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1.	Significant accounting policies:

(a)	Basis of presentation:

(b)	Foreign currency:

(c)	Comparative figures:

(d)	Recent accounting pronouncements not yet adopted:

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1.	Significant accounting policies (continued):

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2.	Variable interest entities:

(a)	VIEs of which we are the primary beneficiary:

(i)	Local ownership VIEs:

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2.	Variable interest entities (continued):

(ii)	Accounts receivable securitization:

(iii)	Trinity Helicopters Limited:

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2.	Variable interest entities (continued):

(b)	VIEs of which we are not the primary beneficiary:

(i)	Local ownership VIEs:

(ii)	Leasing entities:

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3.	Restructuring:

(i)	The related asset and liability balances for the leased helicopters we have ceased to use were written off to the lease restructuring expenses.

4.	Asset impairments:

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4.	Asset impairments (continued):

5.	Inventories:

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6.	Other assets:

(a)

The fair value of the foreign currency embedded derivatives and forward contracts is determined to be a recurring Level 2 fair value measurement. Level 2 measurements are determined using a present value model. Inputs to the present value model include publicly available forward rates, credit spreads and interest rates applicable to the contracts, and inputs are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. There were no transfers between categories in the fair value hierarchy.

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7.	Other liabilities:

(a)

The fair value of the foreign currency embedded derivatives and forward contracts is determined to be a recurring Level 2 fair value measurement. Level 2 measurements are determined using a present value model. Inputs to the present value model include publicly available forward rates, credit spreads and interest rates applicable to the contracts, and inputs are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. There were no transfers between categories in the fair value hierarchy.

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8.	Long-term debt obligations:

(a)	Senior unsecured notes:

(b)	Asset-based revolving credit facility:

(c)	Covenant compliance:

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9.	Other financing income (charges):

10.	Capital stock:

•

proportional adjustments will be made to the number of ordinary shares available for issuance under the CHC Group Ltd. 2013 Omnibus Incentive Plan (the “2013 Incentive Plan”) and those subject to outstanding equity awards (including stock options, time-based restricted stock units, performance based restricted stock units, service vesting stock options and shares and share price performance options and shares). Additionally, the exercise price of any stock options outstanding under the 2013 Incentive Plan will be proportionally adjusted to reflect the reverse share split ratio;

•

proportional adjustments will be made to the per-share conversion price of the Company’s redeemable convertible preferred shares in accordance with the Rights and Restrictions of the Redeemable Convertible Preferred Shares. The reverse share split will have no impact on the total number of authorized preferred shares or redeemable convertible preferred shares nor impact the number of redeemable convertible preferred shares issued and outstanding or its par value;

•

in subsequent reporting periods, all capital stock and additional paid-in capital amounts and per share information will be adjusted retroactively for all prior periods presented to reflect the reverse share split. Such adjustments include the calculations of our weighted average number of ordinary shares outstanding and net loss per ordinary share available to common stockholders. The foregoing retroactive adjustment has not been made in the interim financial statements.

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10.	Capital stock (continued):

11.	Income taxes:

12.	Employee pension plans:

13.	Derivative financial instruments and fair value measurements:

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13.	Derivative financial instruments and fair value measurements (continued):

14.	Guarantees:

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15.	Commitments:

(i)	The helicopter operating leases exclude the remaining contractual lease commitments for 16 helicopters that we have permanently ceased use of in our operations and which do not form part of our prospective fleet strategy, which have been provided for as part of restructuring expense (note 3).

16.	Contingencies:

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16.	Contingencies (continued):

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17.	Segment information:

•	Helicopter Services;

•	Heli-One;

•	Corporate and other.

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17.	Segment information (continued):

(i)	Direct costs in the segment information presented excludes helicopter lease and associated costs. In the consolidated statements of operations these costs are combined.

(ii)

Adjusted EBITDAR is defined as earnings before interest, taxes, depreciation, amortization, helicopter lease and associated costs, restructuring expense, asset impairments, gain (loss) on disposal of assets, foreign exchange gain (loss) and other financing income (charges) or total revenue plus earnings from equity accounted investees less direct costs, excluding helicopter lease and associated costs, and general and administration costs.

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17.	Segment information (continued):

(i)	Direct costs in the segment information presented excludes helicopter lease and associated costs. In the consolidated statements of operations these costs are combined.

(ii)

Adjusted EBITDAR is defined as earnings before interest, taxes, depreciation, amortization, helicopter lease and associated costs, restructuring expense, asset impairments, gain (loss) on disposal of assets, foreign exchange gain (loss) and other financing income (charges) or total revenue plus earnings from equity accounted investees less direct costs, excluding helicopter lease and associated costs, and general and administration costs.

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17.	Segment information (continued):

(i)	Direct costs in the segment information presented excludes helicopter lease and associated costs. In the consolidated statements of operations these costs are combined.

(ii)

Adjusted EBITDAR is defined as earnings before interest, taxes, depreciation, amortization, helicopter lease and associated costs, restructuring expense, asset impairments, gain (loss) on disposal of assets, foreign exchange gain (loss) and other financing income (charges) or total revenue plus earnings from equity accounted investees less direct costs, excluding helicopter lease and associated costs, and general and administration costs.

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17.	Segment information (continued):

(i)	Direct costs in the segment information presented excludes helicopter lease and associated costs. In the consolidated statements of operations these costs are combined.

(ii)

Adjusted EBITDAR is defined as earnings before interest, taxes, depreciation, amortization, helicopter lease and associated costs, restructuring expense, asset impairments, gain (loss) on disposal of assets, foreign exchange gain (loss) and other financing income (charges) or total revenue plus earnings from equity accounted investees less direct costs, excluding helicopter lease and associated costs, and general and administration costs.

18.	Supplemental condensed consolidated financial information:

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•	we have a history of net losses;

•	our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in our business or our industry and place us at a competitive disadvantage;

•	failure to regain compliance with all applicable New York Stock Exchange (“NYSE”) listing requirements could cause the NYSE to delist our ordinary shares, which is likely to have an adverse impact on the trading volume, liquidity and the market price of our ordinary shares. See "Risk Factors" for further information;

•	failure to comply with covenants contained in certain of our lease agreements could limit our ability to maintain our leased helicopter fleet and could adversely affect our business;

•	our operations are largely dependent upon the level of activity in the oil and gas industry;

•	many of the markets in which we operate are highly competitive, and if we are unable to effectively compete, it may result in a loss of market share or a decrease in revenue or profit margins;

•	we rely on a limited number of large offshore helicopter support contracts with a limited number of customers. If any of these are terminated early or not renewed, our revenues could decline;

•	operating helicopters involves a degree of inherent risk and we are exposed to the risk of losses from safety incidents;

•	if we are unable to mitigate potential losses through a robust safety management and insurance coverage program, our financial condition would be jeopardized in the event of a safety or other hazardous incident;

•	failure to maintain standards of acceptable safety performance could have an adverse impact on our ability to attract and retain customers and could adversely impact our reputation, operations and financial performance;

•	negative publicity may adversely impact us;

•	our fixed operating expenses and long-term contracts with customers could adversely affect our business under certain circumstances;

•	we depend on a small number of helicopter manufacturers;

•	we depend on a limited number of third-party suppliers for helicopter parts and subcontract services;

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•	restructuring of our operations and organizational structure may lead to significant costs;

•	our business requires substantial capital expenditures, lease and working capital financing. Any deterioration of current industry or business conditions or the capital markets generally could adversely impact our business, financial condition and results of operations;

•	we rely on the secondary used helicopter market to dispose of our older helicopters and parts due to our ongoing fleet modernization efforts;

•	we may not be able to obtain customer contracts covering some of our new helicopters and some of our new helicopters may replace existing helicopters already under contract, which could adversely affect the utilization of our existing fleet;

•	our operations are subject to extensive regulations which could increase our costs and adversely affect us;

•	our MRO business, Heli-One, could suffer if licenses issued by OEMs and/or governmental authorities are not renewed or we cannot obtain additional licenses;

•	we derive significant revenue from non-wholly owned variable interest entities. If we are unable to maintain good relations with the other owners of such non-wholly owned entities, our business, financial condition or results of operations could be adversely affected;

•	our operations may suffer due to political and economic uncertainty;

•	our business in countries with a history of corruption and transactions with foreign governments increases the compliance risks associated with our international activities;

•	we are subject to extensive federal, state, local and foreign environmental, health and safety laws, rules, regulations and ordinances that could have an adverse impact on our business;

•	we are subject to many different forms of taxation in various jurisdictions throughout the world, which could lead to disagreements with tax authorities regarding the application of tax laws;

•	the offshore helicopter services industry is cyclical;

•	we are exposed to foreign currency risks;

•	our failure to hedge exposure to fluctuations in foreign currency exchange rates effectively could unfavorably affect our financial performance;

•	we are exposed to credit risks;

•	our customers may seek to shift risk to us;

•	our customers are primarily in the oil and gas industry and, as a result, changes in economic and industry conditions could expose us to additional credit risk;

•	we are highly dependent upon the level of activity in the North Sea, which is a mature exploration and production region;

•	if oil and gas companies undertake cost reduction methods, there may be an adverse effect on our business;

•	reductions in spending on helicopter services by government agencies could lead to modifications of SAR and EMS contract terms or delays in receiving payments, which could adversely impact our business, financial condition and results of operations;

•	failure to develop or implement new technologies and disruption to our systems could affect our results of operations;

•	we rely on information technology, and if we are unable to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, our operations could be disrupted and our business could be negatively affected;

•	assimilating any future material acquisitions into our company may strain our resources and have an adverse effect on our business;

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•	the loss of key personnel could affect our growth and future success;

•	labor problems could adversely affect us;

•	if the assets in our defined benefit pension plans are not sufficient to meet the plans’ obligations, we could be required to make substantial cash contributions and our liquidity could be adversely affected;

•	adverse results of legal proceedings could materially and adversely affect our business, financial condition or results of operations;

•	in the event we are or become treated as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes, our U.S. shareholders could be subject to adverse U.S. federal income tax consequences;

•	we are controlled by a shareholder group, which might have interests that conflict with ours or the interests of our other shareholders;

•	we are a “controlled company” within the meaning of the NYSE rules and, as a result, qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You do not have the same protections afforded to shareholders of companies that are subject to such requirements;

•	the market for our ordinary shares historically has experienced significant price and volume fluctuations;

•	we have not paid dividends on our ordinary shares historically and may not pay any cash dividends on our ordinary shares for the foreseeable future;

•

pursuant to the terms of the preferred shares issued in the Private Placement, which rank senior to our ordinary shares, we are required to pay regular cash dividends or issue shares in respect of amounts accrued as dividends on the preferred shares, and we may be required under certain circumstances to repurchase the preferred shares; such obligations could adversely affect our liquidity and financial condition;

•	we may seek additional capital in the future, which could dilute the holders of our outstanding ordinary shares and may adversely affect the market price of our ordinary shares;

•	the issuance of preferred shares in the Private Placement and the issuance of additional preferred shares in lieu of preferred dividends in cash will reduce the relative voting power of holders of our ordinary shares, will dilute the ownership of such holders, and may adversely affect the market price of our ordinary shares;

•	the dividends on the preferred shares will increase net loss per ordinary share;

•	our preferred shares have rights, preferences and privileges that are not held by, and are preferential to the rights of, holders of our ordinary shares. Such preferential rights could adversely affect our liquidity and financial condition, and may result in the interests of the holders of our preferred shares differing from those of the holders of our ordinary shares;

•	there may be sales of a substantial amount of our ordinary shares, and these sales could cause the price of our ordinary shares to fall;

•	we are a holding company and, accordingly, are dependent upon distributions from our subsidiaries to generate the funds necessary to meet our financial obligations and pay dividends;

•	the requirements of being a public company may strain our resources and distract our management;

•	our failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and ordinary share price;

•	if securities analysts or industry analysts downgrade our ordinary shares, publish negative research or reports or fail to publish reports about our business, our share price and trading volume could decline;

•	our actual operating results may differ significantly from our guidance and investor expectations, which could cause our share price to decline;

•	provisions of our articles of association and Cayman Islands corporate law may discourage or prevent an acquisition of us which could adversely affect the value of our ordinary shares;

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•	our organizational documents contain a variety of anti-takeover provisions that could delay, deter or prevent a change in control;

•	shareholder rights under Cayman Islands law may differ materially from shareholder rights in the United States, which could adversely affect the ability of us and our shareholders to protect our and their interests;

•	as a shareholder, you might have difficulty obtaining or enforcing a judgment against us because we are incorporated under the laws of the Cayman Islands; and

•	our Major Investors, Clayton, Dubilier & Rice ("CD&R") and First Reserve Management, L.P., may compete with us, and our articles of association contain a provision that expressly permits our non-employee directors to compete with us.

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•

Our Helicopter Services segment consists of flying operations in the Eastern North Sea, the Western North Sea, the Americas, the Asia Pacific region and the Africa-Euro Asia region, primarily serving our offshore oil and gas customers and providing SAR and EMS to government agencies. The Eastern North Sea is comprised mainly of Norway while the Western North Sea includes the United Kingdom, Ireland and the Netherlands. The Americas is comprised of Brazil, North American countries and other South American countries. The Asia Pacific region includes Australia and Southeast Asian countries, including East Timor and Malaysia, and the Africa-Euro Asia region includes Nigeria, Equatorial Guinea, Kazakhstan, Mozambique, Romania and other African and Eastern European countries.

•	Helicopter Services generated approximately 88% to 90% of its revenue for the three years ended April 30, 2015 from oil and gas customers, and of this amount, the majority is tied to our customers’ offshore production operations, which have long-term transportation requirements.

•	Helicopter Services also provides SAR and EMS to government agencies and to our oil and gas customers. SAR and EMS revenue to non-oil and gas customers has historically contributed approximately 10% to 11% of Helicopter Services revenue for the three years ended April 30, 2015.

•

Our Heli-One segment includes helicopter maintenance, repair and overhaul facilities in Norway, Poland, Canada and the United States, providing services for our fleet and for our external customer base primarily in Europe, Asia and North America. Although intersegment revenues are eliminated from the presentation of our consolidated financial information, operationally, Heli-One’s largest customer is our Helicopter Services segment.

•

We have historically generated the majority of our third-party Heli-One revenue by providing maintenance, repair and overhaul services to other helicopter operators. Approximately 34%, 38% and 40% of our third-party Heli-One revenue in the 2013, 2014, and 2015 fiscal years, respectively, was derived from “power by the hour” contracts, where the customer pays a ratable monthly charge, typically based on the number of hours flown, for all scheduled and un-scheduled maintenance.

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(i)	Adjusted EBITDAR margin excluding special items is calculated as Adjusted EBITDAR excluding special items divided by total revenue less reimbursable revenue. Cost reimbursements from customers are recorded as reimbursable revenue with the related reimbursement expense in direct costs.

(ii)	Operating margin is calculated as operating loss divided by total revenue.

(iii)

HE Rate is the third-party operating revenue from our Helicopter Services segment excluding reimbursable revenue divided by a weighted average factor corresponding to the number of heavy and medium helicopters in our fleet. Our heavy and medium helicopters, including owned and leased, are weighted at 100% and 50%, respectively, to arrive at a single HE count, excluding helicopters expected to be retired from our fleet and those helicopters which form part of our restructuring activities.

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General level of offshore production and drilling activity. Demand for our services depends primarily upon ongoing offshore hydrocarbon production and the capital spending of oil and gas companies and the level of offshore drilling activity. Higher activity levels can lead to greater utilization of our helicopters by our customers. Because a large portion of our costs are fixed, our Adjusted EBITDAR margins typically improve when more of our helicopters are deployed.

•	Impact of fleet mix. Generally, contracts for our helicopter services requiring heavier and newer helicopters provide an opportunity to generate greater profit than lighter and older helicopters. Consequently, our revenue and profit opportunity improves as we upgrade our fleet and enter into new contracts.

•	Timing of new contracts and our commencement of service under new contracts. Our results of operations in a particular period can be impacted by the timing of the execution of new contracts and our ability to provide services under new contracts.

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(i)	EMS only.

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(i)	Direct costs in the information above excludes helicopter lease and associated costs. These costs are combined in the consolidated statements of operations, which are included in the unaudited interim consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

(ii)

Adjusted EBITDAR is a non-GAAP measure. See “Key Financial and Operating Metrics” for the definition and discussion of this non-GAAP measure. Additional information about our Adjusted EBITDAR, including a reconciliation of this measure to our consolidated financial statements is also provided in Note 17 of our unaudited interim consolidated financial statements for the three and six months ended October 31, 2014 and 2015, included elsewhere in this Quarterly Report on Form 10-Q.

(iii)	Adjusted EBITDAR excluding special items is a non-GAAP measure. See “Key Financial and Operating Metrics” for the definition and discussion of this non-GAAP measure. A description of the adjustments to and reconciliations of this non-GAAP financial measure to Adjusted EBITDAR is as follows:

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(iv)	Adjusted EBITDAR margin and Adjusted EBITDAR margin excluding special items are non-GAAP measures. See “Key Financial and Operating Metrics” for the definition and discussion of these non-GAAP measures. These measures are calculated by dividing the respective numerator by total revenues less reimbursable revenue.

(v)	Adjusted net loss is a non-GAAP measure. See “Key Financial and Operating Metrics” for the definition and discussion of this non-GAAP measure. A description of the adjustments to and reconciliations of this non-GAAP financial measure to the most comparable GAAP financial measure is as follows:

(vi)	HE Rate is a non-GAAP measure. See “Key Financial and Operating Metrics” for the definition and discussion of this non-GAAP financial measure. See below for the reconciliation of HE Rate.

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(i)	Includes revenue from the customer reimbursement of fuel costs of $20.8 million for the three months ended October 31, 2014 and $13.5 million for the three months ended October 31, 2015.

(ii)	Includes $20.5 million in fuel costs for the three months ended October 31, 2014 and $13.3 million for the three months ended October 31, 2015.

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Eastern North Sea. Revenues in the Eastern North Sea decreased by $14.2 million, or 15.5%, compared to the prior year quarter. This was primarily due to the impact of the strengthening U.S. dollar on reported results in this region, which decreased revenue by $15.9 million compared to the prior year quarter. This was partially offset by a net increase of $1.7 million in revenue as a result of a higher activity level with customers compared to the prior year quarter, including the provision of SAR helicopter flying services to oil and gas customers.

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Western North Sea. Revenues in the Western North Sea decreased by $20.4 million, or 18.4%, compared to the prior year quarter, which included a $7.9 million decrease related to the impact of the strengthening U.S. dollar on reported results in this region. There was an $8.2 million decrease as a result of reduced activity levels due to oil and gas exploration and production contract completions, contract modifications with continuing customers due to changes in customers' helicopter requirements, and a $4.3 million decrease due to lower levels of reimbursable revenue, partly driven by the decline in fuel prices.

•	Americas. Revenues in the Americas decreased by $13.3 million, or 17.6%, compared to the prior year quarter, primarily due to contract completions and reduced activity in Brazil, partially offset by new oil and gas contract wins, both in Brazil and in Canada.

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Asia Pacific. Revenues in Asia Pacific decreased by $18.6 million, or 22.4%, compared to the prior year quarter, which included an $8.2 million decrease related to the impact of the strengthening U.S. dollar on reported results in this region. Revenue also decreased by $14.1 million due to contract completions, contract modifications with continuing customers due to changes in customers' helicopter requirements and reductions in customer activity, primarily in Malaysia, East Timor and Australia. These decreases were partially offset by new contract wins and modifications for oil and gas customers, which generated additional revenue of $3.7 million compared to the prior year quarter.

•	Africa-Euro Asia. Revenues in Africa-Euro Asia decreased by $25.1 million, or 46.4%, compared to the prior year quarter due primarily to contract completions and a reduction in ad-hoc work in Tanzania, Nigeria, Equatorial Guinea and Mozambique. The majority of the reduction in revenue was due to helicopter services provided to customers for exploration related activity.

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Crew costs, which include salaries, benefits, training and recruitment costs, decreased by $36.4 million to $76.9 million compared to the prior year quarter. The decrease in crew costs was partially due to the impact of the strengthening U.S. dollar, which decreased crew costs by $13.4 million compared to the prior year quarter. The remaining $23.0 million decrease was as a result of lower crew requirements due to reduced activity, contract completions and cost saving initiatives, primarily in Brazil, and in our Africa-Euro Asia and North Sea regions. Crew costs were incurred only by our Helicopter Services segment.

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Base operations and other costs, which include our base operations, reimbursable costs, insurance costs and other external expenses, decreased by $27.7 million to $56.1 million compared to the prior year quarter, which included an approximate $8.1 million decrease related to the impact of the strengthening U.S. dollar. There was a decrease of $7.9 million in rechargeable costs to customers, due to a decrease in fuel prices and lower flying hours, compared to the prior year quarter. Contract completions, primarily in our Africa-Euro Asia and Asia Pacific regions, following the closure of bases supporting specific customer contracts, in addition to cost saving initiatives in Brazil and in our North Sea region, reduced costs by $11.7 million compared to the prior year quarter. Base operations and other costs were incurred only by our Helicopter Services segment.

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Maintenance costs decreased by $14.6 million to $59.9 million compared to the prior year quarter. Maintenance costs decreased by $6.0 million in the current year quarter compared to the prior year quarter due to the impact of foreign exchange translation, as a result of the strengthening U.S. dollar. Maintenance costs include those related to repairs for owned and leased major components, spares and rotable and repairable parts, which are recognized when the costs are incurred. Our costs therefore can vary with the timing of the maintenance activity. A portion of our maintenance costs are externally subcontracted on a PBH basis and vary with flight hours. Maintenance costs decreased by $6.8 million compared to the prior year quarter due to a combination of reduced activity, fleet optimization initiatives and improved rotable and fleet maintenance planning, but were also impacted by the timing of maintenance events. In addition, in the prior year quarter, we incurred $1.8 million related to ongoing inspection costs on our H225 fleet. These inspection costs were incurred in the prior fiscal year until the completion of retrofit of the redesigned gear shaft on our H225 helicopters at the end of fiscal 2015.

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Support costs decreased by $11.3 million to $31.3 million compared to the prior year quarter, due to a combination of foreign exchange translation, reduced headcount and lower levels of consulting and professional fees, driven by our cost saving initiatives and activity levels. The majority of support costs were incurred by our Helicopter Services segment, with $4.5 million related to our Heli-One segment.

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(i)	In the prior year quarter, direct costs were comprised of crew costs of $113.2 million, base operations and other costs of $77.7 million and maintenance and support costs of $89.6 million. In the current year quarter, direct costs were comprised of crew costs of $76.9 million, base operations and other costs of $56.1 million and maintenance and support costs of $59.4 million.

(ii)	Adjusted EBITDAR margin is calculated as Adjusted EBITDAR divided by total revenue less reimbursable revenue. Cost reimbursements from customers are recorded as reimbursable revenue with the related reimbursement expense in direct costs.

(iii)

HE Rate is the third-party operating revenue from the Helicopter Services segment excluding reimbursable revenue divided by a weighted average factor corresponding to the number of heavy and medium helicopters in our fleet. Our heavy and medium helicopters, including owned and leased, are weighted at 100% and 50% respectively to arrive at a single HE count, excluding helicopters expected to be retired from our fleet and those helicopters which form part of our restructuring activities. An average of this figure is used to calculate our HE Rate.

•	Contract completions and decreased customer activity in the North Sea, related to both oil and gas exploration and production contracts, were offset by higher levels of cost savings, which increased Adjusted EBITDAR by $3.7 million and Adjusted EBITDAR margin by 1.4% compared to the prior year quarter;

•	Cost reduction efforts in the Americas, including Brazil, exceeded reductions in revenue, which increased Adjusted EBITDAR by $1.3 million and Adjusted EBITDAR margin by 2.0% compared to the prior year quarter;

•

Lower maintenance costs, primarily due to a combination of reduced activity, fleet optimization initiatives, improved rotable and fleet maintenance planning, increased Adjusted EBITDAR by $9.0 million and Adjusted EBITDAR margin by 3.0% compared to the prior year quarter. A part of this reduction in maintenance costs was due to $1.8 million incurred in the prior year quarter related to ongoing inspection costs on our H225 fleet. These inspection costs were incurred in the prior fiscal year until the completion of retrofit of the redesigned gear shaft on our H225 helicopters at the end of fiscal 2015;

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•	Lower activity in our Africa-Euro Asia region, primarily due to contract completions and a reduction in ad-hoc work in Tanzania, Nigeria, Equatorial Guinea, and Mozambique for oil and gas related activity, decreased Adjusted EBITDAR by $12.5 million and Adjusted EBITDAR margin by 1.2% compared to the prior year quarter; and

•	Lower activity in our Asia Pacific region, primarily due to contract completions in Malaysia, East Timor and Australia, partially offset by cost saving initiatives, decreased Adjusted EBITDAR by $2.3 million, with a minimal impact on Adjusted EBITDAR margin compared to the prior year quarter.

(i)	In the prior year quarter, direct costs were comprised of maintenance costs of $63.9 million and support costs of $5.2 million. In the current year quarter, direct costs were comprised of maintenance costs of $42.0 million and support costs of $4.5 million.

(ii)	Adjusted EBITDAR margin is calculated as Adjusted EBITDAR divided by total revenue less reimbursable revenue, of which there was none in the Heli-One segment in the prior and current year quarters.

•	Adjusted EBITDAR decreased approximately $2.2 million compared to the prior year quarter, primarily due to a lower level of internal revenue from our Helicopter Services segment, due to a decrease in flying activity, but also due to a decrease in third-party PBH activity; partially offset by

•	Lower support and executive costs due to cost saving initiatives, resulted in an increase to Adjusted EBITDAR of $0.4 million compared to the prior year quarter.

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(i)	Direct costs in the information above excludes helicopter lease and associated costs. These costs are combined in the consolidated statements of operations, which are included in the unaudited interim consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

(ii)

Adjusted EBITDAR is a non-GAAP measure. See “Key Financial and Operating Metrics” for the definition and discussion of this non-GAAP measure. Additional information about our Adjusted EBITDAR, including a reconciliation of this measure to our consolidated financial statements is also provided in Note 17 of our unaudited interim consolidated financial statements for the three and six months ended October 31, 2014 and 2015, included elsewhere in this Quarterly Report on Form 10-Q.

(iii)	Adjusted EBITDAR excluding special items is a non-GAAP measure. See “Key Financial and Operating Metrics” for the definition and discussion of this non-GAAP measure. A description of the adjustments to and reconciliations of this non-GAAP financial measure to Adjusted EBITDAR is as follows:

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(iv)	Adjusted EBITDAR margin and Adjusted EBITDAR margin excluding special items are non-GAAP measures. See “Key Financial and Operating Metrics” for the definition and discussion of these non-GAAP measures. These measures are calculated by dividing the respective numerator by total revenues less reimbursable revenue.

(v)	Adjusted net loss is a non-GAAP measure. See “Key Financial and Operating Metrics” for the definition and discussion of this non-GAAP measure. A description of the adjustments to and reconciliations of this non-GAAP financial measure to the most comparable GAAP financial measure is as follows:

(vi)	HE Rate is a non-GAAP measure. See “Key Financial and Operating Metrics” for the definition and discussion of this non-GAAP financial measure. See below for the reconciliation of HE Rate.

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(i)	Includes revenue from customer reimbursement of fuel costs of $43.1 million for the six months ended October 31, 2014 and $29.2 million for the six months ended October 31, 2015.

(ii)	Includes $43.3 million in fuel costs for the six months ended October 31, 2014 and $29.2 million for the six months ended October 31, 2015.

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Eastern North Sea. Revenues in the Eastern North Sea decreased by $36.9 million, or 19.0%, compared to the prior year period. This was primarily due to the impact of the strengthening U.S. dollar on reported results in this region, which decreased revenue by $34.1 million compared to the prior year period. The remaining $2.8 million decrease was a result of a net reduction in activity levels with existing customers, contract wins and completions.

•

Western North Sea. Revenues in the Western North Sea decreased by $50.6 million, or 22.0%, compared to the prior year period, which included a $19.3 million decrease related to the impact of the strengthening U.S. dollar on reported results in this region. There was a $39.8 million decrease in revenue in the region from contract completions, contract modifications with continuing customers due to changes in customers' helicopter requirements and lower reimbursable revenue, the latter of which has been impacted by lower fuel prices. This was partially offset by an $8.5 million increase in revenue from new contract wins in the oil and gas sector.

•	Americas. Revenues in the Americas decreased by $15.5 million, or 10.4%, compared to the prior year period. There was a $33.4 million decrease in revenue primarily due to contract completions and reduced activity in Brazil, partially offset by new contract wins in Brazil, Suriname and Canada, which resulted in additional revenue of $17.9 million.

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Asia Pacific. Revenues in Asia Pacific decreased by $27.7 million, or 16.9%, compared to the prior year period. This was primarily due to the impact of the strengthening U.S. dollar on reported results in this region, which decreased revenue by $15.4 million. Revenue also decreased by $22.8 million due to contract completions, modifications and decreased activity from existing customers, mainly in Malaysia, East Timor and Australia. This was partially offset by a $10.5 million increase in revenue from new contract wins and modifications for oil and gas customers, primarily in Australia.

•	Africa-Euro Asia. Revenues in Africa-Euro Asia decreased by $43.2 million, or 42.3%, compared to the prior year period due primarily to contract completions and a reduction in ad-hoc work in Tanzania, Nigeria, Equatorial Guinea and Mozambique. The majority of the reduction in revenue was due to helicopter services provided to customers for oil and gas exploration related activity.

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Crew costs, which include salaries, benefits, training and recruitment costs, decreased by $61.5 million to $165.0 million compared to the prior year period. The decrease in crew costs was partially due to the impact of the strengthening U.S. dollar, which decreased crew costs by $27.9 million compared to the prior year period. The remaining $33.6 million decrease was as a result of lower crew requirements due to reduced activity, contract completions and cost saving initiatives, primarily in Brazil, and in our Africa-Euro Asia and North Sea regions. Crew costs were incurred only by our Helicopter Services segment.

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Base operations and other costs, which include our base operations, reimbursable costs, insurance costs and other external expenses, decreased by $47.1 million to $118.7 million compared to the prior year period, which included an approximate $16.5 million decrease related to the impact of the strengthening U.S. dollar. There was a decrease of $17.9 million in rechargeable costs to customers due to a decrease in fuel prices and lower flying hours compared to the prior year period. In addition, contract completions following the closure of bases, primarily in our Africa-Euro Asia and Asia Pacific regions, in addition to cost saving initiatives in Brazil and in our North Sea region, have reduced costs by $12.7 million compared to the prior year period. Base operations and other costs were incurred only by our Helicopter Services segment.

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Maintenance costs decreased by $38.3 million to $125.9 million compared to the prior year period. Maintenance costs decreased by $15.4 million in the current year period compared to the prior year period due to the impact of foreign exchange translation, as a result of the strengthening U.S. dollar. Maintenance costs include those related to repairs for owned and leased major components, spares and rotable and repairable parts, which are recognized when the costs are incurred. Our costs therefore can vary with the timing of the maintenance activity. A portion of our maintenance costs are externally subcontracted on a PBH basis and vary with flight hours. Maintenance costs decreased by $19.0 million compared to the prior year period due to a combination of reduced activity, fleet optimization initiatives and improved rotable and fleet maintenance planning, but were also impacted by the timing of maintenance events. In addition, in the prior year period, we incurred $3.9 million related to ongoing inspection costs on our H225 fleet. These inspection costs were incurred in the prior fiscal year until the completion of retrofit of the redesigned gear shaft on our H225 helicopters at the end of fiscal 2015.

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Support costs decreased by $25.0 million to $64.0 million compared to the prior year period, due to a combination of foreign exchange translation, reduced headcount and lower levels of consulting and professional fees, driven by our cost saving initiatives and activity levels. The majority of support costs are incurred by our Helicopter Services segment, with $8.5 million related to our Heli-One segment.

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(i)	In the prior year period, direct costs were comprised of crew costs of $226.5 million, base operations and other costs of $159.6 million and maintenance and support costs of $194.0 million. In the current year period, direct costs were comprised of crew costs of $165.0 million, base operations and other costs of $118.7 million and maintenance and support costs of $129.4 million.

(ii)	Adjusted EBITDAR margin is calculated as Adjusted EBITDAR divided by total revenue less reimbursable revenue. Cost reimbursements from customers are recorded as reimbursable revenue with the related reimbursement expense in direct costs.

(iii)

HE Rate is the third-party operating revenue from the Helicopter Services segment excluding reimbursable revenue divided by a weighted average factor corresponding to the number of heavy and medium helicopters in our fleet. Our heavy and medium helicopters, including owned and leased, are weighted at 100% and 50% respectively to arrive at a single HE count, excluding helicopters expected to be retired from our fleet and those helicopters which form part of our restructuring activities. An average of this figure is used to calculate our HE Rate.

•	Lower activity in our Africa-Euro Asia region, primarily due to contract completions and a reduction in ad-hoc work in Tanzania, Nigeria, Equatorial Guinea, and Mozambique for oil and gas exploration related activity, decreased Adjusted EBITDAR by $20.7 million and Adjusted EBITDAR margin by 1.0% compared to the prior year period;

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Contract completions and decreased customer activity in the North Sea, related to oil and gas exploration and production contracts, including the completion of several short-term contracts compared to the prior year period, decreased Adjusted EBITDAR by $5.1 million and Adjusted EBITDAR margin by 0.4%. This was partially offset by cost savings through reduction in head count and other initiatives; offset by

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Lower maintenance costs, primarily due to a combination of reduced activity, fleet optimization initiatives, improved rotable and fleet maintenance planning, increased Adjusted EBITDAR by $24.7 million and Adjusted EBITDAR margin by 4.1% compared to the prior year period. A part of this reduction in maintenance costs was due to $3.9 million incurred in the prior year period related to ongoing inspection costs on our H225 fleet. These inspection costs were incurred in the prior fiscal year until the completion of retrofit of the redesigned gear shaft on our H225 helicopters at the end of fiscal 2015.

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(i)	In the prior year period, direct costs were comprised of maintenance costs of $113.6 million and support costs of $11.1 million. In the current year period, direct costs were comprised of maintenance costs of $93.5 million and support costs of $8.5 million.

(ii)	Adjusted EBITDAR margin is calculated as Adjusted EBITDAR divided by total revenue less reimbursable revenue, of which there was none in the Heli-One segment in the prior and current year periods.

•	Lower levels of external third-party PBH revenue and lower MRO revenue with our Helicopter Services segment due to a decrease in flying activity, partially offset by cost control efforts, decreased Adjusted EBITDAR by approximately $3.4 million compared to the prior year period; offset by

•	Lower facilities, support and executive costs due to our cost saving initiatives, and changes in the allowance for doubtful accounts, increased Adjusted EBITDAR by $3.7 million compared to the prior year period.

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There were favorable changes in working capital of $13.9 million compared to the prior year period. The positive working capital change was primarily driven by a $10.0 million favorable change in receivables, due to the timing of collections from customers. In addition, there was a $7.5 million favorable reduction in the use of cash for inventories, partly due to a reduction in spend on consumable items, and a $13.3 million favorable change in income taxes, prepaid expenses, payables and accruals driven primarily by the timing of payments. These favorable changes were primarily offset by lower cash inflows of $10.6 million from changes in deferred revenue, primarily due to the timing of contract completions in our MRO business compared to the prior year period and a $6.2 million unfavorable change in other assets and liabilities, primarily related to security and other deposits;

•	Operating cash flows benefited from a reduction in cash contributions to our defined benefit pension plans of $10.7 million, due to the timing of pension plan payments and also due to the settlement of our defined benefit plan in the Netherlands in fiscal 2015;

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There was a $17.8 million reduction in interest costs, as a result of repurchases of senior secured notes by one of our subsidiaries, CHC Helicopter S.A., in May and December 2014 and January 2015 and also due to redemptions and repurchases by CHC Helicopter S.A. of our senior unsecured notes, during November and December 2014 and April, July and August 2015. See "—Sources of Liquidity" included elsewhere in this Quarterly Report on Form 10-Q for further information;

•	Offsetting these improvements to operating cash flows, we incurred cash restructuring costs of $37.1 million in the current year period, related to our employee and fleet restructuring initiatives. See "Recent Events" included elsewhere in this Quarterly Report on Form 10-Q for further information; and

•	We incurred an additional $3.4 million of realized losses on foreign exchange, foreign currency forward contracts and other financing expenses in the current year period compared to the prior year period, primarily due to the strengthening of the U.S. dollar against the Canadian dollar on foreign currency forward contracts, which were used to reduce our economic exposure to Canadian dollar costs.

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•	During the current year period, CHC Helicopter S.A., borrowed $98.0 million on our senior secured revolving credit facility;

•	During the current year period, one of our subsidiaries borrowed $14.4 million on the ABL Facility, which we have entered into with a syndicate of financial institutions. See "—Sources of Liquidity" included elsewhere in this Quarterly Report on Form 10-Q for further information;

•	There was an increase in cash inflows of $20.1 million in our current facility secured by accounts receivable, due to the timing of transactions in our trade receivables securitization program compared to the prior year period, and a $0.6 million reduction in cash payments on our capital leases;

•	In the prior year period, CHC Helicopter S.A. repurchased on the open market $65.0 million of our senior secured notes at premiums ranging from 108.00% to 109.13% in May 2014 for $70.6 million in cash; and

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In the prior year period, a distribution of $8.5 million was paid to the holder of the non-controlling interest of EHOB due to an amendment of the shareholders' agreement on October 30, 2014. For more information, see Note 2(a)(i) of our unaudited interim consolidated financial statements for the three and six months ended October 31, 2014 and 2015, included elsewhere in this Quarterly Report on Form 10-Q.

•	In July and August, 2015, CHC Helicopter S.A. repurchased $40.6 million of the senior unsecured notes on the open market at prices ranging from 50.50% to 55.25% of the principal for cash proceeds of $22.1 million;

•	On June 12, 2015, one of our subsidiaries entered into our ABL Facility on which we incurred deferred financing costs of $4.9 million. See "—Sources of Liquidity" included elsewhere in this Quarterly Report on Form 10-Q for further information; and

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On August 21, 2014, we announced the entry into definitive agreements with funds managed by CD&R for aggregate investment of up to $600.0 million in us through a private placement issuance of our preferred shares (the "Private Placement"). The Private Placement involved three closings: (a) 116,000 preferred shares purchased upon the first closing, (b) 384,000 preferred shares purchase upon the second closing, and (c) 100,000 preferred shares to be purchased upon the third closing. In the prior year period, we received $110.2 million of net proceeds on the issuance of the redeemable convertible preferred shares in connection with the first closing of the Private Placement.

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•	Contractual Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

•	Contractual Adjusted EBITDA does not reflect the cash requirements necessary to service principal payments on our indebtedness;

•	Contractual Adjusted EBITDA does not reflect the cash requirements to pay our taxes;

•	Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Contractual Adjusted EBITDA does not reflect any cash requirements for such replacements; and

•	Contractual Adjusted EBITDA is not adjusted for all cash and non-cash income or expense items that are reflected in our statements of cash flow.

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(i)	Fixed charges include interest expense, the interest component of payments associated with capital lease obligations, net of interest income, and pro-forma adjustments as per the applicable indenture governing the senior secured notes and the senior unsecured notes. The amortization of debt issuance costs and financing fees are excluded from fixed charges.

(ii)	Asset impairment charge includes impairment of funded residual value guarantees, impairment of assets held for sale, impairment of intangible assets, impairment of goodwill and impairment of inventories.

(iii)	Amortization of initial costs on leased helicopters.

(iv)	Unusual or non-recurring costs that include professional fees.

(v)	Costs incurred related to potential investment, acquisitions and divestitures.

(vi)	This is an adjustment to arrive at the current service cost of the pension.

(vii)

Contractual Adjusted EBITDA for the periods presented does not include the pro forma effect of helicopter acquisitions or disposals. However, the senior secured revolving credit facility and the applicable indenture governing the senior secured notes and the senior unsecured notes permit us to calculate Contractual Adjusted EBITDA for purposes of the applicable covenants contained therein, giving pro-forma effect to helicopter acquisitions, net of disposals.

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