TIDMDNA
RNS Number : 9782D
Doric Nimrod Air One Limited
12 July 2016
QUARTERLY FACT SHEET
30 June 2016
DORIC NIMROD AIR ONE LIMITED
LSE: DNA
The Company
Doric Nimrod Air One Limited ("the Company") is a Guernsey
domiciled company, which is listed on the Specialist Fund Segment
(SFS) of the London Stock Exchange's Main Market. The Company has
purchased one Airbus A380-861 aircraft, manufacturer's serial
number (MSN) 016, which it has leased for an initial term of 12
years, with fixed lease rentals for the duration, to Emirates
Airline ("Emirates"), the national carrier owned by the Investment
Corporation of Dubai, based in Dubai, United Arab Emirates.
Investment Strategy
The Company's investment objective is to obtain income returns
and a capital return for its shareholders by acquiring, leasing and
then selling a single aircraft. The Company receives income from
the lease and its directors are targeting a gross distribution to
the shareholders of 2.25 pence per share per quarter (9p per
annum). It is anticipated that income distributions will continue
to be made quarterly.
The total return for a shareholder investing today (30 June
2016) at the current share price consists of future income
distributions during the remaining lease duration and a return of
capital at dissolution of the Company. The latter payment is
subject to the future value and the respective sales proceeds of
the aircraft, quoted in US dollars and the USD/GBP exchange rate at
that point in time. Since launch three independent appraisers
provide the Company with their future values for the aircraft at
the end of each financial year. The latest appraisals available are
dated the end of March 2016. The table below summarizes the total
return components, calculated on different exchange rates and using
the average value of the aircraft as provided by the three
independent external appraisers. Regarding the following two
tables, there is no guarantee that the aircraft will be sold at
such a sale price or that such capital returns would be generated.
It is also assumed that the lessee will honour all its contractual
obligations during the entire anticipated lease term.
Following the recent vote by the United Kingdom to exit the
European Union, volatility in the currency markets has been
observed. The contracted lease rentals are calculated to satisfy
interest and principal in US dollars and distributions and Company
running costs in sterling. The Company is therefore insulated from
such foreign currency market volatility during the term of the
lease.
I. Implied Future Total Return Components Based on
Appraisals(1)
The implied return figures are not a forecast and
assume the Company has not incurred any unexpected
costs.
Aircraft value at lease expiry according to
* Prospectus appraisal USD 110 million
* Latest appraisal(2) USD 107 million
==============================================================================================
per Share Income Distributions Return of Capital Total Return(3)
--------------------- --------------------------- ---------------------------
Prospectus Latest Prospectus Latest
Appraisal Appraisal(4) Appraisal Appraisal(4)
--------------------- ----------- -------------- ----------- --------------
Prospectus
FX Rate(5) 61p 161p 157p 222p 218p
------------- --------------------- ----------- -------------- ----------- --------------
Current
FX Rate(6) 61p 191p 186p 251p 247p
------------- --------------------- ----------- -------------- ----------- --------------
(1) See final sentences in the second paragraph of
Investment Strategy
(2) Date of valuation: 31 March 2016
(3) Excluding earned dividend
(4) Average of the three appraisals as at the Company's
year-end in the expiry year of the lease
(5) 1.5900 USD/GBP
(6) 1.3392 USD/GBP (30 June 2016)
II. Company Facts (30 June 2016)
Listing LSE
---------------------------- ---------------------------------
Ticker DNA
---------------------------- ---------------------------------
Current Share Price 110p (closing)
---------------------------- ---------------------------------
Market Capitalisation GBP 46.7 million
---------------------------- ---------------------------------
Initial Debt USD 122 million
---------------------------- ---------------------------------
Outstanding Debt USD 67.4 million (55% of Initial
Balance Debt)
---------------------------- ---------------------------------
Current/Future Anticipated 2.25p per quarter (9p per
Dividend annum)
---------------------------- ---------------------------------
Earned Dividends 47.25p
---------------------------- ---------------------------------
Current Dividend
Yield 8.18%
---------------------------- ---------------------------------
Dividend Payment April, July, October, January
Dates
---------------------------- ---------------------------------
Expected Future Total 2.24 (based on the Current
Cash Multiple(1) Share Price)
---------------------------- ---------------------------------
Total Expense Ratio 1.4% (based on Average Net
Assets)
---------------------------- ---------------------------------
Currency GBP
---------------------------- ---------------------------------
Launch Date/Price 13 December 2010 / 100p
---------------------------- ---------------------------------
Remaining Lease Duration 6 years 6 months
---------------------------- ---------------------------------
Incorporation Guernsey
---------------------------- ---------------------------------
Aircraft Registration A6-EDC (16.12.2022)
Number (Lease Expiry
Date)
---------------------------- ---------------------------------
Asset Manager Doric GmbH
---------------------------- ---------------------------------
Corp & Shareholder Nimrod Capital LLP
Advisor
---------------------------- ---------------------------------
Administrator JTC (Guernsey) Ltd
---------------------------- ---------------------------------
Auditor Deloitte LLP
---------------------------- ---------------------------------
Market Makers Jefferies International Ltd,
Numis Securities Ltd,
Shore Capital Ltd,
Winterflood Securities Ltd
---------------------------- ---------------------------------
SEDOL, ISIN B4MF389, GG00B4MF3899
---------------------------- ---------------------------------
Year End 31 March
---------------------------- ---------------------------------
Stocks & Shares ISA Eligible
---------------------------- ---------------------------------
Website www.dnairone.com
---------------------------- ---------------------------------
(1) See final sentences in the second paragraph of Investment
Strategy
Asset Manager's Comment
1. The Doric Nimrod Air One Airbus A380
The Airbus A380 is registered in the United Arab Emirates under
the registration mark A6-EDC. For the period from original delivery
of the aircraft to Emirates in November 2008 until the end of May
2016, a total of 3,937 flight cycles were logged. Total flight
hours were 33,124. This equates to an average flight duration of
eight hours and 25 minutes.
The A380 owned by the Company visited Auckland, Hong Kong,
Milan, New York JFK, and Sydney during the second quarter of
2016.
Maintenance Status
Emirates maintains its A380 aircraft fleet based on a
maintenance programme according to which minor maintenance checks
are performed every 1,500 flight hours, and more significant
maintenance checks (C checks) at 24 month or 12,000 flight hour
intervals, whichever occurs first. The last heavy maintenance
check, the 6-year check, was completed in December 2014.
Emirates bears all costs (including for maintenance, repairs and
insurance) relating to the aircraft during the lifetime of the
lease.
During the period under review the asset manager, Doric,
undertook a records audit. The final report was not available at
the editorial deadline.
2. Market Overview
During the first four months of 2016 passenger demand, measured
in revenue passenger kilometres (RPKs), increased by 6.4% compared
to the same period the year before. Adjusted for the extra day, as
2016 is a leap year, traffic grew slightly ahead of its average
growth rate over the past decade. After an increase of 7% during
the first quarter, growth moderated in April. The decline was
partly attributable to disruptions following the Brussels terrorist
attacks in March, while the stimulatory effect of low oil prices
appeared to lose some momentum and the global economic situation
remained subdued. In its latest forecast released in June, IATA
expects an RPK growth of 6.2% in 2016, a downward revision of 0.7
percentage points compared to the forecast at the end of last year
but still above-trend.
At 78.9% the average passenger load factor between January and
April 2016 remained unchanged compared to the year before. IATA
estimates an average worldwide passenger load factor of 80.0% for
the full year 2016. The minor decline compared to the previous
year's record annual high is due to a capacity increase of an
expected 0.6 percentage points above forecast demand growth.
A regional breakdown reveals that Middle East airlines,
including Emirates, continued to outperform the overall market
again this year. Between January and April RPKs increased by 11.1%
compared to the previous period. Africa showed a strong recovery
with 9.9%. Asia/Pacific-based operators followed with 8.4%. Europe
grew by 4.5% and North America by 3.8%. Latin American market
participants recorded 3.7% more RPKs.
Fuel is the single largest operating cost of airlines and has
significant effects on the industry's profitability. According to
its latest report released in June, IATA expects an average fuel
price of USD 55.6 per barrel. This would be 17% lower compared to
the previous year. It could drive the average share of fuel costs
in operating expenses down to less than 20% for the first time
since 2004. The industry-wide net profit could be further boosted
to an estimated USD 39.4 billion. The net profit margin of 5.6%
would be the highest for more than a decade. In 2015 the revised
industry net profit reached USD 35.3 billion, compared to a revised
net profit of USD 13.7 billion the year before. The profit
development during this year will heavily depend on the oil price
level. IATA has based its calculations on an average crude oil
price of USD 45 per barrel. This includes a rising profile during
the course of the year to just above USD 50 per barrel by the end
of 2016.
(c) International Air Transport Association, 2016. Air Passenger
Market Analysis April 2015 / Air Passenger Market Analysis April
2016 / Economic Performance of the Airline Industry, 2016 Mid-Year
Report / Press Release No. 24: Passenger Demand Growth Slows. All
Rights Reserved. Available on the IATA Economics page.
3. Lessee - Emirates Key Financials
In the financial year 2015/16 ending on 31 March 2016 Emirates
made its highest profit ever with USD 1.9 billion - an increase of
56% compared to the previous period. The profit margin of 8.4% is
the greatest since 2010/11. At the same time, the 28(th)
consecutive year of profit provided a number of global and
operational challenges to the company. The rise of the US dollar
against currencies in most of Emirates' key markets only had a USD
1.1 billion impact on the airline's bottom line. As a result of
this and fare adjustments following the reduction in fuel prices
there was a 4% drop in revenue to USD 23.2 billion. During the
financial year, the airline had to deal with weak consumer
confidence in a slow global economic environment, terror threats
and geopolitical instability in many regions it serves.
Nevertheless, the company was able to maintain its strategy of a
diversified revenue base which limited the carrier's exposure to
single geographical regions.
The airline's operating costs were significantly influenced by
the drop in oil prices with a 39% lower average fuel price compared
to the previous period. As Emirates remained largely unhedged on
jet fuel prices, this significantly paid off. Fuel costs remained
the largest component in operating costs, but significantly
decreased by 9 percentage points to 26%. Total operating costs
decreased by 8% over the 2014/15 financial year.
As of 31 March 2016, the balance sheet total amounted to USD
32.5 billion, an increase of 7% compared to the beginning of the
financial year. Total equity increased by 14.6% to USD 8.8 billion
with an equity ratio of 27.2%. The current ratio stood at 0.82,
meaning the airline would be able to meet about four-fifths of its
current liabilities by liquidating all its current assets.
Significant items on the liabilities side of the balance sheet
included current and non-current borrowings and lease liabilities
in the amount of USD 13.7 billion. As of 31 March 2016, the
carrier's cash balance was USD 5.4 billion, up by USD 846 million
compared to the beginning of the financial year.
Between April 2015 and March 2016 the airline raised a record
USD 7.3 billion in aircraft financing and has already received
committed offers of finance for deliveries in the current financial
year. Over the last ten years Emirates has raised more than USD 45
billion from international markets to finance its fleet and
business growth.
New destinations, larger aircraft deployment and increased
frequencies to existing destinations boosted the transport
capacities for passengers (measured in ASKs) by 12.8% compared to
the previous financial year. Passenger demand (in RPKs) grew by
8.4%, resulting in a passenger load factor of 76.5%. The economy
class seat factor stood at 79.2%. About 32% of the 51.9 million
passengers carried in the 2015/16 financial year travelled aboard
an A380. Premium and overall seat factors for Emirates' flagship
aircraft outperformed the network.
During the financial year 2015/16 Emirates added eight new
passenger destinations to its network, bringing the total up to 153
in six continents, and added services and capacity to another 34
cities on its existing route network across Africa, Asia, Europe,
the Middle East, and North America. The increasing number of A380
aircraft joining the fleet allowed the airline to introduce
superjumbo services to a further four destinations during the
course of the 2015 calendar year. At the same time A380 services to
nine existing routes were increased. This means one out of every
four destinations on the carrier's passenger network is served by
an A380.
With 29 new wide-body aircraft, Emirates' highest number during
a financial year, and nine phase-outs the average fleet age was
brought down to 74 months or approximately half the industry
average of 140 months. The number of orders yet to be delivered
stood at 252 aircraft at the end of March 2016. According to a
comprehensive retirement programme announced in December 2015,
Emirates intends to retire another 26 aircraft in the current
financial year.
Source: Ascend, Emirates
4. Aircraft - A380
At the end of June 2016 Emirates operated a fleet of 81 A380s
which currently serve 40 destinations from its Dubai hub:
Amsterdam, Auckland, Bangkok, Barcelona, Beijing, Birmingham,
Brisbane, Copenhagen, Dallas, Dusseldorf, Frankfurt, Hong Kong,
Houston, Jeddah, Kuala Lumpur, Kuwait, London Gatwick, London
Heathrow, Los Angeles, Madrid, Manchester, Mauritius, Melbourne,
Milan, Mumbai, Munich, New York JFK, Paris, Perth, Prague, Rome,
San Francisco, Seoul, Shanghai, Singapore, Sydney, Taipei, Toronto,
Washington, and Zurich. Vienna is scheduled to become an A380
destination on July 1, 2016. Emirates has further announced that it
will be upgrading one of the two daily flights servicing its
Dubai-Moscow route to an A380, commencing December 1, 2016. This
will raise the number of seats on the route by about a quarter. The
A380 service into Domodedovo was pulled due to economic turmoil in
Russia. After an increase of demand over the last twelve months
with some 400,000 passengers having travelled on the route, the
airline is determined to resume the A380 service to the Russian
capital soon.
At the end of June 2016 the global A380 fleet consisted of 193
commercially used planes in service. The thirteen operators are
Emirates (81), Singapore Airlines (19), Deutsche Lufthansa (14),
Qantas (12), British Airways (12), Air France (10), Korean Airways
(10), Etihad Airways (8) Malaysia Airlines (6), Qatar Airways (6),
Thai Airways (6), China Southern Airlines (5), and Asiana (4). The
number of undelivered A380 orders stood at 128.
In January 2016 Iranian flag carrier Iran Air and Airbus signed
a heads of term agreement for the acquisition of 118 aircraft in
total, including 12 A380s. The next step is to firm this up in a
purchase order and obtain a US export licence. For this reason
these aircraft are not yet part of Airbus' order book.
In April 2016 it became known that in the first quarter 2016
Emirates agreed to take two extra A380 aircraft originally
commissioned by Japan's Skymark Airlines.
For a long time Emirates has been known as the strongest
supporter of a re-engined A380 and prepared to order up to 200 of
the so-called A380neo. Speaking in front of aviation professionals
in June, Airbus' CEO Fabrice Bregier ruled out an A380neo in the
near future. In May Emirates' President Tim Clark had indicated
that Emirates might purchase up to 60 additional aircraft of the
current version, if Airbus were not prepared to launch a neo. With
regard to the airline's retirement plans for in-service A380s Clark
said that extending leases beyond the useful life of 12 to 13 years
would be an option.
Source: Airbus, Ascend, Emirates
Contact Details
Company
Doric Nimrod Air One Limited
Dorey Court, Admiral Park
St Peter Port
Guernsey GY1 2HT
Tel: +44 1481 702400
www.dnairone.com
Corporate & Shareholder Advisor
Nimrod Capital LLP
3 St Helen's Place
London EC3A 6AB
Tel: +44 20 7382 4565
www.nimrodcapital.com
Disclaimer
This document is issued by Doric Nimrod Air One Limited (the
"Company") to and for the information of its existing shareholders
and does not in any jurisdiction constitute investment advice or an
invitation to invest in the shares of the Company. The Company has
used reasonable care to ensure that the information included in
this document is accurate at the date of its issue but does not
undertake to update or revise the information, including any
information provided by the Asset Manager, or guarantee the
accuracy of such information.
To the extent permitted by law neither the Company nor the Asset
Manager nor their directors or officers shall be liable for any
loss or damage that anyone may suffer in reliance on such
information. The information in this document may be changed by the
Company at any time. Past performance cannot be relied on as a
guide to future performance. The value of an investment may go down
as well as up and some or all of the total amount invested may be
lost.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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