TIDMDNA
RNS Number : 9733R
Doric Nimrod Air One Limited
02 July 2015
QUARTERLY FACT SHEET
30 June 2015
DORIC NIMROD AIR ONE LIMITED
LSE: DNA
The Company
Doric Nimrod Air One Limited ("the Company") is a Guernsey
domiciled company, which was listed on the Specialist Fund Market
(SFM) of the London Stock Exchange and the Channel Islands Stock
Exchange on 13 December 2010. 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
2015) at 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 2015. 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.
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 USD 104 million
==============================================================================================
per Share Income Distributions Return of Capital Total Return(2)
--------------------- --------------------------- ---------------------------
Prospectus Latest Prospectus Latest
Appraisal Appraisal(3) Appraisal Appraisal(3)
--------------------- ----------- -------------- ----------- --------------
Prospectus
FX Rate(4) 70p 161p 152p 231p 222p
------------- --------------------- ----------- -------------- ----------- --------------
Current FX
Rate(5) 70p 163p 154p 233p 224p
------------- --------------------- ----------- -------------- ----------- --------------
(1) See final sentences of Investment Strategy
(2) Excluding earned dividend
(3) Average of the three appraisals as at the Company's year-end in
the expiry year of the lease
(4) 1.5900 USD/GBP
(5) 1.5719 USD/GBP (30 June 2015)
II. Company Facts (30 June 2015)
Listing LSE
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Ticker DNA
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Current Share Price 107.25p (closing)
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Market Capitalisation GBP 45.5 million
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Initial Debt USD 122 million
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Outstanding Debt Balance USD 78.6 million (64% of Initial Debt)
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Current/Future Anticipated 2.25p per quarter (9p per annum)
Dividend
----------------------------- ----------------------------------------
Earned Dividends 38.25p
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Current Dividend Yield 8.39%
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Dividend Payment Dates April, July, October, January
----------------------------- ----------------------------------------
Expected Future Total 2.09 (based on the Current Share Price)
Cash Multiple(1)
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Currency GBP
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Launch Date/Price 13 December 2010 / 100p
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Remaining Lease Duration 7 years 6 months
----------------------------- ----------------------------------------
Incorporation Guernsey
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Aircraft Registration A6-EDC (16.12.2022)
Number (Lease Expiry Date)
----------------------------- ----------------------------------------
Asset Manager Doric GmbH
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Corp & Shareholder Advisor Nimrod Capital LLP
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Administrator JTC (Guernsey) Limited
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Auditor Deloitte LLP
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Market Makers Jefferies International Ltd,
Numis Securities Ltd,
Shore Capital Ltd,
Winterflood Securities Ltd
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SEDOL, ISIN B4MF389, GG00B4MF3899
----------------------------- ----------------------------------------
Year End 31 March
----------------------------- ----------------------------------------
Stocks & Shares ISA Eligible
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Website www.dnairone.com
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(1) See final sentences 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
2015, a total of 3,391 flight cycles were logged. Total flight
hours were 28,417. This equates to an average flight duration of
approximately eight hours and 20 minutes.
The A380 owned by the Company visited Auckland, Frankfurt,
Munich, New York, Rome, and Toronto during the second quarter of
2015.
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 sooner. The last heavy maintenance
check, which was 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.
Inspections
The asset manager Doric undertook a records audit in June
2015.
2. Market Overview
From January to April 2015 passenger demand, measured in revenue
passenger kilometres (RPKs), increased by 6.3% compared to the year
before. April results confirm that passenger growth remains robust.
In its latest forecast released in June IATA expects an RPK growth
of 6.7% for the current year - an increase of 0.8 percentage points
compared to last year's growth rate. The fall in oil prices since
autumn 2014 is supporting the economic outlook. Business confidence
has however not further improved due to weaknesses in the emerging
markets. Until April 2015 airlines increased their capacities,
measured in available seat kilometres (ASKs), by 5.8%. The Middle
East (+13.4%) and Asia/Pacific (+7.6%) were by far the most active
regions in terms of capacity growth. All other regions expanded
their capacities below the overall average with a shrinking market
in Africa.
The average passenger load factor in the first four months of
this year was 79.0%. This is an increase of 0.3 percentage points
compared to the same period the year before. IATA expects an
average worldwide passenger load factor of 80.2% for the full year
2015.
A regional breakdown reveals that the Middle East airlines
continue to outperform the overall market in 2015. Until the end of
April RPKs increased by 10.9% compared to the first four months in
2014. Asia/Pacific-based operators followed with 9.5%. Latin
America grew by 6.0% and Europe by 4.6%. North American market
participants recorded 3.0% more RPKs. Africa shrank by 1.3%.
After a sharp decline in oil prices starting in the autumn of
2014, IATA has revised its fuel price target several times in the
recent past. In its latest outlook, released in June, the industry
association expects an average price per barrel of USD 78 during
this year. Fuel is the single largest operating cost of airlines
and has significant effects on the industry's profitability.
Comparatively low oil prices could drive the average share of fuel
costs in operating expenses down to 28%. This could result in a
significant boost of the industry-wide net profit to an estimated
USD 29.3 billion. The net profit margin of 4.0% would be the
highest for more than a decade. This outlook is supported by IATA's
latest quarterly survey on business confidence of airlines, which
was released in June. The airline CFOs expect expanding air
transport volumes over the next 12 months and further growth in
profitability.
Source: IATA
3. Lessee - Emirates Key Financials
Emirates recorded steady performance and significant growth
during the 2014/15 financial year which ended on 31 March 2015.
Revenue, including other operating income, reached a record high of
USD 24.2 billion, up by 7.5% compared to the previous financial
year.
The airline posted a net profit of USD 1.2 billion, representing
an increase of 40% over last year's results. This was Emirates'
27(th) consecutive year of profit and one of the best performances
to date according to His Highness Sheikh Ahmed bin Saeed Al
Maktoum, Chairman and Chief Executive of Emirates Airline and
Group. Nonetheless the company faced many global and operational
challenges. Revenues were impacted by flight plan adjustments made
to address the Ebola outbreak in Africa, armed conflicts in several
regions, and the 80-day runway upgrading work at Dubai
International Airport. Emirates' net profit was impacted by the
strong rise of the US dollar against many revenue generating
currencies of the airline. The bottom line has improved due to a
significant drop in jet fuel prices during the second half of the
2014/15 financial year. Overall, the airline's fuel bill decreased
by 6.5% compared to the period before and currently represents
34.6% of operating costs, remaining the biggest component for the
carrier.
As of 31 March 2015, the balance sheet total amounted to USD
30.3 billion, an increase of 9.6% compared to the beginning of the
financial year. Total equity increased by 11.1% to USD 7.7 billion
with an equity ratio of 25.4%. The current ratio stood at 0.80,
meaning the airline would be able to meet most of its current
liabilities by liquidating all of 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 billion. As of 31 March 2015, the carrier's cash balance was
USD 4.6 billion, down by USD 88 million compared with the beginning
of the 2014/15 financial year.
During the 2014/15 financial year the airline's ASKs increased
by 9.1%. Measured in RPKs passenger traffic grew by 9.4%, resulting
in an average passenger load factor of 79.6%. This is above the
79.4% reached in the prior period. A record 49.3 million passengers
flew with Emirates between 1 April 2014 and 31 March 2015 - an
increase of 10.7% compared to the previous financial year.
During the 2014/15 financial year Emirates took delivery of 24
wide-body aircraft including 12 Airbus A380s, 10 Boeing 777-300ERs
and two Boeing 777 freighters. Ten older aircraft were phased out.
As of 31 March 2015 the carrier's average fleet age was 75 months,
compared to the industry average of 140 months.
As of 31 May 2015 Emirates had 233 wide-body aircraft in
operation. According to company sources, Emirates is the world's
largest operator of wide-body passenger aircraft. The number of
Emirates' orders yet to be delivered at the end of May 2015 was 278
aircraft. The airline operates the world's largest fleets of Airbus
A380 and Boeing 777-300ER aircraft.
With its increased fleet and resources, Emirates launched five
additional destinations during the last financial year including
Abuja, Brussels, Budapest, Chicago, and Oslo. In addition, the
operator added frequencies to 34 existing destinations.
Referring to the Dubai World Central airport (DWC), Emirates
Airline president Tim Clark expressed his confidence that the
carrier could operate upwards of 500 aircraft in the distant
future. The all-new facility is expected to commence operations in
2023-25 with an initial capacity of 120 million passengers per
year. Emirates' present hub, Dubai International airport (DXB), is
apparently constraining the carrier's growth and Tim Clark expects
the fleet size to increase to no more than 280-300 aircraft within
the next decade. On top of the more than 140 destinations the
carrier already serves, another 100 are on its radar. These cannot
be serviced due to physical constraints at DXB. In its final stage
DWC is expected to host up to 250 million passengers a year.
Source: Ascend, Emirates
4. Aircraft - A380
As of June 2015 Emirates operated a fleet of 62 A380s which
currently serve 32 destinations from its Dubai hub: Amsterdam,
Auckland, Bangkok, Barcelona, Beijing, Brisbane, Dallas, Frankfurt,
Hong Kong, Houston, Jeddah, Kuwait, London Gatwick, London
Heathrow, Los Angeles, Manchester, Mauritius, Melbourne, Milan,
Mumbai, Munich, New York JFK, Paris, Perth, Rome, San Francisco,
Seoul, Shanghai, Singapore, Sydney, Toronto and Zurich. On 1 July
2015 Emirates will add Dusseldorf (Germany) to its A380 network,
followed by Madrid (Spain) a month later. As of October 2015,
Emirates will provide a second daily A380 service to the Swiss
financial capital, Zurich. In December the airline will introduce
its new higher-density A380 configuration with 615 seats. The
aircraft with a two class layout will initially be deployed between
Dubai and Copenhagen. The Danish capital will be the first in
Scandinavia to boast a scheduled A380 service.
The global A380 fleet consisted of 165 commercially used planes
in service in June 2015. The thirteen operators are Emirates (62
A380 aircraft), Singapore Airlines (19), Deutsche Lufthansa (14),
Qantas (12), Air France (10), Korean Airways (10), British Airways
(9), Malaysia Airlines (6), Thai Airways (6), China Southern
Airlines (5), Qatar Airways (5), Asiana (4) and Etihad Airways
(3).
In June 2015 Malaysia Airlines (MAS), following the tragic,
much-publicised loss of two aircraft, announced that the airline is
looking to remove a number of aircraft from its fleet, including
two of its six Airbus A380 aircraft, either through a sale, lease,
or a sale and leaseback scheme. This statement was made after the
carrier declared it was "technically bankrupt"; the potential
disposal is part of its restructuring plan. In the same month
Airbus confirmed that the first delivery of an Airbus A380 to the
Russian carrier Transaero will probability be delayed past the end
of this year. According to Fabrice Bregier, Airbus CEO, the airline
is facing commercial issues, mainly due to devaluation of the
rouble and the shrinking tourist market in Russia. Transaero had
ordered four aircraft in total.
In June 2015 the number of undelivered A380 orders stood at 152.
In December 2014 Air France announced its intention to cancel its
two outstanding orders for A380s, which would bring the total of
undelivered orders to 150.
Ten years after the first A380 take-off on 27 April 2005 the
worldwide A380 fleet is transporting nearly three million
passengers every month on some 200 flights daily.
Emirates' president Tim Clark believes that the second-hand
market for the Airbus A380 will be a good opportunity for carriers
to explore the economic capabilities of the jet: "It's clear to me
that there are carriers interested in the A380 that can't afford
one." He believes the second-hand market for the type will be
"fairly strong", especially as passenger demand increases with a
recovering global economy. In April 2015 Tim Clark said that used
A380s present a "very good value proposition" for customers who
"want to come in at a slightly lower price".
Source: Airbus, Ascend, Emirates
Contact Details
Company
Doric Nimrod Air One Limited
Frances House, Sir William Place
St Peter Port
Guernsey GY1 4EU
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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