TIDMDNA
RNS Number : 2700V
Doric Nimrod Air One Limited
14 April 2016
QUARTERLY FACT SHEET
31 March 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 Market
(SFM) of the London Stock Exchange. 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 (31 March
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 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(2) USD 104 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) 63p 161p 152p 224p 215p
------------- --------------------- ----------- -------------- ----------- --------------
Current FX
Rate(6) 63p 178p 168p 241p 231p
------------- --------------------- ----------- -------------- ----------- --------------
(1) See final sentences of Investment Strategy
(2) Date of valuation: 31 March 2015
(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) 1.4369 USD/GBP (31 March 2016)
II. Company Facts (31 March 2016)
Listing LSE
----------------------------- ----------------------------------------
Ticker DNA
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Current Share Price 111.5p (closing)
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Market Capitalisation GBP 47.3 million
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Initial Debt USD 122 million
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Outstanding Debt Balance USD 70.2 million (58% of Initial Debt)
----------------------------- ----------------------------------------
Current/Future Anticipated 2.25p per quarter (9p per annum)
Dividend
----------------------------- ----------------------------------------
Earned Dividends 45p
----------------------------- ----------------------------------------
Current Dividend Yield 8.07%
----------------------------- ----------------------------------------
Dividend Payment Dates April, July, October, January
----------------------------- ----------------------------------------
Expected Future Total 2.07 (based on the Current Share Price)
Cash Multiple(1)
----------------------------- ----------------------------------------
Total Expense Ratio 1.4% (based on Average Net Assets)
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Currency GBP
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Launch Date/Price 13 December 2010 / 100p
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Remaining Lease Duration 6 years 9 months
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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) Ltd
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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
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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
February 2016, a total of 3,797 flight cycles were logged. Total
flight hours were 31,884. This equates to an average flight
duration of eight hours and 25 minutes.
The A380 owned by the Company visited Amsterdam, Kuala Lumpur,
Milan, New York JFK, and Perth during the first 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.
2. Market Overview
During the year 2015 passenger demand, measured in revenue
passenger kilometres (RPKs), increased by 6.5% compared to the year
before. This is the strongest performance since 2010 and well above
the 10-year average growth rate of 5.5%. Lower airfares more than
compensated for the weaker economic fundamentals in some regions of
the world. Adjusted for distortions caused by the rise of the US
dollar, global ticket prices were 5% lower than in 2014. For 2016
IATA expects a supportive environment for another year of strong
passenger traffic. Further declining oil prices in the last few
months might provide further stimulus for air travel growth in the
current year. In its latest forecast released in December, IATA
expects an RPK growth of 6.9% for 2016 - a moderate increase
compared to the previous year's growth rate. In 2015 airlines
increased their capacities, measured in available seat kilometres
(ASKs), by 5.6%. The Middle East (+12.6%) and Asia/Pacific (+6.7%)
were the most active regions in terms of capacity growth.
The average passenger load factor in 2015 was 80.4%. This is an
increase of 0.7 percentage points compared to the year before, a
record annual high. IATA estimates an average worldwide passenger
load factor of 80.4% for the full year 2016.
A regional breakdown reveals that Middle East airlines continue
to outperform the overall market in 2015. RPKs increased by 10.1%
compared to 2014. Asia/Pacific-based operators followed with 8.6%.
Latin America grew by 6.8%, and Europe by 5.1%. North American
market participants recorded 4.3% more RPKs and growth in Africa
was 3.1%.
(MORE TO FOLLOW) Dow Jones Newswires
April 14, 2016 11:40 ET (15:40 GMT)
After a sharp decline in oil prices starting in the autumn of
2014, IATA has revised its fuel price target several times. In its
latest report released in December, the industry association
expects an average price per barrel of USD 63.8 during 2016. 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 21% this year and could further boost
the industry-wide net profit to an estimated USD 36.3 billion. The
net profit margin of 5.1% would be the highest for more than a
decade. In 2015 the industry net profit reached USD 33 billion,
compared to USD 17.3 billion the year before. The profit
development during this year will heavily depend on the oil price
level. IATA has observed forecasts performed by third parties with
a range between USD 20 and USD 60 per barrel and assumes USD 63.8
per barrel for its own calculations. By the end of March 2016 the
price per barrel of Brent crude was around USD 40.
(c) International Air Transport Association, 2016. Air Passenger
Market Analysis December 2014 / Air Passenger Market Analysis
January 2016 / Economic Performance of the Airline Industry, 2015
end-year report. All Rights Reserved. Available on IATA Economics
page.
3. Lessee - Emirates Key Financials
During the first half of the current financial year ending on 31
March 2016 Emirates recorded revenues, including other operating
income, of USD 11.5 billion. This is 4% below the previous year's
figure. According to a company statement the unfavourable currency
environment and lower average fares - some of the fuel costs
savings were passed on to passengers - were contributing factors.
The carrier was further challenged by continued regional unrest and
increased competition which added downward pressure on its
yields.
However the airline posted a net profit of USD 849 million,
representing an increase of 65% compared to the same period last
year. Lower fuel prices more than compensated for the adverse
external factors and improved the airline's bottom line
significantly. The average fuel price in the reporting period was
41% below the one in the first six months of the previous financial
year. Fuel costs remained the largest component in Emirates'
operating costs, but decreased by 10 percentage-points to 28%. The
airline's profitability was also fostered by its continued ability
to grow passenger demand.
As of 30 September 2015, the balance sheet total amounted to USD
30 billion, a decrease of 1.3% compared to the beginning of the
financial year. Total equity increased by 10.1% to USD 8.5 billion
with an equity ratio of 28.3%. The current ratio stood at 0.67,
meaning the airline would be able to meet about two thirds 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 30 September 2015, the
carrier's cash balance was USD 3.2 billion, down by USD 1.4 billion
compared to the beginning of the 2015/16 financial year. This was
largely caused by continued investment in new aircraft, ancillary
infrastructure projects and acquisitions.
During the first half of the 2015/16 financial year the
airline's ASKs increased by 16%. Measured in RPKs passenger traffic
grew by 11%, resulting in an average passenger load factor of
78.3%. This is below the 81.5% reached in the prior period. A
record 25.7 million passengers flew with Emirates between 1 April
and 30 September 2015 - an increase of 10% compared to the previous
financial year.
The year 2015 marked Emirates' 30(th) year of operations. With
over 51.3 million passengers travelling on more than 186,000
flights the volume of passengers increased by 9% compared to 2014.
The airline's fleet of modern and fuel efficient aircraft covered
more than 824 million kilometres around the globe. This distance is
equivalent to more than 1,000 trips to the moon and back. Reviewing
the achievements and challenges, Emirates' President Tim Clark was
quoted as follows: "2015 has been one of considerable growth for
Emirates as we continued to steer our course despite the headwinds
of regional conflict, unfavourable currency impact, and shaky
business and consumer confidence in many global markets."
In 2015 the airline expanded its network to 150 destinations
with the addition of six passenger destinations. Emirates uplifted
frequencies and upgraded capacity to numerous points across its
network. 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 previous year. At the
same time A380 services to nine already existing routes were
increased.
Emirates is the world's largest operator of wide-body passenger
aircraft. As of 31 March 2016 Emirates had 251 wide-body aircraft
in operation. The number of Emirates' orders yet to be delivered
stood at 252 aircraft. The airline operates the world's largest
fleet of Airbus A380 and Boeing 777-300ER aircraft. Between January
and December 2016 Emirates plans to phase in 37 new aircraft
including 21 A380s.
In January 2016 Emirates released its fifth Environmental Report
covering the financial year 2014-15 which ended on March 31, 2015.
During the period under review, the fuel and carbon dioxide
efficiency on a passenger kilometre basis remained unchanged
compared to the previous period. On average 3.99 litres per 100
passenger kilometres were consumed. Emirates continued its fleet
renewal strategy and replaced ten older and less fuel efficient
aircraft with modern jets such as the A380. These efforts were
affected by a number of operational limitations. Airspace closures
due to security concerns and instability in many parts of the world
resulted in higher fuel consumption, as did carrying more
contingency fuel than usual. Another contributing factor was the
runway refurbishment and upgrading project at Dubai International
Airport (DXB), which lasted 80 days between May and July 2014 and
impacted the airline's operations. In the long run Emirates will
benefit from this investment. New rapid exit taxiways will boost
the capacity and contribute to further improve the operator's
carbon footprint. Furthermore, the carrier is pursuing a number of
measures to increase fuel efficiency, e.g. by cooperating with
aviation authorities and air traffic control organizations to test
and validate new fuel-saving flight procedures and operational
measures. Emirates is 14% more fuel efficient than IATA's fleet
average.
Source: Ascend, Emirates
4. Aircraft - A380
At the end of March 2016 Emirates operated a fleet of 75 A380s
which currently serve 38 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, Rome, San
Francisco, Seoul, Shanghai, Singapore, Sydney, Toronto, Washington
and Zurich. Prague, Taipei and Vienna are scheduled to become A380
destinations later this year.
The introduction of A380 services to the US capital on February
1, 2016 took place immediately after United Airlines withdrew the
route to Dubai from its flight schedule in order to restore route
capacity. Washington D.C.'s Dulles International Airport has been
serviced by Emirates since September 2012 and is one of the most
successful and profitable routes, according to Tim Clark. Until
February of this year Emirates deployed a Boeing 777-300ER on this
daily flight.
In March 2016 the global A380 fleet consisted of 184
commercially used planes in service. The thirteen operators are
Emirates (75), Singapore Airlines (19), Deutsche Lufthansa (14),
Qantas (12), Air France (10), Korean Airways (10), British Airways
(11), Malaysia Airlines (6), Thai Airways (6), China Southern
Airlines (5), Qatar Airways (6), Asiana (4) and Etihad Airways (6).
The number of undelivered A380 orders stood at 135. This includes
an order of three A380 aircraft placed by Japan-based carrier All
Nippon Airways (ANA) in December 2015 and disclosed in January this
year. The single-aisle operator will start A380 operations in 2019
to meet increasing traffic demands to and from Japan. Airbus' order
book also shows an adjustment with regard to a four aircraft order
originally placed by Transaero Airlines, which filed for bankruptcy
protection in September 2015 and ceased flight operations a month
later. Three of the aircraft are now assigned to Air Accord, a
special purpose vehicle, and the remainder has been cancelled. Air
France's decision to cancel its remaining pair of A380s by
converting the order into three Airbus A350-900 is not yet
reflected in the order book.
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.
(MORE TO FOLLOW) Dow Jones Newswires
April 14, 2016 11:40 ET (15:40 GMT)
The parent company of the A380 operator British Airways (BA) is
evaluating leasing used A380s. According to its CEO Willie Walsh,
IAG might add five or six second-hand aircraft to its current fleet
of 11 superjumbos. Another A380 is due for delivery in June this
year. "We see second-hand A380s as an attractive opportunity,"
Walsh said. He suggested that IAG's subsidiary Iberia could also be
a potential home for another one or two. Walsh assessed the unit
costs of the A380 as "very attractive". He further mentioned the
A380 service operated twice-daily to Los Angeles where BA is able
to maintain the capacity of three Boeing 747s while freeing up a
slot at busy Heathrow airport. The statement about further
superjumbos comes after previous indications that BA sees no room
for additional A380s within its fleet.
Source: Airbus, Ascend, Bloomberg, 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
STREASLLFDSKEFF
(END) Dow Jones Newswires
April 14, 2016 11:40 ET (15:40 GMT)
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