      These increases are partially offset by a decrease in flying hours and the
      loss
      of the ConocoPhillips contract during fiscal 2006. The loss of the
      ConocoPhillips contract resulted in reduced revenue but did not result in a
      corresponding reduction in costs as crews were retained to train and fly on
      new
      contracts commencing in future periods. Flying hours decreased by
      4,463 hours to 91,008 hours in fiscal 2007 compared to
      95,471 hours in fiscal 2006. This decrease is largely due to aircraft
      serviceability issues on certain new aircraft types experienced by European
      Operations throughout fiscal 2007, discussed further below.







43










Segment
      EBITDAR for fiscal 2007 was $95.3 million, down $12.2 million from
      segment EBITDAR of $107.5 million in fiscal 2006. This decrease was due
      primarily to reduced segment EBITDAR of $8.5 million due to serviceability
      issues on certain new aircraft types and aircraft introduction costs and an
      unfavourable FX impact of $3.7 million. These decreases are partially
      offset by segment EBITDAR earned on increased revenue. Segment EBITDAR margins
      decreased from 20.7% in fiscal 2006 to 17.7% in fiscal 2007. Fiscal 2007 margins
      were negatively impacted by significant aircraft introduction costs incurred
      during the year and serviceability issues on certain new aircraft
      types.




European
      Operations has added seven aircraft to its fleet since fiscal 2006, which is
      partially offset by aircraft returned to Heli-One for redeployment. Most of
      the
      aircraft added to the fleet are new aircraft types including the AgustaWestland
      AW139 and Sikorsky S92. The introduction of new aircraft types to meet the
      requirements of new and existing customers has resulted in aircraft introduction
      costs of approximately $7.8 million (fiscal 2006 - $4.4 million)
      expensed during fiscal 2007 primarily relating to the training of personnel
      for
      upcoming contracts, including the Statoil contract in Norway, which will
      generate revenue in the first quarter of fiscal 2008. The cost of introducing
      aircraft has been significant for European Operations as a result of the new
      technology aircraft types introduced and the requirement to type-convert and
      align existing crews on these aircraft.




European
      Operations has also experienced a high amount of scheduled and unscheduled
      maintenance on new and older aircraft during fiscal 2007. This maintenance
      resulted in customer penalties and reduced revenue as aircraft were unable
      to
      operate on contract. The segment EBITDAR impact of aircraft availability issues
      for fiscal 2007 totalled approximately $8.5 million. Even though it is
      normal that new aircraft types have a lower rate of availability during the
      introduction period, the current performance of these new types continues to
      be
      below expectations. The availability rate on these aircraft did improve in
      the
      fourth quarter of fiscal 2007 and is expected to continue to improve in future
      periods. The Company continues to work with manufacturers to remedy
      serviceability issues on new technology aircraft by increasing spare parts
      production and improving technical support.




During
      fiscal 2007, European Operations experienced an operating loss of
      $1.3 million, which is a decrease of $26.0 million from operating
      income of $24.7 million in fiscal 2006. This decrease is due to a reduction
      in segment EBITDAR, increased lease costs of $17.5 million and an
      unfavourable FX impact of $3.7 million. Lease costs increased due to the
      addition of higher value, technologically advanced aircraft in the European
      Operations fleet and short-term lease costs incurred on aircraft required to
      address serviceability issues and other related costs.




At
      April 30, 2007 there were 76 aircraft in this segment, consisting of
      48 heavy and 28 medium aircraft. Included in the heavy aircraft were
      34 Super Pumas, including 16 Super Puma MkIIs and five Sikorsky
      S92 aircraft.




During
      fiscal 2007, European Operations lost one AS365N medium aircraft in a helicopter
      accident off the west coast of England. The cause of the accident has not yet
      been ascertained as it is still under investigation by the Air Accidents
      Investigation Branch.




In
      fiscal 2007, approximately 70% of flying revenue in this segment was derived
      from long-term contracts. The major customers in this segment during fiscal
      2007
      included Apache, bp, TotalFinaElf, Maersk, Statoil, Nexen, Marathon, Tullow
      Oil,
      Perenco UK Limited and the Irish Coast Guard.




During
      and subsequent to fiscal 2007 European Operations was awarded the following
      new
      contracts and contract renewals:




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


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


•
            a
                four-year contract renewal by Apache North Sea Limited for the provision
                of helicopter services in support of Apache’s offshore operations. The
                contract commenced on September 1, 2006 and is supported by a
                Sikorsky S92 aircraft.





44








•
            a
                three-year contract (plus two option years) by TOTAL E&P Norge AS for
                the provision of helicopter transportation services from Stavanger
                and
                Kristiansund, Norway, commencing in early 2008. A Eurocopter EC225
                will be
                deployed on the contract. The contract is expected to generate annual
                revenue of approximately
                $9.0 million.


•
            two
                major contracts by Statoil ASA, Norway for provision of helicopter
                services in the Norwegian Sea. The Company believes that this is
                the
                largest bundle of helicopter services contracts ever awarded, with
                a total
                value of approximately $1.1 billion, over the fixed and option
                periods. The contract details are as
                follows:




(i)
            A
                five-year contract for the provision of five Sikorsky S92 and two
                Eurocopter EC225 aircraft in support of Statoil's offshore operations
                based out of Floroe and Bergen, Norway, plus an additional back-up
                Eurocopter AS332L2 in Bergen. The operation in Floroe will commence
                in
                June 2009 and the contract in Bergen in January 2010. The contract
                includes options for up to four additional
                years.


(ii)
            A
                seven-year contract for the provision of two all-weather Search and
                Rescue
                EC225 aircraft. One helicopter will be based at Statoil's Statfjord
                field
                in the North Sea, and the other in Bergen as back-up for this service.
                Commencing in March 2009, the contract includes options for up to
                four
                additional years.





•
            a
                five-year contract renewal by Statoil for the provision of helicopter
                services in support of Statoil’s offshore operations. The contract will
                commence on July 1, 2009 and is anticipated to generate up to
                $170 million over the five-year extension
                period.


•
            a
                five-year contract renewal by GDF Production Nederland BV in
                Den Helder. The contract was renewed in June 2007 and is expected to
                generate revenue of approximately $55 million over the five-year
                extension period.




**Heli-One**




The
      Heli-One segment includes helicopter repair and overhaul facilities in Norway,
      Canada, Australia, Africa, the US 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 performs composite aerospace
      component manufacturing.











The
      following table provides annual financial information on Heli-One fleet and
      R&O activities (without adjusting for the impact of FX).







45








**Heli-One
                  Activities****Fiscal
                  Year Ended April 30,****(in
                  thousands of Canadian dollars)****Fleet**
              
              
              **R&O**
              
              
              **Total****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****Revenue**ExternalPBH/R&O
              
              $
              -
              
              
              $
              -
              
              
              $
              130,878
              
              
              $
              106,104
              
              
              $
              130,878
              
              
              $
              106,104Lease
              
              
              21,338
              
              
              
              12,882
              
              
              
              -
              
              
              
              -
              
              
              
              21,338
              
              
              
              12,882Other
                  *(i)*
              
              
              -
              
              
              
              -
              
              
              
              28,397
              
              
              
              26,682
              
              
              
              28,397
              
              
              
              26,682Total
              
              
              21,338
              
              
              
              12,882
              
              
              
              159,275
              
              
              
              132,786
              
              
              
              180,613
              
              
              
              145,668InternalPBH/R&O
              
              
              -
              
              
              
              -
              
              
              
              210,098
              
              
              
              194,915
              
              
              
              210,098
              
              
              
              194,915Lease
              
              
              181,200
              
              
              
              150,855
              
              
              
              -
              
              
              
              -
              
              
              
              181,200
              
              
              
              150,855Other
                  *(i)*
              
              
              -
              
              
              
              -
              
              
              
              222
              
              
              
              9,243
              
              
              
              222
              
              
              
              9,243Total
              
              
              181,200
              
              
              
              150,855
              
              
              
              210,320
              
              
              
              204,158
              
              
              
              391,520
              
              
              
              355,013**Total
                  Revenue**
              
              ****
              **202,538**
              
              
              ****
              **163,737**
              
              
              ****
              **369,595**
              
              
              ****
              **336,944**
              
              
              ****
              **572,133**
              
              
              ****
              **500,681**Direct
                  costs
                  *(ii)*
              
              
              (18,839
              )
              
              
              (19,872
              )
              
              
              (280,120
              )
              
              
              (251,334
              )
              
              
              (298,959
              )
              
              
              (271,206
              )**Segment
                  EBITDAR *(ii)***
              
              ****
              **183,699**
              
              
              ****
              **143,865**
              
              
              ****
              **89,475**
              
              
              ****
              **85,610**
              
              
              ****
              **273,174**
              
              
              ****
              **229,475****Segment
                  EBITDAR margin**
              
              ****
              **90.7**
              **%**
              
              ****
              **87.9**
              **%**
              
              ****
              **24.2**
              **%**
              
              ****
              **25.4**
              **%**
              
              ****
              **47.7**
              **%**
              
              ****
              **45.8**
              **%**Aircraft
                  lease and associated costs *(ii)*
              
              
              (87,217
              )
              
              
              (60,685
              )
              
              
              -
              
              
              
              -
              
              
              
              (87,217
              )
              
              
              (60,685
              )**Segment
                  EBITDA *(ii)***
              
              **$**
              **96,482**
              
              
              **$**
              **83,180**
              
              
              **$**
              **89,475**
              
              
              **$**
              **85,610**
              
              
              ****
              **185,957**
              
              
              ****
              **168,790****Segment
                  EBITDA margin**
              
              ****
              **47.6**
              **%**
              
              ****
              **50.8**
              **%**
              
              ****
              **24.2**
              **%**
              
              ****
              **25.4**
              **%**
              
              ****
              **32.5**
              **%**
              
              ****
              **33.7**
              **%**Amortization
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (56,474
              )
              
              
              (44,363
              )Restructuring
                  (costs) recovery
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              991
              
              
              
              (7,445
              )Loss
                  on
                  disposal of assets
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (2,769
              )
              
              
              (685
              )**Operating
                  income**
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              **$**
              **127,705**
              
              
              **$**
              **116,297**




(i)
            Other
                consists of Composites, Heli-One Components B.V. and the recently
                sold
                trading surplus business.


(ii)
            See
                Note 25 to our fiscal 2007 audited consolidated financial
                statements.





Heli-One’s
      third-party revenue for fiscal 2007 was $180.6 million, of which
      approximately 49% was derived from long term contracts, compared to
      $145.7 million in fiscal 2006. The $34.9 million increase in
      third-party revenue was due to increases in both fleet and R&O revenue
      totalling $37.4 million, partially offset by an unfavourable FX impact of
      $2.5 million. External fleet revenue has increased $8.5 million
      (without adjusting for the impact of FX) due to incremental lease revenue on
      a
      larger fleet, including new leasing contracts in Mexico and the US. External
      R&O revenue has increased by $26.5 million (without adjusting for the
      impact of FX) due to an increase in customer flying hours, new PBH contracts
      in
      Malaysia and Mexico, part sales increases and an increase in base maintenance
      activities. Base maintenance activities increased primarily as a result of
      the
      consolidation of Heli-Dyne, which was acquired during fiscal 2007, as well
      as
      increases in third-party base maintenance work performed in Norway and
      Europe.




Heli-One’s
      internal revenues have increased by $36.5 million to $391.5 million in
      fiscal 2007 from $355.0 million in fiscal 2006. This increase is due to
      increases in both internal fleet leasing and R&O revenue. Internal fleet
      revenue has increased by $30.3 million, due to incremental revenue on an
      increase in the number and value of aircraft deployed by European Operations
      and
      Global Operations. Internal R&O revenue has increased by $6.2 million
      due to PBH earned on increased flying hours. Internal revenues are expected
      to
      continue to grow as Global Operations and European Operations deploy more
      aircraft and increase flying activity.







46










Segment
      EBITDAR for fiscal 2007 was $273.2 million, an increase of
      $43.7 million from segment EBITDAR of $229.5 million in fiscal 2006.
      This increase was due to increased EBITDAR of $42.4 million earned on
      increased activity and a favourable FX impact of $1.3 million. Segment
      EBITDAR from fleet leasing has increased by $39.8 million due to an
      increase in the number and value of aircraft in the fleet compared to fiscal
      2006. Segment EBITDAR from R&O has increased by $3.9 million, primarily
      due to an increase in revenue, an increase in external work at improved margins
      and a reduction in maintenance costs primarily due to an estimated
      $4.0 million net credit on the planned exit from a third-party PBH
      maintenance program. These increases are partially offset by the sale of a
      non-core parts trading business during fiscal 2007. In fiscal 2006, this
      business contributed segment EBITDAR of $1.8 million. The development of
      the Boundary Bay R&O facility and expansion of in-house capabilities may
      result in the exit from other third-party PBH maintenance programs in the
      future.




Segment
      EBITDAR margins have improved from 45.8% in fiscal 2006 to 47.7% in fiscal
      2007.
      This increase is due to improved margins on external R&O work and a
      reduction in maintenance costs as noted above.




The
      number of aircraft in the Heli-One fleet has increased by four aircraft to
      34 aircraft at April 30, 2007 compared to fiscal 2006. The increase is
      due to the addition of aircraft to the fleet that are not yet deployed in the
      flying operations as the aircraft are undergoing post-delivery modifications
      and
      an increase in the number of aircraft leased to third-parties. Of the
      34 aircraft in the Heli-One fleet, five aircraft are undergoing
      post-delivery modifications, two are undergoing major inspections,
      19 aircraft are leased to third parties and eight aircraft are available
      for sale.




Operating
      income for fiscal 2007 was $127.7 million, an increase of
      $11.4 million from operating income of $116.3 million in fiscal 2006.
      This increase was due primarily to an increase in segment EBITDAR and a
      favourable FX impact of $3.2 million. These increases are partially offset
      by an increase in external lease charges of $30.1 million and an increase
      in amortization of $12.1 million. Amortization increased over fiscal 2006
      due to an increase in spares (rotables), base maintenance capitalized costs
      and
      the increased value of aircraft in the fleet. External lease charges increased
      due to an increase in the percentage of leased aircraft in the fleet and an
      increase in the interest component of lease expense.




We
      continue to develop our Heli-One operations in anticipation of growth
      opportunities in this segment. We have 71 aircraft (34 heavy and
      37 medium aircraft) on order, expected to be delivered over the next
      five years. We expect that the majority of these aircraft will be used
      internally to support continued growth. Significant opportunities also exist
      from the continued development of Heli-One’s North American R&O facilities
      through the establishment of the 240,000 square foot R&O facility at
      Boundary Bay Airport in Delta, BC, Canada expected to be completed in the fourth
      quarter of fiscal 2008 and the acquisition of Heli-Dyne in the US during fiscal
      2007.




During
      and subsequent to fiscal 2007 Heli-One announced the following contracts and
      contract renewals:




•
            a
                five-year helicopter lease and maintenance contract, plus two option
                years, with AB Norrlandsflyg of Sweden commencing in January 2008.
                Heli-One will provide Norrlandsflyg with two new Sikorsky S76C++
                helicopters in SAR configuration and will support the helicopters’ major
                components through a PBH maintenance agreement. Norrlandsflyg will
                operate
                the aircraft in a SAR capacity for the Swedish Maritime
                Agency.




•
            contracts
                with major European Air Forces as
                follows:




(i)
            Modifications
                to twelve Royal Norwegian Air Force Bell 412SP helicopters and upgrades
                to
                a further six 412 helicopters form SP to HP models. Work will be
                carried
                out in 2007 and 2008.


(ii)
            S61A
                fleet support for Royal Danish Air Force, including C-inspections,
                component repair and overhaul, and personnel
                support.


(iii)
            Phase
                inspections on two Royal Netherlands Air Force AS532U1 Cougar helicopters
                (with options for a further five inspections) to be performed at
                Royal
                Netherlands Air Force facilities in
                Woensdrecht.





•
            a
                contract with Eurocopter for the purchase of 16 new EC225
                helicopters. Total value of the contract is approximately
                $430 million. These aircraft are expected to be delivered between
                fiscal 2008 and fiscal 2012. We plan to use these aircraft in support
                of
                new offshore oil and gas contracts and potentially as SAR aircraft
                to meet
                the unprecedented demand from various customers in both the offshore
                oil
                and gas industry and government sponsored SAR. The EC225 fleet will
                be
                fully supported by Heli-One who will provide total maintenance, repair
                and
                overhaul support for the advanced EC225. Heli-One has been granted
                an
                exclusive license to perform R&O on EC225
                components.







47





**Corporate
      and Other Segment**




Corporate
      segment EBITDAR of $(41.3) million in fiscal 2007 decreased by
      $13.7 million from fiscal 2006. This decrease is due to increased costs of
      $15.1 million, partially offset by a favourable FX impact of
      $1.4 million. The increase in costs of $15.1 million from fiscal 2006
      is due primarily to $8.9 million incurred during fiscal 2007 relating to
      our SOX Section 404 project. In addition, contract settlement costs of
      $3.1 million were incurred during the year and there was an increase in
      professional fees of $7.4 million relating to external audit, consulting
      and other fee increases. These increases are partially offset by a reduction
      in
      variable compensation costs of $1.7 million and a reduction in claim
      reserves for various insured risks of $1.3 million compared to fiscal
      2006.




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




**Revenue**




Total
      revenue for fiscal 2006 was $997.1 million, an increase of
      $42.9 million from revenue of $954.2 million for fiscal 2005. The
      increase of $42.9 million from fiscal 2005 includes revenue growth of
      $139.5 million offset by unfavourable FX of $96.6 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 $29.0 million. This increase was due primarily to
                increased revenue from existing customers and moving into new markets
                including Brazil.




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
            
            
            Change
                *(i)*Industry
                Sector
            
            (percentage
                of total revenue)
            
            
            (in millions
                of CDN dollars)Oil
                and Gas
            
            
            69.9
            %
            
            
            70.0
            %
            
            
            (0.1
            )%
            
            $
            696.7
            
            
            $
            667.6
            
            
            $
            29.1Repair
                and Overhaul
            
            
            13.2
            %
            
            
            11.7
            %
            
            
            1.5
            %
            
            
            131.5
            
            
            
            112.2
            
            
            
            19.3EMS/SAR
            
            
            8.3
            %
            
            
            8.9
            %
            
            
            (0.6
            )%
            
            
            82.7
            
            
            
            84.8
            
            
            
            (2.1
            )Other
            
            
            6.1
            %
            
            
            6.0
            %
            
            
            0.1
            %
            
            
            61.4
            
            
            
            57.5
            
            
            
            3.9Passenger
                Transportation
            
            
            1.8
            %
            
            
            2.6
            %
            
            
            (0.8
            )%
            
            
            18.0
            
            
            
            24.7
            
            
            
            (6.7
            )Training
            
            
            0.7
            %
            
            
            0.8
            %
            
            
            (0.1
            )%
            
            
            6.8
            
            
            
            7.4
            
            
            
            (0.6
            )Total
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            -
            
            
            $
            997.1
            
            
            $
            954.2
            
            
            $
            42.9







(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.





48








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
            
            
            $
            33.4
            
            
            $
            -
            
            
            $
            243.0Q2
            
            
            79.5
            
            
            
            138.5
            
            
            
            218.0
            
            
            
            34.5
            
            
            
            (0.1
            )
            
            
            252.4Q3
            
            
            86.6
            
            
            
            126.0
            
            
            
            212.6
            
            
            
            40.8
            
            
            
            0.1
            
            
            
            253.5Q4
            
            
            88.8
            
            
            
            122.3
            
            
            
            211.1
            
            
            
            37.0
            
            
            
            0.1
            
            
            
            248.2$
            330.9
            
            
            $
            520.4
            
            
            $
            851.3
            
            
            $
            145.7
            
            
            $
            0.1
            
            
            $
            997.1Fiscal
                2005
            Q1
            
            $
            71.9
            
            
            $
            137.6
            
            
            $
            209.5
            
            
            $
            30.2
            
            
            $
            -
            
            
            $
            239.7Q2
            
            
            71.2
            
            
            
            134.6
            
            
            
            205.8
            
            
            
            32.9
            
            
            
            0.1
            
            
            
            238.8Q3
            
            
            73.8
            
            
            
            132.0
            
            
            
            205.8
            
            
            
            32.4
            
            
            
            0.1
            
            
            
            238.3Q4
            
            
            75.2
            
            
            
            126.7
            
            
            
            201.9
            
            
            
            35.3
            
            
            
            0.2
            
            
            
            237.4$
            292.1
            
            
            $
            530.9
            
            
            $
            823.0
            
            
            $
            130.8
            
            
            $
            0.4
            
            
            $
            954.2




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.




**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
                2005European
                flying
            
            **$**
            **97.2**
            
            
            $
            82.1
            
            
            **$**
            **210.7**
            
            
            $
            194.5
            
            
            **$**
            **307.9**
            
            
            $
            276.6International
                flying
            
            ****
            **311.0**
            
            
            
            321.1
            
            
            ****
            **186.2**
            
            
            
            181.6
            
            
            ****
            **497.2**
            
            
            
            502.7**$**
            **408.2**
            
            
            $
            403.2
            
            
            **$**
            **396.9**
            
            
            $
            376.1
            
            
            **$**
            **805.1**
            
            
            $
            779.3










49




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)**




2006
            
            
            2005Segment
            
            Heavy
            
            
            Medium
            
            
            Light
            
            
            Fixed
              Wing
            
            
            Total
            
            
            Heavy
            
            
            Medium
            
            
            Light
            
            
            Fixed
              Wing
            
            
            TotalGlobal
                Operations
            
            **$**
            **70.0**
            
            
            **$**
            **204.8**
            
            
            **$**
            **2.5**
            
            
            **$**
            **30.6**
            
            
            **$**
            **307.9**
            
            
            $
            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
                    Flying
                    Revenue
            
            **$**
            **439.7**
            
            
            **$**
            **332.3**
            
            
            **$**
            **2.5**
            
            
            **$**
            **30.6**
            
            
            **$**
            **805.1**
            
            
            $
            432.3
            
            
            $
            312.2
            
            
            $
            5.1
            
            
            $
            29.7
            
            
            $
            779.3Total
                %
            
            ****
            **54.6**
            **%**
            
            ****
            **41.3**
            **%**
            
            ****
            **0.3**
            **%**
            
            ****
            **3.8**
            **%**
            
            ****
            **100.0**
            **%**
            
            
            55.5
            %
            
            
            40.1
            %
            
            
            0.6
            %
            
            
            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 helicopter passenger traffic at Aberdeen Airport for fiscal 2006 and
      2005.




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 $55.8 million, to $788.5 million,
      from $732.7 million for fiscal 2005. The $55.8 million increase from
      fiscal 2005 is primarily due to an increase in variable costs incurred to
      support revenue growth.




**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. This decrease of
      $7.4 million from fiscal 2005 is due primarily to a reduction of
      $4.2 million in variable compensation costs from fiscal 2005 and a
      reduction in Schreiner corporate office expenses of $10.7 million as a
      result of restructuring initiatives. These increases were partially offset
      by
      various individually immaterial items including an increase in professional
      fees
      and adjustments to claims reserves for various insured risks.







50





**Amortization**




Amortization
      expense increased $5.4 million to $55.5 million in fiscal 2006 from
      $50.1 million in fiscal 2005. The increase in amortization was due largely
      to amortization on an increased value of repairable parts and an increase in
      the
      owned aircraft fleet size since fiscal 2005, as well as other asset additions.
      Repairable parts balances increased from fiscal 2005 to support the addition
      of
      new aircraft and several new aircraft types to the fleet. See page 31,
“*Property and Equipment - Fleet - By Segment*” for additional
      information regarding aircraft additions.




**Restructuring
      Costs**




During
      fiscal 2006 we completed the consolidation of all our operations into three
      new
      operating divisions, Global Operations, European Operations and
      Heli-One.




We
      expensed costs of $16.1 million and $17.4 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.




**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 31, *“Property and Equipment - Fleet - By Segment*” and
      page 60, “*Liquidity and Capital Resources - Investing
      Activities*”), and received net proceeds of $218.2 million, resulting
      in a deferred gain of $22.1 million primarily related to the 21 aircraft
      sale-leaseback transactions during the year.




**Operating
      Income**




Operating
      income increased by $0.6 million to $109.1 million in fiscal 2006 from
      $108.5 million in fiscal 2005. The $0.6 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
      $13.8 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.




**Financing
      Charges**




Financing
      charges for the fiscal year ended April 30, 2006 totalled
      $53.0 million compared to $37.4 million in fiscal 2005. The increase
      in financing charges compared to fiscal 2005 was primarily due to increased
      interest on debt obligations and increases in FX losses, partially offset by
      increased interest income.




(in millions
                of Canadian dollars)
            
            **2006**
            
            
            2005Interest
                on debt obligations
            
            **$**
            **43.5**
            
            
            $
            32.4Amortization
                of deferred financing costs
            
            ****
            **1.6**
            
            
            
            3.2Foreign
                exchange losses (gains)
            
            ****
            **6.2**
            
            
            
            (1.2
            )Release
                of currency translation adjustment
            
            ****
            **2.6**
            
            
            
            -Other
                interest and banking expenses
            
            ****
            **(0.9**
            **)**
            
            
            3.0Total
            
            **$**
            **53.0**
            
            
            $
            37.4










51




The
      average rate on our variable-rate senior credit facilities during fiscal 2006
      was 4.4% compared to 4.0% in fiscal 2005. In addition to higher effective
      interest rates on the senior credit facility borrowings, interest on long-term
      debt increased by $11.1 million due to higher average borrowings primarily
      for capital expenditures and aircraft deposits in fiscal 2006 compared to fiscal
      2005.




**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 Inaer and a $21.8 million gain from the
      sale of our interest in CHL and other long-term investments.




**Equity
      Earnings of Associated Companies and Non-Controlling
      Interest**




Equity
      earnings of associated companies and non-controlling interest increased by
      $1.4 million to $6.6 million in fiscal 2006, from $5.2 million in
      fiscal 2005. During fiscal 2006 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.




**Income
      Taxes**




We
      had
      an income tax provision of $10.5 million in fiscal 2006 compared to
      $27.3 million in fiscal 2005. This provision was comprised of the
      following:




(in
                millions of Canadian dollars)
            
            **2006**
            
            
            2005Earnings
                from continuing operations before income taxes
            
            **$**
            **100.2**
            
            
            $
            74.3Combined
                Canadian federal and provincial statutory income tax rate
            
            ****
            **34**
            **%**
            
            
            35
            %Income
                tax provision calculated at statutory rate
            
            ****
            **(34.1**
            **)**
            
            
            (26.0
            )(Increase)
                decrease in income tax provision resulting from:Rate
                differences in various jurisdictions
            
            ****
            **13.5**
            
            
            
            16.0Effect
                of change in tax legislation
            
            ****
            **(0.2**
            **)**
            
            
            (4.2
            )Non-deductible
                items
            
            ****
            **(1.2**
            **)**
            
            
            (3.2
            )Large
                corporations tax
            
            ****
            **(0.5**
            **)**
            
            
            (0.5
            )Other
                foreign taxes paid
            
            ****
            **(3.5**
            **)**
            
            
            (1.7
            )Non-taxable
                portion of capital gains
            
            ****
            **13.6**
            
            
            
            1.1Non-taxable
                income
            
            ****
            **2.7**
            
            
            
            1.3Valuation
                allowance
            
            ****
            **(0.3**
            **)**
            
            
            (7.0
            )Other
            
            ****
            **(0.5**
            **)**
            
            
            (3.1
            )Income
                tax provision
            
            **$**
            **(10.5**
            **)**
            
            $
            (27.3
            )







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.




**Net
      Earnings from Continuing Operations**




Net
      earnings from continuing operations for fiscal 2006 was $89.7 million
      ($1.95 per share, diluted), an increase of $42.8 million from
      $46.9 million ($1.03 per share, diluted) in fiscal 2005. The
      $42.8 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 $16.8 million, partially offset by increased
      financing charges of $15.5 million.




**Net
      Earnings from Discontinued Operations**




Net
      earnings from discontinued operations for fiscal 2006 were $1.0 million
      ($0.02 per share, diluted), a decrease of $8.6 million from
      $9.6 million ($0.20 per share, diluted) for fiscal 2005. The net
      earnings from discontinued operations in fiscal 2005 relate primarily to an
      $8.6 million net gain on the disposal of two non-core
      businesses.







52





**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. This reflects a $42.8 million increase in
      net earnings from continuing operations for fiscal 2005 and an $8.6 million
      decrease in net earnings from fiscal 2005 from discontinued
      operations.




**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 and 2005. All information
      has been reclassified for the classification of Survival-One as discontinued
      operations as outlined in Note 2 to our fiscal 2007 audited consolidated
      financial statements.




Fiscal
            
            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 share2006
            
            (in millions
                of Canadian dollars)
            
            
            declared
            
            
            Basic
            
            
            Diluted
            
            
            Basic
            
            
            DilutedQ1
            
            $
            243.0
            
            
            $
            18.8
            
            
            $
            19.2
            
            
            $
            1,669.8
            
            
            $
            975.2
            
            
            $
            -
            
            
            $
            0.45
            
            
            $
            0.41
            
            
            $
            0.46
            
            
            $
            0.42Q2
            
            
            252.4
            
            
            
            39.2
            
            
            
            39.2
            
            
            
            1,675.1
            
            
            
            939.1
            
            
            
            0.40
            
            
            
            0.93
            
            
            
            0.85
            
            
            
            0.93
            
            
            
            0.85Q3
            
            
            253.5
            
            
            
            21.4
            
            
            
            21.5
            
            
            
            1,685.6
            
            
            
            945.8
            
            
            
            -
            
            
            
            0.51
            
            
            
            0.47
            
            
            
            0.51
            
            
            
            0.47Q4
            
            
            248.2
            
            
            
            10.3
            
            
            
            10.8
            
            
            
            1,686.1
            
            
            
            911.7
            
            
            
            -
            
            
            
            0.25
            
            
            
            0.22
            
            
            
            0.26
            
            
            
            0.23Total
            
            $
            997.1
            
            
            $
            89.7
            
            
            $
            90.7
            
            
            
            
            
            
            
            
            
            
            $
            0.40
            
            
            $
            2.14
            
            
            $
            1.95
            
            
            $
            2.16
            
            
            $
            1.97Fiscal2005Q1
            
            $
            239.7
            
            
            $
            18.2
            
            
            $
            17.5
            
            
            $
            1,494.0
            
            
            $
            829.9
            
            
            $
            -
            
            
            $
            0.44
            
            
            $
            0.40
            
            
            $
            0.42
            
            
            $
            0.37Q2
            
            
            238.8
            
            
            
            (0.7
            )
            
            
            (0.7
            )
            
            
            1,512.8
            
            
            
            855.0
            
            
            
            0.30
            
            
            
            (0.02
            )
            
            
            (0.01
            )
            
            
            (0.02
            )
            
            
            (0.01
            )Q3
            
            
            238.3
            
            
            
            14.7
            
            
            
            22.5
            
            
            
            1,624.5
            
            
            
            924.2
            
            
            
            -
            
            
            
            0.35
            
            
            
            0.32
            
            
            
            0.54
            
            
            
            0.49Q4
            
            
            237.4
            
            
            
            14.7
            
            
            
            17.2
            
            
            
            1,686.7
            
            
            
            934.4
            
            
            
            -
            
            
            
            0.35
            
            
            
            0.32
            
            
            
            0.41
            
            
            
            0.38Total
            
            $
            954.2
            
            
            $
            46.9
            
            
            $
            56.5
            
            
            
            
            
            
            
            
            
            
            $
            0.30
            
            
            $
            1.12
            
            
            $
            1.03
            
            
            $
            1.35
            
            
            $
            1.23




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 fiscal 2006
      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-$(23.3) million, Q2-$(22.9) million, Q3-$(22.6) million and
      Q4-$(27.8) million for a total negative FX impact of
      $96.6 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
                Q2 of fiscal 2005, the Company incurred a tax asset adjustment of
                $4.2 million relating to a tax rate reduction in the
                Netherlands.




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




(iii)
            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.


(iv)
              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.
  (v)
              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 38,
“*Results of Operations - Income Taxes*”, and page 39, *“Results
        of Operations - Net Loss from Discontinued Operations*”.





53







**REVIEW
      BY SEGMENT**




**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
            
            
            $
            130,844
            
            
            $
            435
            
            N/A
            
            $
            954,242Foreign
                exchange impact *(ii)*
            
            
            (27,868
            )
            
            
            (54,575
            )
            
            
            (14,153
            )
            
            
            (17
            )
            N/A
            
            
            (96,613
            )Revenue
                increase (decrease)
            
            
            66,679
            
            
            
            44,045
            
            
            
            28,977
            
            
            
            (243
            )
            N/A
            
            
            139,458**Year
                ended April 30, 2006 *(i)***
            
            **$**
            **330,877**
            
            
            **$**
            **520,367**
            
            
            **$**
            **145,668**
            
            
            **$**
            **175**
            
            **N/A**
            
            **$**
            **997,087***Total
                revenue increase (decrease)*
            
            *$*
            *38,811*
            
            
            *$*
            *(10,530*
            *)*
            
            *$*
            *14,824*
            
            
            *N/A*
            
            *N/A*
            
            *$*
            *42,845**%
                increase (decrease)*
            
            **
            *13.3*
            *%*
            
            **
            *(2.0*
            *%)*
            
            **
            *11.3*
            *%*
            
            *N/A*
            
            *N/A*
            
            **
            *4.5*
            *%**%
                increase excluding FX*
            
            **
            *22.8*
            *%*
            
            **
            *8.3*
            *%*
            
            **
            *22.1*
            *%*
            
            *N/A*
            
            *N/A*
            
            **
            *14.6*
            *%*





**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
            
            
            $
            231,016
            
            
            $
            (32,103
            )
            
            $
            (153,227
            )
            
            $
            243,762Foreign
                exchange impact *(ii)*
            
            
            (6,730
            )
            
            
            (12,766
            )
            
            
            (6,993
            )
            
            
            1,471
            
            
            
            -
            
            
            
            (25,018
            )Segment
                EBITDAR increase (decrease)
            
            
            10,368
            
            
            
            9,455
            
            
            
            5,452
            
            
            
            2,970
            
            
            
            (822
            )
            
            
            27,423**Year
                ended April 30, 2006 *(i)***
            
            **$**
            **90,922**
            
            
            **$**
            **107,481**
            
            
            **$**
            **229,475**
            
            
            **$**
            **(27,662**
            **)**
            
            **$**
            **(154,049**
            **)**
            
            **$**
            **246,167***Segment
                EBITDAR margin (iii)**-
                Last year*
            
            **
            *29.9*
            *%*
            
            **
            *20.9*
            *%*
            
            **
            *45.2*
            *%*
            
            *N/A*
            
            
            *N/A*
            
            
            **
            *25.5*
            *%**-
                This year*
            
            **
            *27.5*
            *%*
            
            **
            *20.7*
            *%*
            
            **
            *45.8*
            *%*
            
            *N/A*
            
            
            *N/A*
            
            
            **
            *24.7*
            *%**Total
                Segment EBITDAR increase (decrease)*
            
            *$*
            *3,638*
            
            
            *$*
            *(3,311*
            *)*
            
            *$*
            *(1,541*
            *)*
            
            *$*
            *4,441*
            
            
            *$*
            *(822*
            *)*
            
            *$*
            *2,405**%
                increase (decrease)*
            
            **
            *4.2*
            *%*
            
            **
            *(3.0*
            *%)*
            
            **
            *(0.7*
            *%)*
            
            **
            *13.8*
            *%*
            
            *N/A*
            
            
            **
            *1.0*
            *%**%
                increase excluding FX*
            
            **
            *11.9*
            *%*
            
            **
            *8.5*
            *%*
            
            **
            *2.4*
            *%*
            
            **
            *9.3*
            *%*
            
            *N/A*
            
            
            **
            *11.2*
            *%*





**Segment
      EBITDA*(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)*
            
            $
            15,889
            
            
            $
            21,976
            
            
            $
            180,463
            
            
            $
            (32,103
            )
            
            $
            -
            
            
            $
            186,225Foreign
                exchange impact *(ii)*
            
            
            (6,644
            )
            
            
            (8,983
            )
            
            
            (651
            )
            
            
            1,467
            
            
            
            -
            
            
            
            (14,811
            )Segment
                EBITDA increase (decrease)
            
            
            (1,539
            )
            
            
            18,864
            
            
            
            (11,022
            )
            
            
            2,974
            
            
            
            -
            
            
            
            9,277**Year
                ended April 30, 2006 *(i)***
            
            **$**
            **7,706**
            
            
            **$**
            **31,857**
            
            
            **$**
            **168,790**
            
            
            **$**
            **(27,662**
            **)**
            
            **$**
            **-**
            
            
            **$**
            **180,691***Segment
                EBITDA margin(i)**-
                Last year*
            
            **
            *5.4*
            *%*
            
            **
            *4.1*
            *%*
            
            **
            *35.3*
            *%*
            
            *N/A*
            
            
            *N/A*
            
            
            **
            *19.5*
            *%**-
                This year*
            
            **
            *2.3*
            *%*
            
            **
            *6.1*
            *%*
            
            **
            *33.7*
            *%*
            
            *N/A*
            
            
            *N/A*
            
            
            **
            *18.1*
            *%**Total
                Segment EBITDA increase (decrease)*
            
            *$*
            *(8,183*
            *)*
            
            *$*
            *9,881*
            
            
            *$*
            *(11,673*
            *)*
            
            *$*
            *4,441*
            
            
            *$*
            *-*
            
            
            *$*
            *(5,534*
            *)**%
                increase (decrease)*
            
            **
            *(51.5*
            *%)*
            
            **
            *45.0*
            *%*
            
            **
            *(6.5*
            *%)*
            
            **
            *13.8*
            *%*
            
            *N/A*
            
            
            **
            *(3.0*
            *%)**%
                increase (decrease) excluding FX*
            
            **
            *(9.7*
            *%)*
            
            **
            *85.8*
            *%*
            
            **
            *(6.1*
            *%)*
            
            **
            *9.3*
            *%*
            
            *N/A*
            
            
            **
            *5.0*
            *%*





**Segment
      Operating 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
            
            
            $
            127,459
            
            
            $
            (43,411
            )
            
            
            N/A
            
            
            $
            108,520Foreign
                exchange impact *(ii)*
            
            
            (6,310
            )
            
            
            (8,460
            )
            
            
            1,065
            
            
            
            (62
            )
            
            N/A
            
            
            
            (13,767
            )Operating
                income increase (decrease)
            
            
            (1,676
            )
            
            
            19,608
            
            
            
            (12,227
            )
            
            
            8,608
            
            
            N/A
            
            
            
            14,313**Year
                ended April 30, 2006 *(i)***
            
            **$**
            **2,913**
            
            
            **$**
            **24,721**
            
            
            **$**
            **116,297**
            
            
            **$**
            **(34,865**
            **)**
            
            **N/A**
            
            
            **$**
            **109,066***Total
                operating income increase (decrease)*
            
            *$*
            *(7,986*
            *)*
            
            *$*
            *11,148*
            
            
            *$*
            *(11,162*
            *)*
            
            *$*
            *8,546*
            
            
            *N/A*
            
            
            *$*
            *546**%
                increase (decrease)*
            
            **
            *(73.3*
            *%)*
            
            **
            *82.1*
            *%*
            
            **
            *(8.8*
            *%)*
            
            **
            *19.7*
            *%*
            
            *N/A*
            
            
            **
            *0.5*
            *%**%
                increase (decrease) excluding FX*
            
            **
            *(15.4*
            *%)*
            
            **
            *144.5*
            *%*
            
            **
            *(9.6*
            *%)*
            
            **
            *19.8*
            *%*
            
            *N/A*
            
            
            **
            *13.2*
            *%*


(i)
              Figures
                  have been reclassified for the classification of Survival-One as
                  discontinued operations as outlined in Note 2 to our fiscal 2007
                  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 2007 audited consolidated financial
                  statements.





54





**Global
      Operations**









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 S76, but also includes a number of heavy aircraft,
      including the Eurocopter Super Puma, the Sikorsky S61N and the Sikorsky
      S92.




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.







55





During
      fiscal 2006 Global Operations was 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
                S76C+
                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 S61 services in support of the Sable
                Offshore Energy Project in Halifax, Canada;
                and




•
            a
                two-year contract for an S92 in Asia with Malaysian Helicopter Services
                in
                support of Shell offshore
                operations.




**European
      Operations**









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 S92 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.







56





During
      fiscal 2006 European Operations 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 S92s and three
                AgustaWestland AW139s;




•
            a
                five-year contract renewal by ConocoPhillips (UK) Limited for the
                provision of a dedicated Sikorsky S76C, 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
                S76A+ 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
                S92 helicopters beginning on July 1, 2007;
                and




•
            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.




**Heli-One**









Heli-One’s
      third-party revenue for fiscal 2006 was $145.7 million, of which
      approximately 33% was derived from long term contracts, compared to
      $130.8 million in fiscal 2005. This $14.9 million increase in
      third-party revenue was due to growth from new leasing, PBH and increases in
      third-party repair and overhaul activity totalling $29.0 million, partially
      offset by an unfavourable FX impact of $14.1 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.




Segment
      EBITDAR for fiscal 2006 was $229.5 million, down $1.5 million from
      segment EBITDAR of $231.0 million in fiscal 2005. This was the combined
      result of increased EBITDAR of $5.5 million, offset by an unfavourable FX
      impact of $7.0 million. The decrease in EBITDAR is primarily attributable
      to direct cost savings of approximately $13.4 million from restructuring
      initiatives and EBITDAR earned on increased external revenues, more than offset
      by lower lease and PBH revenues from internal customers.




Heli-One’s
      segment EBITDAR margin has increased slightly from 45.2% in fiscal 2005 to
      45.8%
      in fiscal 2006. 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.







57





Operating
      income for fiscal 2006 was $116.3 million, down $11.2 million from
      operating income of $127.5 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
      $4.6 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 fiscal 2005. The primary reasons for the increase 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.




**LIQUIDITY
      AND CAPITAL RESOURCES**




**Operating
      Activities**




Cash
      flows from operations for fiscal 2007 of $26.2 million consisted of
      $41.0 million in net earnings from continuing operations plus various items
      not involving cash and long-term receivables increases of $17.3 million due
      to the build-up of operating capability for BHS in Brazil. This is partially
      offset by a change in non-cash working capital of
      $37.2 million.




The
      change in non-cash working capital was impacted by the following
      items:




•
            An
                increase in receivables of $50.8 million over the prior year
                primarily related to an increase in trade receivables from increased
                activity and an increase in non-trade receivables of $10.9 million
                related to the sale of an aircraft to a lessor. Days sales in trade
                receivables decreased from 69 days at April 30, 2006 to
                66 days at April 30 2007, which was offset by an increase in
                trade receivables of $47.4 million resulting from an increase in
                activity.




•
            An
                increase in inventory of $39.9 million over the prior year due to the
                introduction of 40 aircraft, increases in safety stock at bases
                throughout the world to improve aircraft serviceability, and increased
                base maintenance related to the acquisition of Heli-Dyne in fiscal
                2007.




•
            An
                increase in prepaid expenses of $30.4 million over the prior year
                largely related to the advancement of approximately $25 million of
                security deposits related to future lease
                transactions.




•
            An
                increase in payables and accruals of $83.9 million over the prior
                year mainly related to approximately $40 million in final balances
                owing on recent aircraft purchases and overall increased
                activity.




Cash
      flows from operations for fiscal 2006 of $32.1 million consisted of
      $89.7 million in net earnings from continuing operations, plus various
      items not involving cash including $37.5 million in gains on the disposal
      of assets and long-term investments. The $55.0 million in non-cash working
      capital investment in fiscal 2006 is primarily due to increases in inventory
      and
      accounts receivable.




Inventory
      investment in fiscal 2006 was significant for the following
      reasons:




•
            the
                addition of 18 new aircraft and several new aircraft types, including
                the
                Sikorsky S92, 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
                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







58










•
            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.




Cash
      flows from operations for fiscal 2005 of $78.6 million consisted of
      $46.9 million in net earnings from continuing operations plus various items
      not involving cash, including the $14.3 million fair value adjustment
      recorded on Composites. The change in non-cash working capital of
      $22.7 million was primarily due to a $60.5 million increase in
      accounts payable, partially offset by increases in accounts receivable of
      $38.1 million.




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, 2007 we had unused borrowing capacity under our credit
      facilities of $38.3 million (April 30, 2006 - $147.1 million) and
      cash and cash equivalents of $89.5 million (April 30, 2006 -
      $26.3 million), for a total of $127.8 million (April 30, 2006 -
      $173.4 million). We do not expect any material changes to our 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 currently owned aircraft as a source of liquidity.
      Sale-leaseback transactions are used by us as a cost effective way to finance
      new aircraft. Aircraft are sometimes acquired over an extended period through
      deposits and then sold and leased back shortly after acquisition.




There
      are no material or legal restrictions on our ability to obtain cash from our
      subsidiaries. Certain jurisdictions that we operate in give rise to practical
      restrictions on our ability to obtain cash from our subsidiaries due to central
      banking legislation in these jurisdictions. These restrictions have not and
      are
      not expected to have an impact on our ability to meet our obligations. 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 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 61,
“*Financial Instruments.*“




**Financing
      Activities**




Cash
      flow from financing activities was $207.3 million for fiscal 2007, compared
      to $76.5 million for fiscal 2006. Total debt increased by
      $216.5 million during the year from $624.1 million at April 30,
      2006 to $840.6 million at April 30, 2007. The $216.5 million
      increase was comprised of an increase in debt of $220.5 million offset by
      favourable FX of $4.0 million.




During
      fiscal 2007, we negotiated increases in capacity of two of our existing
      operating lease facilities and added a third facility with a major European
      bank, creating new operating lease capacity of US $235 million
      (approximately $260 million). These facilities provide us with operating
      flexibility including the ability to move aircraft among countries within agreed
      limits, as long as pre-negotiated percentages of limits of facility value are
      maintained in primary and non-primary jurisdictions. During fiscal 2007, we
      entered into financing transactions on 29 aircraft related to these
      facilities.




During
      the third quarter of fiscal 2007, we reclassified the outstanding balance under
      our senior revolving credit facility to “Current portion of debt obligations” in
      the consolidated financial statements, as the facility is due for renewal in
      December 2007. Effective July 31, 2007, we have renewed the facility and
      consequently we have reclassified the outstanding balance to “long-term debt
      obligations” in the first quarter of fiscal 2008.




Financing
      activities generated cash of $76.5 million for fiscal 2006, compared to
      $123.6 million generated for fiscal 2005. 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 entered into lease transactions on 14 aircraft under
      these facilities during fiscal 2006.







59





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 61, “*Financial
      Instruments*”. At April 30, 2007 our total net debt was denominated in
      the following currencies:




Currency
            
            Debt
                in functional currency
              (millions)
            
            
            Canadian
                equivalent
              (millions)UK
                pound sterling
            
            £
            9.6
            
            
            $
            21.2Euro
            
            €
            33.2
            
            
            
            50.2Canadian
                dollar
            
            $
            164.2
            
            
            
            164.2US
                dollar
            
            USD
            505.0
            
            
            
            558.9Norwegian
                kroner
            
            NOK
            240.0
            
            
            
            44.7Brazilian
                real
            
            BRL
            2.7
            
            
            
            1.4Cash
                (various currencies)
            
            
            
            
            
            
            (89.5
            )Total
                net debt
            
            
            
            
            
            $
            751.1







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. At April 30, 2007 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 2007 we declared an annual dividend of $0.50 payable quarterly on each
      Class A subordinate voting share and Class B multiple voting share
      (approximately $21.9 million). Of this, dividends totalling
      $10.6 million were paid by April 30, 2007. During fiscal 2006, we
      declared an annual dividend of approximately $17.1 million or
      $0.40 per share, $8.5 million of which was paid in fiscal 2006 with
      the remaining $8.6 million paid in fiscal 2007. 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 was $6.3 million
      during fiscal 2007 (2006 - $0.5 million). This is primarily related to the
      exercise of 792,000 options into 1,584,000 Class A subordinate voting
      shares for cash proceeds of $5.6 million.




At
      April 30, 2007, long-term debt (including current portion) totalled
      $840.6 million (2006 - $624.1 million) and shareholders’ equity
      totalled $551.3 million (2006 - $490.7 million). The long-term debt to
      equity ratio was 1.5:1 at April 30, 2007, compared to 1.3:1 at
      April 30, 2006.




**Investing
      Activities**




Cash
      used for investing activities was $169.3 million in fiscal 2007. Property
      and equipment additions of $393.2 million were comprised of
      (i) $245.3 million for the purchase of 35 helicopters (five
      aircraft purchased off-lease), including 24 that were subsequently leased
      through sale-leaseback transactions, (ii) $18.1 million for aircraft
      modifications, (iii) $39.4 million related to buildings and other
      equipment; and (iv) $90.4 million related to investments in spare
      parts (rotables) to support the Company’s existing fleet and additional aircraft
      and new aircraft types. The aircraft expenditures of $245.3 million
      consisted of aircraft purchases of $330.4 million less the application of
      deposits on these aircraft of $85.1 million. We advanced new aircraft
      deposits during the year of $87.6 million toward future aircraft purchases.
      We novated certain of our aircraft purchases to lessors during the year and
      have
      been reimbursed $40.9 million in deposits from aircraft manufacturers
      resulting in net payments of aircraft deposits of
      $46.7 million.




Capital
      expenditures during fiscal 2007 for helicopter major inspections totalled
      $30.1 million. These expenditures were financed from net proceeds totalling
      $318.3 million, primarily from proceeds received on 28 sale-leaseback
      transactions and the disposal of 13 aircraft.







60





Cash
      used for investing activities was $124.2 million in fiscal 2006. Property
      and equipment additions in fiscal 2006 of $280.7 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) $20.2 million for ground equipment, vehicles, a
      simulator and office furniture and fixtures. The aircraft expenditures of
      $177.2 million consisted of aircraft purchases of $264.9 million less
      the application of deposits on these aircraft of $87.7 million. We advanced
      new aircraft deposits during fiscal 2006 of $125.0 million toward future
      aircraft purchases.




Capital
      expenditures during fiscal 2006 for helicopter major inspections totalled
      $23.6 million. These expenditures were financed from proceeds received on
      property and equipment dispositions and from operating cash flow. Proceeds
      from
      disposals during fiscal 2006 totalled $313.7 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
      $8.4 million received from other dispositions.




Cash
      used for investing activities was $242.7 million in fiscal 2005. Property
      and equipment additions of $234.7 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, and
      (iv) $19.7 million related to other property and equipment. 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 fiscal
      2005 of $53.0 million toward future aircraft purchases.




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.




We
      have
      no other material capital expenditure commitments at April 30, 2007 other
      than commitments to take delivery of aircraft as discussed previously on
      page 32, “*Property and Equipment - Commitments to Acquire New
      Aircraft.*“ See also Note 26 to our fiscal 2007 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, 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 is as follows (in millions of Canadian
      dollars):




**April
                30, 2007**
            
            April
                30, 2006Fair
                Value
            
            Carrying
                Value
            Fair
                Value
            
            Carrying
                ValueSenior
                subordinated notes (73⁄8%)
            
            **$**
            **429.4**
            
            
            **$**
            **442.7**
            
            
            $
            454.3
            
            
            $
            448.1







**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 and anticipated transactions in
      currencies other than the Canadian dollar. We do not enter into derivative
      transactions for speculative or trading purposes.







61





As
      at
      April 30, 2007 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 our
      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 foreign
      currency translation adjustment account in the equity section of the balance
      sheet in accordance with Canadian GAAP at April 30, 2007.




The
      nature, maturity, notional amount and fair market value of our derivatives
      used
      in risk management activities as at April 30, 2007 are as
      follows:




Hedging
                Item
            Maturity
            
            Notional
              amount
            Fair
                market value
              gain
                (loss) (millions)Forward
                foreign exchange contractsSell
                US
                dollar; buy Canadian dollar
            Various
            
            $118.0
            
            $5.0Sell
                pound sterling; buy euro
            Various
            
            €  30.5
            
            (1.2)Sell
                Norwegian kroner; buy pound sterling
            May
                2007
            
            £
                12.4
            
            -Sell
                Norwegian kroner; buy Australian dollar
            May
                2007
            
            AUD
                28.0
            
            -Sell
                Norwegian kroner; buy euro
            May
                2007
            
            €  26.9
            
            -Sell
                Canadian dollar; buy euro
            May
                2007
            
            €  2.7
            
            -Sell
                Brazilian real; buy US dollar
            May
                2007
            
            USD
                28.0
            
            0.1Sell
                Canadian dollar; buy Norwegian kroner
            May
                2007
            
            NOK
                150.0
            
            (0.2)Sell
                Canadian dollar; buy US dollar
            June
                2007
            
            USD
                150.0
            
            (0.2)$3.5




**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, 2007 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 be considered as off-balance sheet
      arrangements.




We
      have
      provided guarantees to certain lessors in respect of operating leases. If we
      fail to meet the senior credit facilities' financial ratios or breach any of
      the
      covenants of those facilities and, as a result, the senior lenders accelerate
      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 us under
      these guarantees.




We
      have
      provided limited guarantees to third parties under some of our operating leases
      relating to a portion of the aircraft values at the termination of the leases.
      The leases have terms expiring between fiscal 2008 and 2016. Our exposure under
      the asset value guarantees including guarantees in the form of junior loans,
      rebateable advance rentals and deferred payments is approximately
      $86.4 million (2006 - $60.8 million). The resale market for the
      aircraft types for which we have provided guarantees remains strong, and as
      a
      result, we do not anticipate incurring any liability or loss with respect to
      these guarantees.







62




We
      have
      provided guarantees to certain lessors in respect of novated aircraft purchase
      contracts. Under these contracts, if the manufacturer fails to meet specified
      delivery terms or becomes insolvent prior to aircraft delivery, we may be
      required to reimburse the lessor for amounts paid by the lessor to the aircraft
      manufacturer. Under either scenario, we have recourse against the aircraft
      manufacturer. Once aircraft are delivered under the novated aircraft purchase
      agreements, we no longer have an obligation under these guarantees. Our maximum
      exposure under the guarantees in the novated aircraft purchase agreements at
      April 30, 2007, was approximately $179.5 million (April 30, 2006
      - $nil). We do not anticipate incurring any liability or loss with respect
      to
      these guarantees.




At
      April 30, 2007 we operated 16 aircraft (2006 - 19 aircraft) under
      operating leases with four entities that would be considered variable interest
      entities (“VIEs”) under Canadian and US GAAP. These leases have terms and
      conditions similar to those of our other operating leases over periods ranging
      from fiscal 2010 to 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 have concluded that we are not
      required to consolidate any of the VIEs with which we have aircraft leasing
      arrangements.




Based
      on appraisals by independent helicopter valuation companies as at April 30,
      2007, the estimated fair market value of the aircraft leased from VIEs is
      $94.3 million (2006 - $134.1 million). We have provided junior loans
      and loans receivable in connection with operating leases with these VIEs. Our
      maximum exposure to loss related to the junior loans and loans receivable as
      a
      result of our involvement with the VIEs is $14.4 million (2006 -
      $17.7 million). For additional information, see Note 26 to our fiscal
      2007 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, 2007. Additional information is contained in Notes 14 and
      26 to our fiscal 2007 audited consolidated financial statements.




**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
            
            $
            397.9
            
            
            $
            333.7
            
            
            $
            41.5
            
            
            $
            9.6
            
            
            $
            13.1Senior
                subordinated notes (73⁄8%)
            
            
            442.7
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            442.7Operating
                lease (aircraft)
            
            
            556.3
            
            
            
            103.4
            
            
            
            187.5
            
            
            
            151.7
            
            
            
            113.7Operating
                lease (other)
            
            
            44.6
            
            
            
            5.7
            
            
            
            9.0
            
            
            
            7.5
            
            
            
            22.4New
                aircraft commitments
            
            
            837.1
            
            
            
            295.5
            
            
            
            474.2
            
            
            
            67.4
            
            
            
            -Total
                contractual obligations
            
            $
            2,278.6
            
            
            $
            738.3
            
            
            $
            712.2
            
            
            $
            236.2
            
            
            $
            591.9




**DEFINED
      BENEFIT PENSION PLANS**




Approximately
      33% of our active employees are covered by defined benefit pension plans. At
      April 30, 2007, we had a net unfunded deficit of $23.6 million
      relating to defined benefit pension plans that are required to be funded,
      compared to $28.0 million at April 30, 2006, a decrease of
      $4.4 million. Of the $23.6 million unfunded deficit at April 30,
      2007, $37.6 million, $5.2 million, and $2.7 million were related
      to plans in the UK, the Netherlands and Norway, respectively. These deficits
      were offset by a surplus of $21.9 million in one of the Norwegian plans. In
      addition, at April 30, 2007, we had a deficit of $53.6 million related
      to plans that do not require funding, compared to a deficit of
      $46.2 million for those plans at April 30, 2006.




The
      unfunded deficit relating to funded plans decreased during fiscal 2007 primarily
      due to decreases in estimated benefit obligations mainly resulting from
      increases in the discount rates used and a positive FX impact.







63




Pension
      expense for fiscal 2007 was $20.9 million, compared to $27.9 million
      for fiscal 2006 and $23.2 million for fiscal 2005. The primary reasons for
      the $7.0 million decrease in pension expense from fiscal 2006 to fiscal
      2007 were an $8.7 million increase in the return on plan assets and a
      $3.1 million decrease in the amortization of net actuarial and experience
      losses.




During
      the year ended April 30, 2007, a plan amendment resulted in a
      $2.3 million increase in the benefit obligation of the Norwegian plan. This
      amendment arose as a result of legislation in Norway that requires certain
      variable pay amounts to be included in pensionable earnings.




While
      the asset mix varies in each plan, overall the asset mix was 48% equities,
      37%
      fixed income and 15% money market as at April 30, 2007.




**SHARE
      DATA**




Our
      share capital as at April 30 was comprised of the following:




Number
                of Shares
            
            
            Consideration(amounts
                in thousands)
            
            **April
                30, 2007**
            
            
            April
                30, 2006
            
            
            **April
                30, 2007**
            
            
            April
                30, 2006Class
                A subordinate voting shares
            
            ****
            **39,858**
            
            
            
            36,860
            
            
            **$**
            **235,346**
            
            
            $
            223,241Class
                B multiple voting shares
            
            ****
            **5,863**
            
            
            
            5,861
            
            
            ****
            **18,413**
            
            
            
            18,413Ordinary
                shares
            
            ****
            **22,000**
            
            
            
            22,000
            
            
            ****
            **33,000**
            
            
            
            33,000Ordinary
                share loan
            
            ****
            **-**
            
            
            
            -
            
            
            ****
            **(33,000**
            **)**
            
            
            (33,000
            )Class
                  A
                  subordinate voting employee share purchase loans
            
            ****
            **-**
            
            
            
            -
            
            
            ****
            **(1,254**
            **)**
            
            
            (1,502
            )**$**
            **252,505**
            
            
            $
            240,152Contributed
                surplus
            
            
            
            
            
            
            
            
            
            **$**
            **5,042**
            
            
            $
            4,363







Class A
      subordinate voting shares that would be issued upon conversion of the
      following:




Class
                A Shares that would be issued upon conversion of the
                following:
            
            **April
                30, 2007**
            
            
            April
                30, 2006Class
                B Shares
            
            ****
            **5,863**
            
            
            
            5,861Stock
                options
            
            ****
            **2,232**
            
            
            
            3,819Convertible
                debt
            
            ****
            **-**
            
            
            
            1,379




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 million 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 the Company’s fiscal 2007 audited consolidated financial
      statements).




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 $14.5 million as at
      April 30, 2007. As a result, the employee share purchase loans, of
      $1.3 million at April 30, 2007 (2006 - $1.5 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.







64




During
      the first two months of fiscal 2008, we issued 14,867 Class A
      subordinate voting shares for consideration of approximately
      $0.4 million.




**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, 2007, $6.0 million (2006
      - $3.7 million) in unamortized pre-operating expenses, which are expected
      to be recoverable from the related future cash flows 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 service 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 $33.1 million and $46.7 million as at
      April 30, 2007 and 2006, respectively. 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.







65







(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 33% of our 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.




(f)
            Utilization
                of income tax losses




We
      have
      accumulated $153.7 million and $45.0 million in non-capital and
      capital losses, respectively, as at April 30, 2007. As detailed in
      Note 22 to our fiscal 2007 audited consolidated financial statements, some
      of the non-capital losses expire between fiscal 2008 and 2027 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
      $96.4 million of the non-capital losses and all of the capital losses will
      be realized in the future and, accordingly, have recorded future tax assets
      of
      $36.3 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 of the minimum lease payments at the beginning of the lease term
      is less than 90% of the fair value of the leased aircraft, we include in our
      minimum lease payments the 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 2007 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
      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 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.







66





Certain
      of our operating leases have junior loans, deferred payments and rebateable
      advance rentals 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, 2007 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.




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




Under
      Accounting Guideline 15 - Consolidation of Variable Interest Entities, 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 our 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 our
      estimates or assessments. These adjustments could materially increase or
      decrease our results of operations.




**NEW
      ACCOUNTING STANDARDS**




(a)
            Financial
                Instruments




As
      required by the Canadian Institute of Chartered Accountants (“CICA”), on
      May 1, 2007, the Company adopted the following CICA Handbook Sections:
      Section 1530 - Comprehensive Income (“Section 1530”),
      Section 3855 - Financial instruments - Recognition & Measurement
      (“Section 3855”) and Section 3865 - Hedges (‘Section 3865”). The
      adoption of these new standards resulted in changes in the accounting and
      presentation for financial instruments and hedges as well as the recognition
      of
      certain transition adjustments that have been recorded in opening retained
      earnings or opening accumulated other comprehensive earnings (“AOCI”). As
      required by the transitional provisions of these new standards, the comparative
      interim consolidated financial statements have not been restated. The principal
      changes in the accounting for financial instruments and hedging relationships
      due to the adoption of these new standards are described below.




Comprehensive
      Income




Section 1530
      introduces the concept of comprehensive income which consists of net earnings
      and other comprehensive earnings (“OCI”) and represents the change in equity of
      an entity during a period arising from transactions and other events and
      circumstances from non-owner sources. OCI represents amounts that are recognized
      in comprehensive earnings but excluded from net earnings as required by primary
      sources of GAAP. These amounts include gains and losses on available-for-sale
      financial assets, exchange gains and losses arising from the translation of
      the
      financial statements of self-sustaining foreign operations, and the portion
      of
      the gain or loss on the hedging item that is determined to be an effective
      cash
      flow hedge or an effective hedge of a net investment in a self-sustaining
      foreign operation.




As
      a
      result of the adoption of Section 1530, the Company now presents a
      consolidated statement of comprehensive earnings as part of the consolidated
      financial statements and AOCI is presented as a new category of shareholders’
equity in the consolidated balance sheets. AOCI includes the balance that was
      previously classified as the foreign currency translation adjustment in the
      Company’s financial statements.







67





Financial
      Instruments - Recognition & Measurement




Section 3855
      establishes standards for recognizing and measuring financial assets, financial
      liabilities and non-financial derivatives. Section 3855 requires that
      financial assets, financial liabilities and non-financial derivatives that
      do
      not qualify for the normal purchase and sale exemption be recognized on the
      balance sheet at fair value on initial recognition. Measurement in subsequent
      periods depends on how the financial instrument has been classified. Financial
      assets and liabilities that have been classified as “held for trading” are
      carried at fair value with both realized and unrealized gains and losses
      included in net income. Financial assets classified as “held-to-maturity”,
“loans and receivables” and financial liabilities other than those classified as
“held for trading” are carried at amortized cost using the effective interest
      method, with realized gains and losses and impairment losses recognized
      immediately in net income. Financial assets classified as “available-for-sale”
are carried at fair value with unrealized gains and losses reported in OCI
      and
      impairment losses recognized immediately in net earnings.




Derivatives
      are recorded on the balance sheet at fair value, including derivatives that
      are
      embedded in a non-derivative host contract where the economic characteristics
      and risks of the embedded derivative are not closely related to those of the
      host contract. Changes in the fair value of derivatives are recognized in net
      earnings, with the exception of changes recognized in OCI for derivatives that
      have been designated as a cash flow hedge or a hedge of a net investment in
      a
      self sustaining foreign operation.




Hedges




Section 3865
      establishes new standards for hedge accounting. Section 3865 carries
      forward much of the guidance from Accounting Guideline 13 - Hedging
      Relationships and adds requirements detailing how to apply hedge accounting
      to
      various types of hedges. The purpose of hedge accounting is to ensure that
      counterbalancing gains, losses, revenues and expenses are recognized in net
      income in the same period(s). Hedge accounting is optional and certain
      conditions must be satisfied before a hedging relationship qualifies for hedge
      accounting, including identification of the specific risk exposure(s) being
      hedged, formal documentation of the hedging relationship at inception and
      reasonable assurance that the hedging relationship will be effective both at
      inception and throughout the term of the hedging relationship.




Section 3865
      discusses three different types of hedges, a fair value hedge, a cash flow
      hedge
      and a hedge of a net investment in a self-sustaining foreign operation, and
      prescribes the accounting treatment for each. A fair value hedge is a hedge
      of
      the exposure to changes in the fair value of all or a portion of a recognized
      asset or liability or previously unrecognized firm commitment attributable
      to a
      specified risk. In a fair value hedge, both the hedged item and the hedging
      item
      are measured at fair value with gains and losses due to fluctuations in fair
      value recognized immediately in net income. A cash flow hedge is a hedge of
      the
      exposure to variability in cash flows of a recognized asset or liability or
      a
      forecasted transaction attributable to a specified risk or variability in cash
      flows of a firm commitment attributable to foreign currency risk. In a cash
      flow
      hedge, there is no change to the measurement or gain or loss recognition on
      the
      hedged item. However, the portion of the gain or loss on the hedging item
      determined to be effective is recognized in OCI and released into net income
      in
      the same period the hedged item affects net income. Any ineffective portion
      is
      recognized immediately in net income. A hedge of a net investment in a
      self-sustaining foreign operation is treated such that gains and losses on
      the
      effective portion of the hedging item are recognized in OCI. Any ineffective
      portion is recognized immediately in net income.




Impact
      of Adoption




*New
                Accounting Policies*




*(i)*
            *Classification
                of financial instruments*




Held
      for trading financial assets and liabilities are financial instruments that
      are
      not loans or receivables and are: acquired or incurred principally for the
      purpose of selling or repurchasing the instrument in the near term; or part
      of a
      portfolio of identified financial instruments that are managed together and
      for
      which there is evidence of a recent actual pattern of short-term profit taking;
      or a derivative, except for a derivative that is a designated and effective
      hedging instrument. The Company may also designate any financial instrument
      irrevocably on initial recognition as held for trading. Held for trading
      financial instruments are carried at fair value with both realized and
      unrealized gains and losses included in net income.







68





Held-to-maturity
      investments are non-derivative financial assets with fixed or determinable
      payments and fixed maturity that an entity has the positive intention and
      ability to hold to maturity, other than financial instruments that have been
      designated on initial recognition as held for trading or as available for sale
      or those that meet the definition of loans and receivables. Held to maturity
      investments are carried at amortized cost using the effective interest method,
      with realized gains and losses and impairment losses recognized immediately
      in
      net income.




Loans
      and receivables are non-derivative financial assets resulting from the delivery
      of cash or other assets by a lender to a borrower in return for a promise to
      repay on a specified date, or on demand, usually with interest, other than
      debt
      securities and loans and receivables that have been designated on initial
      recognition as held for trading or as available for sale. Loans and receivables
      are carried at amortized cost using the effective interest method, with realized
      gains and losses and impairment losses recognized immediately in net
      income.




Available
      for sale financial assets are those non-derivative financial assets that are
      designated as available for sale, or that are not classified as loans and
      receivables, held-to-maturity investments, or held for trading. Available for
      sale financial assets are carried at fair value with unrealized gains and losses
      reported in OCI and impairment losses recognized immediately in net
      earnings.




*(ii)*
            *Determination
                of fair value*




The
      fair value of a financial instrument is the amount of consideration that would
      be agreed upon in an arm’s length transaction between knowledgeable, willing
      parties who are under no compulsion to act. The fair value of a financial
      instrument on initial recognition is normally the transaction price, which
      is
      the fair value of the consideration given or received. Subsequent to initial
      recognition, the fair values of financial instruments that are quoted in active
      markets are based on bid prices for financial assets held and offer prices
      for
      financial liabilities. When independent prices are not available, fair values
      are determined by using valuation techniques which refer to observable market
      data. These include comparisons with similar instruments where market observable
      prices exist, discounted cash flow analysis, option pricing models and other
      valuation techniques commonly used by market participants. For certain
      derivatives, fair values may be determined in whole or in part from valuation
      techniques using non-observable market data or transaction prices.




*(iii)*
            *Transaction
                costs*




Transaction
      costs that are directly attributable to the acquisition or issue of a financial
      asset or financial liability are netted against the fair value of the financial
      instrument on initial recognition, with the exception of transaction costs
      related to financial instruments that are classified as held for trading. These
      transaction costs are then amortized over the expected life of the financial
      instrument using the effective interest rate method. Transaction costs related
      to held for trading financial instruments are expensed as incurred.




*(iv)*
            *Normal
                purchase and sale exemption*




All
      derivative contracts for the purchase and sale of non-financial instruments
      are
      designated as normal purchases and normal sales. These contracts do not have
      the
      capability of contractual net settlement. As a result of the application of
      this
      exemption, the Company is prevented from treating such contracts as derivatives
      under Section 3855 in the future.




*Classification
                on Initial Adoption*




The
      Company made the following classifications of its major categories of assets
      and
      liabilities:




•
            Cash
                and cash equivalents and restricted cash are designated as held for
                trading. These items are measured at fair value. At May 1 and
                July 31, 2007, the measured amount approximates
                cost.




•
            Receivables,
                junior loans and loans receivable are classified as loans and receivables.
                After their initial fair value assessment, these items are measured
                at
                amortized cost using the effective interest rate
                method.




•
            Payables
                and accruals, dividends payable, non-revolving long-term debt and
                senior
                subordinated notes are classified as other liabilities. After their
                initial fair value assessment, these items are measured at amortized
                cost
                using the effective interest rate
                method.







69





On
      May 1, 2007, previously deferred debt issue costs, discounts and premiums
      of $5.4 million were reclassified from other assets, resulting in a
      reduction of long-term debt and senior subordinated notes of $0.3 million
      and $4.5 million, respectively. The remaining $0.6 million was
      recorded as a transition adjustment to reduce opening retained earnings as
      a
      result of adopting the effective interest rate method of
      amortization.




*Derivatives*




All
      derivative instruments are recorded on the balance sheet at fair
      value.




*Embedded
        Derivatives*




The
      Company also identified embedded derivatives outstanding at May 1, 2007
      that require separation from their host contract, primarily relating to foreign
      currency embedded derivatives. These embedded derivatives were accounted for
      as
      derivatives under Section 3855 and resulted in a transition adjustment to
      opening retained earnings of $2.6 million.




*Guarantees*




The
      Company has recognized a liability for the fair value of the obligation
      undertaken in issuing guarantees to third parties under some of the Company’s
      operating leases relating to a portion of the aircraft values at the termination
      of the leases, regardless of whether or not the liability is probable, and
      a
      corresponding prepaid rent asset. The corresponding prepaid rent asset related
      to operating lease asset value guarantees is being amortized on a straight-line
      basis over the lease term of the specific lease to which the asset relates.
      The
      liability is reduced as the Company is released from risk upon expiration or
      settlement of the guarantee.




The
      Company recorded a transition adjustment to retained earnings of
      $2.8 million. In addition, on May 1, 2007, the Company recorded a
      guarantee liability of $19.2 million in other liabilities. The
      corresponding amortized carrying value of the prepaid rent asset is recorded
      in
      other assets.




*Cash
        Flow Hedges*




The
      Company uses foreign exchange forward contracts to hedge the currency risk
      associated with certain foreign currency purchase commitments, payroll and
      associated accounts payable and accounts receivable. The effective portion
      of
      hedging gains and losses associated with these cash flow hedges is recorded
      in
      other comprehensive earnings and is released from accumulated other
      comprehensive income and recorded in income when the hedged item affects
      income.




When
      a
      hedging instrument expires or is sold, or when a hedge is discontinued or no
      longer meets the criteria for hedge accounting, any cumulative gain or loss
      recorded in other comprehensive earnings at that time remains in other
      comprehensive earnings until the forecasted transaction is recorded. When a
      forecasted transaction is no longer expected to occur, the cumulative gain
      or
      loss that was reported in other comprehensive earnings is immediately recorded
      in net earnings.




Upon
      adoption of Section 3865, the Company recorded an increase of
      $2.3 million in AOCI.


*Net
        Investment Hedges*


The
      Company uses net investments in self-sustaining foreign operations to hedge
      foreign currency debt, including a portion of the US $400 million 73⁄8%
      senior subordinated notes. Gains or losses related to the effective portion
      of
      the hedge are recognized in other comprehensive earnings. These gains or losses
      will be recorded in net earnings upon the repatriation or disposal of the
      investment in the foreign operation. Upon adoption of Section 3855 and
      3865, the Company reclassified $40.8 million previously recorded in the
      foreign currency translation account to opening accumulated other comprehensive
      earnings.







70





*Transition
        Adjustments*




The
      following table summarizes the adjustments required to adopt these new
      standards.




**Retained
                earnings**
            
            
            **Accumulated
                other comprehensive earnings**Deferred
                debt issue costs
            
            **$**
            **(580**
            **)**
            
            **$**
            **-**Cash
                flow hedges
            
            ****
            **-**
            
            
            ****
            **2,275**Guarantees
            
            ****
            **(2,774**
            **)**
            
            ****
            **-**Embedded
                derivatives
            
            ****
            **2,550**
            
            
            ****
            **-****Total**
            
            **$**
            **(804**
            **)**
            
            **$**
            **2,275**




(b)
            Other




In
      July
      2006, the CICA revised Section 1506 - Accounting Changes, which requires
      that (i) voluntary changes in accounting policy are made only if they
      result in the financial statements providing reliable and more relevant
      information, (ii) changes in accounting policy are generally applied
      retrospectively, and (iii) prior period errors are corrected
      retrospectively. Section 1506 is effective for our fiscal year beginning
      May 1, 2007. Section 1506 could have a material impact on the
      financial statements if a change in accounting policy were to
      occur.




**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, 2007, 2006 and 2005 were
      $32.9 million, $130.6 million and $49.1 million, respectively,
      compared to net earnings of $44.0 million, $90.7 million and
      $56.5 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 2007 audited consolidated financial
      statements.




**SUMMARY
      FINANCIAL DATA - US DOLLARS**




Certain
      summary financial data from our fiscal 2007 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, 2007 of $1.1067 = US $1.00.







71




**Financial
      Highlights**




Year
                ended April 30, (in millions
                of US dollars, except per share amounts)
            
            **2007**
            
            
            2006Revenue
            
            **$**
            **1,038.3**
            
            
            $
            901.0Operating
                income
            
            ****
            **104.0**
            
            
            
            98.6Net
                earnings from continuing
                operations
            
            ****
            **37.0**
            
            
            
            81.1Net
                earnings from discontinued
                operations
            
            ****
            **2.0**
            
            
            
            0.9Extraordinary
                item
            
            ****
            **0.7**
            
            
            
            -Net
                earnings
            
            ****
            **39.7**
            
            
            
            82.0**Per
                Share
                Information**BasicNet
                earnings
                from continuing operations
            
            **$**
            **0.88**
            
            
            $
            1.93Net
                earnings
                from discontinued operations
            
            ****
            **0.05**
            
            
            
            0.02Extraordinary
                item
            
            ****
            **0.02**
            
            
            
            -Net
                earnings
            
            ****
            **0.95**
            
            
            
            1.95DilutedNet
                earnings
                from continuing operations
            
            **$**
            **0.81**
            
            
            $
            1.76Net
                earnings
                from discontinued operations
            
            ****
            **0.05**
            
            
            
            0.02Extraordinary
                item
            
            ****
            **0.02**
            
            
            
            -Net
                earnings
            
            ****
            **0.88**
            
            
            
            1.78




ITEM
                6.
            DIRECTORS,
                SENIOR MANAGEMENT AND EMPLOYEES




**DIRECTORS
      AND SENIOR MANAGEMENT**




**Board
      of Directors**




The
      table and notes below set out the name of each person currently serving as
      a
      director of the Corporation, their age, the period or periods during which
      they
      have served as a director of the Corporation, the province/state and country
      of
      residence, their principal occupation, business or employment and all other
      positions with the Corporation and any affiliates thereof now held by the
      director, 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
      director or over which the director exercises control or direction.




**Sylvain
                Allard**, M.B.A., 49,
            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 eight 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.,****61,
            Director
                since November, 2004. Resident of Texas, United States of America.
                Mr. Carty is the Vice Chairman and Chief Financial Officer of Dell
                Inc. He 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 to 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. and Barrick Gold
                Corp.





72










**Craig
                C. Dobbin**, 42,
            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. From 1996 to 2006, he was 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,
            Director
                since 2006. Resident of Newfoundland and Labrador, Canada. Mr. Dobbin
                is the founder and President of Killick Capital Inc., a Newfoundland
                based
                private equity company and is the Chairman of the Board of the
                Corporation. 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 1994 to 1998 and from 2001 to 2003. He is currently
                a
                director of Aurora Energy Resources Inc., Plasco Energy Group Inc.,
                Consilient Technologies Inc., Verafin Inc. and Greyfirst
                Corp.**George
                N. Gillett Jr.**, 68,
            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 the Montreal Canadiens hockey club, Booth Creek Ski Holdings,
                and Coleman Natural Foods. He is also a director of Steadman Hawkins
                Research Foundation and is a member of the Board of Governors of
                the
                National Hockey League.**John
                J. Kelly**,B.E.,
                Ph.D., 72,
            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., 56,
            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.





73










**Sir
                Bob Reid**, 73,
            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., 61,
            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 the French company, Areva.**William
                W. Stinson**, 73,
            Director
                since 2003. Resident of Newfoundland and Labrador, Canada. He is
                Chairman
                and CEO of Westshore Terminals Inc. 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., 49,
            See
                *“Board of Directors.”***Annette
                Cusworth**, C.A., 41,
            Resident
                of British Columbia, Canada. Ms. Cusworth began as the Assistant
                Director, Financial Reporting of the Corporation in November 2004,
                subsequently holding the positions of Director, Financial Reporting
                and
                Corporate Controller. In October 2006 she was appointed Vice-President,
                Financial Services. Prior to her employment with the Corporation,
                she was
                the Manager, Financial Services for Weldwood of Canada Limited, a
                Canadian
                subsidiary of International Paper.**Rick
                Davis**, C.A., 45,
            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.





74










**Mark
                Dobbin**, 47,
            See
                *“Board of Directors.”***G.
                Blake Fizzard**, C.A., 43,
            Resident
                of British Columbia, Canada. Mr. Fizzard began as the Director of
                Taxation of the Corporation 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
                O. Green**, C.G.A., 50,
            Resident
                of British Columbia, Canada. Mr. Green has been employed by the
                Corporation 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 the 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., 50,
            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.**Martin
                Lockyer**, LLB, 47,
            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.**Nancy
                Montgomery**, C.A., 36,
            Resident
                of British Columbia, Canada. Ms. Montgomery began as the Director,
                SOX and Internal Audit of the Corporation in March 2006. In
                May 2007, she was appointed Vice-President, Internal Audit. Prior to
                her employment with the Corporation, she was the Manager, SOX Compliance
                at a major publicly traded Canadian gold mining
                Company.




**Family
      Relationships**




Craig
      C. Dobbin and Mark Dobbin are brothers. Their father, Craig L. Dobbin, was
      the
      former Executive Chairman of the Company and his estate holds the majority
      of
      the shares of the Company.







75





The
      following table sets out the number of securities of each class of voting
      securities of the Corporation and SARs (vested and unvested) beneficially owned,
      directly or indirectly, or controlled or directed by each director and the
      value
      of SARs and options as at April 30, 2007.




**Director**
            **Director
                Since**
            **Class
                A**
              **Shares**
            **Class
                B**
              **Shares**
            **Ordinary
                Shares**
            **Class
                A Shares Under Options**
            **Share
                Appreciation Rights**
            **Value
                of All Unexercised In-The-Money Options and
                SARS****Vested**
            **Unvested**
            **Options**
            **Vested**
              **SARs**
            **Unvested
                SARs**Sylvain
                Allard
            2004
            278,468
            -
            -
            643,932
            -
            -
            7,713,216
            -
            -Donald
                Carty, OC
            2004
            20,000
            -
            -
            -
            73,334
            36,666
            -
            47,667
            23,833Craig
                C. Dobbin
            1998
            -
            -
            -
            60,000
            -
            -
            1,042,200
            -
            -Mark
                D. Dobbin
            2006*(i)*
            5,665,188*(ii)*
            5,673,604*(iii)*
            22,000,000*(iv)*
            519,990*(v)*
            -
            110,000
            4,055,922
            -
            118,800George
                N. Gillett Jr.
            2004
            -
            -
            -
            -
            73,334
            36,666
            
            310,000
            -John
                J. Kelly, B.E., Ph.D.
            1999
            6,280
            -
            -
            -
            60,000
            -
            
            1,008,450
            -Jack
                M. Mintz, B.A., M.A., Ph.D.
            2004
            2,000
            -
            -
            -
            73,334
            36,666
            
            409,200
            -Sir
                Bob Reid
            2004
            -
            -
            -
            -
            110,000
            -
            
            731,500
            -Guylaine
                Saucier, C.M., F.C.A.
            2005
            3,000
            -
            -
            -
            73,334
            36,666
            
            -
            -William
                W. Stinson
            2003
            10,000
            -
            -
            -
            110,000
            -
            -
            1,039,500
            -




(i)
            Mark D.
                Dobbin previously served as a director of the Corporation from 1994
                - 1998
                and 2001 - 2003.


(ii)
            Of
                these, 3,892,540 shares are held by Discovery Helicopters Inc., a
                holding
                company, all of the voting shares of which are owned by the Estate
                of
                Craig L. Dobbin, of which Mark Dobbin is the sole executor and
                251,264 shares are held by a family education
                trust. (iii)
            Of
                these, 5,555,432 shares are held by Discovery Helicopters
                Inc. (iv)
            These
              shares
              are held by O.S. Holdings, a holding company wholly owned indirectly
              by
              the Estate of Craig L. Dobbin. (v)
            These
              options
              are held by the Estate of Craig L.
              Dobbin.




76





**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.




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




The
      Corporation recognizes the importance of adhering to superior corporate
      governance standards. The Corporation has developed sound corporate governance
      policies and procedures, which are monitored and reviewed on a continuous basis,
      and adopts a ‘‘best practices’’ approach in all of its 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.




For
      the
      purposes of the Corporation’s NYSE listing, it is considered a “foreign private
      issuer” which means that the Corporation is not required to comply with most of
      the NYSE’s corporate governance listing standards. Under NYSE rules, the
      Corporation is required to disclose any significant ways in which its corporate
      governance practices differ from those followed by US domestic companies under
      the NYSE’s listing standards. The Corporation believes that there are no
      significant differences between its corporate governance practices and those
      required to be followed by US domestic issuers under the NYSE listing standards
      except that the Corporation complies with the Toronto Stock Exchange (“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 practices is available on our website
      at www.chc.ca and in print from us upon request.




The
      current members of the Corporate Governance, Compensation and Nominating
      Committee are Sir Bob Reid (Chair), George Gillett and William
      Stinson.




**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. 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, 2007, the
      Audit Committee met nine times.




In
      carrying out their responsibilities, the Audit Committee has:




•
            met
                with management and the external auditors to review and discuss the
                April 30, 2007 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







77




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




The
      current members of the Audit Committee are Dr. Jack Mintz (Chair), Donald Carty
      and Guylaine Saucier.




**PENSION
      COMMITTEE**




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




The
      current members of the Pension Committee are Dr. Kelly (Chair),
      Mr. 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 includes the Named Executive Officers
      (as defined below), 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 our
      subsidiaries. The Corporate Governance, Compensation and Nominating Committee
      generally meet quarterly to discuss compensation and governance matters. The
      current members of the Committee are listed on the preceding page.




**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 2007 total base salary for the
      Named Executive Officers was $2,000,568 and compensation under the annual
      incentive bonus program was $1,560,589, representing 78% of base salary (106%
      for the CEO). 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 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.







78




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 following
      consultation with independent compensation consultants.




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 primarily 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 certain other 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 for the CEO, the only remaining eligible participant in the
      TSR
      Plan, is equal to 3% of net earnings for the completed fiscal year in excess
      of
      the minimum 12.5% return on opening shareholders' equity. Fiscal 2007 was the
      last year in which the TSR Plan was in effect. The long term incentive plan
      described below replaces the TSR Plan. In respect of fiscal 2007, the total
      TSR
      Plan bonus was $nil.




**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 proceeding the grant date by the target percentage of his/her
      annual salary. The PSUs vest on the third anniversary of the grant date
      according to a schedule based upon the target return on equity over the
      applicable three year period. The vesting may range from 0% to 200%. Vesting
      PSUs are redeemed at a price equal to the average closing price of the
      Class A Subordinate Voting Shares on the TSX on the five trading days
      proceeding the date of vesting.







79




**Corporate
      Development**




In
      the
      past, the Corporate Governance, Compensation and Nominating Committee has deemed
      certain extraordinary circumstances worthy of special recognition where
      significant benefits have accrued to the Corporation and has authorized the
      payment of Corporate Development bonuses in such circumstances. No Corporate
      Development bonuses have been paid since Fiscal 2005 and it is not currently
      contemplated that any Corporate Development bonuses will be paid in the future,
      however, the Committee retains discretion to recommend to the Board of Directors
      such changes to the Corporation’s compensation program from time to time as may
      be appropriate to achieve the Corporation’s objectives.




**Share
      Option Plan**




The
      Employee Share Option Plan is intended to serve as a long-term incentive plan
      that aligns 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. The Corporation contributes 6% of gross earnings up to
      regulatory maximums on behalf of senior executives.




Under
      supplementary retirement plan agreements, the Named Executive Officers and
      former executives, Mr. O. Noel Clarke and Mr. Jo Mark Zurel may
      receive supplementary retirement benefits in addition to the retirement benefits
      provided under the RPP. These benefits are described under “Executive Retirement
      Plan and Retiring Allowance.”




**Compensation
      of Directors**




During
      fiscal 2007, 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 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. If the
      chairman of a committee resides in a jurisdiction where the currency trades
      at a
      premium to the US dollar then the committee chair fee is paid in the local
      currency.







80




The
      following table sets out the cash retainer and fees paid to each director during
      fiscal year 2007, in Canadian dollars at the exchange rates prevailing at the
      date of payment.




**Director**
            **Director
                and Board**
              **Chair
                Cash**
              **Retainer**
              **$**
            **Committee
                Chair**
              **Cash
                Retainer**
              **$**
            **Board
                and Committee**
              **Attendance
                Fees**
              **$**
            **Total
                Annual Fees**
              **$**Sylvain
                Allard
            -
            -
            -
            -Donald
                Carty, O.C.
            45,835
            -
            32,025
            77,860Craig
                C. Dobbin
            45,835
            -
            18,334
            64,169Mark
                D. Dobbin
            284,375
            -
            -
            284,375George
                N. Gillett Jr.
            45,835
            -
            16,169
            62,004John
                J. Kelly, B.E., Ph.D.
            58,266
            14,567
            23,306
            96,139Jack
                M. Mintz, B.A., M.A., Ph.D.
            45,835
            28,647
            32,025
            106,507Sir
                Bob Reid
            85,416
            53,385
            38,392
            177,193Guylaine
                Saucier, C.M., F.C.A.
            45,835
            -
            38,930
            84,765William
                W. Stinson
            45,835
            -
            11,212
            57,047




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 vest 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 2006, 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.




No
      options were granted to directors during fiscal year 2007. Upon being elected
      to
      the board of directors of the Corporation on September 28, 2006,
      Mark D. Dobbin was granted 110,000 SARs at a grant price equal to the
      closing price on the TSX of the Corporation’s Class A Subordinate Voting
      shares on September 28, 2006.




At
      April 30, 2007 a total of 830,000 issued and outstanding SARs had been
      granted to current directors. Of this total issuance, 573,336 SARs were vested
      at April 30, 2007. No SARs have been exercised subsequent to April 30,
      2007.




**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




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







81




**Chief
      Executive Officer Compensation**




The
      Chief Executive Officer’s compensation package is based on an independent review
      of compensation practices within a comparator group of companies chosen with
      the
      advice of an external independent compensation consultant. The comparator group
      includes Canadian and U.S. companies with international operations chosen for
      similarities to the Corporation in terms of size and complexity. The
      compensation data derived from this comparator group is also used to develop
      compensation recommendations for other members of the Corporation’s executive
      team.




The
      compensation philosophy applicable to the CEO is the same as for the
      Corporation’s other executives and is set out above.




Base
      Salary - The base salary of the CEO is determined by an analysis of the CEO’s
      position versus the compensation data for CEOs of the companies in the
      Corporation’s comparator group, and with consideration for the CEO’s
      performance. The Board conducts the assessment of the CEO’s overall performance,
      taking into account his absolute performance relative to objectives agreed
      to at
      the beginning of each year, and his success in delivering value to shareholders.
      Within this framework, the Board’s decision may therefore result in a salary
      above or below the median for the comparator group, which is the level normally
      targeted by the Board for base salary. Actual base salary paid to the CEO in
      fiscal 2007 positioned him at 101% the median base salary paid to CEOs of the
      Corporation’s comparator group.




Annual
      Incentive Award - There were two components of the annual incentives for the
      CEO
      in fiscal 2007. Under the STIP, described above, the CEO has a target award
      of
      110% of base salary, with an annual incentive opportunity ranging from 0% to
      210% of base salary. Under the TSR Plan, also described above, he was eligible
      for an award equal to 3% of the Corporation’s net earnings for fiscal 2007 in
      excess of 12.5% return on the Corporation’s opening shareholders’
equity.




For
      fiscal 2007, the CEO received an award of 106% of base salary under the STIP
      and
      $nil under the TSR Plan. The aggregate of base salary and annual incentive
      award
      paid to the CEO for fiscal 2007 positioned him at 75% of the 75% percentile of
      aggregate base salary and annual incentive paid to CEOs in the comparator group.
      The award was based upon the Corporation’s actual ROCE for fiscal 2007 being
      99.73% of budgeted ROCE and the Corporation’s net earnings for fiscal 2007 being
      less than a 12.5% return on the Corporation’s opening shareholders’
equity.




Long
      Term Incentives - In 2007, the CEO was granted 28,894 PSUs under the LTIP at
      a
      grant price of $28.12 with a notional value equivalent to 125% of his annual
      salary.




The
      vesting conditions are identical to those applicable to the rest of the
      executive group, as described above.




The
      aggregate of base salary, annual incentive and long-term incentive awards
      (“Total Direct Compensation”) placed the CEO at 59% of the 75% percentile of
      Total Direct Compensation paid to CEOs in the comparator group.










82





COMPENSATION
      TABLES




The
      following table is additional disclosure designed to give shareholders greater
      clarity and a more detailed understanding of the compensation paid, granted
      or
      awarded in respect of fiscal 2007 to the Corporation’s current executive
      officers.




**Name
                and principal position**
            **Year**
            **Annual
                compensation**
              **$**
              *(i)*
            **Long-term
                compensation**
              **$**
              *(ii)*
            **All
                other compensation**
              **$**
              *(iii)*
            **Pension
                service cost**
              **$**
            **Total
                compensation**
              **$**
            **EBITDA**
              **$
                millions**
            **Total
                compensation as % of EBITDA**
              **%****Sylvain
                Allard**
              President
                and Chief Executive Officer
            2007
            1,340,690
            
            812,500
            
            61,399
            
            408,100
            
            2,622,689
            
            181,005
            
            1.45%**Rick
                Davis**
              Senior
                Vice-President and Chief Financial Officer
            2007
            640,308
            
            350,000
            
            58,999
            
            -
            
            1,049,307
            
            181,005
            
            0.58%**Christine
                Baird**
              President,
                Global Operations
            2007
            626,436
            
            165,000
            
            39,520
            
            98,600
            
            929,556
            
            181,005
            
            0.51%**Neil
                Calvert**
              President,
                Heli-One
            2007
            521,067
            
            165,000
            
            59,163
            
            89,600
            
            834,830
            
            181,005
            
            0.46%**Keith
                Mullett**
              Managing
                Director, European Operations
            2007
            445,093
            
            153,085
            
            75,493
            
            76,900
            
            750,571
            
            181,005
            
            0.41%




Notes:


(i)
            Cash
                payments of base salary and STIP
                award.


(ii)
            The
                value of PSUs granted under the LTIP calculated by multiplying the
                number
                of PSUs granted by the grant price which for Fiscal 2007 was $28.12.
                In
                the case of Mr. Davis, no value is ascribed to the SARs granted to
                him during Fiscal 2007 as none of these had vested as of April 30,
                2007.


(iii)
            Includes
                vehicle expenses and allowances, relocation assistance under the
                Corporation’s relocation plans available to employees other then the Named
                Executive Officers and contribution to the
                RPP.





83








The
      remuneration paid to the President and Chief Executive Officer, each person
      who
      served as the Chief Financial Officer of the Corporation at any time during
      the
      year and the other three most highly compensated executive officers (the “Named
      Executive Officers”) for each of the last three years ended April 30 is as
      follows:




**Annual
                    compensation**
                
                **Long-term
                    compensation****Bonus***(i)*
                
                
                
                **Awards****Name
                    and principal position**
                **Year**
                **Salary**
                  **$**
                
                **Operations**
                  **$**
                  *(v)*
                
                **Corporate
                    development**
                  **$**
                  *(iv)*
                
                **Other
                    annual compensation**
                  **$**
                  *(ii)*
                
                **Securities
                    under options/SARs granted**
                  **#**
                
                **All
                    other compensation**
                  **$**
                  *(iii)***Sylvain
                    Allard**
                2007
                650,000
                
                690,690
                
                -
                
                -
                
                -
                
                20,000President
                    & Chief Executive Officer
                2006
                650,000
                
                -
                
                -
                
                -
                
                200,000
                
                19,0002005
                650,000
                
                1,807,000
                
                225,000
                
                -
                
                -
                
                16,500**Jo
                    Mark Zurel**
                2007
                21,000
                
                -
                
                -
                
                -
                
                -
                
                1,060,000Former
                    Senior Vice-President & Chief Financial
                2006
                435,000
                
                -
                
                -
                
                -
                
                100,000
                
                19,000Officer
                2005
                435,000
                
                1,072,000
                
                150,000
                
                -
                
                -
                
                16,500**Rick
                    Davis**
                2007
                350,000
                
                290,308
                
                -
                
                -
                
                55,524
                
                20,000Senior
                    Vice-President & Chief Financial
                2006
                200,000
                
                20,000
                
                -
                
                -
                
                40,000
                
                9,500Officer
                2005
                175,000
                
                74,760
                
                -
                
                -
                
                -
                
                8,250**Christine
                    Baird**
                2007
                339,900
                
                286,536
                
                -
                
                -
                
                -
                
                20,000President,
                    Global Operations
                2006
                330,000
                
                33,000
                
                -
                
                -
                
                60,000
                
                19,0002005
                330,000
                
                161,700
                
                -
                
                -
                
                -
                
                16,500**Neil
                    Calvert**
                2007
                339,900
                
                181,167
                
                -
                
                -
                
                -
                
                20,000President,
                    Heli-One
                2006
                330,000
                
                33,000
                
                -
                
                -
                
                60,000
                
                19,0002005
                330,000
                
                207,075
                
                -
                
                -
                
                -
                
                16,500**Keith
                    Mullett**
                2007
                326,205
                
                111,888
                
                -
                
                -
                
                -
                
                18,920Managing
                    Director, European Operations
                2006
                252,804
                
                108,959
                
                -
                
                -
                
                60,000
                
                15,1662005
                204,762
                
                143,471
                
                -
                
                -
                
                -
                
                10,735




(i)
              Bonuses
                  are shown in the fiscal year to which payments relate.(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
                  2007 and for all except the Executive Chairman in each of the previous
                  two
                  fiscal years. The amounts shown for Mr. Davis in fiscal 2005 are
                  relocation allowance in connection with the move of the Corporation’s head
                  office in fiscal 2005 and vehicle benefits.(iii)
              This
                  consists of Corporation’s contributions to the RPP made on behalf of the
                  Named Executive Officers. For Mr. Zurel, whose employment with the
                  Corporation terminated on May 10, 2006, it includes amounts payable
                  to him upon termination including bonuses, car allowance, and health
                  and
                  dental benefits.(iv)
              These
                  special transaction bonuses (Corporate Development) are related
                  to the
                  acquisition of Schreiner Aviation Group and 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)
              Mr. Davis
                  became Acting Chief Financial Officer on May 10, 2006 and was
                  appointed Senior Vice-President and Chief Financial Officer on
                  September 13, 2006.(vii)
              Mr. Mullett
                  is paid in GBP. The amounts included in the table are the Canadian
                  dollar
                  equivalents converted using the year to date average exchange rate
                  as at
                  April 30 of the relevant year.





84





**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**
              **Period**
            **Estimated
                Future Payouts Under**
              **Non-Securities-Price-Based
                Plans****Name**
            **PSUs
                (#)**
            **Until**
              **Payout**
            **Threshold**
              **($
                or #)**
            **Target**
              **($
                or #)**
            **Maximum**
              **($
                or #)**Sylvain
                Allard
            28,894
            April
                30, 2009
            N/A
            N/A
            N/ARick
                Davis
            12,447
            April
                30, 2009
            N/A
            N/A
            N/AChristine
                Baird
            5,868
            April
                30, 2009
            N/A
            N/A
            N/ANeil
                Calvert
            5,868
            April
                30, 2009
            N/A
            N/A
            N/AKeith
                Mullett
            5,444
            April
                30, 2009
            N/A
            N/A
            N/A







**Employee
      Share Option Plan**




The
      following table provides information as of April 30, 2007 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
      Corporation’s 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
              2,232,922
              
              
              $
                  17.64
              
              10,462Equity
                  compensation plans not approved by security holders
              -
              
              
              -
              
              -Total
              2,232,922
              
              
              $
                  17.64
              
              10,462




As
      at
      August 31, 2007, the number of securities to be issued upon the exercise of
      outstanding options under the Employee Share Option Plan is 2,194,922 being
      4.8%
      of the aggregate number of Class A and Class B shares outstanding.




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




No
      options were granted to the Named Executive Officers during Fiscal
      2007.







85





The
      following table sets out the aggregate number of SARs 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**
            **SARs
                Granted**
              **#**
            **Percent
                of Total SARs Granted to Employees during the year ended April 30,
                2007**
            **Exercise
                Price**
              **($/Security)**
            **Market
                Value of Securities Underlying SARs at the Date of Grant
                ($/Security)**
            **Expiration
                Date**Sylvain
                Allard
            -
            -
            -
            -
            -Rick
                Davis
            55,524
            57.1%
            $22.07
            $22.07
            September
                28, 2016Jo
                Mark Zurel
            -
            -
            -
            -
            -Christine
                Baird
            -
            -
            -
            -
            -Neil
                Calvert
            -
            -
            -
            -
            -Keith
                Mullett
            -
            -
            -
            -
            -







**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, 2007 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, 2007 was $23.15.




**Name**
            **Type
                of Security**
            **Securities
                acquired on exercise**
              **#**
            **Aggregate
                value realized**
              **$**
            **Options
                exercisable (vested) at April 30, 2007**
              **#
                *(i)***
            **Options
                not exercisable (unvested) at April 30, 2007**
              **#
                *(i)***
            **Value
                of all vested unexercised in-the-money options**
              **April
                30, 2007**
              **$**
            **Value
                of all non-vested unexercised in-the-money options**
              **April
                30, 2007**
              **$**Sylvain
                Allard
            Class A
            -
            -
            241,966
            80,000
            7,713,216
            -Rick
                Davis
            Class A
            -
            -
            4,000
            16,000
            -
            -Jo Mark
                Zurel
            Class A
            46,500
            1,052,063
            97,500
            -
            1,469,650
            -Christine
                Baird
            Class A
            -
            -
            12,000
            18,000
            -
            -Neil
                Calvert
            Class A
            -
            -
            12,000
            18,000
            -
            -Keith
                Mullett
            Class A
            -
            -
            18,000
            18,000
            121,080
            -




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








86





**Executive
      Retiring Plan and Retiring Allowance**




Under
      supplementary retirement plan agreements ("SRPs") with the Corporation, the
      Named Executive Officers and former executive, 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 (“CPI”) 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 decided to partially fund the SRP to the 50 percent 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 for
      Mr. Allard is 24.3 years, Mr. Davis is 8.7 years,
      Ms. Baird is 24.8 years, Mr. Calvert is 11.7 years,
      Mr. Mullett is 8.0 years, Mr. Zurel is 14.04 years and
      Mr. Clarke is 14.5 years (inclusive of his 10 years of additional
      service discussed above).




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$
            
            
            $
            
            
            $
            
            
            $
            
            
            $
            
            
            $200,000
            
            
            60,000
            
            
            80,000
            
            
            100,000
            
            
            120,000
            
            
            140,000400,000
            
            
            120,000
            
            
            160,000
            
            
            200,000
            
            
            240,000
            
            
            280,000600,000
            
            
            180,000
            
            
            240,000
            
            
            300,000
            
            
            360,000
            
            
            420,000800,000
            
            
            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
            
            
            1,400,000







87




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, the former 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 was to 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. Mr. Dobbin died in October 2006, prior to
      retirement. The Corporation commenced payment of the Retiring Allowance to
      the
      estate of Craig L. Dobbin of $180,000 per month on November 1, 2006.
      Payments will be made for 240 months. The Retiring Allowance may increase
      based upon annual increases in the 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.




**Employment
      Agreements**




The
      Corporation has entered into employments contracts with each of the Named
      Executive Officers which provide, in effect, that if the Corporation terminates
      the employment of such person for other than just cause, the Corporation shall
      pay to such person a multiple of the person’s base salary plus the average of
      the bonus paid in the last two years of employment. In the case of
      Mr. Allard, the multiple is three and in the case of each of the other
      Named Executive Officers the multiple is two. Mr. Allard’s contract also
      provides that the he may elect to voluntarily terminate his employment within
      180 days following the consummation of a defined change in control of the
      Corporation. Mr. Davis’ contract provides that if his employment as Senior
      Vice-President and Chief Financial Officer of the Corporation is not confirmed
      on substantial the same terms within 180 days following the consummation of
      a defined change in control of the Corporation, he may voluntarily terminate
      his
      employment. In the case of such voluntary termination of employment the person
      is entitled to the benefits described above in the event of termination by
      the
      Corporation and all unvested stock options and SARs shall vest.




**Indebtedness
      of Directors and Officers**




Effective
      July 30, 2002, in connection with section 402 of 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.




The
      following table provides the aggregate indebtedness outstanding at
      August 31, 2007 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)
            $1,206,210
            -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.







88




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.




Name
                and principal position
            Involvement
                of Corporation or subsidiary
            Largest
                amount outstanding during fiscal year 2007
              $
            Amount
                outstanding as at August 31, 2007
              $
            Financially
                assisted securities purchases during fiscal 2007
              #
            Security
                for indebtedness
            Amount
                forgiven during fiscal 2007EXECUTIVE
                SHARE PURCHASE LOANS (A loan program)Sylvain
                Allard
              President
                & Chief Executive Officer, Proposed Nominee Director
            Lender
            277,067
            236,189
            -
            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.
            -Christine
                Baird
              President,
                CHC Global Operations
            Lender
            34,980
            28,021
            -
            A
                first lien on the Class A shares purchased under the
                program
            -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)
            -







**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.







89




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 the Estate of Craig L.
      Dobbin. 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 U.K. regulatory authorities in
      connection with the foreign ownership requirements of European legislation
      applicable to the Corporation’s then U.K. operating subsidiary, Brintel
      Helicopters Limited ("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 was, and each of the
      beneficiaries of his Estate 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
      guaranteed the obligations of each of O.S. Holdings Inc. and Holdco to the
      Corporation and pledged the shares of Holdco owned by him in favour of the
      Corporation as security for such guarantee. As a result of Mr. Dobbin’s
      death, the Corporation's recourse is against his Estate in connection with
      the
      repayment of the loan and such guarantee is limited to the realization of the
      shares of Holdco held by his Estate.




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,
      2007.




**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.




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 commencing on July 1, 2006 and ending on October 15, 2007 on an
      aggregate basis was $648,181.




**Employees**




The
      following table provides employee data at April 30, 2007, 2006 and
      2005.




**Year
                ended April 30****2007**
            
            
            2006
            
            
            2005Administrative,
                support and other personnel
            
            
            1,534
            
            
            
            1,320
            
            
            
            1,450Pilots
            
            
            930
            
            
            
            836
            
            
            
            756Maintenance
                engineers
            
            
            1,353
            
            
            
            1,010
            
            
            
            8833,817
            
            
            
            3,166
            
            
            
            3,089







90




In
      Norway, we have collective agreements in place with pilots, engineers,
      administration personnel and rescuemen. The current agreements are all for
      two years, with the pilot agreement expiring April 30, 2008 and the
      agreements with other groups expiring March 31, 2008 and September 30,
      2008.




In
      the
      UK, we have a collective agreement with our pilots and a separate agreement
      with
      our engineers and other ground staff. The current agreements are both for
      five years and expire on June 30, 2010.




In
      Denmark, we have collective agreements in place with pilots, engineers and
      other
      operations staff. The current agreements are all for three years and expire
      on February 28, 2010.




In
      Ireland, we had collective agreements in place with our pilots, aircrew and
      engineers. The current agreements are all for three years and expire on
      April 30, 2009.




In
      the
      Netherlands, we have two collective agreements with our pilots which expire
      on
      April 30, 2009. The agreement with other personnel expires on
      April 30, 2008.




In
      Australia, we have a collective agreement with our pilots that will expire
      on
      May 1, 2008, a collective agreement with our aircrew which will expire on
      August 21, 2008 and a collective agreement with our engineers which will
      expire August 31, 2008.




We
      also
      have a collective agreement with certain of the employees at Composites that
      expires on October 14, 2008.




Employees
      at our other helicopter operations are not unionized.




**Share
      Ownership**




The
      following table sets out the share ownership and details of the outstanding
      options held by each Named Executive Officer at August 31,
      2007.




Name
            Class
                A
              Shares
            Percent
                of Total
              Class
                A
              Shares
            Options
                (Class A
              Shares)
              *(i)*
            Exercise
                Price of options
            Expiration
                date of optionsSylvain
                Allard
            278,468
            0.697%
            Grant
                1:
            103,216
            
            Grant
                1:
            $  
                4.26
            
            Grant
                1:
            April
                22, 2009Grant
                2:
            118,750
            
            Grant
                2:
            30.70
            
            Grant
                2:
            May
                1, 2012Grant
                3:
            100,000
            
            Grant
                3:
            49.60
            
            Grant
                3:
            June
                29, 2015321,966Rick
                Davis
            2,400
            0.006%
            
            20,000
            
            
            $
                49.60
            
            
            June
                29, 2015Christine
                Baird
            13,160
            0.033%
            
            30,000
            
            
            $
                49.60
            
            
            June
                29, 2015Neil
                Calvert
            2,399
            0.006%
            
            30,000
            
            
            $
                49.60
            
            
            June
                29, 2015Keith
                Mullet
            337
            0.000%
            Grant
                1:
            6,000
            
            Grant
                1:
            $
                30.70
            
            Grant
                1:
            May
                1, 2012Grant
                2:
            30,000
            
            Grant
                2:
            49.60
            
            Grant
                2:
            June
                29, 201536,000




(i)
            Each
                option entitles the holder to receive two Class A
                shares.




ITEM
                7.
            MAJOR
                SHAREHOLDERS AND RELATED PARTY
                TRANSACTIONS




**PRINCIPAL
      SHAREHOLDERS**




As
      at
      August 31, 2007, there were 39,925,256 Class A Subordinate Voting
      Shares, 5,857,560 Class B Multiple Voting Shares and 22,000,000 Ordinary
      Shares issued and outstanding. The Class A Subordinate Voting Shares
      represent 39.6% of the aggregate voting rights attached to the Corporation’s
      voting shares.







91










The
      following table sets forth information regarding beneficial ownership, as of
      August 31, 2007, 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 each class of our voting securities.
      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
              SharesEstate
                of Craig L. Dobbin *(ii)*
            
            
            5,426,462
            
            
            
            5,555,432
            
            
            
            22,000,000
            
            
            
            13.6
            %
            
            
            94.8
            %
            
            
            100.0
            %FMR
                Corp.
            
            
            2,875,800
            
            
            
            -
            
            
            
            -
            
            
            
            7.2
            %
            
            
            -
            
            
            
            -




(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, 2007, 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., a holding company, all of the voting shares of
                which are
                owned by the estate of Craig L. Dobbin (the “Estate”), holds 3,892,540
                Class A shares. All of the Class B shares are beneficially owned
                by the Estate. O.S. Holdings Inc., a holding company, wholly owned
                by the
                Estate, holds all of the ordinary shares. The Estate directly or
                indirectly own shares of the Corporation that collectively carry
                62.8% of
                the votes attached to all of the outstanding shares of the Corporation.
                The shares owned by Discovery Helicopters Inc. collectively represent
                59.0% of the votes attached to all of our outstanding
                shares.




**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 ACN) 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:




**2007**
            
            
            2006
            
            
            2005Revenues
                from ACN
            
            **$**
            **90,256**
            
            
            $
            70,738
            
            
            $
            43,518Direct
                costs
            
            ****
            **432**
            
            
            
            446
            
            
            
            1,298Inventory
                additions
            
            ****
            **-**
            
            
            
            10,679
            
            
            
            -Capital
                asset additions
            
            ****
            **-**
            
            
            
            5,692
            
            
            
            8,160Net
                  amounts receivable and payable in respect of such revenues,
                  expenses and additions
            
            ****
            **25,351**
            
            
            
            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 was subordinated to the Company’s senior
                credit facilities and its senior subordinated notes (see Note 14 to
                our fiscal 2007 audited consolidated financial statements). The loan
                was
                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 (2006 - $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,
                2007.







92




During
        the year ended April 30, 2007, the entire principal balance of the loan was
        converted to Class A subordinate voting shares. As a result, 1,379,310
        Class A shares were issued and the loan and related interest ceased on the
        conversion date. At the date of conversion, the loan had a carrying value
        of
        approximately $4.9 million that was recorded as capital
        stock.




ITEM
                8.
            FINANCIAL
                INFORMATION




FINANCIAL
      STATEMENTS




Financial
      statements are included under Item 17.


**Litigation**
  We
          are
          party to litigation from time to time.  We currently are not party to
          any legal proceedings which management expects will have a material adverse
          effect on the results of operations, business, prospects or financial condition
          of the Company; however, the outcome of any litigation cannot be determined
          with
          certainty.  We have voluntarily self-reported to the Bureau of
          Industry and Security and the Office of Foreign Assets Control that we
          may have
          violated certain U.S. export control laws, which may result in proceedings
          being
          instituted against us by one or both of those agencies; however, we do
          not
          expect that any such proceedings, if instituted, will have a material adverse
          effect on our results of operations, business, prospects or financial
          condition.
  **Dividend
          Policy**
  On
          October 30, 2002 we paid a cash dividend in the amount of $0.20 per
          share on our Class A Subordinate Voting Shares and Class B Multiple
          Voting Shares.  We commenced paying a quarterly dividend on
          October 2, 2003 of $0.125 per share on our Class A Subordinate
          Voting Shares and Class B Multiple Voting Shares.  Commencing
          October 8, 2004 we increased our quarterly dividend from $0.125 to
          $0.150 per share on our Class A Subordinate Voting Shares and
          Class B Multiple Voting Shares.  On April 14, 2005 we
          subdivided our Class A Subordinate Voting Shares and Class B Multiple
          Voting Shares (as well as our Ordinary Shares) on a 2-for-1 basis and the
          quarterly dividend was adjusted accordingly from $0.150 to $0.075 with
          the first
          payment date being May 9, 2005.  The quarterly dividend was
          increased from $0.075 to $0.100 per share during the second quarter of
          fiscal 2006 with the first payment date on November 7, 2005 and from $0.100
          to $0.125 per share in the second quarter of fiscal 2007 with the first
          payment date on November 6, 2006.  Subject to financial results
          and declaration by the Board of Directors, we currently intend to continue
          to
          declare and pay a regular quarterly dividend in such amount per share on
          our
          Class A Subordinate Voting Shares and Class B Multiple Voting Shares,
          and declared and announced such a quarterly dividend on September 12,
          2007.
  The
          timing and amount of dividends, if any, will depend, among other things,
          on our
          results of operations, financial condition, cash requirements, restrictions
          in
          financing agreements and other factors deemed relevant by our Board of
          Directors.






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, 2007, seven
      registered holders of record in the United States held 5,678,530
      Class A Subordinate Voting Shares (or 14.2% 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.




**Class
                A Subordinate Voting Shares**
            
            
            **Class
                B Multiple Voting Shares****High**
            
            
            **Low**
            
            
            **Volume**
            
            
            **High**
            
            
            **Low**
            
            
            **Volume****Fiscal
                2007**First
                quarter
            
            $
            28.50
            
            
            $
            23.65
            
            
            
            7,662,870
            
            
            $
            28.30
            
            
            $
            24.88
            
            
            
            6,750Second
                quarter
            
            
            26.10
            
            
            
            21.06
            
            
            
            5,945,693
            
            
            
            26.99
            
            
            
            21.78
            
            
            
            8,336Third
                quarter
            
            
            26.69
            
            
            
            22.63
            
            
            
            5,743,981
            
            
            
            26.00
            
            
            
            24.30
            
            
            
            13,117Fourth
                quarter
            
            
            25.45
            
            
            
            21.86
            
            
            
            8,442,500
            
            
            
            25.60
            
            
            
            23.00
            
            
            
            5,940**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







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**2003
            
            $
            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
            
            
            
            29,6002007
            
            
            28.50
            
            
            
            21.06
            
            
            
            27,795,044
            
            
            
            28.30
            
            
            
            21.78
            
            
            
            34,143










93










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
                2007
            
            $
            24.45
            
            
            $
            21.86
            
            
            
            3,311,859
            
            
            $
            25.10
            
            
            $
            23.63
            
            
            
            700April
                2007
            
            
            24.05
            
            
            
            22.40
            
            
            
            2,849,313
            
            
            
            23.63
            
            
            
            23.00
            
            
            
            1,500May
                2007
            
            
            26.54
            
            
            
            23.13
            
            
            
            2,898,543
            
            
            
            26.35
            
            
            
            23.81
            
            
            
            4,300June
                2007
            
            
            28.33
            
            
            
            23.16
            
            
            
            5,399,615
            
            
            
            27.70
            
            
            
            24.34
            
            
            
            2,400July
                2007
            
            
            29.88
            
            
            
            27.33
            
            
            
            4,062,967
            
            
            
            29.70
            
            
            
            27.70
            
            
            
            1,100August
                2007
            
            
            29.98
            
            
            
            25.04
            
            
            
            3,718,755
            
            
            
            30.00
            
            
            
            26.00
            
            
            
            4,000







On
      August 31, 2007 the closing price of our Class A Subordinate Voting
      Shares on the TSX was $25.50.




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.




**High**
            
            
            **Low**
            
            
            **Volume****Fiscal
                2007**First
                quarter
            
            $
            25.60
            
            
            $
            21.25
            
            
            
            757,300Second
                quarter
            
            
            23.25
            
            
            
            18.66
            
            
            
            1,024,500Third
                quarter
            
            
            23.37
            
            
            
            19.25
            
            
            
            874,000Fourth
                quarter
            
            
            21.60
            
            
            
            18.65
            
            
            
            787,981**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







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.




**High**
            
            
            **Low**
            
            
            **Volume**2003
            
            $
            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
            
            
            
            3,139,1002007
            
            
            25.60
            
            
            
            18.65
            
            
            
            3,443,781










94




**High**
            
            
            **Low**
            
            
            **Volume**March
                2007
            
            $
            20.83
            
            
            $
            18.65
            
            
            
            257,600April
                2007
            
            
            21.04
            
            
            
            20.03
            
            
            
            110,400May
                2007
            
            
            24.58
            
            
            
            20.89
            
            
            
            362,000June
                2007
            
            
            26.66
            
            
            
            21.65
            
            
            
            813,100July
                2007
            
            
            28.46
            
            
            
            25.87
            
            
            
            471,400August
                2007
            
            
            28.30
            
            
            
            23.65
            
            
            
            772,800




The
      closing price of our Class A Subordinate Voting Shares on August 31,
      2007 as reported on the NYSE was US $24.20.






ITEM
                10.
            ADDITIONAL
                INFORMATION




**ARTICLES
      OF AMALGAMATION AND BY-LAWS**




The
      Company was formed by amalgamation under the Canada Business Corporations Act
      and its corporation number is 222233-7. The Articles of Amalgamation (the
“Articles”) do not provide for any specific persons or objects, rather the
      Company may exercise all the power of a natural person except where specifically
      limited in the Articles. The Articles contain no such restriction.




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. 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.







95





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 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.




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.




**MATERIAL
      CONTRACTS**




We
      have
      not entered into any material contracts other than those in the normal course
      of
      business.




**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.







96




**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 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.




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, 2007, we maintained operations in the
      UK, Norway, the Netherlands, South Africa, Australia, Brazil 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.







97





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, 2007 follow.




**FOREIGN
      CURRENCY EXCHANGE RATE RISK**




A
      10%
      change in the exchange rate of the US dollar, euro, pound sterling, Norwegian
      kroner and Brazilian real against the Canadian dollar, with all other variables
      remaining constant, would have resulted in a $67.6 million change in the
      fair market value of our long-term debt at April 30, 2007. Our euro and
      pound sterling debt are designated as hedges of our net investments in foreign
      operations in the Netherlands and the UK. 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.




Due
      to
      the fact that a significant portion of our business activities are denominated
      in foreign currencies, a change in these currencies against the Canadian dollar
      can have a significant impact on our revenue, operating income and net earnings.
      It is estimated that a 1% change in all currencies against the Canadian dollar
      would have the following approximate impacts: revenue - $14 million,
      operating income - $3 million and net earnings - $2 million
      ($0.04 per share, diluted). We continue to mitigate this impact to the
      extent possible through our hedging programs.




**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. A 1% change in variable interest rates on long-term debt, with
      all
      other variables remaining constant, would result in a $2.8 million change
      in interest expense for the year ended April 30, 2007. 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
      $7.0 million change in lease expense for the year ended April 30,
      2007.




**EQUITY
      PRICE RISK**




As
      of
      April 30, 2007, 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.







98





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




**DISCLOSURE
      CONTROLS AND PROCEDURES**




The
      Company’s management, with the participation of its Chief Executive Officer and
      Chief Financial Officer, have evaluated the effectiveness of the Company’s
      disclosure controls and procedures. Based upon the results of that evaluation,
      the Company’s Chief Executive Officer and Chief Financial Officer have concluded
      that, as of April 30, 2007, the Company’s disclosure controls and
      procedures were effective to provide reasonable assurance that the information
      required to be disclosed by the Company in reports it files is recorded,
      processed, summarized and reported within the appropriate time periods and
      forms.




**INTERNAL
      CONTROL OVER FINANCIAL REPORTING**




The
      Company’s management, under the supervision of the Audit Committee and its Chief
      Executive Officer and Chief Financial Officer, are responsible for establishing
      and maintaining adequate internal control over financial reporting. The
      Company’s internal control over financial reporting is a process designed to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles (“GAAP”). The Company’s controls
      include policies and procedures that:




•
            Pertain
                to the maintenance of records that, in reasonable detail, accurately
                and
                fairly reflect the transactions and dispositions of the assets of
                the
                Company;




•
            Provide
                reasonable assurance that transactions are recorded as necessary
                to permit
                preparation of financial statements in accordance with generally
                accepted
                accounting principles, and receipts and expenditures of the Company
                are
                made only in accordance with authorizations of management and the
                directors of the Company; and




•
            Provide
                reasonable assurance regarding prevention or timely detection of
                unauthorized acquisition, use or disposition of the Company’s assets that
                could have a material effect on the annual financial statements or
                interim
                financial statements.




There
      have been no significant changes in the Company’s internal controls over
      financial reporting during the most recent interim period that has materially
      affected, or is reasonably likely to materially affect, the Company’s internal
      control over financial reporting.







99





**LIMITATIONS
      OF CONTROLS AND PROCEDURES**




The
      Company’s management, including the Chief Executive Officer and Chief Financial
      Officer, believe that any disclosure controls and procedures or internal
      controls over financial reporting, no matter how well conceived and operated,
      can provide only reasonable, not absolute, assurance that the objectives of
      the
      control 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, they cannot provide absolute assurance that all control issues
      and instances of fraud, if any, within the Company have been prevented or
      detected. These inherent limitations include the realities that judgements
      in
      decision-making can be faulty, and that breakdowns can occur because of a 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 unauthorized
      override of the control. The design of any systems of controls also is based
      in
      part upon 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. Accordingly, because of the inherent
      limitations in a cost effective control system, misstatements due to error
      or
      fraud may occur and not be detected.




**REPORTS
      ON INTERNAL CONTROL OVER FINANCIAL REPORTING**




Management’s
      Report on Internal Control Over Financial Reporting can be found on
      page 103 of this Annual Report on Form 20-F. The Company’s independent
      auditors, Ernst & Young LLP, a registered public accounting firm has audited
      the accompanying annual consolidated financial statements for fiscal 2007,
      the
      Company’s internal control over financial reporting, and management’s assessment
      that it maintained effective internal control over financial reporting. Their
      attestation report on management’s assessment of the effectiveness of the
      Company’s internal control over financial reporting can be found on
      page 105 of this Annual Report on Form 20-F.






ITEM
                16A.
            AUDIT
                COMMITTEE FINANCIAL EXPERT




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




ITEM
                16B.
            CODE
                OF ETHICS




The
      Corporation has adopted a Code of Ethics which 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 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 is available on our website at
      *www.chc.ca* and in print from us upon request.




ITEM
                16C.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES




For
      the
      years ended April 30, 2007 and 2006, 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:




2007
            
            
            2006($ millions)Audit
                Fees
            
            $
            4.1
            
            
            $
            2.4Audit-Related
                Fees
            
            
            0.2
            
            
            
            0.1Tax
                Fees
            
            
            0.9
            
            
            
            0.9All
                Other Fees
            
            
            0.1
            
            
            
            -Total
            
            $
            5.3
            
            
            $
            3.4










100




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 fiscal 2006 and 2007 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 company
      legislation or where such audits are required under other agreements. In fiscal
      2007 audit services included the provision of services in connection with
      expressing an opinion on management’s assessment of internal control over
      financial reporting together with E&Y’s assessment of our internal control
      over financial reporting.




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 incurred 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 incurred with E&Y in connection with
      ongoing tax planning and other initiatives being considered by us.




All
      Other Fees - includes fees for services which are not audit, audit-related,
      or
      tax services, but which are not prohibited 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 2007 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.







101





PART
      III




ITEM
                17.
            FINANCIAL
                STATEMENTS




The
      financial statements and supplementary information required to be filed under
      this item are presented on pages 102 through 162 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
      July 31, 2007.




**Contents**
            
            **Page**MANAGEMENT’S
                REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
            
            
            103REPORT
                OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL
                STATEMENTS
            
            
            104REPORT
                OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROLS
                (UNDER THE STANDARDS OF THE PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD
                (UNITED STATES))
            
            
            105CONSOLIDATED
                BALANCE SHEETS
            
            
            107CONSOLIDATED
                STATEMENTS OF EARNINGS
            
            
            108CONSOLIDATED
                STATEMENTS OF SHAREHOLDERS’ EQUITY
            
            
            109CONSOLIDATED
                STATEMENTS OF CASH FLOWS
            
            
            110NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS
            
            
            111





102




MANAGEMENT’S
      REPORT ON INTERNAL
      CONTROL OVER FINANCIAL REPORTING




Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting. Internal control over financial reporting is a process
      designed by, or under the supervision of, the President & Chief Executive
      Officer and the Senior Vice-President & Chief Financial Officer and effected
      by the Board of Directors, management and other personnel to provide reasonable
      assurance regarding the reliability of financial reporting and the preparation
      of financial statements for external purposes in accordance with generally
      accepted accounting principles. It includes those policies and procedures
      that:




*(a)*
            Pertain
                to the maintenance of records that, in reasonable detail, accurately
                and
                fairly reflect the transactions and dispositions of the assets of
                the
                Company;




*(b)*
            Provide
                reasonable assurance that transactions are recorded as necessary
                to permit
                preparation of financial statements in accordance with generally
                accepted
                accounting principles, and that receipts and expenditures of the
                Company
                are made only in accordance with authorizations of management and
                the
                directors of the Company; and




*(c)*
            Provide
                reasonable assurance regarding prevention or timely detection of
                unauthorized acquisition, use, or disposition of the Company’s assets that
                could have a material effect on the financial
                statements.




We
      have
      excluded from our assessment the internal control over financial reporting
      at
      BHS - Brazilian Helicopter Services Taxi Aereo S.A. (“BHS”) which was acquired
      on March 8, 2007 as described in Note 11 of the notes to our audited
      consolidated financial statements for the year ended April 30, 2007. BHS’
total and net assets and total revenues represented $58 million (2.8%),
      $25 million (4.4%) and $6 million (0.5%), respectively, of the
      corresponding financial statement amounts as of, and for the year ended,
      April 30, 2007. The net loss of BHS included in consolidated net income was
      $0.3 million (0.7%) for the year ended April 30, 2007.




Internal
      control over financial reporting cannot provide absolute assurance of achieving
      financial reporting objectives because of its inherent limitations. Internal
      control over financial reporting is a process that involves human diligence
      and
      compliance and is subject to lapses in judgment and breakdowns resulting from
      human failures. Internal control over financial reporting also can be
      circumvented by collusion or improper overrides. Because of such limitations,
      there is a risk that material misstatements may not be prevented or detected
      on
      a timely basis by internal control over financial reporting. However, these
      inherent limitations are known features of the financial reporting process,
      and
      it is possible to design into the process safeguards to reduce, though not
      eliminate, this risk. Also, projections of any evaluation of the effectiveness
      of internal control over financial reporting to future periods are subject
      to
      the risk that the controls may become inadequate because of changes in
      conditions, or that the degree of compliance with the policies or procedures
      may
      deteriorate.




Management
      assessed the effectiveness of the Company’s internal controls over financial
      reporting as of April 30, 2007, based on the criteria set forth in
*Internal Control - Integrated framework* issued by the Committee of
      Sponsoring Organizations of the Treadway Commission. Based on this assessment,
      management believes that, as of April 30 2007, the Company’s internal
      control over financial reporting was effective.




Management’s
      assessment of the effectiveness of the Company’s internal controls over
      financial reporting as of April 30, 2007, has been audited by Ernst &
Young LLP, the independent auditors, who also audited the Company’s consolidated
      financial statements for the year ended April 30, 2007. As stated in the
      Report of Independent Registered Public Accounting Firm on Internal Controls,
      they have expressed an unqualified opinion on management’s assessment of the
      Company’s internal control over financial reporting and an unqualified opinion
      on the effectiveness of the Company’s internal control over financial reporting
      as of April 30, 2007.




Sylvain
                Allard, MBA
              President
                and Chief Executive Officer
            Rick
                Davis, CA
              Senior
                Vice President and Chief Financial
                Officer


Vancouver,
      Canada


September
      17, 2007





103





REPORT
      OF INDEPENDENT REGISTERED
      PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENTS




To
      the
      Board of Directors and Shareholders of CHC Helicopter Corporation




We
      have
      audited the consolidated balance sheets of CHC Helicopter Corporation as at
      April 30, 2007 and 2006 and the consolidated statements of earnings,
      shareholders’ equity and cash flows for each of the years in the three-year
      period ended April 30, 2007. 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. An audit includes examining, on a test basis, evidence
      supporting the amounts and disclosures in the financial statements. An audit
      also includes assessing the accounting principles used and significant estimates
      made by management, as well as evaluating the overall financial statement
      presentation. We believe 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, 2007 and
      2006 and the results of its operations and its cash flows for each of the years
      in the three-year period ended April 30, 2007 in accordance with Canadian
      generally accepted accounting principles.




We
      have
      also audited, in accordance with the Standards of the Public Company Accounting
      Oversight Board (United States), the effectiveness of the Company’s
      internal control over financial reporting as of April 30, 2007 based on
      criteria established in Internal Control-Integrated Framework issued by the
      Committee of Sponsoring Organizations of the Treadway Commission and our report
      dated July 26, 2007 (except for internal control over financial reporting
      related to Notes 33 and 34(b) of the 2007 consolidated financial statements
      as to which the date is September 17, 2007) expressed an unqualified
      opinion thereon.










Chartered
      Accountants


Vancouver,
      Canada


July 26,
      2007 (except for Notes 33 and 34(b), as to which the date is
      September 17, 2007)







104





REPORT
      OF INDEPENDENT REGISTERED
      PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROLS


(UNDER
      THE STANDARDS OF THE PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD (UNITED
      STATES))




To
      the
      Board of Directors and Shareholders of CHC Helicopter Corporation




We
      have
      audited management’s assessment, included in the accompanying Management’s
      Report on Internal Control over Financial Reporting, that CHC Helicopter
      Corporation maintained effective internal control over financial reporting
      as of
      April 30, 2007, based on criteria established in Internal
      Control-Integrated Framework issued by the Committee of Sponsoring Organizations
      of the Treadway Commission (the COSO criteria). CHC Helicopter Corporation’s
      management is responsible for maintaining effective internal control over
      financial reporting and for its assessment of the effectiveness of internal
      control over financial reporting. Our responsibility is to express an opinion
      on
      management’s assessment and an opinion on the effectiveness of the company’s
      internal control over financial reporting based on our audit.




We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan and perform the audit to obtain reasonable assurance about whether
      effective internal control over financial reporting was maintained in all
      material respects. Our audit included obtaining an understanding of internal
      control over financial reporting, evaluating management’s assessment, testing
      and evaluating the design and operating effectiveness of internal control,
      and
      performing such other procedures as we considered necessary in the
      circumstances. We believe that our audit provides a reasonable basis for our
      opinion.




A
      company’s internal control over financial reporting is a process designed to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles. A company’s internal control over
      financial reporting includes those policies and procedures that (1) pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the company;
      (2) provide reasonable assurance that transactions are recorded as
      necessary to permit preparation of financial statements in accordance with
      generally accepted accounting principles, and that receipts and expenditures
      of
      the company are being made only in accordance with authorizations of management
      and directors of the company; and (3) provide reasonable assurance
      regarding prevention or timely detection of unauthorized acquisition, use,
      or
      disposition of the company’s assets that could have a material effect on the
      financial statements.




Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.




As
      indicated in the accompanying Management’s Report on Internal Control over
      Financial Reporting, management’s assessment of and conclusion on the
      effectiveness of internal control over financial reporting did not include
      the
      internal controls of BHS - Brazilian Helicopter Services Taxi Aero S.A., which
      is included in the April 30, 2007 consolidated financial statements of CHC
      Helicopter Corporation and constituted $58 million (2.8%) and
      $25 million (4.4%) of total and net assets, respectively, as of
      April 30, 2007 and $6 million (0.5%) of revenues for the year then
      ended. The net loss of BHS - Brazilian Helicopter Services Taxi Aero S.A.
      included in CHC Helicopter Corporation’s consolidated net income was
      $0.3 million (0.7%) for the year ended April 30, 2007. Our audit of
      internal control over financial reporting of CHC Helicopter Corporation also
      did
      not include an evaluation of the internal control over financial reporting
      of
      BHS - Brazilian Helicopter Services Taxi Aero S.A.







105





In
      our
      opinion, management’s assessment that CHC Helicopter Corporation maintained
      effective internal control over financial reporting as of April 30, 2007,
      is fairly stated, in all material respects, based on the COSO criteria. Also,
      in
      our opinion, CHC Helicopter Corporation maintained, in all material respects,
      effective internal control over financial reporting as of April 30, 2007,
      based on the COSO criteria.




We
      also
      have audited, in accordance with Canadian generally accepted auditing standards
      and the standards of the Public Company Accounting Oversight Board
      (United States), the consolidated balance sheets of CHC Helicopter
      Corporation as at April 30, 2007 and 2006 and the consolidated statements
      of earnings, shareholders’ equity and cash flows for each of the years in the
      three-year period ended April 30, 2007 and our report dated July 26,
      2007 (except for Notes 33 and 34(b), as to which the date is
      September 17, 2007) expressed an unqualified opinion thereon.










Chartered
      Accountants


Vancouver,
      Canada


July 26,
      2007 (except for internal control over financial reporting related to
      Notes 33 and 34(b) of the 2007 consolidated financial statements as to
      which the date is September 17, 2007)





106





CHC
        Helicopter Corporation


CONSOLIDATED
      BALANCE SHEETS


As
      at
      April 30 (in thousands of Canadian dollars)


Incorporated
      under the laws of Canada




**2007**
            
            
            2006**Assets
                *(Note 14)***Current
                assetsCash
                and cash equivalents*(Note 6)*
            
            **$**
            **89,511**
            
            
            $
            26,331Receivables
                *(Note 7)*
            
            ****
            **277,767**
            
            
            
            246,217Future
                income tax assets *(Note 22)*
            
            ****
            **32,169**
            
            
            
            26,859Inventory
            
            ****
            **126,315**
            
            
            
            91,884Prepaid
                expenses
            
            ****
            **55,121**
            
            
            
            10,619Assets
                of discontinued operations *(Note 5)*
            
            ****
            **3,961**
            
            
            
            3,857****
            **584,844**
            
            
            
            405,767Property
                and equipment, net *(Note 8)*
            
            ****
            **1,092,664**
            
            
            
            919,364Investments
                *(Note 9)*
            
            ****
            **7,478**
            
            
            
            5,422Intangible
                assets *(Note 10)*
            
            ****
            **17,874**
            
            
            
            640Goodwill
                *(Note 11)*
            
            ****
            **55,276**
            
            
            
            1,224Other
                assets *(Note 12)*
            
            ****
            **290,936**
            
            
            
            296,352Future
                income tax assets *(Note 22)*
            
            ****
            **34,678**
            
            
            
            39,848Assets
                of discontinued operations *(Note 5)*
            
            ****
            **18,469**
            
            
            
            17,465**$**
            **2,102,219**
            
            
            $
            1,686,082**Liabilities
                and shareholders’ equity**Current
                liabilitiesPayables
                and
                accruals
            
            **$**
            **340,912**
            
            
            $
            227,646Deferred
                revenue
            
            ****
            **2,057**
            
            
            
            2,608Dividends
                payable
            
            ****
            **11,241**
            
            
            
            8,548Income
                taxes payable
            
            ****
            **7,498**
            
            
            
            7,018Future
                income tax liabilities *(Note 22)*
            
            ****
            **9,813**
            
            
            
            8,852Current
                portion of debt obligations *(Note 14(a))*
            
            ****
            **333,728**
            
            
            
            24,948Liabilities
                of
                discontinued operations *(Note 5)*
            
            ****
            **2,979**
            
            
            
            4,037****
            **708,228**
            
            
            
            283,657Long-term
                debt *(Note 14(a))*
            
            ****
            **64,168**
            
            
            
            150,982Senior
                subordinated notes *(Note 14(b))*
            
            ****
            **442,680**
            
            
            
            448,120Other
                liabilities *(Note 16)*
            
            ****
            **139,791**
            
            
            
            132,431Future
                income tax liabilities *(Note 22)*
            
            ****
            **193,172**
            
            
            
            176,708Liabilities
                of discontinued operations *(Note 5)*
            
            ****
            **2,900**
            
            
            
            3,450Shareholders’
                equity
            
            ****
            **551,280**
            
            
            
            490,734**$**
            **2,102,219**
            
            
            $
            1,686,082




Commitments,
      Guarantees, and Contingencies *(Notes 14, 26, 28 and
      29)*




On
      behalf of the Board:




Mark
                Dobin
              Chairman
            Jack
                M. Mintz, Ph.D.
              Director




See
      accompanying notes







107





CHC
        Helicopter Corporation


CONSOLIDATED
      STATEMENTS OF EARNINGS


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




**2007**
            
            
            2006
            
            
            2005**Revenue*(Note
                31(a))***
            
            **$**
            **1,149,107**
            
            
            $
            997,087
            
            
            $
            954,242Direct
                costs
            
            ****
            **(924,714**
            **)**
            
            
            (788,501
            )
            
            
            (732,738
            )General
                and administration
                costs
            
            ****
            **(43,388**
            **)**
            
            
            (27,895
            )
            
            
            (35,279
            )Amortization
            
            ****
            **(65,303**
            **)**
            
            
            (55,470
            )
            
            
            (50,184
            )Restructuring
                (costs) recovery*(Note
                15)*
            
            ****
            **2,341**
            
            
            
            (16,150
            )
            
            
            (17,390
            )Gain
                (loss) on disposals of
                assets
            
            ****
            **(2,987**
            **)**
            
            
            (5
            )
            
            
            4,129Fair
                value adjustment*(Note
                5)*
            
            ****
            **-**
            
            
            
            -
            
            
            
            (14,260
            )**Operating
                income**
            
            ****
            **115,056**
            
            
            
            109,066
            
            
            
            108,520Debt
                settlement costs*(Note
                14(e))*
            
            ****
            **-**
            
            
            
            -
            
            
            
            (2,017
            )Financing
                charges*(Note
                14(d))*
            
            ****
            **(58,296**
            **)**
            
            
            (52,974
            )
            
            
            (37,428
            )**Earnings
                    from continuing operations before**income taxes and undernoted
                    items
            
            ****
            **56,760**
            
            
            
            56,092
            
            
            
            69,075Gain
                on sale of long-term
                investments*(Note
                9)*
            
            ****
            **-**
            
            
            
            37,558
            
            
            
            -Equity
                    in
                    earnings of associated companies and non-controlling
                    interest
            
            ****
            **1,053**
            
            
            
            6,564
            
            
            
            5,192Income
                tax provision*(Note
                22)*
            
            ****
            **(16,826**
            **)**
            
            
            (10,509
            )
            
            
            (27,338
            )**Net
                earnings from continuing
                operations**
            
            ****
            **40,987**
            
            
            
            89,705
            
            
            
            46,929Net
                earnings from discontinued
                operations*(Note
                5)*
            
            ****
            **2,167**
            
            
            
            1,005
            
            
            
            9,590**Net
                earnings before extraordinary
                item**
            
            ****
            **43,154**
            
            
            
            90,710
            
            
            
            56,519Extraordinary
                item, net of tax*(Note
                11(b))*
            
            ****
            **810**
            
            
            
            -
            
            
            
            -**Net
                earnings**
            
            **$**
            **43,964**
            
            
            $
            90,710
            
            
            $
            56,519Earnings
                per share*(Note
                23)*BasicNet
                earnings from continuing
                operations
            
            **$**
            **0.97**
            
            
            $
            2.14
            
            
            $
            1.12Net
                earnings from discontinued
                operations
            
            ****
            **0.05**
            
            
            
            0.02
            
            
            
            0.23Extraordinary
                item
            
            ****
            **0.02**
            
            
            
            -
            
            
            
            -Net
                earnings
            
            ****
            **1.04**
            
            
            
            2.16
            
            
            
            1.35DilutedNet
                earnings from continuing
                operations
            
            **$**
            **0.90**
            
            
            $
            1.95
            
            
            $
            1.03Net
                earnings from discontinued
                operations
            
            ****
            **0.05**
            
            
            
            0.02
            
            
            
            0.20Extraordinary
                item
            
            ****
            **0.02**
            
            
            
            -
            
            
            
            -Net
                earnings
            
            ****
            **0.97**
            
            
            
            1.97
            
            
            
            1.23




See
      accompanying notes







108





CHC
        Helicopter Corporation


CONSOLIDATED
      STATEMENTS OF SHAREHOLDERS’ EQUITY


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




**2007**
            
            
            2006
            
            
            2005**Retained
                earnings, beginning of
                year**
            
            ****
            **312,481**
            
            
            
            238,854
            
            
            
            195,140Net
                earnings
            
            ****
            **43,964**
            
            
            
            90,710
            
            
            
            56,519Dividends
            
            ****
            **(21,912**
            **)**
            
            
            (17,083
            )
            
            
            (12,805
            )**Retained
                earnings, end of
                year**
            
            ****
            **334,533**
            
            
            
            312,481
            
            
            
            238,854Capital
                stock*(Note
                17)*
            
            ****
            **252,505**
            
            
            
            240,152
            
            
            
            239,469Contributed
                surplus*(Note
                17)*
            
            ****
            **5,042**
            
            
            
            4,363
            
            
            
            3,291Foreign
                currency translation
                adjustment*(Note
                20)*
            
            ****
            **(40,800**
            **)**
            
            
            (66,262
            )
            
            
            (21,471
            )**Total
                shareholders’
                equity**
            
            **$**
            **551,280**
            
            
            $
            490,734
            
            
            $
            460,143**Dividends
                declared per
                participating voting share**
            
            **$**
            **0.50**
            
            
            $
            0.40
            
            
            $
            0.30




See
      accompanying notes







109





CHC
        Helicopter Corporation


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


Year
      ended April 30 (in thousands of Canadian dollars)




**2007**
              
              
              2006
              
              
              2005**Operating
                  activities**Net
                  earnings from continuing
                  operations
              
              **$**
              **40,987**
              
              
              $
              89,705
              
              
              $
              46,929Operating
                  items not involving
                  cash:Amortization
              
              ****
              **65,303**
              
              
              
              55,470
              
              
              
              50,184Loss
                  (gain) on
                  disposals of assets and long-term investments
              
              ****
              **2,987**
              
              
              
              (37,553
              )
              
              
              (4,129
              )Equity
                  earnings
                  of associated companies and non-controlling
                  interest
              
              ****
              **(1,053**
              **)**
              
              
              (6,564
              )
              
              
              (5,192
              )Income
                  taxes
              
              ****
              **5,256**
              
              
              
              2,611
              
              
              
              18,976Defined
                  benefit
                  pension plans
              
              ****
              **887**
              
              
              
              (2,015
              )
              
              
              (13,280
              )Amortization
                  of
                  contract credits and deferred gains
              
              ****
              **(15,293**
              **)**
              
              
              (15,616
              )
              
              
              (14,103
              )Prepaid
                  aircraft rental
              
              ****
              **(15,326**
              **)**
              
              
              (1,453
              )
              
              
              (7,513
              )Claims
                  reserve
              
              ****
              **(5,141**
              **)**
              
              
              3,408
              
              
              
              -Deferred
                  revenue
              
              ****
              **(685**
              **)**
              
              
              6,083
              
              
              
              (6,618
              )Long-term
                  receivables from BHS - Brazilian Helicopter Services Taxi Aereo
                  Ltda.
                  prior to acquisition
              
              ****
              **(17,324**
              **)**
              
              
              -
              
              
              
              -Other
              
              ****
              **2,819**
              
              
              
              (6,957
              )
              
              
              13,382****
              **63,417**
              
              
              
              87,119
              
              
              
              78,636Change
                  in non-cash working capital*(Note
                  24)*
              
              ****
              **(37,199**
              **)**
              
              
              (55,020
              )
              
              
              22,726Cash
                  flow from
                  operations
              
              ****
              **26,218**
              
              
              
              32,099
              
              
              
              101,362**Financing
                  activities**Long-term
                  debt
                  proceeds
              
              ****
              **386,889**
              
              
              
              595,345
              
              
              
              384,684Long-term
                  debt
                  repayments
              
              ****
              **(166,344**
              **)**
              
              
              (497,089
              )
              
              
              (242,927
              )Dividends
                  paid
              
              ****
              **(19,211**
              **)**
              
              
              (14,939
              )
              
              
              (11,596
              )Capital
                  stock
                  issued
              
              ****
              **6,297**
              
              
              
              496
              
              
              
              907Other
              
              ****
              **(379**
              **)**
              
              
              (7,338
              )
              
              
              (7,488
              )****
              **207,252**
              
              
              
              76,475
              
              
              
              123,580**Investing
                  activities**Property
                  and equipment
                  additions
              
              ****
              **(393,246**
              **)**
              
              
              (280,701
              )
              
              
              (234,742
              )Helicopter
                  major
                  inspections
              
              ****
              **(30,066**
              **)**
              
              
              (23,612
              )
              
              
              (15,539
              )Proceeds
                  from disposal of assets
                  and long-term investments
              
              ****
              **318,320**
              
              
              
              313,694
              
              
              
              90,925Junior
                  loans
                  receivable
              
              ****
              **(17,809**
              **)**
              
              
              481
              
              
              
              -Aircraft
                  deposits
              
              ****
              **(46,683**
              **)**
              
              
              (124,990
              )
              
              
              (52,983
              )Restricted
                  cash
              
              ****
              **6,835**
              
              
              
              (5,565
              )
              
              
              (5,323
              )Investments
                  in subsidiaries, net
                  of cash acquired
              
              ****
              **-**
              
              
              
              (1,123
              )
              
              
              (17,984
              )Advances
                  to BHS - Brazilian
                  Helicopter Services Taxi Aereo Ltda. prior to
                  acquisition
              
              ****
              **(1,780**
              **)**
              
              
              (3,892
              )
              
              
              -Cash
                  on acquisition of BHS -
                  Brazilian Helicopter Services Taxi Aereo Ltda., net of acquisition
                  costs
              
              ****
              **1,674**
              
              
              
              -
              
              
              
              -Other
              
              ****
              **(6,524**
              **)**
              
              
              1,555
              
              
              
              (7,075
              )****
              **(169,279**
              **)**
              
              
              (124,153
              )
              
              
              (242,721
              )Effect
                  of exchange rate changes on
                  cash and cash equivalents
              
              ****
              **(150**
              **)**
              
              
              (10,623
              )
              
              
              (3,828
              )Cash
                  provided by (used in)
                  continuing operations
              
              ****
              **64,041**
              
              
              
              (26,202
              )
              
              
              (21,607
              )Cash
                  (used in) provided by
                  discontinued operations*(Note
                  5)*
              
              ****
              **(861**
              **)**
              
              
              1,142
              
              
              
              11,919Change
                  in cash and cash
                  equivalents during the year
              
              ****
              **63,180**
              
              
              
              (25,060
              )
              
              
              (9,688
              )**Cash
                  and cash equivalents,
                  beginning of year**
              
              ****
              **26,331**
              
              
              
              51,391
              
              
              
              61,079**Cash
                  and cash equivalents, end of
                  year**
              
              **$**
              **89,511**
              
              
              $
              26,331
              
              
              $
              51,391







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






110





CHC
        Helicopter Corporation


NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS


April 30,
      2007, 2006 and 2005


(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, Canada, and more
      recently, Brazil. 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 (“EMS/SAR”) 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 the current year’s
      presentation of the results of Survival-One Limited (“Survival-One”) in
      discontinued operations. The comparative consolidated balance sheet, statements
      of earnings and cash flows have been reclassified to reflect the results of
      Survival-One in discontinued operations (Note 5).




*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.




111







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







*Allowance
      for doubtful accounts*




The
      Company maintains an allowance for doubtful accounts against its trade
      receivables for estimated losses that may arise if its customers are unable
      to
      make required payments. Management specifically analyzes the age of outstanding
      customer balances, historical bad debts, customer credit worthiness and payment
      history when making estimates of the uncollectibility of the Company’s trade
      receivables, loans and other accounts receivable. When all or part of a trade
      receivable is known to be uncollectible, the trade receivable and related
      allowance are written off. Amounts subsequently recovered from trade receivables
      previously considered uncollectible and written off are recorded in income
      as an
      expense recovery in the period that the cash is collected.




*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.






112





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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










*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 tested for impairment when an event or change in circumstances
      indicate that their carrying value may not be recoverable.




*Goodwill*




Goodwill
      is the excess of the cost of an acquired enterprise over the net of the amounts
      assigned to assets acquired and liabilities assumed. Goodwill is not amortized.
      It is tested for impairment annually or more frequently if events or changes
      in
      circumstances indicate that it is impaired. Goodwill is allocated to a reporting
      unit and any potential goodwill impairment is identified by comparing the
      carrying amount of the reporting unit with its fair value. If any potential
      impairment is identified, it is quantified by comparing the carrying amount
      of
      goodwill to its fair value and is recognized in the consolidated statements
      of
      earnings.




*Deferred
      financing costs*




Costs
      incurred in connection with securing debt financing are deferred and 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 in the period prior to the new business being capable of
      consistently providing its intended product and/or service. Deferral occurs
      where the expenses are related directly to placing the new business 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.
      Deferral ceases at the earlier of the achievement of a specified commercial
      activity level or the passage of a specified period of time. Amortization of
      the
      deferred expenses related to the operations of new businesses is based on their
      expected period of benefit, not exceeding five years. The Company
      periodically evaluates the recoverability of the deferred expenses from future
      cash flows from operations to determine whether any write-down 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 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*




The
      Company recognizes revenue when there is persuasive evidence of an arrangement;
      the services or products have been performed or delivered to the customer;
      the
      sales price is fixed or determinable; and collection is probable.




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.




113







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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










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




The
      Company enters into long-term “Power by the Hour” or “PBH” contracts with
      third-party customers to provide maintenance and repair and overhaul (“R&O”)
      services on customer owned engines and components. Under these contracts,
      customers pay a fixed fee per hour flown to the Company. In exchange for this
      fee, the Company provides R&O services for the customer’s engines and
      components over the specific terms of the contract. The Company has determined
      that these contracts contain multiple deliverables. These deliverables are:
      (i) scheduled major component overhauls at a future date when a
      predetermined number of hours have been used on these components and
      (ii) ongoing routine maintenance on major and non-major components. The
      Company treats these as separate units of accounting as each of these
      deliverables has value to the customer on a stand-alone basis. The residual
      method has been used to allocate the fair value of these deliverables. Under
      this method, the amount of consideration allocated to the delivered item equals
      the total consideration less the fair value of the undelivered item. The fair
      value of the undelivered item is based on objective and reliable evidence.
      Customers are usually invoiced in advance for R&O services performed under
      PBH contracts. Typically, a portion of this revenue is recognized on a monthly
      basis to reflect ongoing routine maintenance services provided. The balance
      is
      recognized on a percentage of completion basis, based on the actual costs
      incurred and work performed, as the scheduled major component overhauls are
      completed. Any loss on R&O contracts is recognized in earnings immediately
      when known.




*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*




The
      Company measures stock option costs using the grant-date fair value method
      and
      recognizes compensation expense on a straight-line basis over the requisite
      service periods of the options, which is consistent with the grade vesting
      terms.




114







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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










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 13). Compensation expense related
      to SARs is measured 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, and is recognized
      on a straight-line basis over the grade vesting terms.




*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. 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.




Gains
      or losses associated with financial instruments that have been terminated prior
      to maturity are deferred and recognized in earnings in the period in which
      the
      underlying hedged item is recognized. In the event a hedging relationship ceases
      to be effective or 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.**
            **FUTURE
                ACCOUNTING CHANGES**




(a)
            Financial
                Instruments




**Overview**




In
      2005, the Canadian Institute of Chartered Accountants (“CICA”) issued three new
      accounting standards related to financial instruments: Section 1530 -
      Comprehensive Income (“Section 1530”), Section 3855 - Financial
      Instruments - Recognition & Measurement (“Section 3855”) and
      Section 3865 - Hedges (“Section 3865”). These new standards apply to
      interim and annual financial statements relating to fiscal years beginning
      on or
      after October 1, 2006 and will be adopted by the Company on May 1,
      2007.




**Comprehensive
      Income**




Section 1530
      introduces the concept of comprehensive income which consists of net income
      and
      other comprehensive income (“OCI”) and represents the change in equity of an
      entity during a period arising from transactions and other events and
      circumstances from non-owner sources. OCI represents amounts that are recognized
      in comprehensive income but excluded from net income as required by primary
      sources of GAAP. These amounts include gains and losses on available-for-sale
      financial assets, exchange gains and losses arising from the translation of
      the
      financial statements of self-sustaining foreign operations, and the portion
      of
      the gain or loss on the hedging item that is determined to be an effective
      cash
      flow hedge or an effective hedge of a net investment in a self-sustaining
      foreign operation. The Company’s financial statements will include a
      Consolidated Statement of Comprehensive Income and accumulated other
      comprehensive income will be presented as a new category of shareholders’ equity
      in the Consolidated Balance Sheets.






115





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







**Financial
      Instruments - Recognition & Measurement**




Section 3855
      establishes standards for recognizing and measuring financial assets, financial
      liabilities and non-financial derivatives. Section 3855 requires that
      financial assets, financial liabilities and non-financial derivatives that
      do
      not qualify for the normal purchase and sale exemption be recognized on the
      balance sheet at fair value on initial recognition. Measurement in subsequent
      periods depends on how the financial instrument has been classified. Financial
      assets and liabilities that have been classified as “held for trading” are
      carried at fair value with both realized and unrealized gains and losses
      included in net income. Financial assets classified as “held-to-maturity”,
“loans and receivables” and financial liabilities other than those classified as
“held for trading” are carried at amortized cost using the effective interest
      method, with realized gains and losses and impairment losses recognized
      immediately in net income. Financial assets classified as “available-for-sale”
are carried at fair value with unrealized gains and losses reported in OCI
      and
      impairment losses recognized immediately in net income.




Derivatives
      are recorded on the balance sheet at fair value, including derivatives that
      are
      embedded in a non-derivative host contract where the economic characteristics
      and risks of the embedded derivative are not closely related to those of the
      host contract. Changes in the fair value of derivatives are recognized in net
      income, with the exception of changes recognized in OCI for derivatives that
      have been designated as a cash flow hedge or a hedge of a net investment in
      a
      self sustaining foreign operation.




The
      Company is currently completing the process of identifying its financial
      instruments and derivatives.




**Hedges**




Section 3865
      establishes new standards for hedge accounting. Section 3865 carries
      forward much of the guidance from Accounting Guideline 13 - Hedging
      Relationships and adds requirements detailing how to apply hedge accounting
      to
      various types of hedges. The purpose of hedge accounting is to ensure that
      counterbalancing gains, losses, revenues and expenses are recognized in net
      income in the same period(s). Hedge accounting is optional and certain
      conditions must be satisfied before a hedging relationship qualifies for hedge
      accounting, including identification of the specific risk exposure(s) being
      hedged, formal documentation of the hedging relationship at inception and
      reasonable assurance that the hedging relationship will be effective both at
      inception and throughout the term of the hedging relationship.




Section 3865
      discusses three different types of hedges, a fair value hedge, a cash flow
      hedge
      and a hedge of a net investment in a self-sustaining foreign operation, and
      prescribes the accounting treatment for each. A fair value hedge is a hedge
      of
      the exposure to changes in the fair value of all or a portion of a recognized
      asset or liability or previously unrecognized firm commitment attributable
      to a
      specified risk. In a fair value hedge, both the hedged item and the hedging
      item
      are measured at fair value with gains and losses due to fluctuations in fair
      value recognized immediately in net income. A cash flow hedge is a hedge of
      the
      exposure to variability in cash flows of a recognized asset or liability or
      a
      forecasted transaction attributable to a specified risk or variability in cash
      flows of a firm commitment attributable to foreign currency risk. In a cash
      flow
      hedge, there is no change to the measurement of or gain or loss recognition
      on
      the hedged item. However, the portion of the gain or loss on the hedging item
      determined to be effective is recognized in OCI and released into net income
      in
      the same period the hedged item affects net income. Any ineffective portion
      is
      recognized immediately in net income. A hedge of a net investment in a
      self-sustaining foreign operation is treated such that gains and losses on
      the
      effective portion of the hedging item and hedged item are recognized in OCI.
      Any
      ineffective portion is recognized immediately in net income.




**Impact
      of Adoption**




As
      at
      May 1, 2007, the Company will recognize all of its financial assets and
      liabilities in its Consolidated Balance Sheet according to their classification.
      Recognition, de-recognition and measurement policies followed in financial
      statements for periods prior to the adoption of the financial instruments
      standards are not reversed and, therefore, those financial statements are not
      restated. Any adjustments of previous carrying amounts are recognized as an
      adjustment of the balance of retained earnings or as the opening balance in
      a
      separate component of accumulated other comprehensive income.






116





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







Adjustments
      to opening retained earnings may include:




•
            The
                difference between the carrying amount and the fair value of financial
                assets and financial liabilities on initial measurement, other than
                financial assets classified as
                available-for-sale.


•
            The
                difference between the carrying amount and the fair value of derivatives,
                other than those that are designated and effective hedging
                items.


•
            The
                ineffective portion of the gain or loss on a hedging item that is
                determined to be an effective
                hedge.


•
            The
                impact of embedded derivatives outstanding as at May 1,
                2007.




Adjustments
      to accumulated OCI may include:




•
            The
                difference between the carrying amount and the fair value of financial
                assets classified as
                available-for-sale.


•
            The
                portion of the gain or loss on a hedging item that is determined
                to be an
                effective cash flow hedge or an effective hedge of a net investment
                in a
                self-sustaining foreign operation.


•
            Reclassification
                of the unrealized foreign currency translation adjustment in the
                financial
                statements of self-sustaining foreign operations, net of hedge
                transactions.




The
      Company is currently quantifying the impact of these transition adjustments
      on
      opening retained earnings and the opening balance of accumulated other
      comprehensive income.




(b)
            Other




In
      July
      2006, the CICA revised Section 1506 - Accounting Changes, which requires
      that (i) voluntary changes in accounting policy are made only if they
      result in the financial statements providing reliable and more relevant
      information, (ii) changes in accounting policy are generally applied
      retrospectively, and (iii) prior period errors are corrected
      retrospectively. Section 1506 is effective for the Company’s fiscal year
      beginning May 1, 2007. Section 1506 could have a material impact on
      the financial statements if a change in accounting policy were to
      occur.




**4.**
            **ACCOUNTING
                ESTIMATES AND MEASUREMENT
                UNCERTAINTY**




The
      preparation of these 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, 2007, $6.0 million (2006
      - $3.7 million) in unamortized pre-operating expenses, which are expected
      to be recoverable from the related future cash flows of such 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 service 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.






117





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







(c)
            Carrying
                value of aircraft




Based
      on independent appraisals, the appraised value of the Company’s owned aircraft
      exceeded the carrying value by $33.1 million and $46.7 million as at
      April 30, 2007 and 2006, 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.




(e)
            Defined
                benefit employee pension plans




The
      Company maintains both funded and unfunded defined benefit employee pension
      plans in the UK, 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 $153.7 million and $45.0 million in
      non-capital and capital losses, respectively, as at April 30, 2007. As
      detailed in Note 22, some of the non-capital losses expire between fiscal
      2008 and 2027 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 $96.4 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 $36.3 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 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.






118





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







(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 of the minimum lease payments at the beginning of
      the
      lease term is less than 90% of the fair value of the leased aircraft, the
      Company includes in its minimum lease payments the 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 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
      a
      different lease classification.




Certain
      of the Company’s operating leases have junior loans, deferred payments and
      rebateable advance rentals 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, 2007 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
      Accounting Guideline 15 - Consolidation of Variable Interest Entities, 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. 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.




**5.**
            **DISCONTINUED
                OPERATIONS**




During
      fiscal 2007 the Company classified Survival-One Limited (“Survival-One”) as
      discontinued operations as a result of the decision by management to divest
      of
      this business. The assets and liabilities of Survival-One were measured using
      discounted cash flows at the lower of their carrying amount and their estimated
      fair value less costs to sell. No fair value adjustment was recorded when
      Survival-One was classified as discontinued operations at January 31, 2007.
      The Company has recorded imputed interest in the results of discontinued
      operations. The results of operations of Survival-One have been reported in
      discontinued operations for the twelve months ended April 30, 2007 and the
      prior period comparative figures have been restated. Previously, these amounts
      were included in the Heli-One segment.




Subsequent
      to the fiscal year ended April 30, 2007, the sale of Survival-One was
      completed. Accordingly, commencing on May 1, 2007, the operations and cash
      flows of Survival-One will be eliminated from the ongoing operations of the
      Company.






119





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







The
      Company reclassified CHC Composites Inc. (“Composites”) to continuing operations
      in the Heli-One segment for the year ended April 30, 2005 as it did not
      receive an acceptable offer for Composites while the business was held for
      sale.
      The impact of reclassifying Composites to continuing operations resulted in
      a
      decrease in net earnings from continuing operations of $21.3 million,
      consisting of a $7.0 million net loss from operations and a
      $14.3 million fair value adjustment. The fair value adjustment was
      originally recorded when Composites was classified as held for sale and the
      assets and liabilities of the business were valued at the lower of their
      carrying amounts and their estimated fair value, less costs to sell. The 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).




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.




The
      following tables present the consolidated balance sheets, consolidated
      statements of earnings and consolidated statements of cash flows of the
      discontinued operations included in the consolidated financial
      statements:




**As
                at April 30,****Balance
                Sheets**
            
            **2007**
            
            
            2006**Assets**Receivables
            
            **$**
            **2,994**
            
            
            $
            3,109Future
                income tax assets
            
            ****
            **125**
            
            
            
            -Inventory
            
            ****
            **739**
            
            
            
            638Prepaid
                expenses
            
            ****
            **103**
            
            
            
            110****
            **3,961**
            
            
            
            3,857Property
                and equipment, net
            
            ****
            **7,289**
            
            
            
            6,720Intangible
                assets
            
            ****
            **4,046**
            
            
            
            4,166Goodwill
            
            ****
            **7,134**
            
            
            
            6,579**Total
                assets of discontinued operations**
            
            ****
            **22,430**
            
            
            
            21,322**Liabilities**Payables
                and accruals
            
            ****
            **1,734**
            
            
            
            1,948Current
                portion of debt obligations
            
            ****
            **-**
            
            
            
            746Income
                taxes payable
            
            ****
            **1,245**
            
            
            
            1,343****
            **2,979**
            
            
            
            4,037Long-term
                debt
            
            ****
            **-**
            
            
            
            157Future
                income tax liabilities
            
            ****
            **2,900**
            
            
            
            3,293**Total
                liabilities of discontinued operations**
            
            ****
            **5,879**
            
            
            
            7,487**Net
                assets of discontinued operations**
            
            **$**
            **16,551**
            
            
            $
            13,835







**Year
                Ended April 30,****Statement
                of Earnings**
            
            **2007**
            
            
            2006
            
            
            2005Revenue
            
            **$**
            **18,799**
            
            
            $
            17,681
            
            
            $
            25,619Operating
                income
            
            **$**
            **3,508**
            
            
            $
            2,452
            
            
            $
            23,973Net
                earnings from discontinued operations *(i)*
            
            **$**
            **2,167**
            
            
            $
            1,005
            
            
            $
            9,590







(i)
            Net
                earnings from discontinued operations for the year ended April 30,
                2007 includes income tax expense of $0.5 million (2006 -
                $0.4 million; 2005 -
                $0.3 million).




120
  CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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





**Year
                Ended April 30,****Statements
                of Cash Flows**
            
            **2007**
            
            
            2006
            
            
            2005Operating
                activities
            
            **$**
            **4,237**
            
            
            $
            3,617
            
            
            $
            (1,052
            )Financing
                activities
            
            ****
            **(2,535**
            **)**
            
            
            (907
            )
            
            
            (601
            )Investing
                activities
            
            ****
            **(2,686**
            **)**
            
            
            (1,459
            )
            
            
            12,865****
            **(984**
            **)**
            
            
            1,251
            
            
            
            11,212Effect
                of exchange rate changes on cash and cash equivalents
            
            ****
            **123**
            
            
            
            (109
            )
            
            
            707Cash
                provided by (used in) discontinued operations
            
            **$**
            **(861**
            **)**
            
            $
            1,142
            
            
            $
            11,919







**6.**
            **CASH
                AND CASH EQUIVALENTS**




At
      April 30, 2007, cash includes funds restricted for current taxes withheld
      and payable and other current obligations totalling $7.7 million (2006 -
      $6.3 million).






**7.**
            **RECEIVABLES**




The
      Company’s current receivables balance was comprised of the
      following:


**2007**
            
            
            2006Trade
                receivables, net of allowance for doubtful accounts of $8.4 million
                (2006
                - $24.5 milion)
            
            **$**
            **232,240**
            
            
            $
            192,639Due
                from BHS - Brazilian Helicopter Services Taxi Aereo Ltda.
                *(i)*
            
            ****
            **-**
            
            
            
            9,641Other
                receivables
            
            ****
            **45,527**
            
            
            
            43,937**$**
            **277,767**
            
            
            $
            246,217




(i)
            BHS
                - Brazilian Helicopter Services Taxi Aereo Ltda. receivables are
                now
                eliminated upon consolidation effective March 8, 2007, the
                acquisition date of BHS
                (Note 11(a)).







**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****2007**Flying
                Assets
            
            **$**
            **1,122,641**
            
            
            **$**
            **149,099**
            
            
            **$**
            **973,542**Facilities
            
            ****
            **99,680**
            
            
            ****
            **34,761**
            
            
            ****
            **64,919**Equipment
            
            ****
            **117,972**
            
            
            ****
            **63,769**
            
            
            ****
            **54,203****$**
            **1,340,293**
            
            
            **$**
            **247,629**
            
            
            **$**
            **1,092,664**2006Flying
                Assets
            
            $
            990,067
            
            
            $
            158,931
            
            
            $
            831,136Facilities
            
            
            88,114
            
            
            
            39,811
            
            
            
            48,303Equipment
            
            
            113,224
            
            
            
            73,299
            
            
            
            39,925$
            1,191,405
            
            
            $
            272,041
            
            
            $
            919,364




Amortization
      of property and equipment totalled $63.5 million in fiscal 2007 (2006 -
      $52.9 million; 2005 - $51.6 million).






121





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







**9.**
            **INVESTMENTS**




**2007**
            
            
            2006Long-term
                investments, at equityLuchthaven
                Den
                Helder C.V. (2007 - 50%, 2006 - 50%)
            
            **$**
            **5,072**
            
            
            $
            3,545Aero
                  Contractors Company of Nigeria Limited ("ACN") (2007 - 40%, 2006 -
                  40%)
            
            ****
            **1,406**
            
            
            
            -Other,
                at cost
            
            ****
            **1,000**
            
            
            
            1,877**$**
            **7,478**
            
            
            $
            5,422




During
      fiscal 2006, the Company sold its remaining interest in Canadian Helicopters
      Limited and its interest in Inversiones Aereas S.L. for a total gain on sale
      of
      $37.5 million.




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




**2007**
            
            
            2006Customer
                  contracts and relationships, less accumulated amortization of $0.6
                  million (2006 - $0.1 million)
            
            **$**
            **17,121**
            
            
            $
            212Other,
                net of accumulated amortization of $0.4 million (2006 - $0.2
                million)
            
            ****
            **753**
            
            
            
            428**$**
            **17,874**
            
            
            $
            640







The
      intangible assets were acquired as part of the acquisition of BHS during the
      year ended April 30, 2007 (Note 11(a)) and the acquisitions of Aero
      Turbine Support Ltd. and Coulson Aero Technologies Ltd. during the year ended
      April 30, 2005.




**11.**
            **ACQUISITIONS**




(a)
            BHS
                - Brazilian Helicopter Services Taxi Aereo
                Ltda.




On
      March 8, 2007, following regulatory approval, the Company acquired an
      equity position in BHS - Brazilian Helicopter Services Taxi Aereo Ltda.,
      subsequently named BHS - Brazilian Helicopter Services Taxi Aereo S.A.
      (“BHS”). 100% of the voting common shares were acquired through a jointly owned
      subsidiary BHH - Brazilian Helicopters Holdings S.A. (“BHH”). BHS is one of the
      largest helicopter operators in the Brazilian offshore sector. This acquisition
      was accounted for using the purchase method, with results of operations included
      in the consolidated financial statements of the Company from the date of
      acquisition. The purchase price was allocated based on the fair value of the
      net
      identifiable assets acquired as follows:




**Fair
                value of net assets acquired**Cash
            
            $
            2,529Other
                current assets
            
            
            5,066Intangible
                assets*(i)*
            
            
            17,564Goodwill*(ii)*
            
            
            55,794Property
                and
                equipment
            
            
            1,619Current
                liabilities
            
            
            (4,155
            )Due
                to
                CHC
            
            
            (32,830
            )Long-term
                debt
            
            
            (3,555
            )Tax
                and
                other liabilities
            
            
            (41,177
            )$
            855**Purchase
                price**Consideration
            
            $
            -Acquisition
                costs
            
            
            855$
            855







122







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







(i)
            The
                intangible assets consist of customer contracts and related intangibles
                which are being amortized on a straight line basis over their estimated
                useful life of seven years. (ii)
            The
                acquisition resulted in goodwill of $55.8 million, of which
                $31.1 million has been allocated to Global Operations and
                $24.7 million has been allocated to Heli-One. The goodwill is not
                expected to be deductible for tax
                purposes.




The
      purchase price allocation for this acquisition is preliminary and may be
      adjusted further as a result of obtaining additional information regarding
      preliminary estimates of fair values made at the date of purchase.




(b)
            Heli-Dyne
                Systems Inc.




On
      November 30, 2006, the Company acquired 100% of the issued and outstanding
      shares of Heli-Dyne Systems Inc. (“Heli-Dyne”), subsequently named Heli-One USA
      Inc., a helicopter completion and maintenance centre based in Hurst, Texas.
      Heli-Dyne specializes in the design and installation of helicopter interiors
      and
      the maintenance of airframes and avionics.




This
      acquisition was accounted for using the purchase method, with results of
      operations included in the consolidated financial statements from the
      acquisition date. The net purchase price of $18,000 was allocated based on
      the
      fair value of the net identifiable assets acquired. This allocation resulted
      in
      an excess of the fair value of the net identifiable assets over the cost of
      the
      purchase, which is sometimes referred to as negative goodwill. The negative
      goodwill was allocated to the fair value of the long-term assets acquired and
      the remaining excess of $0.8 million was recognized as an extraordinary
      gain.




**12.**
            **OTHER
                ASSETS**




**2007**
            
            
            2006Prepaid
                pension costs *(i)*
            
            **$**
            **99,956**
            
            
            $
            100,101Prepaid
                aircraft rentals *(ii)*
            
            ****
            **38,277**
            
            
            
            21,042Aircraft
                operating lease junior loans *(iii)*
            
            ****
            **61,517**
            
            
            
            40,502Deferred
                    charges, less accumulated amortization of $2.0 million (April
                    30, 2006 -
                    $0.7 million) *(iv)*
            
            ****
            **9,752**
            
            
            
            6,245Deferred
                    financing costs, less accumulated amortization of $5.9 million
                    (April 30, 2006 - $4.4 million)
                    *(v)*
            
            ****
            **7,426**
            
            
            
            6,769Loans
                receivable *(vi)*
            
            ****
            **15,868**
            
            
            
            20,326Pre-operating
                expenses *(vii)*
            
            ****
            **6,025**
            
            
            
            3,657Aircraft
                deposits *(viii)*
            
            ****
            **32,876**
            
            
            
            70,872Norway
                public pension scheme prepayments
            
            ****
            **4,955**
            
            
            
            6,324Restricted
                cash *(ix)*
            
            ****
            **13,669**
            
            
            
            19,705Other
            
            ****
            **615**
            
            
            
            809**$**
            **290,936**
            
            
            $
            296,352




(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 amounts due from lessors on
                the
                financing of 71 aircraft under operating leases as at April 30,
                2007. Such loans bear interest at 2.5% to 7.0% (2006 - 2.5% to 7.0%)
                with
                principal and accrued interest due at maturity. These loans mature
                between
                fiscal 2008 and 2016. As at April 30, 2007, 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, 2007 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.






123





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







(v)
            Deferred
                financing costs (net of accumulated amortization) at April 30, 2007
                include $11.1 million (2006 - $10.9 million) in legal, bank and
                other fees directly related to long-term financing activities net
                of
                $3.7 million of debt premium (2006 - $4.0 million) related to
                the Company’s US dollar denominated senior subordinated notes. These costs
                are being amortized to financing charges over the term of the related
                debt
                obligations, with $1.5 million amortized in fiscal 2007 (2006 -
                $1.6 million; 2005 -
                $3.0 million).




(vi)
            The
                loans receivable are non-interest bearing loans with lessors for
                the
                financing of 25 aircraft under operating leases as at April 30,
                2007. Such loans mature between fiscal 2010 and 2014, at the end
                of the
                lease terms. As at April 30, 2007, 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.




(vii)
            The
                pre-operating expenses balance as of April 30, 2007 consists of costs
                incurred in the start-up phase of new businesses. These costs are
                being
                amortized on a straight-line basis over periods not exceeding
                five years. The Company has determined that the pre-operating
                expenses are recoverable from future cash flows to be generated from
                the
                new businesses.




During
      the fiscal year ended April 30, 2007, the Company expensed
      $1.5 million (2006 - $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.




(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 a SARs derivative and deposits
                held as
                security for guarantees and bid
                bonds.




**13.**
            **STOCK
                APPRECIATION RIGHTS, PERFORMANCE UNITS AND LONG-TERM INCENTIVE
                PLANS**




At
      April 30, 2007 the Company had 623,334 (2006 - 413,333) 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 409,358 units that had been granted but not
      vested at April 30, 2007 (2006 - 366,668) at reference prices ranging from
      $19.43 to $24.55. These units will vest from fiscal 2008 to 2012. The units
      granted under the stock appreciation rights plan vest equally over either a
      three-year or five-year period with one-third or one-fifth vesting,
      respectively, on each of the anniversary dates.




Stock
      appreciation rights granted by the Company must be exercised within
      10 years of the date of grant. The stock appreciation rights outstanding,
      both vested and unvested, have expiry dates ranging from fiscal 2011 to
      2017.




At
      April 30, 2007 the Company had 77,412 (2006 - 92,412) 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, 2007 were issued prior to the stock split. The Company had no
      performance units that had been granted but not vested at April 30, 2007
      and 2006.




Performance
      units granted by the Company must be exercised within 10 years of the date
      of grant. The performance units that were vested and unexercised at
      April 30, 2007 have expiry dates ranging from fiscal 2014 to
      2015.




During
      the year ended April 30, 2006 the Company initiated a long-term incentive
      plan 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. During fiscal 2007, 131,564 LTIP units were granted (2006 -
      140,363). At April 30, 2007, the Company had 271,927 LTIP units (2006
      - 140,363) that had been granted and were outstanding, all of which were not
      vested.









124


CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







Compensation
      expense with respect to these plans for the year ended April 30, 2007 was
      $3.9 million (2006 - $2.8 million; 2005 - $0.7 million, with the
      inclusion of the associated hedging instrument, in respect of SARs for 2006
      and
      2005). During the year the Company de-designated the hedging instrument in
      respect of SARs and therefore the fiscal 2007 compensation expense does not
      include any amounts in respect of this derivative instrument. At April 30,
      2007 the Company’s liability with respect to the stock appreciation rights and
      performance units was $6.7 million (2006 - $11.4 million), which is
      recorded in current liabilities. At April 30, 2007 the Company’s liability
      with respect to LTIP units was $nil (2006 - $1.9 million (Note 16))
      based on the April 30, 2007 value of the Company’s shares and management’s
      best estimate of achieving its required performance factor.




**14.**
            **DEBT
                OBLIGATIONS**




(a)
            Long-term
                debt




Interest
                  rates
              Principal
                repayment
                  terms
              Maturity
                  dates
              **2007**
              
              2006**Senior
                  credit facilities**Non-revolving
                  credit facilitiesGBP
                  LIBOR + margin
              Quarterly
              December
                  2009
              **$
                  8,401**
              
              $
                  10,846Euro
                  LIBOR + margin
              Quarterly
              December
                  2009
              **49,967**
              
              65,451Revolving
                  credit facilityCAD
                  B.A. + margin
              At
                  maturity
              December
                  2007
              **137,000**
              
              15,000US
                  LIBOR + margin
              At
                  maturity
              December
                  2007
              **116,203**
              
              44,812NOK
                  LIBOR + margin
              At
                  maturity
              December
                  2007
              **44,664**
              
              -GBP
                  LIBOR + margin
              At
                  maturity
              December
                  2007
              **7,747**
              
              -**Other
                  term loans**12%
                  unsecured, subordinated, convertible note
                  *(Note 31(b))*
              At
                  maturity
              January
                  2008
              **-**
              
              4,6952.50%
              At
                  maturity
              December
                  2010
              **1,927**
              
              1,7335.75%
              At
                  maturity
              January
                  2008
              **1,157**
              
              1,0088.00%
              Monthly
              February
                  2009
              **26**
              
              -Non-interest
                  bearing
              Monthly
              December
                  2010
              **92**
              
              405Non-interest
                  bearing
              At
                  maturity
              April
                  2012
              **1,949**
              
              1,799Non-interest
                  bearing
              Semi-annually
              April
                  2009
              **192**
              
              24812%
              Monthly
              March
                  2009
              **1,234**
              
              -9.84%
              Monthly
              December
                  2010
              **124**
              
              -Non-interest
                  bearing
              Monthly
              April
                  2010
              **91**
              
              -B.A.
                  CDOR rate + margin
              Semi-annually
              June
                  2014
              **8,138**
              
              9,223B.A.
                  CDOR rate + margin
              Semi-annually
              April
                  2018
              **18,984**
              
              20,710Total
                  long-term debt
              
              
              **397,896**
              
              175,930Less:
                  current portion
              
              
              **(333,728)**
              
              (24,948)**$
                  64,168**
              
              $150,982




The
      applicable variable interest rates were: 30-day GBP LIBOR - 5.57% (2006 -
      4.63%), 30-day Euro LIBOR - 3.86% (2006 - 2.67%), 30-day CAD B.A. - 4.36% (2006
      - 4.09%), 30-day US LIBOR - 5.32% (2006 - 5.04%), 30-day NOK LIBOR - 4.31%
      (2006
      - 2.78%) and six-month B.A. CDOR - 4.41% (2006 - 4.26%). 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. As at April 30, 2007 and 2006 the Company was in compliance with
      all material covenants and other conditions imposed by its debt and helicopter
      lease agreements.






125





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







During
      the year ended April 30, 2007 the Company agreed to revisions of its senior
      credit facilities to increase borrowing availability under them. The senior
      credit facilities currently consist of a revolving facility of
      US $250.0 million, a revolving facility of £ 30.0 million, a
      term facility of €  33.1 million and a term facility of
£ 3.8 million.




As
      at
      April 30, 2007, the Company reclassified the outstanding balance under the
      senior revolving credit facility to “Current portion of debt obligations” on the
      financial statements, as the facility is due for renewal in December
      2007.




*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.




(b)
            Senior
                subordinated notes




The
      US $400.0 million (2006 - US $400.0 million)
      ($442.7 million at April 30, 2007; $448.1 million at
      April 30, 2006) 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. 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:


**2007**
              
              
              2006Debt
                  in
                original
                  currency
              
              
              Canadian
                  equivalent
              
              
              Debt
                  in
                original
                  currency
              
              
              Canadian
                  equivalentEuro
              
              **€**
              **33,183**
              
              
              **$**
              **50,159**
              
              
              €
              46,454
              
              
              $
              65,700Pound
                  sterling
              
              **£**
              **9,570**
              
              
              ****
              **21,181**
              
              
              £
              7,537
              
              
              
              15,384US
                  dollar
              
              **USD**
              **505,023**
              
              
              ****
              **558,909**
              
              
              USD
              440,000
              
              
              
              492,932Norwegian
                  kroner
              
              **NOK**
              **240,000**
              
              
              ****
              **44,664**
              
              
              NOK
              -
              
              
              
              -Brazilian
                  real
              
              **BRL**
              **2,661**
              
              
              ****
              **1,449**
              
              
              BRL
              -
              
              
              
              -**$**
              **676,362**
              
              
              
              
              
              
              $
              574,016








126





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







(d)
            Financing
                charges




**2007**
            
            
            2006
            
            
            2005Interest
                on debt obligations
            
            **$**
            **51,798**
            
            
            $
            43,457
            
            
            $
            32,469Amortization
                of deferred financing costs
            
            ****
            **1,443**
            
            
            
            1,560
            
            
            
            3,176Foreign
                exchange losses
            
            ****
            **8,210**
            
            
            
            6,234
            
            
            
            (1,200
            )Release
                of currency translation adjustment *(i)*
            
            ****
            **(282**
            **)**
            
            
            2,612
            
            
            
            -Other
                interest (income) expense
            
            ****
            **(2,873**
            **)**
            
            
            (889
            )
            
            
            2,983**$**
            **58,296**
            
            
            $
            52,974
            
            
            $
            37,428







(i)
            During
                the year ended April 30, 2007, the Company settled
                $125.9 million (2006 - $20.0 million; 2005 - $nil) 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.




(e)
            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.




(f)
            Repayment
                requirements




Principal
      repayment requirements related to the total debt obligations over the next
      five years are as follows:




2008
            
            $
            333,7282009
            
            
            26,9202010
            
            
            14,6052011
            
            
            4,7952012
            
            
            4,782







**15.**
            **RESTRUCTURING
                COSTS**




During
      the year ended April 30, 2007, the Company reversed $2.3 million of
      restructuring costs as the liability was determined no longer necessary. During
      the years ended April 30, 2006 and 2005, the Company expensed restructuring
      costs of $16.2 million and $17.4 million, respectively. Restructuring
      costs were primarily comprised of voluntary retirement and involuntary severance
      costs and professional and consulting fees.




The
      following table provides a reconciliation of the Company’s restructuring cost
      accrual for the years ended April 30:


**2007**
            
            2006
            
            2005Restructuring
                costs accrued, beginning of year
            **$
                5,876**
            
            $
                7,678
            
            $
                1,833Expensed
                (recovered) during the year - continuing operations
            **(2,341)**
            
            16,150
            
            17,390Expensed
                during the year - discontinued operations
            **-**
            
            195
            
            199Restructuring
                costs paid during the year
            **(3,004)**
            
            (18,147)
            
            (11,744)Restructuring
                costs accrued, end of year
            **$
                531**
            
            $
                5,876
            
            $
                7,678







127







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







**16.**
            **OTHER
                LIABILITIES**




**2007**
            
            
            2006Deferred
                revenue *(i)*
            
            **$**
            **9,083**
            
            
            $
            6,743Deferred
                government assistance *(ii)*
            
            ****
            **2,716**
            
            
            
            3,323Accrued
                pension obligation *(iii)*
            
            ****
            **31,623**
            
            
            
            34,040Deferred
                gains on sale-leasebacks of aircraft *(iv)*
            
            ****
            **79,713**
            
            
            
            60,405Insurance
                claims accrual *(v)*
            
            ****
            **9,609**
            
            
            
            13,655Long-term
                incentive plan *(vi)*
            
            ****
            **-**
            
            
            
            1,935Unfavourable
                contract credits *(vii)*
            
            ****
            **1,144**
            
            
            
            6,722Lease
                aircraft return costs *(viii)*
            
            ****
            **-**
            
            
            
            2,141Other
            
            ****
            **5,903**
            
            
            
            3,467**$**
            **139,791**
            
            
            $
            132,431




(i)
              Deferred
                  revenue at April 30, 2007 includes $9.1 million (2006 -
                  $6.8 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 the long-term balance deferred in other liabilities
                  to be
                  recognized in earnings when the services are
                  performed.


(ii)
            The
                Government of Newfoundland and Labrador has provided CHC Composites
                Inc.
                with financial assistance to partially offset construction costs
                of
                property 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. However, as these specified conditions have been fully
                met by
                Composites as at April 30, 2007, the risk of conversion of the
                assistance to common shares no longer exists. 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, 2007 government
                assistance of $2.7 million (April 2006 - $3.3 million)
                relating to plant and equipment has been deferred to other
                liabilities.




(iii)
            The
                Company has a supplementary retirement pension plan (“SERP”) in Canada for
                certain of its executives. This plan had accrued benefit obligations
                at
                April 30, 2007 of $17.8 million (2006 - $20.6 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, 2007 was
                $6.7 million (2006 - $5.7 million). Included in the accrued
                pension obligation at April 30, 2007 was $7.1 million (2006 -
                $7.7 million) related to funded defined benefit pension plans in the
                Netherlands that had a funding deficit upon acquisition in fiscal
                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 $29.5 million for fiscal 2007 (2006 -
                $22.1 million). Deferred gain amortization of $10.2 million
                (2006 - $8.9 million; 2005 - $7.1 million) was recorded as a
                reduction of operating lease expense during fiscal 2007. 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
                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.




(vi)
            See
                discussion in Note 13.




(vii)
            As
                part of the acquisition of Schreiner in fiscal 2004, 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. During fiscal 2007
                amortization of these unfavourable contract credits of $5.9 million
                (2006 -$5.7 million; 2005 - $6.7 million) was recorded as a
                reduction of operating expenses.


(viii)
              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,
                  2007 the Company had provided $nil (2006 - $2.1 million) in respect
                  of these obligations.


128





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


(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**2007**
            
            
            2006
            
            
            2005
            
            
            **2007**
            
            
            2006
            
            
            2005Class
                A subordinate voting shares
            
            ****
            **39,858**
            
            
            
            36,860
            
            
            
            36,833
            
            
            **$**
            **235,346**
            
            
            $
            223,241
            
            
            $
            222,727Class
                B multiple voting shares
            
            ****
            **5,863**
            
            
            
            5,861
            
            
            
            5,866
            
            
            ****
            **18,413**
            
            
            
            18,413
            
            
            
            18,431Ordinary
                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
            
            
            
            
            
            
            
            ****
            **(1,254**
            **)**
            
            
            (1,502
            )
            
            
            (1,689
            )**$**
            **252,505**
            
            
            $
            240,152
            
            
            $
            239,469Contributed
                surplus
            
            
            
            
            
            
            
            
            
            
            
            
            
            **$**
            **5,042**
            
            
            $
            4,363
            
            
            $
            3,291




*Class A
      subordinate voting shares that would be*


*issued
      upon conversion of the following:*




**2007**
            
            
            2006
            
            
            2005Class
                B multiple voting shares
            
            ****
            **5,863**
            
            
            
            5,861
            
            
            
            5,866Share
                options*(Note 18)*
            
            ****
            **2,232**
            
            
            
            3,819
            
            
            
            2,815Convertible
                debt *(Note 31(b))*
            
            ****
            **-**
            
            
            
            1,379
            
            
            
            1,379







129





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


(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, 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
            
            
            
            22,000Shares
                issued to employees for cashShare
                purchase plan
            
            
            22
            
            
            
            -
            
            
            
            -Share
                conversions
            
            
            5
            
            
            
            (5
            )
            
            
            -**Balance,
                April 30, 2006**
            
            
            36,860
            
            
            
            5,861
            
            
            
            22,000Share
                issued to employees for cashShare
                option plan *(Note 18)*
            
            
            1,584
            
            
            
            -
            
            
            
            -Share
                purchase plan
            
            
            35
            
            
            
            2
            
            
            
            -Conversion
                of debt *(Note 31(b))*
            
            
            1,379
            
            
            
            -
            
            
            
            -**Balance,
                April 30, 2007**
            
            $
            39,858
            
            
            $
            5,863
            
            
            $
            22,000







Stated
                value
            
            Class
                A subordinate
              voting
                shares
            
            
            Class
                B
              multiple
              voting
                shares
            
            
            Contributed
                surplus**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
            
            
            
            4,363Shares
                issued to employees for cashShare
                option plan *(Note 18)*
            
            
            5,611
            
            
            
            -
            
            
            
            -Share
                purchase plan *(Note 18)*
            
            
            686
            
            
            
            -
            
            
            
            -Conversion
                of debt *(Note 31(b))*
            
            
            5,808
            
            
            
            -
            
            
            
            (951
            )Stock
                based compensation expense *(Note 18)*
            
            
            -
            
            
            
            -
            
            
            
            1,630**Balance,
                April 30, 2007**
            
            $
            235,346
            
            
            $
            18,413
            
            
            $
            5,042







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.






130





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







The
      Company has issued 22 million 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).




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 $14.5 million as at
      April 30, 2007. As a result, the employee share purchase loans of
      $1.3 million on April 30, 2007 (2006 - $1.5 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.




Declaration
      of dividends is restricted by covenants contained in certain of the Company’s
      debt agreements. The declaration of dividends during fiscal 2007 at $0.50 (2006
      - $0.40) per participating voting share totalling $21.9 million (2006 -
      $17.1 million) was in compliance with these covenants.




**18.**
            **SHARE
                OPTION PLAN**




For
      the
      year ended April 30, 2007, the Company recorded stock based compensation of
      $1.6 million (2006 - $1.1 million; 2005 - $nil) in the consolidated
      statement of earnings and as contributed surplus. The Black Scholes option
      pricing model was used to estimate the fair value of options granted in fiscal
      2007 and 2006 using the following estimates and assumptions:


Expected
                life
            4
                yearsExpected
                dividend yield
            1.2%Risk-free
                interest rate
            3.2%Stock
                volatility
            31%







The
      weighted average grant-date fair value of options granted in the year is equal
      to $13.53 (2006 - $12.82).




As
      at
      April 30, 2007, 1,116,461 (2006 - 1,909,672) options were outstanding, of
      which 734,711 options were then exercisable at prices ranging from $4.26 to
      $49.60 per option and a weighted average exercise price of $27.72 per
      option. All outstanding options have exercise prices ranging from $4.26 to
      $53.86 per option and a weighted average exercise price of $35.27 per
      option (2006 - $23.54). All outstanding options expire between 2008 and 2016,
      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. During fiscal 2007, 792,000 options were exercised
      into
      1,584,000 Class A subordinate voting shares for cash proceeds of
      $5.6 million.






131





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







A
      summary of recent share option activities is as follows:




**2007**


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
              $49.10
                - $53.86
            
            
            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**
            
            
            ****
            **502**
            
            
            **$**
            **49.60**
            
            
            ****
            **1,909**
            
            
            **$**
            **23.54**Granted
            
            ****
            **-**
            
            
            ****
            **-**
            
            
            ****
            **-**
            
            
            ****
            **-**
            
            
            ****
            **-**
            
            
            ****
            **-**
            
            
            ****
            **30**
            
            
            ****
            **52.25**
            
            
            ****
            **30**
            
            
            ****
            **52.25**Forfeited
            
            ****
            **-**
            
            
            ****
            **-**
            
            
            ****
            **-**
            
            
            ****
            **-**
            
            
            ****
            **-**
            
            
            ****
            **-**
            
            
            ****
            **(16**
            **)**
            
            ****
            **(49.60**
            **)**
            
            ****
            **(16**
            **)**
            
            ****
            **(49.60**
            **)**Expired
            
            ****
            **-**
            
            
            
            **-**
            
            
            
            **-**
            
            
            
            **-**
            
            
            
            **-**
            
            
            
            **-**
            
            
            ****
            **(15**
            **)**
            
            ****
            **(49.60**
            **)**
            
            ****
            **(15**
            **)**
            
            ****
            **(49.60**
            **)**Exercised
            
            ****
            **(340**
            **)**
            
            ****
            **(4.30**
            **)**
            
            ****
            **(450**
            **)**
            
            ****
            **(9.00**
            **)**
            
            ****
            **-**
            
            
            ****
            **-**
            
            
            ****
            **(2**
            **)**
            
            ****
            **(49.60**
            **)**
            
            ****
            **(792**
            **)**
            
            ****
            **(7.08**
            **)**End
                of year
            
            ****
            **145**
            
            
            **$**
            **4.27**
            
            
            ****
            **20**
            
            
            **$**
            **8.18**
            
            
            ****
            **452**
            
            
            **$**
            **30.44**
            
            
            ****
            **499**
            
            
            **$**
            **49.76**
            
            
            ****
            **1,116**
            
            
            **$**
            **35.27**Weighted
                average contractual life of options outstanding
            
            **1.5
                years**
            
            
            
            
            
            
            **0.4
                years**
            
            
            
            
            
            
            **5.0
                years**
            
            
            
            
            
            
            **8.3
                years**
            
            
            
            
            
            
            **5.9
                years**







**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
            
            
            $
            14.25Granted
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            510
            
            
            
            49.60
            
            
            
            510
            
            
            
            49.60Forfeited
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (8
            )
            
            
            (49.60
            )
            
            
            (8
            )
            
            
            (49.60
            )End
                of year
            
            
            485
            
            
            $
            4.28
            
            
            
            470
            
            
            $
            8.96
            
            
            
            452
            
            
            $
            30.44
            
            
            
            502
            
            
            $
            49.60
            
            
            
            1,909
            
            
            $
            23.54Weighted
                average contractual life of options outstanding
            
            2.5
                years
            
            
            
            
            
            
            1.4
                years
            
            
            
            
            
            
            6.0
                years
            
            
            
            
            
            
            9.2
                years
            
            
            
            
            
            
            4.8
                years







**19.**
            **SUPPLEMENTAL
                CASH FLOW INFORMATION**




**2007**
            
            
            2006
            
            
            2005Cash
                interest paid
            
            **$**
            **49,074**
            
            
            $
            39,451
            
            
            $
            23,007Cash
                taxes paid
            
            **$**
            **11,571**
            
            
            $
            13,550
            
            
            $
            11,143




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
      adjusted for cash taxes paid. Accordingly, it includes the impact of changes
      in
      current as well as long-term income tax assets and liabilities.




The
      conversion of the 12%, unsecured, subordinated, convertible note into
      Class A subordinate voting shares during fiscal 2007 was a non-cash
      transaction (Note 31(b)).






132





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







**20.**
            **FOREIGN
                CURRENCY**




(a)
            Foreign
                currency translation adjustment




**2007**
            
            
            2006
            
            
            2005Balance,
                beginning of year
            
            **$**
            **(66,262**
            **)**
            
            $
            (21,471
            )
            
            $
            (17,605
            )Release
                of currency translation adjustment *(Note 15(d))*
            
            ****
            **(282**
            **)**
            
            
            2,612
            
            
            
            -Translation
                adjustment during year
            
            ****
            **25,744**
            
            
            
            (47,403
            )
            
            
            (3,866
            )Balance,
                end of year
            
            **$**
            **(40,800**
            **)**
            
            $
            (66,262
            )
            
            $
            (21,471
            )







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
      fiscal 2007 and 2006 the Company had designated the full amount of its
      US $400.0 million ($442.7 million) 73⁄8% senior subordinated notes
      as the hedged item in a series of hedges of the Company’s net investments in its
      self-sustaining foreign operations in Canada, Norway, the UK and the
      Netherlands. 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, 2007 was a net foreign exchange gain of $0.4 million, net of
      taxes of $0.1 million (2006 - gain of $57.0 million, net of taxes of
      $12.4 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:


**2007**
            
            
            2006US
                dollar
            
            **$**
            **1.11**
            
            
            $
            1.12UK
                pound sterling
            
            ****
            **2.21**
            
            
            
            2.04Norwegian
                kroner
            
            ****
            **0.19**
            
            
            
            0.18South
                African rand
            
            ****
            **0.16**
            
            
            
            0.19Australian
                dollar
            
            ****
            **0.92**
            
            
            
            0.85Euro
            
            ****
            **1.51**
            
            
            
            1.41Brazilian
                real
            
            ****
            **0.54**
            
            
            
            0.54







Income
      statement accounts denominated in foreign currencies have been translated at
      the
      following year to date annual average exchange rates:


**2007**
            
            
            2006
            
            
            2005US
                dollar
            
            **$**
            **1.14**
            
            
            $
            1.19
            
            
            $
            1.27UK
                pound sterling
            
            ****
            **2.17**
            
            
            
            2.11
            
            
            
            2.35Norwegian
                kroner
            
            ****
            **0.18**
            
            
            
            0.18
            
            
            
            0.19South
                African rand
            
            ****
            **0.16**
            
            
            
            0.19
            
            
            
            0.20Australian
                dollar
            
            ****
            **0.88**
            
            
            
            0.89
            
            
            
            0.94Euro
            
            ****
            **1.47**
            
            
            
            1.44
            
            
            
            1.61Brazilian
                real
            
            ****
            **0.53**
            
            
            
            0.52
            
            
            
            0.45







133







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







**21.**
            **FINANCIAL
                INSTRUMENTS**




(a)
            Primary
                Financial Instruments




The
      carrying values of the Company’s primary financial instruments, 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, 2007**
            
            
            April
                30, 2006**Fair**
              **value**
            
            
            **Carrying**
              **value**
            
            
            Fair
              value
            
            
            Carrying
                value73⁄8%
                Senior subordinated notes
            
            **$**
            **429,400**
            
            
            **$**
            **442,680**
            
            
            $
            454,282
            
            
            $
            448,120







(b)
            Derivative
                Financial Instruments Used for Risk
                Management




The
      Company regularly enters into forward foreign exchange contracts 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 and anticipated transactions in currencies
      other than the Canadian dollar. 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, 2007 are as
      follows:




Hedging
                item
            Maturity
            
            Notional
              amount
            
            Fair
                market
              valueForward
                foreign exchange contractsSell
                US
                dollar; buy Canadian dollar
            Various
            *(i)*
            $118,010
            
            $
                5,002Sell
                pound sterling; buy euro
            Various
            *(i)*
            €  30,517
            
            (1,216)Sell
                Norwegian kroner; buy pound sterling
            May
                2007
            
            £
                12,388
            
            15Sell
                Norwegian kroner; buy Australian dollar
            May
                2007
            
            AUD
                28,000
            
            (23)Sell
                Norwegian kroner; buy euro
            May
                2007
            
            €  26,893
            
            (43)Sell
                Canadian dollar; buy euro
            May
                2007
            
            €  2,740
            
            (21)Sell
                Brazilian real; buy US dollar
            May
                2007
            
            USD
                28,000
            
            144Sell
                Canadian dollar; buy Norwegian kroner
            May
                2007
            
            NOK
                150,000
            
            (142)Sell
                Canadian dollar; buy US dollar
            June
                2007
            
            USD
                150,000
            
            (201)$
                3,515







(i)
            With
                expiration dates through to fiscal
                2010.





Throughout
      the year ended April 30, 2007, the Company continued its designation of its
      US $400.0 million ($442.7 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 foreign currency translation adjustment account in the equity
      section of the balance sheet in accordance with Canadian GAAP.




(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.






134





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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












(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, 2007 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 $8.4 million at
      April 30, 2007 (2006 - $24.5 million).




**22.**
            **INCOME
                TAXES**




The
      Company’s income tax provision is comprised as follows:


**2007**
            
            
            2006
            
            
            2005Current
                income tax (provision) recoveryCanada
            
            **$**
            **(3,793**
            **)**
            
            $
            (2,800
            )
            
            $
            (3,810
            )Foreign
            
            ****
            **1,262**
            
            
            
            6,790
            
            
            
            (25,632
            )****
            **(2,531**
            **)**
            
            
            3,990
            
            
            
            (29,442
            )Future
                income tax (provision) recoveryCanadaRecovery
                related to origination and reversal of temporary
                differences
            
            ****
            **5,837**
            
            
            
            14,646
            
            
            
            9,022ForeignProvision related
                to origination and reversal of temporary differences
            
            ****
            **(20,132**
            **)**
            
            
            (29,145
            )
            
            
            (6,918
            )****
            **(14,295**
            **)**
            
            
            (14,499
            )
            
            
            2,104Income
                tax provision
            
            **$**
            **(16,826**
            **)**
            
            $
            (10,509
            )
            
            $
            (27,338
            )







As
      the
      Company operates in several tax jurisdictions, its income is subject to various
      rates of taxation. The income tax provision differs from the amount that would
      have resulted from applying the Canadian statutory income tax rates to earnings
      before taxes as follows:


**2007**
            
            
            2006
            
            
            2005Earnings
                from continuing operations before income taxes
            
            **$**
            **57,813**
            
            
            $
            100,214
            
            
            $
            74,267Combined
                Canadian federal and provincial statutory income tax rate
            
            ****
            **34**
            **%**
            
            
            34
            %
            
            
            35
            %Income
                tax provision calculated at statutory rate
            
            ****
            **(19,656**
            **)**
            
            
            (34,073
            )
            
            
            (25,993
            )(Increase)
                decrease in income tax provision resulting from:Rate
                differences in various jurisdictions
            
            ****
            **12,857**
            
            
            
            13,515
            
            
            
            16,043Effect
                of change in tax legislation
            
            ****
            **(1,285**
            **)**
            
            
            (220
            )
            
            
            (4,224
            )Non-deductible
                items
            
            ****
            **(637**
            **)**
            
            
            (1,187
            )
            
            
            (3,193
            )Large
                corporations tax
            
            ****
            **-**
            
            
            
            (470
            )
            
            
            (457
            )Other
                foreign taxes paid
            
            ****
            **(7,761**
            **)**
            
            
            (3,471
            )
            
            
            (1,745
            )Non-taxable
                portion of capital gains
            
            ****
            **575**
            
            
            
            13,617
            
            
            
            1,154Non-taxable
                income
            
            ****
            **1,857**
            
            
            
            2,669
            
            
            
            1,274Valuation
                allowance
            
            ****
            **717**
            
            
            
            (334
            )
            
            
            (7,049
            )Other
            
            ****
            **(3,493**
            **)**
            
            
            (555
            )
            
            
            (3,148
            )Income
                tax provision
            
            **$**
            **(16,826**
            **)**
            
            $
            (10,509
            )
            
            $
            (27,338
            )







135







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







During
      fiscal 2007, legislation was enacted in Canada to reduce the federal corporate
      income tax rate from 22.12% to 19% in phased reductions over the period 2008
      to
      2010. As a result, the Company adjusted the value of its future income tax
      assets related to losses carried forward and other temporary differences in
      Canada by $1.2 million.




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.




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.




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:


**2007**
            
            
            2006**Future
                income tax (liabilities) assets**Property
                and equipment
            
            **$**
            **(77,027**
            **)**
            
            $
            (99,406
            )Long-term
                investments
            
            ****
            **(13,547**
            **)**
            
            
            (10,261
            )Pension
                and other employee benefits
            
            ****
            **(14,410**
            **)**
            
            
            (9,253
            )Deferred
                capital gains and deferred revenue
            
            ****
            **(37,615**
            **)**
            
            
            (30,699
            )Losses
                carried forward
            
            ****
            **52,303**
            
            
            
            41,463Deferred
                costs
            
            ****
            **(1,013**
            **)**
            
            
            348Long-term
                debt
            
            ****
            **(42,243**
            **)**
            
            
            (19,380
            )Current
                accounts payable and receivable
            
            ****
            **15,994**
            
            
            
            11,486Other
            
            ****
            **(2,372**
            **)**
            
            
            4,232Total
                future income tax liabilities
            
            ****
            **(119,930**
            **)**
            
            
            (111,470
            )Valuation
                allowance
            
            ****
            **(16,208**
            **)**
            
            
            (7,383
            )Net
                future income tax liabilities
            
            **$**
            **(136,138**
            **)**
            
            $
            (118,853
            )Distributed
                as follows:Current
                future income tax assets
            
            ****
            **32,169**
            
            
            
            26,859Current
                future income tax liabilities
            
            ****
            **(9,813**
            **)**
            
            
            (8,852
            )Long-term
                future income tax assets
            
            ****
            **34,678**
            
            
            
            39,848Long-term
                future income tax liabilities
            
            ****
            **(193,172**
            **)**
            
            
            (176,708
            )**$**
            **(136,138**
            **)**
            
            $
            (118,853
            )







(a)
            Tax
                losses




The
      Company has accumulated approximately $153.7 million in non-capital losses,
      of which $72.9 million is available to reduce future Canadian income taxes
      otherwise payable and $80.8 million is available to reduce future income
      taxes otherwise payable in other foreign jurisdictions. If unused, these losses
      will expire as follows:




(in
                thousands of Canadian dollars)2008
            
            $
            5,0672009
            
            
            8,9372014
            
            
            2,9942015
            
            
            19,3282026
            
            
            33,0522027
            
            
            4,179Indefinitely
            
            
            80,192$
            153,749







136







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







The
      Company has also accumulated approximately $45.0 million in capital losses,
      which carry forward indefinitely and are available to reduce future capital
      gains realized in Canada.




The
      Company has provided a valuation allowance in respect of $57.3 million
      (Canada - $22.6 million; other jurisdictions - $34.7 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 per share has 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 42,819,468 for the fiscal year ended April 30,
      2007 (2006 - 42,708,378; 2005 - 42,673,079).




**2007**Net
                  earnings
              
              
              Weighted
              
              
              Net
                  earnings
                per
                  shareCont.
                ops.
              
              
              Disc.
                ops.
              
              
              Extra-ordinary
                  item
              
              
              Total
              
              
              average
                  number of shares
              
              
              Cont.
                ops.
              
              
              Disc.
                ops.
              
              
              Extra-ordinary
                  item
              
              
              Total$
              40,987
              
              
              $
              2,167
              
              
              $
              810
              
              
              $
              43,964
              
              
              
              42,819Shares
                  as security for Class A subordinate voting employee share
                purchase
                  loans
                  *(Note 17)*
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (626
              )**Basic**
              
              $
              40,987
              
              
              $
              2,167
              
              
              $
              810
              
              
              $
              43,964
              
              
              
              42,193
              
              
              $
              0.97
              
              
              $
              0.05
              
              
              $
              0.02
              
              
              $
              1.04**Effect
                  of potential dilutive securities:**Share
                  options *(Note 18)*
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,978Convertible
                  debt *(Note 31(b))*
              
              
              379
              
              
              
              -
              
              
              
              -
              
              
              
              379
              
              
              
              1,323Shares
                  as security for Class A subordinate voting employee share
                purchase
                  loans
                  *(Note 17)*
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              626**Diluted**
              
              $
              41,366
              
              
              $
              2,167
              
              
              $
              810
              
              
              $
              44,343
              
              
              
              46,120
              
              
              $
              0.90
              
              
              $
              0.05
              
              
              $
              0.02
              
              
              $
              0.97




2006Net
                earnings
            
            
            Weighted
            
            
            Net
                earnings
              per
                shareCont.
              ops.
            
            
            Disc.
              ops.
            
            
            Extra-ordinary
                item
            
            
            Total
            
            
            average
                number of shares
            
            
            Cont.
              ops.
            
            
            Disc.
              ops.
            
            
            Extra-ordinary
                item
            
            
            Total$
            89,705
            
            
            $
            1,005
            
            
            $
            -
            
            
            $
            90,710
            
            
            
            42,708Shares
                as security for Class A subordinate voting employee share
              purchase
                loans
                *(Note 17)*
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (709
            )**Basic**
            
            $
            89,705
            
            
            $
            1,005
            
            
            $
            -
            
            
            $
            90,710
            
            
            
            41,999
            
            
            $
            2.14
            
            
            $
            0.02
            
            
            $
            -
            
            
            $
            2.16**Effect
                of potential dilutive securities:**Share
                options *(Note 18)*
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,076Convertible
                debt *(Note 31(b))*
            
            
            386
            
            
            
            -
            
            
            
            -
            
            
            
            386
            
            
            
            1,379Shares
                as security for Class A subordinate voting employee share
              purchase
                loans
                *(Note 17)*
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            709**Diluted**
            
            $
            90,091
            
            
            $
            1,005
            
            
            $
            -
            
            
            $
            91,096
            
            
            
            46,163
            
            
            $
            1.95
            
            
            $
            0.02
            
            
            $
            -
            
            
            $
            1.97







137







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







2005Net
                earnings
            
            
            Weighted
            
            
            Net
                earnings
              per
                shareCont.
              ops.
            
            
            Disc.
              ops.
            
            
            Extra-ordinary
                item
            
            
            Total
            
            
            average
                number of shares
            
            
            Cont.
              ops.
            
            
            Disc.
              ops.
            
            
            Extra-ordinary
                item
            
            
            Total$
            46,929
            
            
            $
            9,590
            
            
            $
            -
            
            
            $
            56,519
            
            
            
            42,673Shares
                as security for Class A subordinate voting employee share
              purchase
                loans
                *(Note 17)*
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (736
            )**Basic**
            
            $
            46,929
            
            
            $
            9,590
            
            
            $
            -
            
            
            $
            56,519
            
            
            
            41,937
            
            
            $
            1.12
            
            
            $
            0.23
            
            
            $
            -
            
            
            $
            1.35**Effect
                of potential dilutive securities:**Share
                options *(Note 18)*
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,975Convertible
                debt *(Note 31(b))*
            
            
            386
            
            
            
            -
            
            
            
            -
            
            
            
            386
            
            
            
            1,379Shares
                as security for Class A subordinate voting employee share
              purchase
                loans
                *(Note 17)*
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            736**Diluted**
            
            $
            47,315
            
            
            $
            9,590
            
            
            $
            -
            
            
            $
            56,905
            
            
            
            46,027
            
            
            $
            1.03
            
            
            $
            0.20
            
            
            $
            -
            
            
            $
            1.23







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.




At
      April 30, 2007, there were 160,519 (2006 - nil, 2005 - nil) potentially
      dilutive shares that have not been included in the diluted earnings per share
      calculation for each period presented because their effect is
      anti-dilutive.




There
      were 22 million ordinary shares outstanding at April 30, 2007 and at
      April 30, 2006, all of which are owned by the Company’s controlling
      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**




**2007**
            
            
            2006
            
            
            2005Receivables
            
            **$**
            **(50,755**
            **)**
            
            $
            (37,285
            )
            
            $
            (40,291
            )Inventory
            
            ****
            **(39,902**
            **)**
            
            
            (29,936
            )
            
            
            1,765Prepaid
                expenses
            
            ****
            **(30,449**
            **)**
            
            
            (6,170
            )
            
            
            1,709Payables
                and accruals
            
            ****
            **83,907**
            
            
            
            18,371
            
            
            
            59,543**$**
            **(37,199**
            **)**
            
            $
            (55,020
            )
            
            $
            22,726







**25.**
            **SEGMENT
                INFORMATION**




The
      Company operates under the following segments:




•
            Global
                Operations;


•
            European
                Operations;


•
            Heli-One;
                and


•
            Corporate
                and Other.







138




CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







This
      segment classification is representative of the Company’s business strategy and
      reflects the Company’s internal reporting and management structure. 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 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.




European
      Operations includes flying 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, as well
      as
      EMS/SAR services throughout Europe.




Global
      Operations includes flying operations in Australia, Africa, the Middle East,
      the
      Americas, Asia, Brazil, and in other locations around the world, serving
      offshore oil and gas, EMS/SAR and other industries.




Heli-One
      includes helicopter repair and overhaul facilities in Norway, Canada, Australia,
      the US and the UK, providing helicopter repair and overhaul services for the
      Company’s fleet and for a growing external customer base in Europe, Asia and
      North America. As well, Heli-One performs composite aerospace component
      manufacturing.




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).






139





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







**Year
      Ended April 30, 2007**


Global
              operations
            
            
            European
                operations
            
            
            Heli-One
            
            
            Corporate
                and other
            
            
            Inter-segment
                eliminations
            
            
            Consolidated**Revenue
                from external customers**
            
            $
            427,956
            
            
            $
            539,921
            
            
            $
            180,613
            
            
            $
            617
            
            
            $
            -
            
            
            **$**
            **1,149,107**Add:
                Inter-segment revenues
            
            
            1,093
            
            
            
            6,634
            
            
            
            391,520
            
            
            
            1,433
            
            
            
            (400,680
            )
            
            ****
            **-****Total
                revenue**
            
            
            429,049
            
            
            
            546,555
            
            
            
            572,133
            
            
            
            2,050
            
            
            
            (400,680
            )
            
            ****
            **1,149,107**Direct
                costs*(i)*
            
            
            (293,918
            )
            
            
            (451,213
            )
            
            
            (298,959
            )
            
            
            -
            
            
            
            219,823
            
            
            ****
            **(824,267**
            **)**General
                and administration
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (43,388
            )
            
            
            -
            
            
            ****
            **(43,388**
            **)****Segment
                EBITDAR*(ii)***
            
            
            135,131
            
            
            
            95,342
            
            
            
            273,174
            
            
            
            (41,338
            )
            
            
            (180,857
            )
            
            ****
            **281,452**Aircraft
                lease and associated costs-
                Internal
            
            
            (92,052
            )
            
            
            (89,148
            )
            
            
            343
            
            
            
            -
            
            
            
            180,857
            
            
            ****
            **-**-
                External
            
            
            (8,928
            )
            
            
            (3,959
            )
            
            
            (87,560
            )
            
            
            -
            
            
            
            -
            
            
            ****
            **(100,447**
            **)****Segment
                EBITDA*(iii)***
            
            
            34,151
            
            
            
            2,235
            
            
            
            185,957
            
            
            
            (41,338
            )
            
            
            -
            
            
            ****
            **181,005**Amortization
            
            
            (4,116
            )
            
            
            (3,424
            )
            
            
            (56,474
            )
            
            
            (1,289
            )
            
            
            -
            
            
            ****
            **(65,303**
            **)**Restructuring
                costs
            
            
            -
            
            
            
            -
            
            
            
            991
            
            
            
            1,350
            
            
            
            -
            
            
            ****
            **2,341**Gain
                (loss) on disposals of assets
            
            
            16
            
            
            
            (101
            )
            
            
            (2,769
            )
            
            
            (133
            )
            
            
            -
            
            
            ****
            **(2,987**
            **)****Operating
                income (loss)**
            
            $
            30,051
            
            
            $
            (1,290
            )
            
            $
            127,705
            
            
            $
            (41,410
            )
            
            $
            -
            
            
            ****
            **115,056**Financing
                charges
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            ****
            **(58,296**
            **)****Earnings
                from continuing operations before income taxes and undernoted
                items**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            ****
            **56,760**Equity
                earnings of associated companies and non-controlling interest
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            ****
            **1,053**Income
                tax provision
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            ****
            **(16,826**
            **)****Net
                earnings from continuing operations**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            ****
            **40,987****Net
                earnings from discontinued operations*****(Note
                5)***
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            ****
            **2,167****Net
                earnings before extraordinary item**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            ****
            **43,154****Extraordinary
                item, net of tax *(Note 11(b))***
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            ****
            **810****Net
                earnings**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            **$**
            **43,964**Segment
                assets - continuing operations
            
            $
            271,321
            
            
            $
            234,182
            
            
            $
            1,460,177
            
            
            $
            114,109
            
            
            
            
            
            
            **$**
            **2,079,789**Segment
                assets - discontinued operations *(Note 5)*
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            ****
            **22,430**Total
                Assets
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            ****
            **2,102,219**Segment
                capital asset expenditures
            
            
            7,096
            
            
            
            3,855
            
            
            
            380,397
            
            
            
            1,898
            
            
            
            
            
            
            ****
            **393,246**Segment
                helicopter major inspections
            
            
            -
            
            
            
            -
            
            
            
            30,066
            
            
            
            -
            
            
            
            
            
            
            ****
            **30,066**Segment
                goodwill
            
            
            30,686
            
            
            
            -
            
            
            
            24,590
            
            
            
            -
            
            
            
            
            
            
            ****
            **55,276**







140





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







**Year
      Ended April 30, 2006*(iv)***


Global
              operations
            
            
            European
                operations
            
            
            Heli-One
            
            
            Corporate
                and other
            
            
            Inter-segment
                eliminations
            
            
            Consolidated**Revenue
                from external customers**
            
            $
            330,877
            
            
            $
            520,367
            
            
            $
            145,668
            
            
            $
            175
            
            
            $
            -
            
            
            $
            997,087Add:
                Inter-segment revenues
            
            
            350
            
            
            
            12,773
            
            
            
            355,013
            
            
            
            58
            
            
            
            (368,194
            )
            
            
            -**Total
                revenue**
            
            
            331,227
            
            
            
            533,140
            
            
            
            500,681
            
            
            
            233
            
            
            
            (368,194
            )
            
            
            997,087Direct
                costs*(i)*
            
            
            (240,305
            )
            
            
            (425,659
            )
            
            
            (271,206
            )
            
            
            -
            
            
            
            214,145
            
            
            
            (723,025
            )General
                and administration
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (27,895
            )
            
            
            -
            
            
            
            (27,895
            )**Segment
                EBITDAR*(ii)***
            
            
            90,922
            
            
            
            107,481
            
            
            
            229,475
            
            
            
            (27,662
            )
            
            
            (154,049
            )
            
            
            246,167Aircraft
                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
            
            
            
            168,790
            
            
            
            (27,662
            )
            
            
            -
            
            
            
            180,691Amortization
            
            
            (4,113
            )
            
            
            (5,946
            )
            
            
            (44,363
            )
            
            
            (1,048
            )
            
            
            -
            
            
            
            (55,470
            )Restructuring
                costs
            
            
            (975
            )
            
            
            (1,597
            )
            
            
            (7,445
            )
            
            
            (6,133
            )
            
            
            -
            
            
            
            (16,150
            )Gain
                on disposals of assets
            
            
            295
            
            
            
            407
            
            
            
            (685
            )
            
            
            (22
            )
            
            
            -
            
            
            
            (5
            )**Operating
                income (loss)**
            
            $
            2,913
            
            
            $
            24,721
            
            
            $
            116,297
            
            
            $
            (34,865
            )
            
            $
            -
            
            
            
            109,066Financing
                charges
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (52,974
            )**Earnings
                from continuing operations before income taxes and undernoted
                items**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            56,092Gain
                on sale of long-term investments
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            37,558Equity
                earnings of associated companies and non-controlling interest
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            6,564Income
                tax provision
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (10,509
            )**Net
                earnings from continuing operations**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            89,705**Net
                earnings from discontinued operations *(Note
                5)***
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,005**Net
                earnings**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            90,710Segment
                assets - continuing operations
            
            $
            167,268
            
            
            $
            235,158
            
            
            $
            1,095,048
            
            
            $
            167,286
            
            
            
            
            
            
            $
            1,664,760Segment
                assets - discontinued operations *(Note 5)*
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            
            21,322Total
                Assets
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,686,082Segment
                capital asset expenditures
            
            
            4,477
            
            
            
            2,281
            
            
            
            273,485
            
            
            
            458
            
            
            
            
            
            
            
            280,701Segment
                helicopter major inspections
            
            
            -
            
            
            
            -
            
            
            
            23,612
            
            
            
            -
            
            
            
            
            
            
            
            23,612Segment
                goodwill
            
            
            -
            
            
            
            -
            
            
            
            1,224
            
            
            
            -
            
            
            
            
            
            
            
            1,224










141







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


(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
            
            
            $
            130,844
            
            
            $
            435
            
            
            $
            -
            
            
            $
            954,242Add:
                Inter-segment revenues
            
            
            -
            
            
            
            10,697
            
            
            
            380,573
            
            
            
            2,741
            
            
            
            (394,562
            )
            
            
            (551
            )**Total
                revenue**
            
            
            292,066
            
            
            
            541,594
            
            
            
            511,417
            
            
            
            3,176
            
            
            
            (394,562
            )
            
            
            953,691Direct
                costs*(i)*
            
            
            (204,782
            )
            
            
            (430,802
            )
            
            
            (280,401
            )
            
            
            -
            
            
            
            241,335
            
            
            
            (674,650
            )General
                and administration
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (35,279
            )
            
            
            -
            
            
            
            (35,279
            )**Segment
                EBITDAR*(ii)***
            
            
            87,284
            
            
            
            110,792
            
            
            
            231,016
            
            
            
            (32,103
            )
            
            
            (153,227
            )
            
            
            243,762Aircraft
                lease and associated costs-
                Internal
            
            
            (64,411
            )
            
            
            (88,816
            )
            
            
            -
            
            
            
            -
            
            
            
            153,227
            
            
            
            --
                External
            
            
            (6,984
            )
            
            
            -
            
            
            
            (50,553
            )
            
            
            -
            
            
            
            -
            
            
            
            (57,537
            )**Segment
                EBITDA*(iii)***
            
            
            15,889
            
            
            
            21,976
            
            
            
            180,463
            
            
            
            (32,103
            )
            
            
            -
            
            
            
            186,225Amortization
            
            
            (3,632
            )
            
            
            (5,539
            )
            
            
            (39,765
            )
            
            
            (1,248
            )
            
            
            -
            
            
            
            (50,184
            )Restructuring
                costs
            
            
            (1,358
            )
            
            
            (2,864
            )
            
            
            (3,108
            )
            
            
            (10,060
            )
            
            
            -
            
            
            
            (17,390
            )Gain
                on disposals of assets
            
            
            -
            
            
            
            -
            
            
            
            4,129
            
            
            
            -
            
            
            
            -
            
            
            
            4,129Fair
                value adjustment
            
            
            -
            
            
            
            -
            
            
            
            (14,260
            )
            
            
            -
            
            
            
            -
            
            
            
            (14,260
            )**Operating
                income (loss)**
            
            $
            10,899
            
            
            $
            13,573
            
            
            $
            127,459
            
            
            $
            (43,411
            )
            
            $
            -
            
            
            
            108,520Debt
                settlement costs
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,017
            )Financing
                charges
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (37,428
            )**Earnings
                from continuing operations before income taxes and undernoted
                items**
            
            
            
            
            
            
            
            
            
            
            
            
            
            69,075Equity
                earnings of associated companies and non-controlling interest
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,192Income
                tax provision
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (27,338
            )**Net
                earnings from continuing operations**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            46,929**Net
                earnings from discontinued operations *(Note
                5)***
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            9,590**Net
                earnings**
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            56,519Segment
                capital asset expenditures
            
            
            13,021
            
            
            
            2,829
            
            
            
            218,509
            
            
            
            383
            
            
            
            
            
            
            
            234,742Segment
                helicopter major inspections
            
            
            -
            
            
            
            -
            
            
            
            15,539
            
            
            
            -
            
            
            
            
            
            
            
            15,539







(i)
            Direct
                costs in the segment information presented excludes aircraft lease
                and
                associated costs. In the consolidated income statement 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, and gain (loss) on disposals of
                      assets.


(iv)
              Comparative
                    information has been reclassified to reflect the classification
                    of
                    Survival-One in discontinued operations as described in
                    Note 2.




*Geographic
      Information*




Revenues
                *(i)*
            
            
            Property
                and equipment *(ii)*
            
            
            Goodwill**2007**
            
            
            2006
            
            
            2005
            
            
            **2007**
            
            
            2006
            
            
            **2007**
            
            
            2006Canada
            
            **$**
            **48,214**
            
            
            $
            32,909
            
            
            $
            23,956
            
            
            **$**
            **104,699**
            
            
            $
            87,912
            
            
            **$**
            **55,276**
            
            
            $
            1,224United
                Kingdom
            
            ****
            **248,752**
            
            
            
            209,355
            
            
            
            237,683
            
            
            ****
            **140,804**
            
            
            
            71,230
            
            
            ****
            **-**
            
            
            
            -Norway
            
            ****
            **202,020**
            
            
            
            206,693
            
            
            
            182,927
            
            
            ****
            **273,042**
            
            
            
            341,683
            
            
            ****
            **-**
            
            
            
            -Africa
            
            ****
            **189,895**
            
            
            
            150,110
            
            
            
            124,337
            
            
            ****
            **189,500**
            
            
            
            140,875
            
            
            ****
            **-**
            
            
            
            -Australia
            
            ****
            **74,641**
            
            
            
            64,536
            
            
            
            62,157
            
            
            ****
            **84,864**
            
            
            
            73,349
            
            
            ****
            **-**
            
            
            
            -Denmark
            
            ****
            **29,095**
            
            
            
            28,144
            
            
            
            35,473
            
            
            ****
            **25,668**
            
            
            
            25,452
            
            
            ****
            **-**
            
            
            
            -The
                Netherlands
            
            ****
            **72,133**
            
            
            
            67,160
            
            
            
            65,915
            
            
            ****
            **63,165**
            
            
            
            32,338
            
            
            ****
            **-**
            
            
            
            -Other
                Asian countries
            
            ****
            **68,096**
            
            
            
            52,661
            
            
            
            88,473
            
            
            ****
            **125,870**
            
            
            
            79,419
            
            
            ****
            **-**
            
            
            
            -Other
                European countries
            
            ****
            **120,884**
            
            
            
            107,964
            
            
            
            88,694
            
            
            ****
            **11,894**
            
            
            
            36,144
            
            
            ****
            **-**
            
            
            
            -Other
                countries
            
            ****
            **95,377**
            
            
            
            77,555
            
            
            
            44,627
            
            
            ****
            **73,158**
            
            
            
            30,962
            
            
            ****
            **-**
            
            
            
            -Consolidated
                total
            
            **$**
            **1,149,107**
            
            
            $
            997,087
            
            
            $
            954,242
            
            
            **$**
            **1,092,664**
            
            
            $
            919,364
            
            
            **$**
            **55,276**
            
            
            $
            1,224







(i)
            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.


(ii)
              Property
                  and equipment is attributed to countries based on the physical
                  location of
                  the asset at the fiscal year-end.
  The
        Company provides services across different geographic areas to many customers.
        Approximately 70% (2006 - 70%; 2005 - 70%) of the Company’s revenues in fiscal
        2007 were derived from customers involved in oil and gas production and
        exploration. In fiscal 2007 and 2006 no single customer represented greater
        than
        10% of revenue.




142





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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




**26.**
            **COMMITMENTS**




The
      Company had entered into aircraft operating leases with 27 lessors in respect
      of
      111 aircraft included in the Company’s fleet at April 30, 2007. At
      inception the Company’s aircraft leases had terms not exceeding 8.5 years.
      At April 30, 2007 these leases had expiry dates ranging from fiscal 2008 to
      2016. 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 facilities or has the work performed by an external
      repair and overhaul service provider.




At
      April 30, 2007, the Company also had commitments with respect to operating
      leases for buildings, land and equipment. During the year ended April 30,
      2007 the Company incurred aircraft operating lease and related costs of
      $100.4 million (2006 - $65.5 million; 2005 - $57.8 million) and
      other operating lease costs of $6.7 million (2006 - $6.4 million; 2005
      - $3.8 million). The Company accounts for lease expense on a straight-line
      basis. The minimum lease rentals required under such leases were
      $600.9 million as at April 30, 2007 and are payable in the following
      amounts over the following fiscal years:


Aircraft
              operating
                leases
            
            
            Building,
                land
              and
                equipment
              operating
                leases
            
            
            Total
              operating
                leases2008
            
            $
            103,438
            
            
            $
            5,706
            
            
            $
            109,1442009
            
            
            96,628
            
            
            
            4,844
            
            
            
            101,4722010
            
            
            90,922
            
            
            
            4,141
            
            
            
            95,0632011
            
            
            82,579
            
            
            
            3,807
            
            
            
            86,3862012
            
            
            69,085
            
            
            
            3,692
            
            
            
            72,777and
                thereafter
            
            
            113,659
            
            
            
            22,416
            
            
            
            136,075$
            556,311
            
            
            $
            44,606
            
            
            $
            600,917




As
      at
      April 30, 2007, the Company had ordered and made deposits (Note 12)
      for a number of aircraft. At April 30, 2007, the Company had committed to
      purchase 34 heavy and 37 medium aircraft. Total capital committed to
      these purchases is approximately $837.1 million
      (US $756.4 million). These aircraft are expected to be delivered in
      fiscal 2008 and beyond and will be deployed in the Company’s European Operations
      and Global Operations.




Depending
      on market conditions, the Company intends to obtain the use of these aircraft
      through operating leases.




**27.**
            **VARIABLE
                INTEREST ENTITIES**




At
      April 30, 2007 the Company operated 16 aircraft (2006 -
      19 aircraft) under operating leases with four 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 2010 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,
      2007, the unaudited estimated fair market value of the aircraft leased from
      VIEs
      is $94.3 million (2006 - $134.1 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
      $14.4 million (2006 - $17.7 million).






143





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







**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 2008 and 2015.
      The
      Company’s exposure under the asset value guarantees including guarantees in the
      form of junior loans, rebateable advance rentals and deferred payments is
      approximately $86.4 million (2006 - $60.8 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.




The
      Company has provided guarantees to certain lessors in respect of novated
      aircraft purchase contracts. Under these contracts, if the manufacturer fails
      to
      meet specified delivery terms or becomes insolvent prior to aircraft delivery,
      the Company may be required to reimburse the lessor for amounts paid by the
      lessor to the aircraft manufacturer. Under either scenario, the Company has
      recourse against the aircraft manufacturer. Once aircraft are delivered under
      the novated aircraft purchase agreements, the Company no longer has an
      obligation under these guarantees. The Company’s maximum exposure under the
      guarantees in the novated aircraft purchase agreements at April 30, 2007
      was approximately $179.5 million (April 30, 2006 - $nil). 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. 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
      US,
      the UK, the Netherlands, Ireland, Denmark, Australia and South Africa for
      approximately 57% 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 2007 were approximately
      $8.4 million (2006 - $5.9 million; 2005 - $5.7 million). The
      increase in expense over the prior year is mainly related to a new plan for
      Global Operations non-resident crew and an increase in the number of employees
      worldwide.






144





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


(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 pension plans in Canada, the UK, Norway and the
      Netherlands for approximately 33% of the Company’s active employees. Funded
      plans require the Company to make cash contributions to the plans 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
      plans 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 *(i)*
            
            
            35
            %Norwegian
                bonds
            
            
            70
            %High
                yield bonds *(i)*
            
            
            25
            %Emerging
                markets bonds *(i)*
            
            
            25
            %Global
                government bonds
            
            
            25
            %Total
                bonds
            
            
            100
            %Money
                market
            
            
            100
            %Property
                funds
            
            
            15
            %Hedge
                funds *(i)*
            
            
            10
            %Private
                equity funds *(i)*
            
            
            10
            %




(i)
            The
                total of equities, emerging markets bonds, high yield bonds, hedge
                funds
                and private equity funds can be maximum 60% of total
                assets.




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 of all the defined
      benefit plans at April 30, 2007 was 48% equities, 37% fixed income and 15%
      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 plan it is expected that the rate of return on the plan assets will be
      between 4% and 5% in excess of price inflation for equities and 2% in excess
      of
      price inflation for bonds. 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 at April 30 on an annual
      basis.




During
      the year ended April 30, 2007, a plan amendment resulted in a
      $2.3 million increase in the benefit obligation of the Norwegian plan. This
      amendment arose as a result of legislation in Norway that requires certain
      variable pay amounts to be included in pensionable earnings.






145





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







The
      consolidated changes in the benefit obligations and fair values of assets for
      the defined benefit plans during fiscal 2007 and 2006 are as
      follows:


2007
            
            
            2006**Change
                in benefit obligations**Benefit
                obligations, beginning of year
            
            $
            599,161
            
            
            $
            620,398Current
                service cost
            
            
            21,455
            
            
            
            19,328Interest
                cost
            
            
            30,804
            
            
            
            28,702Amendments
            
            
            2,269
            
            
            
            (354
            )Net
                actuarial and experience (gains) losses
            
            
            (3,207
            )
            
            
            18,450Past
                service obligation
            
            
            983
            
            
            
            -Benefits
                paid
            
            
            (22,261
            )
            
            
            (15,726
            )Foreign
                exchange
            
            
            31,311
            
            
            
            (71,637
            )Benefit
                obligations, end of year
            
            $
            660,515
            
            
            $
            599,161**Change
                in plan assets**Fair
                value of plan assets, beginning of year
            
            $
            525,010
            
            
            $
            490,501Actual
                return on plan assets
            
            
            29,709
            
            
            
            75,408Employer
                contributions
            
            
            18,612
            
            
            
            30,775Participant
                contributions
            
            
            2,884
            
            
            
            2,638Benefits
                paid
            
            
            (20,402
            )
            
            
            (14,977
            )Foreign
                exchange
            
            
            27,563
            
            
            
            (59,335
            )Fair
                value of plan assets, end of year
            
            $
            583,376
            
            
            $
            525,010**Funded
                status**
            
            $
            (77,139
            )
            
            $
            (74,151
            )Unrecognized
                net actuarial and experience losses
            
            
            138,367
            
            
            
            134,467Unrecognized
                prior service costs
            
            
            1,146
            
            
            
            (149
            )Unrecognized
                transition amounts
            
            
            655
            
            
            
            715Pension
                guarantee deposits
            
            
            5,304
            
            
            
            5,179Total
                recognized net pension asset
            
            $
            68,333
            
            
            $
            66,061




The
      tables below detail as at April 30, 2007 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 $100.0 million
      (Note 12) (2006 - $100.1 million) and accrued benefit obligations
      included in other liabilities of $31.6 million (Note 16) (2006 -
      $34.0 million).




As
                at April 30, 2007Funded
                plans
            
            
            SERP
                &
              Unfunded
            
            
            
            
            
            Other
                assets
            
            
            Other
                liabilitiesSurplus
            
            
            Deficit
            
            
            Plans
            
            
            Total
            
            
            *(Note
                12)*
            
            
            *(Note
                16)*Benefit
                obligations
            
            $
            210,442
            
            
            $
            384,812
            
            
            $
            65,261
            
            
            $
            660,515
            
            
            $
            527,318
            
            
            $
            133,197Fair
                value of plan assets
            
            
            232,383
            
            
            
            339,320
            
            
            
            11,673
            
            
            
            583,376
            
            
            
            508,988
            
            
            
            74,388Funded
                status
            
            
            21,941
            
            
            
            (45,492
            )
            
            
            (53,588
            )
            
            
            (77,139
            )
            
            
            (18,330
            )
            
            
            (58,809
            )Unrecognized
                net actuarial and experience losses
            
            
            36,201
            
            
            
            79,574
            
            
            
            22,592
            
            
            
            138,367
            
            
            
            111,286
            
            
            
            27,081Unrecognized
                prior service costs
            
            
            1,696
            
            
            
            (6,338
            )
            
            
            5,788
            
            
            
            1,146
            
            
            
            1,696
            
            
            
            (550
            )Unrecognized
                transition amounts
            
            
            -
            
            
            
            -
            
            
            
            655
            
            
            
            655
            
            
            
            -
            
            
            
            655Pension
                guarantee deposits
            
            
            4,508
            
            
            
            796
            
            
            
            -
            
            
            
            5,304
            
            
            
            5,304
            
            
            
            -$
            64,346
            
            
            $
            28,540
            
            
            $
            (24,553
            )
            
            $
            68,333
            
            
            $
            99,956
            
            
            $
            (31,623
            )







146





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







As
                at April 30, 2006Funded
                plans
            
            
            SERP
                &
              Unfunded
            
            
            
            
            
            Other
                assets
            
            
            Other
                liabilitiesSurplus
            
            
            Deficit
            
            
            Plans
            
            
            Total
            
            
            *(Note
                12)*
            
            
            *(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
            
            
            33,219
            
            
            
            87,437
            
            
            
            13,811
            
            
            
            134,467
            
            
            
            120,923
            
            
            
            13,544Unrecognized
                prior service costs
            
            
            1,126
            
            
            
            (6,701
            )
            
            
            5,426
            
            
            
            (149
            )
            
            
            1,126
            
            
            
            (1,275
            )Unrecognized
                transition amounts
            
            
            -
            
            
            
            -
            
            
            
            715
            
            
            
            715
            
            
            
            -
            
            
            
            715Pension
                guarantee deposits
            
            
            4,402
            
            
            
            777
            
            
            
            -
            
            
            
            5,179
            
            
            
            5,179
            
            
            
            -$
            66,209
            
            
            $
            26,098
            
            
            $
            (26,246
            )
            
            $
            66,061
            
            
            $
            100,101
            
            
            $
            (34,040
            )







The
      significant weighted average actuarial assumptions adopted in measuring the
      Company’s defined benefit pension plan obligations as at April 30 are as
      follows:


**2007**
            
            
            2006
            
            
            2005Discount
                rate
            
            ****
            **5.32**
            **%**
            
            
            4.94
            %
            
            
            5.15
            %Rate
                of compensation increase
            
            ****
            **3.80**
            **%**
            
            
            3.50
            %
            
            
            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:


**2007**
            
            
            2006
            
            
            2005Discount
                rate
            
            ****
            **5.35**
            **%**
            
            
            5.08
            %
            
            
            5.74
            %Expected
                long-term rate of return on plan assets
            
            ****
            **6.69**
            **%**
            
            
            6.66
            %
            
            
            6.70
            %







The
      Company’s net defined benefit pension plan expense is as follows:


**2007**
            
            
            2006
            
            
            2005Current
                service cost
            
            **$**
            **21,455**
            
            
            $
            19,328
            
            
            $
            19,508Interest
                cost
            
            ****
            **30,804**
            
            
            
            28,702
            
            
            
            29,015Actual
                return on plan assets
            
            ****
            **(29,709**
            **)**
            
            
            (75,408
            )
            
            
            (29,936
            )Excess
                of actual return over expected return
            
            ****
            **(6,583**
            **)**
            
            
            47,769
            
            
            
            347Amortization
                of net actuarial and experience losses
            
            ****
            **6,999**
            
            
            
            10,114
            
            
            
            7,985Amortization
                of prior service costs
            
            ****
            **751**
            
            
            
            (1
            )
            
            
            (376
            )Amortization
                of transition amounts
            
            ****
            **60**
            
            
            
            48
            
            
            
            268Participant
                contributions
            
            ****
            **(2,884**
            **)**
            
            
            (2,638
            )
            
            
            (3,595
            )Net
                defined benefit pension plan expense
            
            **$**
            **20,893**
            
            
            $
            27,914
            
            
            $
            23,216







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, are
      as
      follows:




2008
            
            $
            20,3492009
            
            
            21,4462010
            
            
            23,1402011
            
            
            24,2572012
            
            
            25,4142013-2017
            
            
            145,105







147







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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




Employer
      contributions expected to be paid to the defined benefit pension plans during
      fiscal 2008 as required by funding regulations and law are
      $23.9 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 ACN) 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:




**2007**
              
              
              2006
              
              
              2005Revenues
                  from ACN
              
              **$**
              **90,256**
              
              
              $
              70,738
              
              
              $
              43,518Direct
                  costs
              
              ****
              **432**
              
              
              
              446
              
              
              
              1,298Inventory
                  additions
              
              ****
              **-**
              
              
              
              10,679
              
              
              
              -Capital
                  asset additions
              
              ****
              **-**
              
              
              
              5,692
              
              
              
              8,160Net
                  amounts receivable and payable in respect of such revenues, expenses
                  and
                  additions
              
              ****
              **25,351**
              
              
              
              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 was subordinated to the Company’s senior
                credit facilities and its senior subordinated notes (Note 14). The
                loan was 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 (2006 -
                $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, 2007.




During
      the year ended April 30, 2007, the entire principal balance of the loan was
      converted to Class A subordinate voting shares. As a result, 1,379,310
      Class A shares were issued and the loan and related interest ceased on the
      conversion date. At the date of conversion, the loan had a carrying value of
      approximately $4.9 million that was recorded as capital stock.






148





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


(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,****2007**
            
            
            2006
            
            
            2005**Net
                earnings according to Canadian GAAP**
            
            **$**
            **43,964**
            
            
            $
            90,710
            
            
            $
            56,519Pre-operating
                expenses*(i)*
            
            ****
            **(2,369**
            **)**
            
            
            3,261
            
            
            
            (3,515
            )Tax
                impact of pre-operating expenses*(ix)*
            
            ****
            **684**
            
            
            
            (1,065
            )
            
            
            1,168Unrealized
                gain (loss) on ineffective hedges *(ii)*
            
            ****
            **(9,765**
            **)**
            
            
            43,803
            
            
            
            (4,796
            )Tax
                impact of unrealized gain (loss) on ineffective hedges*(ix)*
            
            ****
            **1,738**
            
            
            
            (7,256
            )
            
            
            778Amortization
                of guarantees recognized*(iii)*
            
            ****
            **(2,002**
            **)**
            
            
            (1,365
            )
            
            
            (827
            )Tax
                impact of amortization of guarantees recognized*(ix)*
            
            ****
            **602**
            
            
            
            533
            
            
            
            225Proportionate
                foreign currency translation ("CTA") (gain) loss due to partial reduction
                in subsidiary net investments *(iv)*
            
            ****
            **(282**
            **)**
            
            
            2,612
            
            
            
            -Tax
                impact of CTA (gain) loss *(ix)*
            
            ****
            **96**
            
            
            
            (891
            )
            
            
            -Other,
                net of tax
            
            ****
            **243**
            
            
            
            277
            
            
            
            (448
            )**Net
                earnings according to US GAAP**
            
            ****
            **32,909**
            
            
            
            130,619
            
            
            
            49,104Other
                comprehensive earningsForeign
                currency translation *(v)*
            
            ****
            **42,059**
            
            
            
            (79,713
            )
            
            
            8,588Minimum
                pension liability *(vi)*
            
            ****
            **14,989**
            
            
            
            23,702
            
            
            
            (78,117
            )Tax
                impact of minimum pension liability *(ix)*
            
            ****
            **(4,580**
            **)**
            
            
            (7,242
            )
            
            
            23,412Foreign
                currency cash flow hedges *(vii)*Unrealized
                holding gains arising during the period
            
            ****
            **252**
            
            
            
            8,166
            
            
            
            7,052Less:
                reclassification adjustment for gains included in net
                earnings
            
            ****
            **(3,480**
            **)**
            
            
            (3,857
            )
            
            
            (4,487
            )Tax
                impact on foreign currency cash flow hedges *(ix)*
            
            ****
            **1,180**
            
            
            
            (1,575
            )
            
            
            (1,052
            )Unrealized
                gains on securities *(viii)*Unrealized
                holding gains arising during the period
            
            ****
            **-**
            
            
            
            2,319
            
            
            
            1,688Less:
                reclassification adjustment for gains included in net
                earnings
            
            ****
            **-**
            
            
            
            (4,007
            )
            
            
            -Tax
                impact on unrealized gains on securities *(ix)*
            
            ****
            **-**
            
            
            
            301
            
            
            
            (301
            )**Comprehensive
                earnings according to US GAAP**
            
            **$**
            **83,329**
            
            
            $
            68,713
            
            
            $
            5,887**Net
                earnings per share according to US GAAP**Basic
            
            **$**
            **0.78**
            
            
            $
            3.11
            
            
            $
            1.17Diluted
            
            **$**
            **0.72**
            
            
            $
            2.84
            
            
            $
            1.06







149







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







(b)
            Consolidated
                balance sheets




**April 30,
                2007**
            
            
            April
                30, 2006**Canadian
                GAAP**
            
            
            **US
                GAAP**
            
            
            Canadian
                GAAP
            
            
            US
                GAAPCurrent
                future income tax assets *(ii)*
            
            **$**
            **32,169**
            
            
            **$**
            **30,958**
            
            
            $
            26,859
            
            
            $
            25,648Other
                current assets *(iii)*
            
            ****
            **552,675**
            
            
            ****
            **554,677**
            
            
            
            378,908
            
            
            
            379,985Property
                and equipment, net *(x)*
            
            ****
            **1,092,664**
            
            
            ****
            **1,273,566**
            
            
            
            919,364
            
            
            
            920,613Long-term
                future income tax assets *(i,iii,iv,vi)*
            
            ****
            **34,678**
            
            
            ****
            **70,242**
            
            
            
            39,848
            
            
            
            53,783Other
                assets *(i,iii,vi,viii)*
            
            ****
            **390,033**
            
            
            ****
            **370,042**
            
            
            
            321,103
            
            
            
            307,520**$**
            **2,102,219**
            
            
            **$**
            **2,299,485**
            
            
            $
            1,686,082
            
            
            $
            1,687,549Current
                future income tax liabilities *(ii,vii)*
            
            **$**
            **9,813**
            
            
            **$**
            **10,561**
            
            
            $
            8,852
            
            
            $
            10,177Other
                current liabilities *(vii,x)*
            
            ****
            **698,415**
            
            
            ****
            **876,081**
            
            
            
            274,805
            
            
            
            271,437Long-term
                debt
            
            ****
            **64,168**
            
            
            ****
            **64,168**
            
            
            
            150,982
            
            
            
            151,287Senior
                subordinated notes
            
            ****
            **442,680**
            
            
            ****
            **442,680**
            
            
            
            448,120
            
            
            
            448,120Other
                liabilities *(ii,iii,vi,vii)*
            
            ****
            **142,691**
            
            
            ****
            **267,984**
            
            
            
            135,881
            
            
            
            193,759Long-term
                future income tax liabilities *(ii,vi,vii,viii)*
            
            ****
            **193,172**
            
            
            ****
            **182,848**
            
            
            
            176,708
            
            
            
            170,331Shareholders’
                equityClass
                A subordinate voting shares
            
            ****
            **235,346**
            
            
            ****
            **234,538**
            
            
            
            223,241
            
            
            
            223,241Class
                A subordinate voting employee share purchase loans
            
            ****
            **(1,254**
            **)**
            
            ****
            **(1,254**
            **)**
            
            
            (1,502
            )
            
            
            (1,502
            )Class
                B multiple voting shares
            
            ****
            **18,413**
            
            
            ****
            **18,413**
            
            
            
            18,413
            
            
            
            18,413Contributed
                surplus
            
            ****
            **5,042**
            
            
            ****
            **5,042**
            
            
            
            4,363
            
            
            
            3,412Foreign
                currency translation adjustment *(ii,iv,v)*
            
            ****
            **(40,800**
            **)**
            
            ****
            **-**
            
            
            
            (66,262
            )
            
            
            -Accumulated
                other comprehensive loss *(v,vi,vii,viii)*
            
            ****
            **-**
            
            
            ****
            **(147,486**
            **)**
            
            
            -
            
            
            
            (136,039
            )Retained
                earnings *(i,ii,iii,iv)*
            
            ****
            **334,533**
            
            
            ****
            **345,910**
            
            
            
            312,481
            
            
            
            334,913**$**
            **2,102,219**
            
            
            **$**
            **2,299,485**
            
            
            $
            1,686,082
            
            
            $
            1,687,549







(i)
            Pre-operating
                expenses




Under
      Canadian GAAP, pre-operating expenses related to the operations of new
      businesses in the period prior to the new business being capable of consistently
      providing its intended product and/or service 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.


(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
      guarantees to third parties under some of the Company’s operating leases
      relating to a portion of the aircraft values at the termination of the leases,
      regardless of whether or not the liability is probable, and a corresponding
      prepaid rent asset. As at April 30, 2007, this liability was equal to
      $17.9 million (2006 - $12.1 million). The corresponding prepaid rent
      assets related to operating lease asset value guarantees are being amortized
      on
      a straight-line basis over the lease term of the specific lease to which they
      relate. The liability is reduced as the Company is released from risk upon
      expiration or settlement of the guarantee.


(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.






150





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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




(v)
                  Foreign
                            currency
                            translation


Under
      Canadian GAAP, foreign currency translation adjustments related to
      self-sustaining subsidiaries arising on consolidation are included as a separate
      component of shareholders’ equity until realized. Under US GAAP, the related
      translation adjustments are included in other comprehensive earnings. Under
      US
      GAAP, the foreign currency translation gain or loss on the revaluation of
      foreign currency denominated debt designated and qualifying as effective hedges
      of the Company’s net investments is included in other comprehensive earnings,
      whereas under Canadian GAAP it is included as a separate component of
      shareholders’ equity until realized.




(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.




Under
      US GAAP, the Company is required to recognize the funded status of its defined
      benefit pension and other post-retirement benefit plans on the balance sheet,
      with a corresponding adjustment to accumulated other comprehensive income,
      net
      of tax as prescribed by FASB Statement No. 158, *Employers’ Accounting
      for Defined Benefit Pension and Other Post-Retirement Plans, an amendment to
      FASB Statements No. 87, 88, 106, and 132(R)*(“Statement 158”)*.*




The
      incremental effects of adopting the provisions of Statement 158 on the
      Company’s balance sheet at April 30, 2007 are presented below:









Prior
                to Adopting Statement 158*(i)*
            
            
            Effect
                of Adopting Statement 158
            
            
            As
                ReportedOther
                assets
            
            $
            5,788
            
            
            $
            (3,940
            )
            
            $
            1,848Other
                liabilities
            
            
            58,185
            
            
            
            83,832
            
            
            
            142,017Future
                income taxes
            
            
            16,009
            
            
            
            25,905
            
            
            
            41,914Accumulated
                other comprehensive loss
            
            
            46,797
            
            
            
            61,867
            
            
            
            108,664







(i)
            Includes
                the effect of recognizing an additional minimum pension liability
                (reduction of $10.4 million and $16.5 million, net of tax for
                fiscal 2007 and fiscal 2006, respectively) included in other comprehensive
                earnings had the Company not been required to adopt Statement 158 at
                April 30, 2007.





The
      adoption of Statement 158 had no effect on the Company’s consolidated
      statement of earnings for the year ended April 30, 2007, or for any prior
      period presented, and it will not affect the Company’s earnings in future
      periods, but will affect comprehensive earnings in future periods.




(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.






151





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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




(ix)
                        Income
                                      taxes


The
      computation of income taxes related to the adjustments above are based on the
      nature of the adjustment and the jurisdiction in which the adjustment
      originated. The Company operates in various jurisdictions which are subject
      to
      local tax legislation, resulting in varying effective tax rates for each
      reconciling item. The following statutory income tax rates by jurisdiction
      were
      used to compute the tax impact of each adjustment in the years ended
      April 30:




**2007**
            
            
            2006
            
            
            2005Canada
            
            ****
            **34.12**
            **%**
            
            
            34.12
            %
            
            
            35.62
            %United
                Kingdom
            
            ****
            **30.00**
            **%**
            
            
            30.00
            %
            
            
            30.00
            %Norway
            
            ****
            **28.00**
            **%**
            
            
            28.00
            %
            
            
            28.00
            %The
                Netherlands
            
            ****
            **29.60**
            **%**
            
            
            30.50
            %
            
            
            30.46
            %Australia
            
            ****
            **30.00**
            **%**
            
            
            30.00
            %
            
            
            30.00
            %Barbados
            
            ****
            **2.46**
            **%**
            
            
            2.04
            %
            
            
            2.00
            %


(x)
                          Assets
                                          under
                                          construction


Under
      US GAAP, the Company is required to record assets under construction as
      prescribed by EITF 97-10, *The Effect of Lessee Involvement in Asset
      Construction*. These amounts relate to aircraft purchase agreements which
      were novated to certain lessors. Assets under construction and the corresponding
      obligation relating to assets under construction totalled $179.4 million at
      April 30, 2007 (2006 - $nil). Once the aircraft are delivered under these
      agreements, a sale-leaseback transaction will occur as the Company will enter
      into operating leases with lessors. This will result in the removal of assets
      under construction and the corresponding liability at that time.




(c)
            Consolidated
                statements of cash flows




Under
      Canadian GAAP, the presentation of a subtotal of the amount of cash provided
      by
      operating activities before the change in non-cash working capital in the
      statement of cash flows is permitted. Under US GAAP, such presentation is not
      permitted.






152





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







(d)
            Consolidated
                statements of changes in shareholders’
equity




**2007**
            
            
            2006
            
            
            2005**Capital
                Stock**Balance,
                beginning of year
            
            **$**
            **240,152**
            
            
            $
            239,469
            
            
            $
            238,428Shares
                issued to employees for cashShare
                option plan
            
            ****
            **5,611**
            
            
            
            -
            
            
            
            668Share
                purchase plan
            
            ****
            **686**
            
            
            
            496
            
            
            
            239Debt
                conversion
            
            ****
            **5,000**
            
            
            
            -
            
            
            
            -Change
                in employee share purchase loans
            
            ****
            **248**
            
            
            
            187
            
            
            
            134Balance,
                end of year
            
            ****
            **251,697**
            
            
            
            240,152
            
            
            
            239,469**Contributed
                Surplus**Balance,
                beginning of year
            
            ****
            **3,412**
            
            
            
            2,340
            
            
            
            2,340Stock
                based compensation expense
            
            ****
            **1,630**
            
            
            
            1,072
            
            
            
            -Balance,
                end of year
            
            ****
            **5,042**
            
            
            
            3,412
            
            
            
            2,340**Retained
                Earnings**Balance,
                beginning of year
            
            ****
            **334,913**
            
            
            
            221,377
            
            
            
            185,078Net
                earnings
            
            ****
            **32,909**
            
            
            
            130,619
            
            
            
            49,104Dividends
            
            ****
            **(21,912**
            **)**
            
            
            (17,083
            )
            
            
            (12,805
            )Balance,
                end of year
            
            ****
            **345,910**
            
            
            
            334,913
            
            
            
            221,377**Accumulated
                Other Comprehensive Loss, Net of Tax**Balance,
                beginning of year
            
            ****
            **(136,039**
            **)**
            
            
            (74,133
            )
            
            
            (30,916
            )Foreign
                currency translation adjustment
            
            ****
            **42,059**
            
            
            
            (79,713
            )
            
            
            8,588Minimum
                pension liability
            
            ****
            **10,409**
            
            
            
            16,460
            
            
            
            (54,705
            )Unrealized
                gains on foreign currency cash flow hedges
            
            ****
            **(2,048**
            **)**
            
            
            2,734
            
            
            
            1,513Unrealized
                gains on securities
            
            ****
            **-**
            
            
            
            (1,387
            )
            
            
            1,387FAS
                158 cumulative adjustment
            
            ****
            **(61,867**
            **)**
            
            
            -
            
            
            
            -Balance,
                end of year
            
            **$**
            **(147,486**
            **)**
            
            $
            (136,039
            )
            
            $
            (74,133
            )Shareholders'
                equity, end of year
            
            **$**
            **455,163**
            
            
            $
            442,438
            
            
            $
            389,053




(e)
            Other
                supplemental disclosures




**2007**
            
            
            2006Payables
                - trade
            
            **$**
            **238,641**
            
            
            $
            138,800Accruals
            
            ****
            **85,468**
            
            
            
            71,965Interest
                accrual
            
            ****
            **16,803**
            
            
            
            16,881Total
                payables and accruals
            
            **$**
            **340,912**
            
            
            $
            227,646




*New
      Accounting Standards*




(i)
            Fair
                Value Measurements




In
      September 2006, the FASB issued SFAS No. 157, *Fair Value
      Measurements* (“SFAS 157”). SFAS 157 defines fair value, establishes a
      framework for measuring fair value and expands disclosures about fair value
      measurement. SFAS 157 is effective for financial statements issued for the
      Company’s fiscal year beginning May 1, 2008, and interim periods within
      that fiscal year. The Company is currently evaluating the implications of this
      Statement.






153





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







(ii)
            Uncertainty
                in Income Taxes




In
      June
      2006, the FASB issued FIN 48, *Accounting for Uncertainty in Income
      Taxes - an Interpretation of FASB Statement No. 109* (“FIN 48”).
      FIN 48 requires a two-step approach when evaluating a tax position. The
      first step is to evaluate the tax position for recognition by determining if
      the
      weight of available evidence indicates it is more-likely-than-not, based solely
      on the technical merits, that the position will be sustained. The second step
      is
      to measure the appropriate amount of tax benefit to recognize, which will be
      measured as the largest amount of tax benefit that is greater than
      50 percent likely of being realized upon ultimate settlement with a taxing
      authority that has full knowledge of all relevant information. The tax position
      should be derecognized in the first period in which it is no longer
      more-likely-than-not that the tax position will be sustained upon examination.
      FIN 48 is effective for the Company’s fiscal year beginning May 1,
      2007. The Company is currently evaluating the implications of this
      Statement.


(ii)
              Quantifying
                  Misstatements in the Financial
                  Statements


In
      September 2006, the SEC Staff issued Staff Accounting Bulletin 108,
*Quantifying Misstatements in the Financial Statements* (“SAB 108”).
      SAB 108 requires that misstatements identified in the current year as a
      result of prior year misstatements be quantified and evaluated using a dual
      approach which includes an income statement and balance sheet assessment of
      any
      misstatement. SAB 108 is effective for fiscal years ending after
      November 15, 2006. The implementation of SAB 108 did not have a
      material impact on the Company’s consolidated financial statements.




**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. US GAAP was employed in the preparation of
      the
      summarized financial information.






154





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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





**2007****As
                  at
                  April 30**
              
              **CHC
                  Helicopter**
                **Corporation**
              
              
              **Guarantor**
                **subsidiaries**
              
              
              **Non-Guarantor**
                **subsidiaries**
              
              
              **Eliminations**
              
              
              **Consolidated****Assets**Current
                  assetsCash
                  and cash
                  equivalents
              
              $
              9,981
              
              
              $
              47,681
              
              
              $
              31,849
              
              
              $
              -
              
              
              $
              89,511Receivables
              
              
              36,800
              
              
              
              194,100
              
              
              
              79,009
              
              
              
              (32,142
              )
              
              
              277,767Inventory
              
              
              -
              
              
              
              15,873
              
              
              
              110,442
              
              
              
              -
              
              
              
              126,315Other
                  current
                  assets
              
              
              2,098
              
              
              
              43,482
              
              
              
              16,454
              
              
              
              26,047
              
              
              
              88,081Assets
                  of
                  discontinued operations
              
              
              -
              
              
              
              3,961
              
              
              
              -
              
              
              
              -
              
              
              
              3,96148,879
              
              
              
              305,097
              
              
              
              237,754
              
              
              
              (6,095
              )
              
              
              585,635Property
                  and equipment,
                  net
              
              
              -
              
              
              
              794,229
              
              
              
              482,337
              
              
              
              (3,000
              )
              
              
              1,273,566Investments
              
              
              661,488
              
              
              
              336,173
              
              
              
              73,565
              
              
              
              (1,063,748
              )
              
              
              7,478Long-term
                  intercompany
              
              
              543,623
              
              
              
              (222,885
              )
              
              
              (236,307
              )
              
              
              (84,431
              )
              
              
              -Other
                  long-term
                  assets
              
              
              36,031
              
              
              
              214,510
              
              
              
              164,065
              
              
              
              (269
              )
              
              
              414,337Assets
                  of discontinued
                  operations
              
              
              -
              
              
              
              18,469
              
              
              
              -
              
              
              
              -
              
              
              
              18,469$
              1,290,021
              
              
              $
              1,445,593
              
              
              $
              721,414
              
              
              $
              (1,157,543
              )
              
              $
              2,299,485**Liabilities
                  and shareholders'
                  equity**Current
                  liabilitiesPayables
                  and
                  accruals
              
              $
              15,979
              
              
              $
              150,226
              
              
              $
              167,367
              
              
              $
              7,340
              
              
              $
              340,912Other
                  current
                  liabilities
              
              
              155,970
              
              
              $
              322,743
              
              
              $
              49,847
              
              
              $
              14,191
              
              
              
              542,751Liabilities
                  of
                  discontinued operations
              
              
              -
              
              
              
              2,979
              
              
              
              -
              
              
              
              -
              
              
              
              2,979171,949
              
              
              
              475,948
              
              
              
              217,214
              
              
              
              21,531
              
              
              
              886,642Long-term
                  debt
              
              
              57,651
              
              
              
              4,018
              
              
              
              2,499
              
              
              
              -
              
              
              
              64,168Senior
                  subordinated
                  notes
              
              
              442,680
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              442,680Other
                  liabilities
              
              
              (1,483
              )
              
              
              159,875
              
              
              
              158,896
              
              
              
              (52,204
              )
              
              
              265,084Future
                  income tax
                  liabilities
              
              
              7,126
              
              
              
              34,724
              
              
              
              73,249
              
              
              
              67,749
              
              
              
              182,848Liabilities
                  of discontinued
                  operations
              
              
              -
              
              
              
              2,900
              
              
              
              -
              
              
              
              -
              
              
              
              2,900Shareholders'
                  equityCapital
                  stock
              
              
              251,697
              
              
              
              88,424
              
              
              
              44,876
              
              
              
              (133,300
              )
              
              
              251,697Contributed
                  surplus
              
              
              5,042
              
              
              
              137,689
              
              
              
              (54,381
              )
              
              
              (83,308
              )
              
              
              5,042Accumulated
                  other
                  comprehensive earnings
                  (loss)
              
              
              9,449
              
              
              
              (169,565
              )
              
              
              19,437
              
              
              
              (6,807
              )
              
              
              (147,486
              )Retained
                  earnings
              
              
              345,910
              
              
              
              711,580
              
              
              
              259,624
              
              
              
              (971,204
              )
              
              
              345,910$
              1,290,021
              
              
              $
              1,445,593
              
              
              $
              721,414
              
              
              $
              (1,157,543
              )
              
              $
              2,299,485









155







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







**2007****For
                the year ended April 30**
            
            **CHC
                Helicopter**
              **Corporation**
            
            
            **Guarantor**
              **subsidiaries**
            
            
            **Non-Guarantor**
              **subsidiaries**
            
            
            **Eliminations**
            
            
            **Consolidated****Revenue**
            
            $
            -
            
            
            $
            752,229
            
            
            $
            586,597
            
            
            $
            (189,719
            )
            
            $
            1,149,107Direct
                costs
            
            
            1,207
            
            
            
            (657,756
            )
            
            
            (443,124
            )
            
            
            172,590
            
            
            
            (927,083
            )General
                and administration costs
            
            
            -
            
            
            
            (43,388
            )
            
            
            -
            
            
            
            -
            
            
            
            (43,388
            )Amortization
            
            
            -
            
            
            
            (20,662
            )
            
            
            (45,482
            )
            
            
            1,041
            
            
            
            (65,103
            )Restructuring
                recovery
            
            
            -
            
            
            
            1,350
            
            
            
            991
            
            
            
            -
            
            
            
            2,341Gain
                (loss) on disposals of assets
            
            
            (6
            )
            
            
            (4,618
            )
            
            
            3,313
            
            
            
            (1,676
            )
            
            
            (2,987
            )**Operating
                income**
            
            
            1,201
            
            
            
            27,155
            
            
            
            102,295
            
            
            
            (17,764
            )
            
            
            112,887Financing
                charges
            
            
            (6,384
            )
            
            
            (37,929
            )
            
            
            (29,861
            )
            
            
            3,991
            
            
            
            (70,183
            )**Earnings
                (loss) from continuing operations before income taxes and undernoted
                items**
            
            
            (5,183
            )
            
            
            (10,774
            )
            
            
            72,434
            
            
            
            (13,773
            )
            
            
            42,704Equity
                in earnings of associated companies
            
            
            14,723
            
            
            
            38,096
            
            
            
            -
            
            
            
            (51,766
            )
            
            
            1,053Intercompany
                charges
            
            
            10,484
            
            
            
            25,919
            
            
            
            (34,634
            )
            
            
            (1,769
            )
            
            
            -Income
                tax recovery (provision)
            
            
            12,885
            
            
            
            (17,545
            )
            
            
            (2,257
            )
            
            
            (6,908
            )
            
            
            (13,825
            )**Net
                earnings from continuing operations**
            
            
            32,909
            
            
            
            35,696
            
            
            
            35,543
            
            
            
            (74,216
            )
            
            
            29,932Net
                earnings from discontinued operations
            
            
            -
            
            
            
            2,167
            
            
            
            -
            
            
            
            -
            
            
            
            2,167**Net
                earnings before extraordinary item**
            
            
            32,909
            
            
            
            37,863
            
            
            
            35,543
            
            
            
            (74,216
            )
            
            
            32,099Extraordinary
                item, net of tax
            
            
            -
            
            
            
            1,268
            
            
            
            1,500
            
            
            
            (1,958
            )
            
            
            810**Net
                earnings**
            
            
            32,909
            
            
            
            39,131
            
            
            
            37,043
            
            
            
            (76,174
            )
            
            
            32,909Retained
                earnings, beginning of year
            
            
            334,913
            
            
            
            672,449
            
            
            
            222,581
            
            
            
            (895,030
            )
            
            
            334,913Dividends
            
            
            (21,912
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (21,912
            )**Retained
                earnings, end of year**
            
            $
            345,910
            
            
            $
            711,580
            
            
            $
            259,624
            
            
            $
            (971,204
            )
            
            $
            345,910







156







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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





**2007****For
                  the year ended
                  April 30**
              
              **CHC
                  Helicopter**
                **Corporation**
              
              
              **Guarantor**
                **subsidiaries**
              
              
              **Non-Guarantor**
                **subsidiaries**
              
              
              **Eliminations**
              
              
              **Consolidated****Operating
                  activities**Cash
                  flow from
                  operations
              
              $
              (8,485
              )
              
              $
              (73,075
              )
              
              $
              107,778
              
              
              $
              -
              
              
              $
              26,218**Financing
                  activities**Long-term
                  debt
                  proceeds
              
              
              131,452
              
              
              
              202,431
              
              
              
              44,288
              
              
              
              8,718
              
              
              
              386,889Long-term
                  debt
                  repayments
              
              
              (60,752
              )
              
              
              (94,020
              )
              
              
              (2,854
              )
              
              
              (8,718
              )
              
              
              (166,344
              )Dividends
                  paid
              
              
              (19,211
              )
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (19,211
              )Capital
                  stock
                  issued
              
              
              6,297
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              6,297Other
              
              
              -
              
              
              
              (80
              )
              
              
              (299
              )
              
              
              -
              
              
              
              (379
              )57,786
              
              
              
              108,331
              
              
              
              41,135
              
              
              
              -
              
              
              
              207,252**Investing
                  activities**Property
                  and equipment
                  additions
              
              
              -
              
              
              
              (257,894
              )
              
              
              (135,352
              )
              
              
              -
              
              
              
              (393,246
              )Helicopter
                  major
                  inspections
              
              
              -
              
              
              
              (14,236
              )
              
              
              (15,830
              )
              
              
              -
              
              
              
              (30,066
              )Proceeds
                  from
                  disposal
              
              
              -
              
              
              
              288,529
              
              
              
              29,791
              
              
              
              -
              
              
              
              318,320Junior
                  loans
                  receivable
              
              
              -
              
              
              
              (13,713
              )
              
              
              (4,096
              )
              
              
              -
              
              
              
              (17,809
              )Aircraft
                  deposits
              
              
              -
              
              
              
              (46,459
              )
              
              
              (224
              )
              
              
              -
              
              
              
              (46,683
              )Restricted
                  cash
              
              
              -
              
              
              
              1,012
              
              
              
              5,823
              
              
              
              -
              
              
              
              6,835Advances
                  to
                  BHS
              
              
              -
              
              
              
              (1,780
              )
              
              
              -
              
              
              
              -
              
              
              
              (1,780
              )Other
              
              
              -
              
              
              
              (2,328
              )
              
              
              (2,522
              )
              
              
              -
              
              
              
              (4,850
              )-
              
              
              
              (46,869
              )
              
              
              (122,410
              )
              
              
              -
              
              
              
              (169,279
              )Effect
                  of exchange rate changes on
                  cash and cash equivalents
              
              
              -
              
              
              
              133
              
              
              
              (283
              )
              
              
              -
              
              
              
              (150
              )Cash
                  provided by (used
                  in)continuing
                  operations
              
              
              49,301
              
              
              
              (11,480
              )
              
              
              26,220
              
              
              
              -
              
              
              
              64,041Cash
                  used in discontinued
                  operations
              
              
              -
              
              
              
              (861
              )
              
              
              -
              
              
              
              -
              
              
              
              (861
              )Change
                  in cash and cash
                  equivalentsduring
                  the
                  year
              
              
              49,301
              
              
              
              (12,341
              )
              
              
              26,220
              
              
              
              -
              
              
              
              63,180**Cash
                  and cash equivalents,
                  beginning of year**
              
              
              (39,320
              )
              
              
              60,022
              
              
              
              5,629
              
              
              
              -
              
              
              
              26,331**Cash
                  and cash equivalents, end of
                  year**
              
              $
              9,981
              
              
              $
              47,681
              
              
              $
              31,849
              
              
              $
              -
              
              
              $
              89,511











157





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


(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
              
              
              21,645
              
              
              
              156,404
              
              
              
              82,750
              
              
              
              (14,582
              )
              
              
              246,217Inventory
              
              
              -
              
              
              
              21,570
              
              
              
              70,314
              
              
              
              -
              
              
              
              91,884Other
                  current
                  assets
              
              
              (1,108
              )
              
              
              9,641
              
              
              
              5,300
              
              
              
              23,511
              
              
              
              37,344Assets
                  of
                  discontinued operations
              
              
              -
              
              
              
              3,857
              
              
              
              -
              
              
              
              -
              
              
              
              3,857(18,783
              )
              
              
              251,494
              
              
              
              163,993
              
              
              
              8,929
              
              
              
              405,633Property
                  and equipment,
                  net
              
              
              7
              
              
              
              523,385
              
              
              
              405,808
              
              
              
              (8,587
              )
              
              
              920,613Investments
              
              
              646,499
              
              
              
              225,649
              
              
              
              105,928
              
              
              
              (972,654
              )
              
              
              5,422Long-term
                  intercompany
              
              
              539,055
              
              
              
              (257,432
              )
              
              
              (138,892
              )
              
              
              (142,731
              )
              
              
              -Other
                  long-term
                  assets
              
              
              39,933
              
              
              
              183,329
              
              
              
              115,214
              
              
              
              (60
              )
              
              
              338,416Assets
                  of discontinued
                  operations
              
              
              -
              
              
              
              17,465
              
              
              
              -
              
              
              
              -
              
              
              
              17,465$
              1,206,711
              
              
              $
              943,890
              
              
              $
              652,051
              
              
              $
              (1,115,103
              )
              
              $
              1,687,549**Liabilities
                  and shareholders'
                  equity**Current
                  liabilitiesPayables
                  and
                  accruals
              
              $
              25,572
              
              
              $
              104,588
              
              
              $
              94,103
              
              
              $
              3,383
              
              
              $
              227,646Other
                  current
                  liabilities
              
              
              24,539
              
              
              
              4,694
              
              
              
              9,825
              
              
              
              10,873
              
              
              
              49,931Liabilities
                  of
                  discontinued operations
              
              
              -
              
              
              
              4,037
              
              
              
              -
              
              
              
              -
              
              
              
              4,03750,111
              
              
              
              113,319
              
              
              
              103,928
              
              
              
              14,256
              
              
              
              281,614Long-term
                  debt
              
              
              101,620
              
              
              
              49,575
              
              
              
              92
              
              
              
              -
              
              
              
              151,287Senior
                  subordinated
                  notes
              
              
              448,120
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              448,120Other
                  liabilities
              
              
              13,740
              
              
              
              123,904
              
              
              
              108,440
              
              
              
              (55,775
              )
              
              
              190,309Future
                  income tax
                  liabilities
              
              
              13,902
              
              
              
              28,953
              
              
              
              71,229
              
              
              
              56,247
              
              
              
              170,331Liabilities
                  of discontinued
                  operations
              
              
              -
              
              
              
              3,450
              
              
              
              -
              
              
              
              -
              
              
              
              3,450Shareholders'
                  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 (loss)
              
              
              741
              
              
              
              (166,699
              )
              
              
              54,729
              
              
              
              (24,810
              )
              
              
              (136,039
              )Retained
                  earnings
              
              
              334,913
              
              
              
              672,449
              
              
              
              222,581
              
              
              
              (895,030
              )
              
              
              334,913$
              1,206,711
              
              
              $
              943,890
              
              
              $
              652,051
              
              
              $
              (1,115,103
              )
              
              $
              1,687,549











158





CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


(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**
            
            $
            -
            
            
            $
            699,532
            
            
            $
            475,807
            
            
            $
            (178,252
            )
            
            $
            997,087Direct
                costs
            
            
            (670
            )
            
            
            (623,553
            )
            
            
            (387,343
            )
            
            
            223,295
            
            
            
            (788,271
            )General
                and administration costs
            
            
            -
            
            
            
            (27,895
            )
            
            
            -
            
            
            
            -
            
            
            
            (27,895
            )Amortization
            
            
            -
            
            
            
            (26,637
            )
            
            
            (27,156
            )
            
            
            (1,413
            )
            
            
            (55,206
            )Restructuring
                costs
            
            
            -
            
            
            
            (11,904
            )
            
            
            (4,246
            )
            
            
            -
            
            
            
            (16,150
            )Gain (loss)
                on disposals of assets
            
            
            -
            
            
            
            12,404
            
            
            
            8,258
            
            
            
            (20,667
            )
            
            
            (5
            )**Operating
                income (loss)**
            
            
            (670
            )
            
            
            21,947
            
            
            
            65,320
            
            
            
            22,963
            
            
            
            109,560Financing
                charges
            
            
            23,228
            
            
            
            (10,221
            )
            
            
            (18,249
            )
            
            
            495
            
            
            
            (4,747
            )**Earnings
                from continuing operations before income taxes and**
              **undernoted
                items**
            
            
            22,558
            
            
            
            11,726
            
            
            
            47,071
            
            
            
            23,458
            
            
            
            104,813Gain
                on sale of long-term investments
            
            
            -
            
            
            
            37,558
            
            
            
            -
            
            
            
            -
            
            
            
            37,558Equity
                in earnings of associated companies and non-controlling
                interest
            
            
            108,422
            
            
            
            25,084
            
            
            
            (66
            )
            
            
            (126,876
            )
            
            
            6,564Intercompany
                charges
            
            
            -
            
            
            
            20,690
            
            
            
            (20,690
            )
            
            
            -
            
            
            
            -Income
                tax provision
            
            
            (361
            )
            
            
            (12,976
            )
            
            
            (7,861
            )
            
            
            1,877
            
            
            
            (19,321
            )**Net
                earnings from continuing operations**
            
            
            130,619
            
            
            
            82,082
            
            
            
            18,454
            
            
            
            (101,541
            )
            
            
            129,614**Net
                earnings from discontinued operations**
            
            
            -
            
            
            
            1,005
            
            
            
            -
            
            
            
            -
            
            
            
            1,005**Net
                earnings**
            
            
            130,619
            
            
            
            83,087
            
            
            
            18,454
            
            
            
            (101,541
            )
            
            
            130,619Retained
                earnings, beginning of year
            
            
            221,377
            
            
            
            589,362
            
            
            
            204,127
            
            
            
            (793,489
            )
            
            
            221,377Dividends
            
            
            (17,083
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (17,083
            )**Retained
                earnings, end of year**
            
            $
            334,913
            
            
            $
            672,449
            
            
            $
            222,581
            
            
            $
            (895,030
            )
            
            $
            334,913







159







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


(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
            )
            
            $
            144,275
            
            
            $
            (80,422
            )
            
            $
            -
            
            
            $
            32,099**Financing
                activities**Long-term
                debt proceeds
            
            
            289,636
            
            
            
            175,265
            
            
            
            152,236
            
            
            
            (21,792
            )
            
            
            595,345Long-term
                debt repayments
            
            
            (372,562
            )
            
            
            (146,006
            )
            
            
            (313
            )
            
            
            21,792
            
            
            
            (497,089
            )Dividends
                paid
            
            
            (14,939
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (14,939
            )Capital
                stock issued
            
            
            496
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            496Other
            
            
            (6,888
            )
            
            
            (450
            )
            
            
            -
            
            
            
            -
            
            
            
            (7,338
            )(104,257
            )
            
            
            28,809
            
            
            
            151,923
            
            
            
            -
            
            
            
            76,475**Investing
                activities**Property
                and equipment additions
            
            
            -
            
            
            
            (166,080
            )
            
            
            (114,621
            )
            
            
            -
            
            
            
            (280,701
            )Helicopter
                major inspections
            
            
            -
            
            
            
            (7,354
            )
            
            
            (16,258
            )
            
            
            -
            
            
            
            (23,612
            )Proceeds
                from disposal
            
            
            -
            
            
            
            258,483
            
            
            
            55,211
            
            
            
            -
            
            
            
            313,694Aircraft
                deposits
            
            
            -
            
            
            
            (124,990
            )
            
            
            -
            
            
            
            
            
            
            
            (124,990
            )Restricted
                cash
            
            
            
            
            
            
            16
            
            
            
            (5,581
            )
            
            
            -
            
            
            
            (5,565
            )Advances
                to BHS
            
            
            -
            
            
            
            (3,892
            )
            
            
            -
            
            
            
            -
            
            
            
            (3,892
            )Other
            
            
            
            
            
            
            (141
            )
            
            
            1,054
            
            
            
            
            
            
            
            913-
            
            
            
            (43,958
            )
            
            
            (80,195
            )
            
            
            -
            
            
            
            (124,153
            )Effect
                of exchange rate changes on cash and cash equivalents
            
            
            -
            
            
            
            (11,389
            )
            
            
            766
            
            
            
            -
            
            
            
            (10,623
            )Cash
                provided by (used in) discontinued operations
            
            
            (136,011
            )
            
            
            117,737
            
            
            
            (7,928
            )
            
            
            -
            
            
            
            (26,202
            )Cash
                provided by discontinued operations
            
            
            -
            
            
            
            1,142
            
            
            
            -
            
            
            
            -
            
            
            
            1,142Change
                in cash and cash equivalents during the year
            
            
            (136,011
            )
            
            
            118,879
            
            
            
            (7,928
            )
            
            
            -
            
            
            
            (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
            )
            
            $
            60,023
            
            
            $
            5,628
            
            
            $
            -
            
            
            $
            26,331







160







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







2005**For
                the year ended April 30**
            
            **CHC
                Helicopter**
              **Corporation**
            
            
            **Guarantor**
              **subsidiaries**
            
            
            **Non-Guarantor**
              **subsidiaries**
            
            
            **Eliminations**
            
            
            **Consolidated****Revenue**
            
            $
            -
            
            
            $
            673,940
            
            
            $
            387,296
            
            
            $
            (106,994
            )
            
            $
            954,242Direct
                costs
            
            
            471
            
            
            
            (538,631
            )
            
            
            (308,995
            )
            
            
            109,345
            
            
            
            (737,810
            )General
                and administration costs
            
            
            -
            
            
            
            (35,279
            )
            
            
            -
            
            
            
            -
            
            
            
            (35,279
            )Amortization
            
            
            123
            
            
            
            (24,313
            )
            
            
            (25,705
            )
            
            
            (221
            )
            
            
            (50,116
            )Restructuring
                costs
            
            
            -
            
            
            
            (15,110
            )
            
            
            (2,280
            )
            
            
            -
            
            
            
            (17,390
            )Gain
                (loss) on disposals of assets
            
            
            -
            
            
            
            (223
            )
            
            
            4,101
            
            
            
            251
            
            
            
            4,129Fair
                value adjustment
            
            
            -
            
            
            
            -
            
            
            
            (14,260
            )
            
            
            -
            
            
            
            (14,260
            )**Operating
                income**
            
            
            594
            
            
            
            60,384
            
            
            
            40,157
            
            
            
            2,381
            
            
            
            103,516Debt
                settlement costs
            
            
            (1,043
            )
            
            
            (974
            )
            
            
            -
            
            
            
            -
            
            
            
            (2,017
            )Financing
                charges
            
            
            (9,903
            )
            
            
            (12,657
            )
            
            
            (19,402
            )
            
            
            (262
            )
            
            
            (42,224
            )**Earnings
                (loss) from continuing operations before income taxes and**
              **undernoted
                items**
            
            
            (10,352
            )
            
            
            46,753
            
            
            
            20,755
            
            
            
            2,119
            
            
            
            59,275Equity
                in earnings of associated companies and non-controlling
                interest
            
            
            57,056
            
            
            
            31,261
            
            
            
            (288
            )
            
            
            (82,837
            )
            
            
            5,192Intercompany
                charges
            
            
            -
            
            
            
            9,451
            
            
            
            (9,451
            )
            
            
            -
            
            
            
            -Income
                tax recovery (provision)
            
            
            2,400
            
            
            
            (14,363
            )
            
            
            (9,726
            )
            
            
            (3,264
            )
            
            
            (24,953
            )**Net
                earnings from continuing operations**
            
            
            49,104
            
            
            
            73,102
            
            
            
            1,290
            
            
            
            (83,982
            )
            
            
            39,514**Net earnings
                from discontinued operations**
            
            
            -
            
            
            
            9,590
            
            
            
            -
            
            
            
            -
            
            
            
            9,590**Net
                earnings**
            
            
            49,104
            
            
            
            82,692
            
            
            
            1,290
            
            
            
            (83,982
            )
            
            
            49,104Retained
                earnings, beginning of year
            
            
            185,078
            
            
            
            506,670
            
            
            
            202,837
            
            
            
            (709,507
            )
            
            
            185,078Dividends
            
            
            (12,805
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (12,805
            )**Retained
                earnings, end of year**
            
            $
            221,377
            
            
            $
            589,362
            
            
            $
            204,127
            
            
            $
            (793,489
            )
            
            $
            221,377







161







CHC
        Helicopter Corporation


Notes
      to the Consolidated Financial Statements


April 30,
      2007, 2006 and 2005


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







2005**For
                the year ended April 30**
            
            **CHC
                Helicopter**
              **Corporation**
            
            
            **Guarantor**
              **subsidiaries**
            
            
            **Non-Guarantor**
              **subsidiaries**
            
            
            **Eliminations**
            
            
            **Consolidated****Operating
                activities**Cash
                flow from operations
            
            $
            (151
            )
            
            $
            124,856
            
            
            $
            (23,343
            )
            
            $
            -
            
            
            $
            101,362**Financing
                activities**Long-term
                debt proceeds
            
            
            356,258
            
            
            
            (24
            )
            
            
            32,209
            
            
            
            (3,759
            )
            
            
            384,684Long-term
                debt repayments
            
            
            (242,588
            )
            
            
            (3,304
            )
            
            
            (794
            )
            
            
            3,759
            
            
            
            (242,927
            )Dividends
                paid
            
            
            (11,596
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (11,596
            )Capital
                stock issued
            
            
            907
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            907Other
            
            
            (7,363
            )
            
            
            -
            
            
            
            (125
            )
            
            
            -
            
            
            
            (7,488
            )95,618
            
            
            
            (3,328
            )
            
            
            31,290
            
            
            
            -
            
            
            
            123,580**Investing
                activities**Property
                and equipment additions
            
            
            -
            
            
            
            (167,005
            )
            
            
            (67,737
            )
            
            
            -
            
            
            
            (234,742
            )Helicopter
                major inspections
            
            
            -
            
            
            
            (11,939
            )
            
            
            (3,600
            )
            
            
            -
            
            
            
            (15,539
            )Proceeds
                from disposal
            
            
            -
            
            
            
            39,798
            
            
            
            51,127
            
            
            
            -
            
            
            
            90,925Aircraft
                deposits
            
            
            -
            
            
            
            (53,360
            )
            
            
            377
            
            
            
            -
            
            
            
            (52,983
            )Restricted
                cash
            
            
            -
            
            
            
            (1,985
            )
            
            
            (3,338
            )
            
            
            -
            
            
            
            (5,323
            )Investment
                in subsidiaries, net of cash acquired
            
            
            -
            
            
            
            (17,984
            )
            
            
            -
            
            
            
            -
            
            
            
            (17,984
            )Other
            
            
            56
            
            
            
            (7,161
            )
            
            
            30
            
            
            
            -
            
            
            
            (7,075
            )56
            
            
            
            (219,636
            )
            
            
            (23,141
            )
            
            
            -
            
            
            
            (242,721
            )Effect
                of exchange rate changes on cash and cash equivalents
            
            
            -
            
            
            
            (4,116
            )
            
            
            288
            
            
            
            -
            
            
            
            (3,828
            )Cash
                provided by (used in)continuing operations
            
            
            95,523
            
            
            
            (102,224
            )
            
            
            (14,906
            )
            
            
            -
            
            
            
            (21,607
            )Cash
                provided by discontinued operations
            
            
            -
            
            
            
            105
            
            
            
            11,814
            
            
            
            -
            
            
            
            11,919Change
                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







**34.**
            **SUBSEQUENT
                EVENT**




(a)
            Sale
                of Survival-One




Subsequent
      to the year ended April 30, 2007, the Company completed of the sale of
      Survival-One, the Company’s Aberdeen based, non-core operating unit engaged in
      the manufacture, repair and distribution of cold-water survival suits and other
      safety equipment for gross proceeds of approximately $37 million. An
      after-tax gain on sale of $16.4 million was recorded in the first quarter
      of fiscal 2008.




(b)
            Renewal
                of Credit Facility




Subsequent
      to the year ended April 30, 2007, the Company reclassified the outstanding
      balance under the senior revolving credit facility to “Long-term debt” on the
      financial statements, as the facility has been renewed with the maturity date
      extended to September 2010. The refinancing will provide an additional
      US $100 million of capacity at interest rates that are consistent with
      previous agreements.






ITEM
                18.
            FINANCIAL
                STATEMENTS




Not
      applicable.






162




ITEM
                19.
            EXHIBITS




1.1
            Articles
                of Amalgamation - 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
            Certificates
                of Amendment to Articles of Amalgamation dated November 2, 1993,
                February 23, 1994, December 24, 1996, December 9, 1997,
                November 18, 2003 and April 14, 2005.1.3
            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.1.4
            Amendments
                to By-laws.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.
                Filed as
                Exhibit 2.2 to the Company’s Annual Report on Form 20-F for
                fiscal 2006 and incorporated herein by reference.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
            Second
                Amended and Restated US $225,000,000 Senior Credit Agreement dated as
                of December 22, 2004 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
                February 2, 2005, March 11, 2005, June 10, 2005,
                June 19, 2006, September 12, 2006, March 9, 2007 and
                April 26, 2007.4.6
            Employee
                Share Option Plan, as amended March 3, 2003 and September 28,
                2006.4.9
            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.7.1
            Statement
                Regarding Computation of Ratio of Earnings to Fixed
                Charges8.1
            Significant
                Subsidiaries12.1
            Section
                302 Certification by Chief Executive Officer12.2
            Section
                302 Certification by Chief Financial Officer13.1
            Section 906
                Certification by Chief Executive Officer13.2
            Section
                906 Certification by Chief Financial
                Officer






163












**SIGNATURE**




The
      registrant hereby certifies that it meets all of the requirements for filing
      on
      Form 20-F and that it has duly caused and authorized the undersigned to
      sign this annual report on its behalf.




Date:
                September 17, 2007
            **CHC
                HELICOPTER CORPORATION**
              
              
              
              BY: /s/
                Rick Davis
              Rick
                Davis
              Senior
                Vice-President & Chief Financial
                Officer







164