TIDMDNA
RNS Number : 6157K
Doric Nimrod Air One Limited
10 July 2017
DORIC NIMROD AIR ONE LIMITED (the "Company")
ANNUAL FINANCIAL REPORT
The Board of the Company is pleased to announce its results for
the year ended 31 March, 2017
To view the Company's Annual Financial Report please follow the
link below:
http://www.rns-pdf.londonstockexchange.com/rns/6157K_-2017-7-10.pdf
In addition, to comply with DTR 4.1 please find below the full
text of the annual financial report. The report will also shortly
be available on the Company's website, https://www.dnairone,com and
on the National Storage Mechanism, which is situated at
www.morningstar.co.uk/uk/nsm.
Annual General Meeting
The Annual General Meeting of the shareholders of the Company
will be held at Ground Floor, Dorey Court, Admiral Park, St Peter
Port, Guernsey on Friday 15 September at 10.30 a.m.
For further information about this announcement contact:
JTC Fund Solutions (Guernsey) Limited, Secretary
Tel: 01481 702 400
Doric Nimrod Air One Limited
Annual Financial Report
From 1 April 2016 to
31 March 2017
SUMMARY INFORMATION
Listing Specialist Fund Segment of
the London Stock Exchange's
Main Market
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Ticker DNA
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Share Price 117.00p (as at 31 March 2017)
117.50p (as at 5 July 2017)
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Market Capitalisation GBP 49.7 million (as at 31
March 2017)
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Aircraft Registration A6-EDC
Number
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Current/Future Anticipated Current dividends are 2.25p
Dividend per quarter per share (9p
per annum) and it is anticipated
this will continue until the
aircraft lease terminates
in 2022.
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Dividend Payment April, July, October, January
Dates
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Currency Sterling
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Launch Date/Price 13 December 2010 / 100p
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Incorporation and Guernsey
Domicile
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Asset Manager Doric GmbH
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Corporate and Shareholder Nimrod Capital LLP
Advisor
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Administrator JTC Fund Solutions (Guernsey)
Limited
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Auditor Deloitte LLP
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Market Makers Shore Capital Limited
Winterflood Securities Limited
Jefferies International Limited
Numis Securities Limited
Canaccord Genuity Limited
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SEDOL, ISIN B4MF389, GG00B4MF3899
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Year End 31 March
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Stocks & Shares ISA Eligible
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Website www.dnairone.com
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COMPANY OVERVIEW
Doric Nimrod Air One Limited (LSE Ticker: DNA) ("DNA" or the
"Company") is a Guernsey company incorporated on 8 October 2010.
It's shares were admitted to trading on the Specialist Fund Segment
("SFS") of the London Stock Exchange's Main Market ("LSE") on 13
December 2010.
The Company's total issued share capital currently consists of
42,450,000 Ordinary Preference Shares (the "Shares") which were
admitted to trading at an issue price of 100 pence per Share. As at
5 July 2017, the latest practicable date prior to publication of
this report, the Shares are trading at 117.50 pence per Share.
Investment Objectives and Policy
The Company's investment objective is to obtain income returns
and a capital return for its shareholders (the "Shareholders") by
acquiring, leasing and then selling a single aircraft. The Company
purchased one Airbus A380-861 aircraft, manufacturers' serial
number 016 (the "Asset" or the "Aircraft") in December 2010 for USD
179m, which it leased (the "Lease") for twelve years to Emirates
Airline ("Emirates"), the national carrier owned by The Investment
Corporation of Dubai based in Dubai, United Arab Emirates.
Distribution Policy
The Company aims to provide its Shareholders with an attractive
total return comprising income, from distributions through the
period of the Company's ownership of the Asset, and capital, upon
the sale of the Asset.
The Company receives income from the lease rentals paid by
Emirates pursuant to the Lease. It is anticipated that income
distributions will be made quarterly, subject to compliance with
applicable laws and regulations. The Company currently targets a
distribution of 2.25 pence per Share per quarter. Emirates bears
all costs (including maintenance, repair and insurance) relating to
the Aircraft during the lifetime of the Lease.
There can be no guarantee that dividends will be paid to
Shareholders and, if dividends are paid, as to the timing and
amount of any such dividend. There can also be no guarantee that
the Company will, at all times, satisfy the solvency test required
to be satisfied pursuant to section 304 of the Companies (Guernsey)
Law, 2008 (the "Law") enabling the Directors to effect the payment
of dividends.
Performance Overview
All payments by Emirates, have to date been made in accordance
with the terms of the Lease.
During the year under review (the "Period") and in accordance
with the Distribution Policy the Company declared four interim
dividends of 2.25 pence per Share. Two interim dividends of 2.25
pence per Share were declared after the reporting period. Further
details of these dividend payments can be found on page 19.
Return of Capital
If and when the Company is wound up (pursuant to a shareholder
resolution, including the liquidation resolution) the Company
intends to return to Shareholders the net capital proceeds upon the
eventual sale of the Asset subject to compliance with the Company's
Articles of Incorporation (the "Articles") and the applicable laws
(including any applicable requirements of the solvency test
contained therein).
Liquidation Resolution
Although the Company does not have a fixed life, the Articles
require that the Directors convene a General Meeting of the Company
six months before the end of the term of the Lease where an
ordinary resolution will be proposed that the Company proceed to an
orderly wind-up at the end of the term of the Lease and the
Directors will consider (and if necessary, propose to Shareholders)
alternatives for the future of the Company, including re-leasing
the Asset, or selling the Asset and reinvesting the capital
received from the sale of the Asset in another aircraft.
CHAIRMAN'S STATEMENT
I am pleased to present Shareholders with the Company's sixth
Annual Financial Report covering the period from 1 April 2016 until
31 March 2017.
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 purchased one Asset in
December 2010 which it leased to Emirates. A senior secured finance
facility provided by Westpac, in the amount of USD 122 million made
up the monies along with the placing proceeds for the acquisition
of the Aircraft. On the purchase of the plane, the Company entered
into a lease with Emirates for an initial term of twelve years,
with fixed lease rentals for the duration. The debt portion of the
funding will be fully amortised over the 12-year term of the Lease,
with the aim of leaving the Aircraft unencumbered on the conclusion
of the Lease.
The lease payments received by the Company from Emirates cover
repayment of the debt as well as income to pay operating expenses
and dividends to Shareholders. Emirates bears all costs (including
maintenance, repair and insurance) relating to the Aircraft during
the lifetime of the Lease.
The Company's Asset Manager, Doric GmbH, continues to monitor
the Lease and to report regularly to the Board. Nimrod Capital LLP,
the Company's Placing Agent as well as its Corporate and
Shareholder Advisory Agent, continues to liaise between the Board
and Shareholders, and to distribute quarterly fact sheets.
During the calendar year 2016 overall global air traffic
passenger demand, measured in revenue passenger kilometres (RPKs),
expanded by 6.3% compared to the year before. Adjusted for the
extra day, as 2016 was a leap year, traffic grew by 6.0%. Growth
was well ahead of its 5.5% ten-year-average. A regional breakdown
reveals that Middle East airlines continued to outperform the
overall market in 2016. Revenue passenger kilometres increased by
11.2% compared to 2015. The average passenger load factor in 2016
increased to 80.5%, the highest annual average on record, improving
marginally on the record set in 2015.
Emirates has also continued to perform well operationally,
flying 56.1 million passengers, an increase of 4 million compared
with the year before. Emirates operated flights to 156 destinations
in 83 countries on six continents during the 2016/17 financial
year. Approximately 37% of Emirates' passengers were carried by an
A380. The airline's sales and earnings were negatively influenced
by tightening yields due to increased competition and the overall
market, including Europe's immigration challenges, terror attacks
and new policies impacting air travel to the US, which caused a
decrease in net profit compared to the previous financial year.
Nevertheless, Emirates achieved a net profit of USD 340 million,
its 29th consecutive year of profit.
The Board recognises Emirates is the sole lessee of the Asset,
and in the event that Emirates defaults on the rental payments it
is unlikely the Company will be able to meet its targeted dividends
or, in the case of ongoing default, continue as a going concern. We
do not believe this is a likelihood at this moment in time given
the current and historical performance of Emirates and its current
financial position.
In economic reality, the Company has also performed well. Four
interim dividends were declared in the Period and future dividends
are targeted to be declared and paid on a quarterly basis. However,
the financial statements do not, in the Board's view, properly
convey this economic reality due to the accounting treatments for
foreign exchange, rental income and finance costs, as required by
international financial reporting standards.
International Financial Reporting Standards ("IFRS") require
that transactions denominated in currencies other than the
presentation currency, (including, most importantly, the cost of
the Aircraft) are translated into presentation currency at the
exchange rate ruling at the date of the transaction whilst monetary
items (principally the outstanding borrowings) are translated at
the rate prevailing on the reporting date. The result is that the
figures sometimes show very large mismatches which are reported as
unrealised foreign exchange differences.
On an on-going basis and assuming the lease and loan payments
are made as anticipated, such exchange differences do not reflect
the commercial substance of the situation in the sense that the key
transactions denominated in US Dollars are in fact closely matched.
Rental income received in US Dollars is used to pay loan repayments
due which are likewise denominated in US Dollars. US Dollar lease
rentals and loan repayments are furthermore fixed at the outset of
the Company's life and are very similar in amount and timing.
In addition to this, rental income receivable is credited evenly
to the Statement of Comprehensive Income over the planned life of
the Company. Conversely, the methodology for accounting for
interest cost means that the proportion of the loan repayments
which is treated as interest, and is debited to the Statement of
Comprehensive Income, varies over the course of the Loan with a
higher proportion of interest expense recognised in earlier
periods, so that the differential between rental income and
interest cost (as reported in the Statement of Comprehensive
Income) reduces over the course of 12 years. In reality however the
amount of rental income is fixed so as to closely match the
interest and principal components of each loan repayment instalment
and allow for payments of operating costs and dividends.
The Board conducts an annual review of the estimated residual
value of the Asset at the end of the 12 year lease to Emirates for
the purpose of validating the depreciation charge. The Board also
assesses if an indicator of impairment of Aircraft value has arisen
which might require the value of the Aircraft to be written down.
In conducting these reviews, the Board engages three
internationally recognised expert appraisers to provide current and
future valuations and takes the advice of the Asset Manager, Doric
GmbH ("Doric").
As of 31 March 2017 the Aircraft's current market value is USD
139 million as per the average of the latest opinion of three
internationally recognised expert appraisers. This is 2.0% lower
compared to last year's forecast. At the end of the 12-year lease,
the appraisers now expect a residual value of USD 104 million, down
by 2.9% compared to the year before, but still above the lowest
value estimated two years ago. During the Period, sterling
depreciated more than 13% against the US Dollar. This would
increase the potential sales proceeds in sterling by the same
percentage. Since the Asset was acquired, the depreciation of
sterling against the US Dollar amounts to more than 21%.
Following a review of the Asset's projected residual values as
is required by IFRS on an annual basis and given the significant
movement in the foreign exchange rate during the year, using the
methodology in Note 3, the Board decided to update the residual
values to the latest estimate using the closing exchange rate. The
impact of this was to increase the residual value estimate in
sterling and reduce the related depreciation as disclosed in the
Statement of Comprehensive Income. Further information about the
residual values of the Asset may be found in Note 9 to the
Financial Statements.
The Board decided to continue the current book value
determination without impairment until more accurate second hand
value information becomes available.
The Board also recognises that the Asset was purchased on the
basis of being leased to Emirates for a twelve year term at
attractive rates. The Board is conscious that the independent
appraisals of the current market value do not reflect the Lease,
which is an intrinsic part of the value of the Company's Asset. In
addition, upon review of the professional advice they have
received, the Board is of the opinion that, the current estimate of
the residual value of the Asset is a reasonable approximation of
the residual value within the IAS 16 definition of residual value
given a comparable asset is not available.
On behalf of the Board, I would like to thank our service
providers for all their help and assistance and all Shareholders
for their continued support of the Company.
Charles Wilkinson
Chairman
ASSET MANAGER'S REPORT
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
2017, a total of 4,491 flight cycles were logged. Total flight
hours were 37,675. This equates to an average flight duration of
eight hours and 25 minutes.
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.
Emirates bears all costs (including for maintenance, repairs and
insurance) relating to the Aircraft during the lifetime of the
Lease.
Inspections
Doric, the Asset Manager, undertook a records audit in March
2017. The lessee was again very helpful in the responses given to
the Asset Manager's technical staff, and the technical
documentation was found to be in good order.
2. Market Overview
The first half of 2016 was characterised by a combination of
high-profile terrorist attacks, political instability in many parts
of the world and subdued economic activity. However, passenger
demand significantly improved between June and December 2016.
According to the International Air Transport Association (IATA),
passengers adapted to the uncertain environment. The moderate
upturn in the global economic cycle was another contributing
factor, which let RPKs grow at an annualized pace of nearly 9% in
the second half of 2016. That development persisted beyond the end
of 2016 with the strongest start to the year since 2005. In January
2017, RPKs grew by 9.6% compared to the same month the year before.
For the full year, IATA expects a demand growth of 5.5%, according
to a report released in March. However, there is uncertainty
whether lower airfares will continue to fuel demand as in the
recent past. As oil prices have significantly increased, since
their 12-year low point reached in January 2016, further leeway for
lower-priced tickets is limited. For this reason, the strength of
the economic cycle will play an important role for the pace of
global passenger growth during the course of this year.
Passenger load factors increased to 80.5% during the calendar
year 2016, the highest annual average on record, improving
marginally on the record set in 2015. With minus 1.6%, the Middle
East recorded the largest decline in load factors as the added
capacity outstripped brisk demand. In January 2017, a worldwide
passenger load factor of 80.2% was recorded, an improvement of 1.2%
compared to the same month the year before and close to an all-time
high. IATA estimates an average worldwide passenger load factor of
79.8% for this year.
In 2016, a regional breakdown reveals that Middle East airlines,
including Emirates, continued to outperform the overall market
demand again last year. RPKs increased by 11.2% compared to the
year 2015. Asia/Pacific-based operators ranked second with 9.1%,
followed by Africa with 6.5%. Europe grew by 4.6%. Latin American
and North American market participants recorded RPK growth of 3.6%
and 3.2% respectively.
Fuel is the single largest operating cost of airlines and has a
significant impact on the industry's profitability. According to
its latest report released in December, IATA expected an average
fuel price of USD 52.1 per barrel in 2016. This would be 22% lower
compared to the previous year. Jet fuel prices have started to rise
with oil prices, and IATA forecasts an average price of USD 64.9
per barrel of jet fuel for this year. Fuel costs in 2017 are set to
represent 18.7% of average operating costs, a 0.5 percentage point
reduction from 2016. This is significantly below the recent peak of
33.2% in 2012-13. Slower GDP growth and rising costs have led to a
downward revision of IATA's 2016 airline industry profitability to
USD 35.6 billion. This is still the highest absolute profit
generated by the airline industry and the highest net profit margin
(5.1%) to date. For 2017, Alexandre de Juniac, IATA's Director
General and CEO, expects a "very soft landing" with an industry net
profit of USD 29.8 billion.
(c) International Air Transport Association, 2017. Air Passenger
Market Analysis December 2016 / Air Passenger Market Analysis
January 2017/ Press Release No. 11: Passenger Demand Growth Hits
Five-Year Peak in January. All Rights Reserved. Available on the
IATA Economics page.
3. Lessee - Emirates Key Financials
In the 2016/17 financial year ending on 31 March 2017, Emirates
recorded the 29(th) consecutive year of profit with a net result of
USD 340 million (AED 1,250 million), down 82% compared to the
previous financial year. The net profit margin was 1.5%, down by 7
percentage points. Revenue for the period remained unchanged at USD
23.2 billion (AED 85.1 billion). However, lower results were to be
expected as Emirates' president Tim Clark hinted earlier in March
2017 that the increased volatility in the market had affected
Emirates' performance. His Highness Sheikh Ahmed bin Saeed Al
Maktoum, Chairman and Chief Executive of Emirates, listed a number
of destabilizing events, which impacted travel demand during the
year: the Brexit vote, Europe's immigration challenges and terror
attacks, new policies impacting air travel into the US, and
currency devaluation. He deemed the past fiscal year as "one of our
most challenging years to date".
In face of these challenges, Emirates increased its passenger
numbers, RPKs and cargo carried during the 2016/17 financial year.
Emirates carried a record 56.1 million passengers (8.1% more than
in the previous fiscal year), increased capacity for passengers
(measured in ASK) by 10.3% and increased RPKs by 8.4%. As a result,
the passenger seat factor dropped by 1.4 percentage points to
75.1%. In the 2016/17 annual report it was noted that the seat
factor on the Emirates' A380 fleet was high - and a testament of
the customer preference for this aircraft. The share of passengers
carried on an A380 increased by 5 percentage points to 37%.
The costs resulting from the ongoing efforts to expand capacity
contributed to a 7.7% increase in operating costs. While fuel
prices fell slight by 2%, an 8% higher uplift in line with the
capacity increase led the airline's fuel bill to increase 6%. Fuel
cost's share of the operating costs only slightly decreased from
25.7% to 25.4% during the reporting period, remaining the biggest
cost component for the airline, followed by personnel costs. The
overall increase in operating costs is marginally higher than the
capacity growth of 7.2%, measured in available tonne kilometre.
As of 31 March 2017, the balance sheet totalled USD 33.1 billion
(AED 121.6 billion), an increase of 2% compared to the previous
financial year. Total equity increased by 8.3% to USD 9.6 billion
(AED 35.1 billion) with an equity ratio of nearly 29%. The carrier
had a cash balance of USD 4.3 billion (AED 15.7 billion) at the end
of the period, down by USD 1.2 billion (AED 4.3 billion) compared
to the previous financial year. This included the repayment of
bullet bonds in the amount of USD 1.1 billion. The current ratio
stood at 0.73, meaning the airline would be able to meet nearly
three-quarters 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 13.9 billion - an increase of 1.8%
against the previous financial year.
In line with its strategy to increase capacity through a young
and efficient fleet, Emirates received a record of 35 wide-body
aircraft, consisting of 19 Airbus A380 and 16 Boeing 777-300ER,
during the 2016/2017 financial year. At the same time, the airline
also retired 27 older aircraft, bringing the average fleet age of 6
years 2 months down to 5 years 3 months, which is well below the
industry average of nearly 12 years. To fund its fleet growth,
Emirates raised USD 7.9 billion (AED 29.1 billion) during the
financial year through finance and operating leases as well as term
loans. Over the last ten years, the operator raised more than USD
47.3 billion (AED 173.7 billion) for aircraft financing.
In the 2016/17 financial year, Emirates launched services to six
new passenger points (Yinchuan and Zhengzhou in China, Yangon in
Myanmar, Hanoi in Vietnam, Fort Lauderdale and Newark in the US).
These new destinations add to Emirates' well-balanced regional
distribution, whereby no region represents more than 30 percent of
overall revenues. In line with increased demand, the operator added
frequencies and increased capacity to several existing destinations
of its global route network, which spanned 156 destinations in 83
countries by fiscal year end.
Source: Emirates
The exchange rate of the UAE Dirham (AED) to the USD is fixed at
3.67.
4. Aircraft - A380
By the end of March 2017, Emirates operated a fleet of 94 A380s,
which currently serve 48 destinations from its Dubai hub:
Amsterdam, Auckland, Bangkok, Barcelona, Beijing, Birmingham,
Brisbane, Casablanca, Christchurch, Copenhagen, Doha, Dusseldorf,
Frankfurt, Guangzhou, Hong Kong, Jeddah, Johannesburg, Kuala
Lumpur, Kuwait, London Gatwick, London Heathrow, Los Angeles,
Madrid, Manchester, Mauritius, Melbourne, Milan, Moscow, Mumbai,
Munich, New York JFK, Paris, Perth, Port Louis, Prague, Rome, San
Francisco, Sao Paulo, Seoul, Shanghai, Singapore, Sydney, Taipei,
Tokyo, Toronto, Vienna, Washington, and Zurich.
On 26 March 2017, Emirates launched three A380 destinations on
the same day. With the deployment of the superjumbo to Casablanca
and Sao Paulo, the airline is providing the first scheduled A380
services into Latin America and North Africa. Healthy demand for
travel between Dubai and Japan is the reason for reintroducing the
A380 to Tokyo-Narita. Another destination back on the A380 flight
schedule is Johannesburg, which was already served by an A380 for a
few months back in 2011/12. In the meantime, Dubai - Johannesburg
is the airline's busiest route in Africa with four daily services.
One of these is now operated by an A380.
At the end of March 2017, the global A380 fleet consisted of 210
commercially operated planes in service. The thirteen operators are
Emirates (94), Singapore Airlines (19), Deutsche Lufthansa (14),
Qantas (12), British Airways (12), Air France (10), Korean Air
(10), Etihad Airways (9) Malaysia Airlines (6), Qatar Airways (7),
Thai Airways (6), China Southern Airlines (5), and Asiana Airlines
(6). The number of undelivered A380 orders stood at 109.
In July 2016, A380 manufacturer Airbus revealed plans to cut
A380 production to one aircraft per month from 2018 onwards.
According to Airbus CEO, Fabrice Brégier, the company remains
committed to the superjumbo and will continue to invest in the jet.
"The A380 is here to stay", Brégier was quoted in the press. The
adjusted production rate allows Airbus to keep "all its options
open" for the emergence of future A380 demand.
In August 2016 Australian flag carrier Qantas disclosed that the
airline is unlikely to take delivery of the final eight A380s it
has on order with Airbus. The airline's CEO Alan Joyce is very
happy with the current network accommodating 12 A380s but is
struggling to find routes for another eight aircraft. Deliveries
have been repeatedly deferred in recent years as a cost-saving
measure.
In September 2016, Singapore Airlines (SIA) announced that they
had decided not to renew the lease on their first Airbus A380
delivered in 2007. The initial lease term expires in October 2017.
No decisions have been made so far on a further four A380 aircraft
which were delivered to SIA on similar operating lease terms in
2008. Singapore Airlines has confirmed it will return four 2007
vintage A380s from its fleet after it had decided not to exercise
the extension options. The carrier is also returning two A330s and
three Boeing 777s from its fleet in the 2017-2018 financial year as
well as taking delivery of three new A380s and ten A350s.
In November 2016, Malaysia Airlines (MAS) detailed its plans to
operate religious pilgrimage flights with its A380 fleet of six
aircraft. According to Peter Bellew, CEO of MAS, they are in the
process of setting up a subsidiary with a separate Malaysian air
operator certificate and it "should be fully operational by spring
2018". "MAS is already transporting Muslim pilgrims on charter
flights to Saudi Arabia very successfully and is in a good position
to cater for increased passenger demand on this route," Bellew
said. The operator will be run on sharia-compliant principles,
which include the use of Islamic financing instruments, but will
not be restricted to Hajj and Umrah business. Bellew also sees
opportunities to operate non-religious charters. Further demand
might come from existing A380 operators seeking temporary increases
in capacity during major overhaul events of their own fleet or for
certain periods during the year. To cover all these future business
opportunities, Bellew suspects the initial fleet could grow to up
to twenty aircraft and might also include "the largest" Boeing
777s. MAS plans to reconfigure its relatively young A380s to
accommodate up to 700
passengers, a capacity increase of more than 40% compared to the
3-class configuration currently installed.
Also in November 2016 Emirates indicated that it will likely
seek to extend leases on its A380s. Asked about the probability of
using the aircraft beyond the 12 years the operator has typically
contracted, Emirates' Senior Vice President of Corporate Treasury
said "we want to keep it for a long time. The type has proven to be
a flexible platform and is a core product for the airline".
At year-end 2016, Emirates deferred delivery by twelve months of
6 Airbus A380s which had been due to arrive in 2017, and 6 which
had been due to arrive in 2018. The postponement follows an
agreement between Emirates and Rolls-Royce, which manufactures the
Trent 900 engine for the type.
In December 2016 it became known that Iran Air had decided to
drop the 12 Airbus A380s from its Airbus order. Earlier that year,
the Iranian flag carrier had signed a heads of term agreement for
the acquisition of 118 aircraft in total, including 12 A380s. The
airline's Chief Executive Officer Farhad Parvaresh attributes the
decision to shelve the order to a lack of infrastructure in the
country. He assumes that it might take another five to six years
until Iran will be able to accommodate high-density aircraft like
the A380.
As per Airbus' monthly-published order book update, Air France
finally decided to swap its two remaining A380 orders for three
Airbus A350 aircraft.
Airbus' President of Commercial Aircraft Fabrice Brégier is
convinced that the demand for A380 aircraft will rebound by 2020.
Considering the growth in international traffic in the next few
years, he expects an increasing level of airport congestion,
especially in Europe and the US. "So the trend is towards bigger
aircraft, and you will see, I'm sure, a second wave of A380
procurement when we reach this congestion."
In March 2017, Qatar Airways indicated that it does not intend
to exercise an option for another three A380s. The fleet currently
consists of seven aircraft and will grow by another three due for
delivery by 2018.
Sources: Airbus, Ascend, Bloomberg, CAPA, Emirates, New Straits
Times, The Edge Financial Daily, FlightGlobal
DIRECTORS
Charles Edmund Wilkinson - Chairman (Age 74) (Independent
non-executive director)
Charles Wilkinson is a solicitor who retired from Lawrence
Graham LLP in March 2005. While at Lawrence Graham he specialised
in corporate finance and commercial law, latterly concentrating on
investment trust and fund work.
Charles is currently Chairman of Doric Nimrod Air Three Limited,
Chairman of the Audit Committee of Doric Nimrod Air Two Limited,
and a director of Landore Resources Ltd, a Guernsey based mining
exploration company. He is resident in Guernsey.
Norbert Bannon (Age 68) (Independent non-executive director)
Norbert Bannon is chairman of a UK DB pension fund, a major
Irish DC pension scheme and is a Director of and advisor to a
number of other financial companies. He is Chairman of Doric Nimrod
Air Two Limited and Chairman of the Audit Committee of Doric Nimrod
Air Three Limited. He has extensive experience in international
finance having been CEO of banks in Singapore and New York. He was
CEO of Ireland's largest venture capital company and was Finance
Director and Chief Risk Officer at a leading investment bank in
Ireland. He has worked as a consultant on risk issues
internationally.
He earned a degree in economics from Queen's University, studied
at Stanford Graduate School of Business and is a Chartered
Accountant.
Geoffrey Alan Hall (Age 68) (Independent non-executive
director)
Geoffrey Hall has extensive experience in asset management,
having previously been Chief Investment Officer of Allianz
Insurance plc, a major UK general insurance company and an
investment manager at HSBC Asset Management, County Investment
Management, and British Railways Pension Funds. Geoffrey is also
currently a Director of Doric Nimrod Air Two Limited and Doric
Nimrod Air Three Limited.
Geoffrey earned his masters degree in Geography at the
University of London. He is an associate of the CFA Society of the
UK.
John Le Prevost (Age 65) (Independent non-executive
director)
John Le Prevost is the Chief Executive Officer of Anson Group
Limited and Chairman of Anson Registrars Limited (the Company's
Registrar). He has spent over 30 years working in offshore trusts
and investment business during which time he was Managing Director
of County NatWest Investment Management (Channel Islands) Limited,
Royal Bank of Canada's mutual fund company in Guernsey and Republic
National Bank of New York's international trust company. John is a
Director of Guaranteed Investment Products I PCC Limited,
Guernsey's largest protected cell company. He is a Director of a
number of other companies associated with Anson Group's business as
well as being a trustee of the Guernsey Sailing Trust. John is also
currently a Director of Doric Nimrod Air Two Limited, Doric Nimrod
Air Three Limited and Amedeo Air Four Plus Limited. He is resident
in Guernsey.
SERVICE PROVIDERS
Management and the Delegation of Functions
The Directors, whose details are set out on page 12 are
responsible for reviewing the business affairs of the Company in
accordance with the Articles and the Prospectus and have overall
responsibility for the Company's activities including all business
decisions, review of performance and authorisation of
distributions. All of the Directors are independent and
non-executive. The Company has delegated management of the Asset to
Doric, which is a company incorporated in Germany. Further details
are outlined below under the heading Asset Manager. The Directors
delegate secretarial and administrative functions to JTC Fund
Solutions (Guernsey) Limited ("JTC" or the "Secretary &
Administrator") which is a company incorporated in Guernsey and
licensed by the Guernsey Financial Services Commission for the
provision of administration services.
Asset Manager
Doric has been appointed by the Company to provide asset
management services to the Company. Pursuant to the Asset
Management Agreement, Doric will: (i) monitor Emirates' and any
subsequent lessees' performance of its obligations under the Lease
and any subsequent leases respectively (which shall include the
obligations relating to the maintenance of insurance cover); (ii)
provide the Company with information regarding alternatives with
respect to any potential sale or re-lease of the Asset; (iii) carry
out mid-lease inspections of the Asset; (iv) provide the Company
with asset monitoring reports describing the state and any material
changes to the state of the Asset; and (v) liaise, as and when
necessary, with lenders, on all matters relating to the Loan, as
required.
Doric has further undertaken that it will dedicate sufficient
time and resources as the Company reasonably believes is required
from time to time to fulfil any contractual arrangements it enters
into with the Company.
Doric Partners LLP ("Doric LLP"), a limited liability
partnership incorporated in England and Wales and Amedeo Services
(UK) Limited ("Amedeo") have been appointed by the Company,
pursuant to the Amended Liaison Services Agreement to act as
Liaison agents. Doric LLP has been appointed to (i) coordinate the
provision of services by Doric to the Company under the Asset
Management Agreement; and (ii) facilitate communication between the
Company and Doric.
The Doric Group is also a member of ISTAT, the International
Society of Transport Aircraft Trading.
The Doric Group is a leading provider of products and services
for investors in the fields of aviation, shipping, renewable energy
and real estate. The Doric Group has an international presence,
with offices in Germany, the United States and the United Kingdom,
and a multinational team which offers access to extensive
relationship networks and expert asset knowledge maintaining
regulated financial institutions in all three jurisdictions. One of
the firm's core competencies is its asset management expertise,
which is an integrated part of all Doric transactions and a
cornerstone of the business. For further information about the
Doric Group, please visit www.doric.com.
The aircraft portfolio currently managed by the Doric Group is
valued at USD 7 billion and consists of 45 aircraft under
management. These aircraft include commercial airliners ranging
from ATR 72-500s and the Airbus A320 family, through the Boeing
737, 777 and Airbus A330/A340 family, up to the Boeing 747-8F and
Airbus A380.
The Doric Group has 22 Airbus A380 aircraft currently under
management and is therefore considered well positioned to perform
the technical asset management of this aircraft type.
Liaison Agent
Amedeo Services (UK) Limited has been appointed by the Company,
pursuant to the Liaison Services Agreement, to, where requested by
the Board, participate in Board meetings, assist in the review of
all asset management matters and provide advice in all asset
management related matters. Amedeo Services (UK) Limited is
authorised by the Financial Conduct Authority and is part of the
Amedeo group of companies.
The Amedeo group is primarily involved in the operating lease
and management of widebody aircraft. Amedeo is a member of ISTAT,
the International Society of Transport Aircraft Trading, and is a
Strategic Partner of IATA, the International Air Transport
Association.
Corporate and Shareholder Adviser
Nimrod Capital LLP ("Nimrod"), which is authorised by the
Financial Conduct Authority, has been appointed as the Corporate
and Shareholder adviser by the Company.
Nimrod was founded in 2008 as an entirely independent
organisation which specialises in generating and sourcing
interesting investment funds, themes and solutions managed by
experts in their fields for the professional investor marketplace.
It has launched nine listed investment companies since its
formation and it also provides investment, marketing, distribution
and advisory services to investment companies and their Board and
managers.
Nimrod, together with Doric and Emirates, was awarded the
"Innovative Deal of the Year 2010" by the international aviation
magazine Airfinance Journal in recognition of the innovative
financing of an Airbus A380 leased to Emirates by the Company,
which was the first stock market listed aircraft investment
vehicle.
Secretary & Administrator
JTC are a multijurisdictional, independent provider of
institutional and private client services. Established for over 25
years, JTC has significant global experience and over GBP47 billion
(USD 70 billion) assets under administration. For further
information about JTC, please visit www.jtcgroup.com.
JTC Fund Solutions (Guernsey) Limited is a Guernsey incorporated
company and provides administration and secretarial services to the
Company pursuant to an Administration and Secretarial Agreement. In
such capacity, JTC is responsible for the general secretarial
functions required by the Law and ensures that the Company complies
with its continuing obligations as well as advising on the
corporate governance requirements and recommendations as applicable
to a company admitted to trading on the SFS.
The Administrator is also responsible for the Company's general
administrative functions such as the calculation of the net asset
value of Shares, the maintenance of accounting and statutory
records and any reporting required under the Foreign Account Tax
Compliance Act of the United States of America.
Registrar
Anson Registrars Limited is the Company's CREST compliant
registrar. The Company's registrar is responsible for the
maintenance of the Company's share register and for the processing
of dividend payments and stock transfers. Anson Registrars Limited
is licensed and regulated by the Guernsey Financial Services
Commission and further information about Anson Registrars Limited
may be found at www.anson-group.com.
Review
The Board keeps under review the performance of the Asset
Manager, Liaison Agent, Corporate and Shareholder Adviser and the
Secretary & Administrator and the powers delegated to each
service provider. In the opinion of the Board the continuing
appointments of the service providers on the terms agreed is in the
best interest of Shareholders as a whole.
MANAGEMENT REPORT
A description of important events which have occurred during the
Period, their impact on the performance of the Company as shown in
the Financial Statements and a description of the principal risks
and uncertainties facing the Company are given in the Chairman's
Statement, Asset Managers Report, Statement of Principal Risks and
the Notes to the Financial Statements contained on pages 42 to 62
and are incorporated here by reference.
Principal Risks and Uncertainties
The Board has undertaken a robust assessment of the principal
risks facing the Company and have undertaken a detailed review of
the effectiveness of the risk management and internal control
systems. The Board is comfortable that the risks are being
appropriately monitored on a regular basis.
The risks set out below are those which are considered to be the
material risks relating to an investment in the Shares but are not
the only risks relating to the Shares or the Company. Additional
risks and uncertainties of which the Company is presently unaware
or that the Company currently believes are immaterial may also
adversely affect it business, financial condition, results of
operations or the value of the Shares.
The principal risks associated with the Company are:
-- Operational risk: the Board is ultimately responsible for all
operational facets of performance including cash management, asset
management, regulatory and listing obligations. The Company has no
employees and so enters into a series of contracts/legal agreements
with a series of service providers to ensure both operational
performance and the regulatory obligations are met. This risk has
been mitigated by the Company using well established, reputable and
experienced service providers and assessing service providers'
continued appointment on at least an annual basis.
-- Investment risk: there are a number of risks associated with
the Asset in relation to the occurrence of technical faults with
the Asset or actions by third parties causing both damage to the
Asset and also damaging the demand for global air travel. This risk
has been mitigated by the lessee's contractual responsibility to
insure, repair and maintain the Aircraft for the duration of the
Lease.
-- Borrowings and financing risk: there is a risk that the
Company is exposed to fluctuations in market interest rates and
foreign exchange rates. This risk has been mitigated by ensuring
that loan repayments are made from lease rental revenues received
in the matching currency and by fixing the interest rates on loan
and lease rentals.
Emirates are the sole lessee of the Asset. Should Emirates
default on the rental payments due to domestic events, events in
the wider airline industry or other reasons it is unlikely the
Company will be able to meet its targeted dividends or, in the case
of ongoing default, continue as a going concern.
-- Secondary market risk: there is a risk that the Company would
not be able to achieve the projected resale value of the asset due
to changes in demand for second hand aircraft of the type owned by
the Company. The Board monitor this on an annual basis and will
make any necessary adjustments to the residual value estimate of
the asset to ensure that projections remain appropriate.
-- Regulatory risk: the Company is required to comply with the
disclosure guidance and transparency rules of the UK Financial
Conduct Authority and the requirements imposed by the Law and the
Guernsey Financial Services Commission. Any failure to comply could
lead to criminal or civil proceedings. Although responsibility
ultimately lies with the Board, the Secretary also monitors
compliance with regulatory requirements.
Going Concern
The Company's principal activities are set out within the
Company Overview on page 2. The financial position of the Company
is set out on pages 38 to 41. In addition, Note 18 to the Financial
Statements includes the Company's objectives, policies and
processes for managing its capital, its financial risk management
objectives and its exposures to credit risk and liquidity risk. The
loan interest rate has been fixed and the fixed rental income under
the Lease means that the rent should be sufficient to repay the
Loan and provide surplus income to pay for the Company's expenses
and permit payment of dividends.
After making reasonable enquiries, and as described above the
Directors have a reasonable expectation that the Company has
adequate resources to continue in its operational existence for the
foreseeable future. Accordingly, they continue to adopt the going
concern basis of accounting in preparing these annual Financial
Statements.
Viability Statement
In accordance with provision C.2.2 of the UK Corporate
Governance Code, the Directors of the Company have considered the
prospects of the Company over the period from present until the
liquidation resolution is put to shareholders six months before the
Aircraft Lease is due to terminate in 2022, a period of
approximately five years.
The Board, in assessing the viability of the Company, have paid
particular attention to the principal risks faced by the Company as
disclosed in the Chairman's Statement, Asset Manager's Report and
the Notes to the Financial Statements, reviewing on an annual basis
the risks faced and ensuring that any mitigation measures in place
are functioning correctly.
In addition, the Board has considered a detailed cashflow
projection for the running costs of the Company. The Company
retains sufficient cash to cover the forecast operating costs of
the Company until the termination date of the Aircraft Lease in
2022, assuming receipt of planned rental income.
The Directors believe that their assessment of the viability of
the Company over the period chosen was sufficiently robust and
encompassed the risks which would threaten the business model,
future performance, solvency or liquidity of the Company
considering a variety of severe but plausible scenarios.
As a result of their review, the Directors of the Company have a
reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due until the
termination date of the Aircraft Lease in 2022.
Responsibility Statement
The Directors jointly and severally confirm that to the best of
their knowledge:
(a) The Financial Statements, prepared in accordance with IFRS
give a fair, balanced and understandable view of the assets,
liabilities, financial position and profits of the Company and
performance of the Company;
(b) This Management Report includes or incorporates by reference
a fair review of the development and performance of the business
and the position of the Company, together with a description of the
principal risks and uncertainties that it faces;
(c) The Annual Report taken as a whole is fair, balanced and
understandable and provides the information necessary for
Shareholders to assess the Company's position, performance,
business model and strategy; and
(d) The Annual Report and Financial Statements includes
information required by the LSE and for ensuring the Company
complies with the relevant provisions of the Disclosure Guidance
and Transparency Rules of the Financial Conduct Authority.
Charles Wilkinson John Le Prevost
Chairman Director
10 July, 2017
DIRECTORS' REPORT
The Directors present their report and Financial Statements of
the Company for the Period.
Principal Activities
The principal activity of the Company is to acquire, lease and
then sell a single aircraft. The Directors do not envisage any
change in these activities for the foreseeable future. A
description of the activities of the Company in the period under
review is given in the Chairman's Statement and the Asset Manager's
Report respectively on pages 4 to 6 and 7 to 11.
Status
The Company is a Guernsey domiciled company the Shares of which
are admitted to trading on the SFS of the LSE. Its registered
number is 52484. The Company operates in accordance with the
Law.
Results and Dividends
The results of the Company for the Period are set out on pages
38 to 41.
The Company declared the following dividends during the period
from 1 April 2016 to date as follows:
Quarter End Announcement Dividend per
Date Payment Date Share (pence)
----------------- ----------------- ----------------- ---------------
31 March 2016 14 April 2016 29 April 2016 2.25
----------------- ----------------- ----------------- ---------------
30 June 2016 11 July 2016 29 July 2016 2.25
----------------- ----------------- ----------------- ---------------
30 September 12 October 28 October
2016 2016 2016 2.25
----------------- ----------------- ----------------- ---------------
31 December 11 January 31 January
2016 2017 2017 2.25
----------------- ----------------- ----------------- ---------------
31 March 2017 11 April 2017 28 April 2017 2.25
----------------- ----------------- ----------------- ---------------
The Company aims to continue to pay quarterly dividends of 2.25
pence per share, in line with the Distribution Policy. There is no
guarantee that any future dividends will be paid.
Directors
The Directors in office are shown on page 12, and all Directors
remain in office as at the date of signature of these Financial
Statements. Further details of the Directors' responsibilities are
given on page 24.
Anson Registrars Limited is the Company's Registrar, Transfer
Agent and Paying Agent. John Le Prevost is a director and
controlling shareholder of Anson Group Limited, the holding company
of Anson Registrars Limited.
Other than the above no Director has a contract of service with
the Company, nor are any such contracts proposed.
The following interests in Shares of the Company are held by
Directors and their connected persons:
Number of Ordinary Preference Shares
Charles Wilkinson 100,000
Geoffrey Hall 45,000
Other than the above shareholdings and Mr Le Prevost's interest
in Anson Registrars Limited, none of the Directors nor any persons
connected with them had a material interest in any of the Company's
transactions, arrangements or agreements during the period and none
of the Directors has or has had any interest in any transaction
which is or was unusual in its nature or conditions or significant
to the business of the Company, and which was effected by the
Company during the reporting period.
At the date of this report, there are no outstanding loans or
guarantees between the Company and any Director.
There were no material related party transactions which took
place in the financial period, other than those disclosed in the
Directors' Report and at Note 20 to the Financial Statements.
Substantial Controllers of Voting Rights
The Company has identified the following substantial controlling
interests in voting rights attached to the Company's issued share
capital in accordance with Chapter 5 of the FCA's Disclosure
Guidance and Transparency Rules. These are based on notifications
made to the Company since inception and may differ substantially
from positions recorded on the Company's share register.
There have been no material changes in the below list of
substantial controlling interests between the end of the year under
review and 5 July, 2017, being the latest practicable date prior to
the date of approval of this report.
Registered Holder % of Total Voting Rights Number of Ordinary Shares Notification Date
City of Bradford Metropolitan District
Council 10.60% 4,500,000 30 September 2013
Nestle Capital Management Limited 9.42% 4,000,000 21 December 2010
East Riding of Yorkshire Council 10.60% 4,500,000 13 January 2011
Insight Investment Management (Global)
Limited 11.78% 5,000,000 4 May 2011
Corporate Governance
Statement of Compliance with the UK Corporate Governance
Code
As a Guernsey company with shares admitted to the SFS, the
Company is not obliged to adopt the UK Corporate Governance Code
(the "Code"). The Company has, however, voluntarily committed to
comply with the Code or explain any departures. A copy of the Code
is available for download from the Financial Reporting Council's
website (www.frc.org.uk). Companies which report against the Code
are also deemed to meet the requirements of the GFSC Code.
Save for departing from the requirements to: (i) have a chief
executive (since the Company does not have any Executive
Directors); (ii) have a senior independent director (since the
Company considers that each Director who is not Chairman can
effectively fulfil this function); (iii) have a remuneration
committee (given the small size of the exclusively non-executive
and independent Board); (iv) have a nomination committee (given the
small size of the exclusively non-executive and independent Board);
(v) appoint the Directors for a fixed term (given the term of the
Lease is twelve years, the Board considers that the defined life of
the Company means that the Directors should be appointed to serve
until the Lease ends and the Company is liquidated, subject to
re-election every three years by the Company's shareholders) and
(vi) have an internal audit function (as the Company has no
executives or employees of its own), the Company is not presently
aware of any departures from the Code.
Board Responsibilities
The Board comprises four Directors, who meet to consider the
affairs of the Company in a prescribed and structured manner.
Biographies of the Directors appear on page 12 demonstrating the
wide range of skills and experience they bring to the Board. All
the Directors are non-executive and independent. The Board
regularly reviews the balance, knowledge and effectiveness of the
Board, to identify if any additional experience or skills are
needed and to ensure that the current Directors have sufficient
available time to undertake the tasks required and remain
independent. When considering the composition of the Board the
Directors will be mindful of diversity and meritocracy.
To date no Director of the Company has resigned. Directors are
able and encouraged to provide statements to the Board of their
concerns and ensure that any items of concern are recorded in the
Board minutes.
In accordance with the Company's Articles the Directors shall
determine the fees payable provided that the aggregate amount of
such fees shall not exceed GBP150,000 per annum. All Directors
receive an annual fee and there are no share options or other
performance related benefits available to them. All Directors are
paid a fee of GBP15,000 per annum and the Chairman is paid an
additional fee of GBP5,000 per annum. The Chairman of the Audit
Committee is paid an additional GBP3,000 per annum. The terms and
conditions of appointment of non-executive directors are available
for inspection at the Company's registered office by prior
arrangement with the Company's Secretary.
Board meetings are held at least twice per year to consider the
business and affairs of the Company together with such further
Board meetings as may be required. The Board hold either a Board
meeting or special dividend committee meeting to consider and if
thought suitable, approve the payment of a dividend in accordance
with the Company's Distribution Policy.
Between these regular meetings the Board keeps in contact by
email and telephone as well as meeting to consider specific matters
of a transactional nature. Additionally the Directors may hold
strategy meetings with relevant advisors in attendance as
appropriate.
The Directors are kept fully informed by the Asset Manager and
Secretary of all matters that are relevant to the business of the
Company and should be brought to the attention of the Directors
and/or Shareholders. All Directors have direct access to the
Secretary who is responsible for ensuring that Board procedures are
followed and that there are effective information flows both within
the Board and between Committees and the Board.
The Directors also have access to the advice and services of the
Asset Manager and Corporate and Shareholder Advisory Agent and may
also, in the furtherance of their duties, take independent
professional advice at the Company's expense.
During the Period the Board met two times, the Director's
attendance is summarised below:-
Director Board Meetings during
the Period
------------------ ----------------------
Charles Wilkinson 2 of 2
------------------ ----------------------
Norbert Bannon 2 of 2
------------------ ----------------------
Geoffrey Hall 2 of 2
------------------ ----------------------
John Le Prevost 2 of 2
------------------ ----------------------
Audit Committee
The Directors are all members of the Audit Committee, with
Norbert Bannon acting as Chairman. The Audit Committee has regard
to the Guidance on Audit Committees published by the Financial
Reporting Council in September 2012 and most recently updated in
April 2016. The Audit Committee examines the effectiveness of the
Company's and service providers' internal control systems as
appropriate, the annual and half-yearly reports and financial
statements, the auditor's remuneration and engagement, as well as
the auditor's independence and any non-audit services provided by
them.
The Audit Committee considers the nature, scope and results of
the auditor's work and reviews annually prior to providing a
recommendation to the Board on the re-appointment or removal of the
auditor. When evaluating the external auditor the Audit Committee
has regard to a variety of criteria including industry experience,
independence, reasonableness of audit plan, ability to deliver
constructive criticism, effectiveness of communication with the
Board and the Company's service providers, quality control
procedures, effectiveness of audit process and added value beyond
assurance in audit opinion.
Auditor independence is maintained through limiting non-audit
services to specific audit-related work that falls within defined
categories; for example, the provision of advice on the application
of International IFRS or formal reports for any stock exchange
purposes. All engagements with the auditor are subject to
pre-approval from the Audit Committee and fully disclosed within
the Annual Financial Report for the relevant period. A new lead
audit partner is appointed every five years and the Audit Committee
ensures the auditor has appropriate internal mechanisms in place to
ensure its independence. The Audit Committee has recommended to the
Board that the re-appointment of Deloitte LLP as the Company's
external auditor be proposed to Shareholders at the 2017 Annual
General Meeting. The Audit Committee will consider arranging for
the external audit contract to be tendered in 2022 (being 10 years
from the initial appointment) with the aim of ensuring a high
quality and effective audit.
The Audit Committee meets at least twice annually, shortly
before the Board meets to consider the Company's Half-yearly and
Annual Financial Reports, and reports to the Board with its
deliberations and recommendations and also holds an annual planning
meeting with the auditor. The Audit Committee operates within
clearly defined terms of reference based on the Institute of
Chartered Secretaries and Administrators recommended terms and
provides a forum through which the Company's external auditor
reports to the Board. The Audit Committee can request information
from the Company's service providers with the majority of
information being directly sourced from the Asset Manager,
Secretary & Administrator and the external auditor. The terms
of reference of the Audit Committee are available upon request.
Each year the Board examines the Audit Committee's performance
and effectiveness, and ensures that its tasks and processes remain
appropriate. Key areas covered included the clarity of the
Committee's role and responsibilities, the balance of skills among
its members and the effectiveness of reporting its work to the
Board. The Board is satisfied that all members of the Committee
have relevant financial experience and knowledge and ensure that
such knowledge remains up to date.
Overall the Board considers that the Audit Committee has the
right composition in terms of expertise and has effectively
undertaken its activities and reported them to the Board during the
Period.
Internal Control and Financial Reporting
The Board is responsible for the Company's system of internal
control and for reviewing its effectiveness. The Board confirms
that there is an on-going process for identifying, evaluating and
monitoring the significant risks faced by the Company.
The internal control systems are designed to meet the Company's
particular needs and the risks to which it is exposed. Accordingly,
the internal control systems are designed to manage rather than
eliminate the risk of failure to achieve business objectives and by
their nature can only provide reasonable and not absolute assurance
against misstatement and loss.
The Board on an annual basis conducts a full review of the
Company's risk management systems including consideration of a risk
matrix which covers various areas of risk including corporate
strategy, accuracy of published information, compliance with laws
and regulations, relationships with service providers and business
activities.
Asset Management services are provided by Doric. Administration
and Secretarial duties for the Company are performed by JTC.
The Directors of the Company clearly define the duties and
responsibilities of their agents and advisors. The appointment of
agents and advisers is conducted by the Board after consideration
of the quality of the parties involved and the Board monitors their
on-going performance and contractual arrangements. The Board also
specifies which matters are reserved for a decision by the Board
and which matters may be delegated to its agents and advisers.
Bribery
The Directors have undertaken to operate the business in an
honest and ethical manner and accordingly take a zero-tolerance
approach to bribery and corruption. The key components of this
approach are implemented as follows:
-- The Board is committed to acting professionally, fairly and with integrity in all its
business dealings and relationships.
-- The Company will implement and enforce effective procedures to counter bribery.
-- The Company requires all its service providers and advisors to adopt equivalent or
similar principles.
Dialogue with Shareholders
All holders of Shares in the Company have the right to receive
notice of, and attend, the general meetings of the Company, during
which members of the Board will be available to discuss issues
affecting the Company.
The primary responsibility for Shareholder relations lies with
the Company's Corporate and Shareholder Advisory Agent. In
addition, the Directors are always available to enter into dialogue
with Shareholders and the Chairman is always willing to meet
Shareholders as the Company believes such communication to be
important. The Company's Directors can be contacted at the
Company's registered office or via the Secretary.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable Guernsey
law and regulations.
Under the Law the Directors are required to prepare financial
statements for each financial year. The Directors have chosen to
prepare the Company's financial statements in accordance with
IFRS.
Under the Law the Directors must not approve the accounts unless
they are satisfied that they give a true and fair view of the state
of affairs of the Company and of the profit or loss of the Company
for that period.
In preparing these financial statements, International
Accounting Standard 1 requires that Directors:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a manner that provides relevant,
reliable, comparable and understandable information;
-- provide additional disclosures when compliance with the specific requirements in
IFRSs are insufficient to enable users to understand the impact
of particular
transactions, other events and conditions on the entity's
financial position and
financial performance; and
-- make an assessment of the Company's ability to continue as a going concern.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Law. They are also
responsible for safeguarding the assets of the Company and for
taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Guernsey governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Disclosure of Information to the Auditor
The Directors who held office at the date of approval of this
Directors' Report confirm in accordance with the provisions of
Section 249 of the Law that, so far as they are each aware, there
is no relevant audit information of which the Company's Auditor is
unaware; and each Director has taken all the steps that he ought to
have taken as a Director to make himself aware of any relevant
audit information and to establish that the Company's Auditor is
aware of that information.
Auditor
Deloitte LLP have expressed their willingness to continue in
office as Auditor and the Audit Committee has recommended their
reappointment. A resolution proposing their reappointment will be
submitted at the Company's forthcoming General Meeting to be held
pursuant to section 199 of the Law.
Charles Wilkinson John Le Prevost
Chairman of the Board Director
Signed on behalf of the Board on 10 July 2017.
AUDIT COMMITTEE REPORT
Membership
Norbert Bannon - Chairman of the Audit Committee
Charles Wilkinson - Chairman of the Board
Geoffrey Hall - Director
John Le Prevost - Director
Key Objective
The provision of effective governance over (i) the
appropriateness of the Company's financial reporting including the
adequacy of related disclosures, (ii) the performance of the
Company's external auditor, (iii) monitoring of the systems of
internal controls operated by the Company and (iv) the Company's
principal service providers and the management of the Company's
regulatory compliance activities.
Responsibilities
The Audit Committee's key duties are as follows:
-- reviewing the Company's financial results announcements and financial statements
and monitoring compliance with relevant statutory and listing
requirements;
-- reporting to the Board on the appropriateness of the Company's accounting policies
and practices including critical accounting policies and
practices;
-- advising the Board on whether the annual report and accounts, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for
shareholders to assess the Company's position, performance,
business model and strategy;
-- overseeing the relationship with the external auditor and reviewing the effectiveness
of the external audit process; and
-- monitoring the systems of internal controls operated by the Company and by the
Company's principal service providers.
Committee Meetings
The Committee meet at least twice a year. The Committee reports
to the Board as part of a separate agenda item, on its activities
and on matters of particular relevance to the Board in the conduct
of its work. During the Period the Committee formally reported to
the Board on two occasions.
Main Activities of the Committee during the Period
The Committee assisted the Board in carrying out its
responsibilities in relation to financial reporting requirements,
compliance and the assessment of internal controls. The Committee
also managed the Company's relationship with the external
auditor.
Fair, Balanced and Understandable
In order to comply with the UK Corporate Governance Code, the
Board requested that the Committee advises them on whether it
believes the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Company's performance, business
model and strategy.
The Committee engaged with the Company's auditor and the
Company's administrator in order to ensure that the accounts were
fair, balanced and understandable.
Financial Reporting and Significant Issues
The Committee's primary role in relation to financial reporting
is to review, with its service providers and the external auditor,
the appropriateness of the half-year and annual financial
statements, the significant financial reporting issues and
accounting policies and disclosures in the financial statements.
The Committee has considered the key risks identified as being
significant to these accounts and the most appropriate treatment
and disclosure of any new significant issues identified during the
audit and half-year reviews as well as any recommendations or
observations made by the external auditor. To aid its review the
Committee considered reports prepared by external service
providers, including Doric and Nimrod, and reports from the
external auditor on the outcome of their annual audit. The
significant issues considered by the Committee in relation to the
2017 accounts and how these were addressed are detailed below:
Significant issues How the Committee addressed
for the Period these significant issues
------------------------------- ---------------------------------------
Residual value of The Company has engaged three
aircraft asset internationally recognised
expert appraisers to provide
The non-current asset the Company with third party
of the Company comprises consultancy valuation services.
a single Airbus A380 All appraisers have used similar
aircraft ("the Asset"). methodologies to derive their
An annual review is opinions on the current market
required of the residual values and future values. In
value of the Asset the absence of sales data for
as per IAS 16 Property, similar used assets, appraisers
Plant and Equipment, are heavily reliant on databases
which defines residual containing historical data
value as "the estimated points of aircraft sales relating
amount that an entity to large commercial aircraft.
would currently obtain Interpretation of historical
from disposal of the data is the basis for the current
asset, after deducting market value and provides,
the estimated costs together with the expected
of disposal, if the developments in the future,
asset were already the foundation for their opinions
of an age and in the on future values. Furthermore,
condition expected the appraisers' valuations
at the end of its take into account specific
useful life." technical and economic developments
as well as general future trends
The Company's estimation in the aviation industry and
technique is to make the macro-economic outlook.
reference to the current The Company uses the average
forecast market value, of the three future values
not an estimate of with inflation provided by
the amount that would the three appraisers as a guide
currently be achieved, to determine the residual value.
and so this is not
a direct application As of 31 March 2017 the Aircraft's
of the IAS 16 definition. current market value is USD
This approach has 138.8m as per the average of
been taken because the latest opinion of three
a current market value internationally recognised
in today's prices expert appraisers - this is
for a twelve year 3.2% below the book value at
old A380 does not this point in time in USD terms.
exist at the reporting The Committee notes that Sterling
date. has depreciated significantly
against the US Dollar since
the asset was acquired. This
supports the conclusion that
there has been no indication
of impairment in the book carry
value expressed in Sterling.
In addition, to give a more
accurate estimate of the depreciation
charge, the Committee has recommended
to the Board that current closing
foreign exchange rates be used
instead of historic foreign
exchange rates.
------------------------------- ---------------------------------------
The Committee has also received
reports from Doric. Doric has
confirmed it has no reason
to question the methodology
used to determine the residual
value in US Dollar terms. In
consultation with the Service
Providers and, given the significant
foreign exchange rate movement,
residual values have been updated
to reflect the latest estimate
in USD terms (USD 104 million)
converted at the current year
closing exchange rate. The
impact of this has been to
increase the equivalent GBP
residual value and reduce the
related depreciation. This
has been disclosed in Note
9.
Upon review of the advice they
have received from Doric and
the appraisers, the Committee
is of the opinion that, the
current estimate of the residual
valuation of the Asset is a
reasonable approximation of
the residual value within the
IAS 16 definition given a comparable
asset is not available.
------------------------------- ---------------------------------------
Recording foreign In assessing foreign exchange,
exchange gains/losses the Committee has considered
the issue at length and are
IFRS require that of the opinion that, on an
certain transactions on-going basis and assuming
denominated in currencies the lease and loan payments
other than the presentation are made as anticipated, such
currency (including, exchange differences do not
most importantly, reflect the commercial substance
the cost of the Asset) of the situation in the sense
be translated into that the key transactions denominated
presentation currency in US Dollars are in fact closely
at the exchange rate matched. Rental income received
ruling at the date in US Dollars is used to pay
of the transaction loan repayments due which are
whilst monetary items likewise denominated in US
(principally the outstanding Dollars. US Dollar lease rentals
borrowings) are translated and loan repayments are furthermore
at the rate prevailing fixed at the outset of the
on the reporting date. Company's life and are very
The resultant figures similar in amount and timing.
sometimes show very
large mismatches which The Committee concluded that
are reported as unrealised the matching of the lease rentals
foreign exchange differences. to settle loan repayments therefore
mitigates risks by foreign
During the Period exchange fluctuations.
the Company has recorded
significant foreign The Committee has carefully
exchange rate losses considered the disclosure in
due to the depreciation Note 18 (b) to the Financial
of Sterling against Statements to ensure that the
US Dollars and the reality of the Company's foreign
consequent increase exchange risk exposure is properly
in the Sterling value explained.
of the US Dollar denominated
debt.
------------------------------- ---------------------------------------
Risk of default by The Committee received quarterly
the Lessee on lease reports from Doric during the
rentals receivable year which comment on the performance
of Emirates. Doric have advised
Emirates are the sole that Emirates has continued
lessee of the Asset. to perform well, flying more
Should Emirates default passengers than ever before.
on the rental payments, Passenger load factors remain
it is unlikely the high.
Company will be able
to meet its targeted The Committee concluded that
dividends or, in the it would continue to receive
case of ongoing default, quarterly reports from Doric
continue as a going on the performance of Emirates
concern. and would continue to monitor
Emirate's overall performance.
The Committee has carefully
considered the disclosure in
Note 18 (c) to the Financial
Statements to ensure that this
concentration of credit risk
is properly reflected.
------------------------------- ---------------------------------------
Going Concern
After making enquiries, the Committee has a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. The Committee
believe the Company is well placed to manage its business risks
successfully as the interest on the Company's Loan has been fixed
and the fixed rental income under the operating lease means that
the rents should be sufficient to repay the Loan and provide
surplus income to pay for the Company's expenses and permit payment
of dividends. Accordingly, the Committee has adopted the going
concern basis in preparing the financial information.
Internal Controls
The Committee has made due enquiry of the internal controls of
the Administrator. The Committee is satisfied with the controls
currently implemented by the Administrator; however it has
requested that the Secretary keep the Company informed of any
developments and improved internal control procedures. The most
recent report on the internal control of JTC's administration
services, prepared in accordance with the International Standard on
Assurance Engagement 3402 ("ISAE 3402"), has been provided to the
Committee.
Internal Audit
The Company has no employees and operates no systems of its own,
relying instead on the employees and systems of its external
service providers. The Board has therefore taken the decision that
it would be of insufficient benefit for the Company to engage an
internal auditor.
External Audit
The effectiveness of the external audit process is dependent on
appropriate audit risk identification at the start of the audit
cycle. The Committee receives from Deloitte a detailed audit plan,
identifying their assessment of the key risks. During the Period,
the primary risks identified were in respect of valuation and
ownership of the Aircraft; the recording of lease rental income;
and accounting for fixed rate debt using the effective interest
rate method.
Using its collective skills, the Committee evaluates the
effectiveness of the audit process in addressing the matters raised
through the reporting it received from Deloitte at the year-end. In
particular the Committee formally appraise Deloitte against the
following criteria:
-- Independence
-- Ethics and Conflicts
-- Knowledge and Experience
-- Challenge
-- Promptness
-- Cost
-- Overall Quality of Service
In addition the Committee also seek feedback from the
Administrator on the effectiveness of the audit process.
For the Period, the Committee were satisfied that there had been
appropriate focus on the primary areas of audit risk and assessed
the quality of the audit process to be good. The Committee
discussed their findings with Deloitte and agreed how future
external audits could be improved.
The Committee hold meetings with the external auditor to provide
additional opportunity for open dialogue and feedback from the
Auditor. Should it be necessary, Committee members may meet with
the external auditor without the Administrator and Asset Manager
being present. Matters typically discussed include the Auditor's
assessment of business risks and management activity thereon, the
transparency and openness of interactions with the Administrator,
confirmation that there has been no restriction in scope placed on
them by the Administrator on the independence of their audit and
how they have exercised professional scepticism.
Appointment and Independence
The Committee considers the reappointment of the external
auditor, including the rotation of the audit partner, each year and
also evaluates their independence on an ongoing basis.
The external auditor is required to rotate the audit partner
responsible for the audit every five years. The current lead audit
partner has been in place since August 2016.
Deloitte has been the Company's external auditor since October
2012. The Committee has provided the Board with its recommendation
to the Shareholders on the reappointment of Deloitte as external
auditor for the year ending 31 March 2018. Accordingly a resolution
proposing the reappointment of Deloitte as the Company's auditor
will be put to the Shareholders at the 2017 Annual General
Meeting.
There are no contractual obligations restricting the Committee's
choice of external auditor. The Committee continues to consider the
audit tendering provisions outlined in the revised UK Corporate
Governance Code, of which it is very supportive.
Non-Audit Services
To further safeguard the objectivity and independence of the
external auditor from becoming compromised, the Committee has a
formal policy governing the engagement of the external auditor to
provide non-audit services. No changes have been made to this
policy during the year. This policy specifies that Deloitte should
only be engaged for non-audit services where there is considered to
be a very low threat to auditor independence.
Deloitte is prohibited from providing any other services without
the Committee's prior approval. In reaching such a determination
the Committee will take into consideration whether it is in the
best interests of the Company that such services should be supplied
by the Company's external auditor (rather than another service
provider) and, if so whether any safeguards regarding auditor
objectivity and independence in the conduct of the audit should be
put in place, whether these would be effective and how such
safeguards should be disclosed.
Committee Evaluation
The Committee's activities formed part of the review of Board
effectiveness performed in 2016.
An internal evaluation of the Committee's effectiveness was
carried out in November 2016.
Yours faithfully
Norbert Bannon
Chairman of Audit Committee
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF DORIC NIMROD AIR ONE
LIMITED
Opinion on financial statements of Doric Nimrod
Air One Limited
====================================================================
In our opinion the financial statements:
* give a true and fair view of the state of the
Company's affairs as at 31 March 2017 and of its
profit for the year then ended;
* have been properly prepared in accordance with
International Financial Reporting Standards (IFRSs)
as adopted by the European Union; and
* have been prepared in accordance with the
requirements of the Companies (Guernsey) Law, 2008.
The financial statements that we have audited comprise:
* the Statement of Comprehensive Income;
* the Statement of Financial Position;
* the Statement of Cash Flows;
* the Statement of Changes in Equity; and
* the related notes 1 to 21.
The financial reporting framework that has been
applied in their preparation is applicable law
and IFRSs as adopted by the European Union.
Summary of our audit approach
========================================================================
Key risks The key risks that we identified in
the current year were:
* Valuation and ownership of aircraft;
* Recognition of lease rental income ; and
* Accounting for debt using the effective interest
method.
The key risks are similar with the prior
year.
-------------- ========================================================
Materiality The materiality we used in the current
year was GBP748,800 which was approximately
2% of the shareholders' equity. This
is consistent with prior year.
-------------- ========================================================
Scoping All audit work for the Company was performed
directly by the audit engagement team.
-------------- ========================================================
Significant There has been no significant changes
changes in in our approach from prior year.
our approach
============== ========================================================
Going concern and the Directors' assessment of
the principal risks that would threaten the solvency
or liquidity of the Company
We have reviewed the Directors' We confirm that we
statement regarding the appropriateness have nothing material
of the going concern basis to add or draw attention
of accounting contained within to in respect of
note 2(i) to the financial these matters.
statements and the Directors'
statement on the longer-term
viability of the Company contained We agreed with the
within the Management Report Directors' adoption
on page 17. of the going concern
basis of accounting
We are required to state whether and we did not identify
we have anything material to any such material
add or draw attention to in uncertainties. However,
relation to: because not all future
-- the Directors' confirmation events or conditions
on page 17 that they have carried can be predicted,
out an assessment of the principal this statement is
risks facing the Company, including not a guarantee as
those that would threaten its to the Company's
business model, future performance, ability to continue
solvency or liquidity; as a going concern.
-- the disclosures on page
16-17 that describe those risks
and explain how they are being
managed or mitigated;
-- the Directors' statement
on page 17 to the financial
statements about whether they
considered it appropriate to
adopt the going concern basis
of accounting in preparing
them and their identification
of any material uncertainties
to the Company's ability to
continue to do so over a period
of at least twelve months from
the date of approval of the
financial statements; and
-- the Directors' explanation
on page 17 as to how they have
assessed the prospects of the
Company, over what period they
have done so and why they consider
that period to be appropriate,
and their statement as to whether
they have a reasonable expectation
that the Company will be able
to continue in operation and
meet its liabilities as they
fall due over the period of
their assessment, including
any related disclosures drawing
attention to any necessary
qualifications or assumptions.
Independence
===================================== ================================
We are required to comply with We confirm that we
the Financial Reporting Council's are independent of
Ethical Standards for Auditors the Company and we
and confirm that we are independent have fulfilled our
of the Company and we have other ethical responsibilities
fulfilled our other ethical in accordance with
responsibilities in accordance those standards. We
with those standards. also confirm we have
not provided any of
the prohibited non-audit
services referred
to in those standards.
Our assessment of risks of material misstatement
======================================================
The assessed risks of material misstatement described
below are those that had the greatest effect on
our audit strategy, the allocation of resources
in the audit and directing the efforts of the
engagement team.
Valuation and ownership of aircraft
=====================================================================================
Risk description Included on the Company's statement
of financial position as at 31 March
2017 is an aircraft asset of GBP92.2
million (2016: GBP94.3 million) as
disclosed in Note 9 to the financial
statements. As explained in Note 2(k),
the Company's accounting policy is
to measure its aircraft asset at depreciated
historic cost less impairment. The
asset is being depreciated on a straight-line
basis over the terms of the lease to
an estimated residual value at the
end of that period. As stated in Note
3, estimation of aircraft residual
value is a source of uncertainty and
is a key determinant in preparing the
financial statements. Refer to the
considerations by the audit committee
on residual value as discussed on pages
26 to 27.
The risk exists that:
* the selected useful life or residual value used in
determining depreciation are not appropriate as the
estimation of aircraft useful life and residual value
is a key judgement;
* an indicator of impairment of the asset might arise
in which case an impairment review should be
performed and the value of the asset written down to
recoverable amount if less than carrying value; and
* the asset does not belong to the Company.
================= ==================================================================
How the scope Our procedures included:
of our audit * critically assessing the conclusions reached by the
responded Board on the appropriateness of the selected residual
to the risk values and evaluating their consistency with the
available market information, including forecast
valuations obtained by the Company from expert
aircraft valuers and the terms of the aircraft lease
agreement. We have considered the qualifications and
experience of the valuers engaged by management. We
have also considered the adequacy of the disclosure
related to this estimation uncertainty set out in
Note 3;
* engaging our internal aircraft valuation specialists
in challenging the Board and Asset Manager on the
assessments made on residual values used at year end.
We discussed and evaluated the impact of market and
non-market news on the selected residual values;
* reviewing and challenging the Board's conclusion on
asset impairment assessment by reviewing for both
internal and external factors which might be
indicators of impairment; and
* reviewing the original purchase agreement for
consistency with the asset owned and obtaining
certificate of registration directly from 'The
International Registry for International Interests in
Mobile Equipment' to confirm ownership.
================= ==================================================================
Key observations Having carried out the procedures,
we are satisfied with the useful life
selected, residual value used and the
Board's assessment that no indicators
of impairment identified.
We also obtained satisfaction regarding
the ownership of the asset recorded
in the financial statements.
================= ==================================================================
Recognition of lease rental income
=====================================================================================
Risk description The Company's lease has been classified
as an operating lease and as such rental
income which amounts to GBP14.9 million
(2016: GBP13.5 million) should be recognised
on a straight-line basis over the lease
term, which differs from the profile
of actual rental payments. As set out
in Note 4 of the financial statements,
a significant portion of these lease
rentals are receivable in US Dollars
and must be appropriately translated
into the Sterling functional and presentation
currency. The recognition of revenue
also requires consideration of all
terms of the signed lease contract.
As stated in Note 3, classification
of the lease as operating lease is
a key source of uncertainty in preparing
the financial statements.The risk is
that revenue is not properly recorded
in accordance with these requirements
and the related deferred or accrued
income in not correctly calculated.
================= ==================================================================
How the scope Our procedures included:
of our audit * consideration on whether the classification of the
responded leases as operating is appropriate with reference to
to the risk the lease terms and the nature of the asset and the
requirements of IAS 17: Leases;
* developing independent expectations of lease income
for the year based on total lease rentals receivable,
the lease term and the applicable foreign exchange
rates during the year. We also traced a sample of
rental income receipts to bank statements; and
* recalculating deferred and accrued rental income
recognised in the Statement of Financial Position and
testing accuracy of related translation differences.
================= ==================================================================
Key observations Having performed the procedures above,
we are satisfied with the classification
of the lease and we conclude that revenue
recognition is in line with the terms
of the signed lease contract. We are
also satisfied with the deferred and
accrued income balances recorded as
these were not materially different
from results of our recalculations.
================= ==================================================================
Accounting for debt using the effective interest
method
=====================================================================================
Risk description In order to part-finance the acquisition
of the asset the Company has obtained
a fixed rate debt. As at 31 March 2017
the value of the total debt held by
the Company was GBP46.4 million (2016:
GBP48.6 million) as disclosed in Note
14 to the financial statements. The
debt is amortising over the lease term.
As set out in Note 2(l) to the financial
statements, the debt instrument is
carried at amortised cost with interest
expense recognised at the effective
interest rate. The risk exists that
the debt is not properly accounted
for using the effective interest rate
method or that adequate disclosure
is not made in the financial statements.
================= ==================================================================
How the scope Our procedures included:
of our audit * reviewing the debt amortisation schedules prepared by
responded management to recalculate the effective interest
to the risk rates on the loan and checked whether they are
consistent with the repayment schedules;
* obtaining direct confirmation of the principal
balance outstanding and recalculating accrued
interest using the effective interest rate; and
* developing an expectation of the interest charges for
the period using the average outstanding principal
balances during the period and the effective interest
rates.
================= ==================================================================
Key observations Having carried out the procedures,
we are satisfied with the valuation
of debt at the effective interest rate
and related interest calculations were
within our expectation.
================= ==================================================================
These matters were addressed in the context of
our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Our application of materiality
=====================================================================
We define materiality as the magnitude of misstatement
in the financial statements that makes it probable
that the economic decisions of a reasonably knowledgeable
person would be changed or influenced. We use
materiality both in planning the scope of our
audit work and in evaluating the results of our
work.
Based on our professional judgement, we determined
materiality for the financial statements as a
whole as follows:
Materiality GBP748,800 (2016: GBP843,000)
------------------- ==============================================
Basis for 2% (2016: 2%) of shareholders' equity
determining
materiality
------------------- ==============================================
Rationale Our materiality is based on the shareholders'
for the benchmark equity of the Company as comprehensive
applied income is significantly influenced
by fluctuations in exchange rates.
We consider shareholders' equity
to be the most important balance
on which the shareholders would judge
the performance of the Company.
=================== ==============================================
We agreed with the Audit Committee that we would
report to the Committee all audit differences
in excess of GBP14,900 (2016: GBP16,000), as well
as differences below that threshold that, in our
view, warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure
matters that we identified when assessing the
overall presentation of the financial statements.
An overview of the scope of our audit
============================================================
Our audit was scoped by obtaining an understanding
of the entity and its environment, including internal
control, and assessing the risks of material misstatement.
Audit work to respond to the risks of material
misstatement was performed directly by the audit
engagement team.
The Company is administered by a third party Guernsey
regulated service provider, as part of our audit
we assessed the design and implementation of controls
established at the service provider for the purposes
of our audit.
This is standalone entity and the audit of the
Company's financial statements has been performed
by a single audit team with no involvement of
other auditors.
Matters on which we are required to report by
exception
=============================================================================================
Adequacy of explanations received
and accounting records We have nothing to
Under the Companies (Guernsey) report in respect
Law, 2008 we are required to of these matters.
report to you if, in our opinion:
* we have not received all the information and
explanations we require for our audit; or
* proper accounting records have not been kept; or
* the financial statements are not in agreement with
the accounting records.
Corporate Governance Statement
Although not required to do We have nothing to
so, the Directors have voluntarily report arising from
chosen to make a corporate our review.
governance statement detailing
the extent of the Company's
compliance with the UK Corporate
Governance Code. We reviewed
the part of the Corporate Governance
Statement relating to the Company's
compliance with certain provisions
of the UK Corporate Governance
Code.
Our duty to read other information
in the Annual Report We confirm that we
Under International Standards have not identified
on Auditing (UK and Ireland), any such inconsistencies
we are required to report to or misleading statements.
you if, in our opinion, information
in the annual report is:
* materially inconsistent with the information in the
audited financial statements; or
* apparently materially incorrect based on, or
materially inconsistent with, our knowledge of the
entity acquired in the course of performing our
audit; or
* otherwise misleading.
In particular, we are required
to consider whether we have
identified any inconsistencies
between our knowledge acquired
during the audit and the Directors'
statement that they consider
the annual report is fair,
balanced and understandable
and whether the annual report
appropriately discloses those
matters that we communicated
to the Audit Committee which
we consider should have been
disclosed.
Respective responsibilities of directors and auditor
=============================================================
As explained more fully in the Directors' Responsibilities
Statement, the Directors are responsible for the
preparation of the financial statements and for
being satisfied that they give a true and fair
view. Our responsibility is to audit and express
an opinion on the financial statements in accordance
with applicable law and International Standards
on Auditing (UK and Ireland). We also comply with
International Standard on Quality Control 1 (UK
and Ireland). Our audit methodology and tools
aim to ensure that our quality control procedures
are effective, understood and applied. Our quality
controls and systems include our dedicated professional
standards review team and independent partner
reviews.
This report is made solely to the Company's members,
as a body, in accordance with Section 262 of the
Companies (Guernsey) Law, 2008. Our audit work
has been undertaken so that we might state to
the Company's members those matters we are required
to state to them in an auditor's report and/or
those further matters we have expressly agreed
to report to them on in our engagement letter
and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company's
members as a body, for our audit work, for this
report, or for the opinions we have formed.
Scope of the audit of the financial statements
===========================================================
An audit involves obtaining evidence about the
amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the
financial statements are free from material misstatement,
whether caused by fraud or error. This includes
an assessment of: whether the accounting policies
are appropriate to the Company's circumstances
and have been consistently applied and adequately
disclosed; the reasonableness of significant accounting
estimates made by the Directors; and the overall
presentation of the financial statements. In addition,
we read all the financial and non-financial information
in the annual report to identify material inconsistencies
with the audited financial statements and to identify
any information that is apparently materially
incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the course
of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies
we consider the implications for our report.
Nicola Sarah Paul FCA
for and on behalf of Deloitte LLP
Recognised Auditor
St Peter Port, Guernsey
10 July 2017
STATEMENT OF COMPREHENSIVE INCOME
For the period from for the year ended 31 March 2017
Year ended Year ended
Notes 31 Mar 31 Mar
2017 2016
GBP GBP
INCOME
A rent income 4 10,409,811 9,023,652
B rent income 4 4,508,388 4,520,740
Bank interest received - 2,523
------------ ------------------
14,918,199 13,546,915
EXPENSES
Operating expenses 5 (601,466) (594,563)
Depreciation of Asset 9 (2,075,698) (4,055,420)
------------ ------------------
(2,677,164) (4,649,983)
Net profit for the period
before finance costs and
foreign exchange losses 12,241,035 8,896,932
Finance costs 10 (2,911,154) (2,733,189)
Net profit for the year
after finance costs before
foreign exchange losses 9,329,881 6,163,743
Unrealised foreign exchange
loss 18b (7,593,215) (1,895,451)
------------ ------------------
Profit for the year 1,736,666 4,268,292
------------ ------------------
Other Comprehensive Income - -
------------ ------------------
Total Comprehensive Income
for the year 1,736,666 4,268,292
------------ ------------------
Pence Pence
Earnings per Share for
the year - Basic and Diluted 8 4.09 10.05
In arriving at the results for the financial year, all amounts
above relate to continuing operations.
The notes on pages 42 to 62 form an integral part of these
Financial Statements.
STATEMENT OF FINANCIAL POSITION
As at 31 March 2017
31 Mar 2017 31 Mar 2016
Notes GBP GBP
NON-CURRENT ASSETS
Aircraft 9 92,187,195 94,262,893
---------------------- ---------------------
CURRENT ASSETS
Accrued income 281,357 94,601
Cash and cash equivalents 16 4,376,502 4,213,957
Receivables 12 12,684 12,479
---------------------- ---------------------
4,670,543 4,321,037
---------------------- ---------------------
TOTAL ASSETS 96,857,738 98,583,930
====================== =====================
CURRENT LIABILITIES
Borrowings 14 9,856,765 8,151,040
Deferred income 10,973,695 8,415,958
Payables - due within one year 13 57,406 56,032
---------------------- ---------------------
20,887,866 16,623,030
NON-CURRENT LIABILITIES
Borrowings 14 36,545,758 40,452,952
---------------------- ---------------------
36,545,758 40,452,952
---------------------- ---------------------
TOTAL LIABILITIES 57,433,624 57,075,982
====================== =====================
TOTAL NET ASSETS 39,424,114 41,507,948
---------------------- ---------------------
EQUITY
Share capital 15 39,016,728 39,016,728
Retained earnings 407,386 2,491,220
---------------------- ---------------------
39,424,114 41,507,948
---------------------- ---------------------
Pence Pence
Net asset value per Ordinary Preference
Share based
on 42,450,000 (Mar 2016: 42,450,000)
shares in issue 92.87 97.78
The financial statements were approved by the Board of Directors
and authorised for issue on
10 July 2017 and are signed on its behalf by:
Charles Wilkinson John Le Prevost
Director Director
The notes on pages 42 to 62 form an integral part of these
Financial Statements.
STATEMENT OF CASH FLOWS
For the year ended 31 March 2017
Year ended Year ended
31 Mar 2017 31 Mar 2016
Notes GBP GBP
OPERATING ACTIVITIES
Profit for the year 1,736,666 4,268,292
Movement in accrued and
deferred income 1,132,705 887,798
Interest received - (2,523)
Depreciation of Asset 9 2,075,698 4,055,420
Loan interest 10 2,850,600 2,821,099
Increase / (decrease) in
payables 1,374 (80,186)
(Increase) / decrease in
receivables (205) 3,618
Amortisation of debt arrangement
costs 10 60,554 (87,910)
Foreign exchange movement 18b 7,593,215 1,895,452
-------------------- -------------------
NET CASH FROM OPERATING
ACTIVITIES 15,450,607 13,761,060
-------------------- -------------------
INVESTING ACTIVITIES
Interest received - 2,523
-------------------- -------------------
NET CASH FROM INVESTING
ACTIVITIES - 2,523
-------------------- -------------------
FINANCING ACTIVITIES
Dividends paid 7 (3,820,500) (3,820,500)
Repayments of capital on
borrowings (9,030,865) (7,329,479)
Repayments of interest on
borrowings (2,804,349) (2,834,472)
-------------------- -------------------
NET CASH USED IN FINANCING
ACTIVITIES (15,655,714) (13,984,451)
-------------------- -------------------
CASH AND CASH EQUIVALENTS
AT BEGINNING
OF YEAR 4,213,957 4,371,633
Decrease in cash and cash
equivalents (205,107) (220,868)
Effects of foreign exchange
rates 367,652 63,192
-------------------- -------------------
CASH AND CASH EQUIVALENTS
AT OF
YEAR 16 4,376,502 4,213,957
-------------------- -------------------
The notes on pages 42 to 62 form an integral part of these
financial statements.
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2017
Notes Share Retained Total
Capital Earnings
GBP GBP GBP
Balance as at 1 April
2016 39,016,728 2,491,220 41,507,948
Total Comprehensive
Income for the year - 1,736,666 1,736,666
Dividends paid 7 - (3,820,500) (3,820,500)
------------------ ------------------ --------------
Balance as at 31 March
2017 39,016,728 407,386 39,424,114
------------------ ------------------ --------------
Notes Share Retained Total
Capital Earnings
GBP GBP GBP
Balance as at 1 April
2015 39,016,728 2,043,428 41,060,156
Total Comprehensive
Income for the year - 4,268,292 4,268,292
Dividends paid 7 - (3,820,500) (3,820,500)
------------------- ------------------ ----------------
Balance as at 31 March
2016 39,016,728 2,491,220 41,507,948
------------------- ------------------ ----------------
The notes on pages 42 to 62 form an integral part of these
financial statements.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2017
1 GENERAL INFORMATION
Doric Nimrod Air One Limited (the "Company") was incorporated in
Guernsey on 8 October 2010 with registered number 52484. The
address of the registered office is given on page 66. Its share
capital consists of one class of Ordinary Preference Shares and one
class of Subordinated Administrative Shares. The Company's Ordinary
Preference Shares have been admitted to trading on the Specialist
Fund Segment ("SFS") of the London Stock Exchange ("LSE").
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 principal activities of the
Company are set out in the Chairman's Statement and Management
Report on pages 4 and 16 respectively.
2 ACCOUNTING POLICIES
The significant accounting policies adopted by the Company are
as follows:
(a) Basis of Preparation
The financial statements have been prepared in conformity with
IFRS, as adopted by the European Union ("EU"), which comprise
standards and interpretations approved by the International
Accounting Standards Board ("IASB") and International Financial
Reporting Interpretations Committee ("IFRIC") as adopted by the EU
and applicable Guernsey law. The financial statements have been
prepared on a historical cost basis.
Changes in accounting policies and disclosure
The following Standards or Interpretations have been adopted in
the current year. Their adoption has not had any impact on the
amounts reported in these financial statements and is not expected
to have any impact on future financial years:
-- IFRS 7 Financial Instruments: Disclosures - amendments
resulting from September 2014 Annual Improvements effective for
annual periods beginning on or after 1 January 2016.
-- IAS 1 Presentation of Financial Statements - amendments
resulting from the disclosure initiative effective for annual
periods beginning on or after 1 January 2016.
-- IAS 16 Property, Plant and Equipment - amendments regarding
the clarification of acceptable methods of depreciation and
amortisation and amendments bringing bearer plants into the scope
of IAS 16 effective for annual periods beginning on or after 1
January 2016.
The following Standards or Interpretations, which are expected
to affect the Company, have been issued but not yet adopted by the
Company. Other Standards or Interpretations issued by the
International Accounting Standards Board ("IASB") and International
Financial Reporting Standards Interpretations Committee ("IFRIC")
are not expected to affect the Company.
asis
-- IFRS 9 Financial Instruments - finalised version,
incorporating requirements for classification and measurement,
impairment, general hedge accounting and derecognition. There is no
mandatory effective date, however the IASB has tentatively proposed
that this will be effective for annual periods commencing on or
after 1 January 2018 and is endorsed in the EU.
-- IFRS 15 Revenue from contracts with customers - deals with
revenue recognition and establishes principles for reporting useful
information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from an entity's contracts with customers. Revenue is recognised
when a customer obtains control of a good or service and thus has
the ability to direct the use and obtain the benefits from the good
or service. The standard replaces IAS 18 'Revenue' and IAS 11
'Construction contracts', related interpretations and is endorsed
in the EU. The standard is effective for annual periods beginning
on or after 1 January 2018.
-- IFRS 16 Leases - specifies how an IFRS reporter will
recognise, measure, present and disclose leases. The standard
provides a single lessee accounting model, requiring lessees to
recognise assets and liabilities for all leases unless the lease
term is 12 months or less or the underlying asset has a low value.
Lessors continue to classify leases as operating or finance, with
IFRS 16's approach to lessor accounting substantially unchanged
from its predecessor, IAS 17 (EU endorsement is outstanding) and is
effective for annual periods beginning on or after 1 January
2019.
-- IAS 7 Statement of Cash Flows - amendments resulting from the
disclosure initiative effective for annual periods beginning on or
after 1 January 2017 (EU endorsement is outstanding).
-- IFRIC 22 'Foreign currency transactions and advance
consideration' - this IFRIC addresses foreign currency transactions
or parts of transactions where there is consideration that is
denominated or priced in a foreign currency. The interpretation
provides guidance for when a single payment/receipt is made as well
as for situations where multiple payments/receipts are made. The
guidance aims to reduce diversity in practice and is effective for
annual periods beginning on or after 1 January 2018 (EU endorsement
is outstanding).
The Directors have considered the above and are of the opinion
that the above Standards and Interpretations are not expected to
have an impact on the Company's financial statements except for the
presentation of additional disclosures and changes to the
presentation of components of the financial statements. These items
will be applied in the first financial year for which they are
required.
(b) Taxation
The Company has been assessed for tax at the Guernsey standard
rate of 0%.
(c) Share Capital
Ordinary Preference Shares (the "Shares") are classified as
equity. Incremental costs directly attributable to the issue of
Shares are recognised as a deduction from equity.
(d) Expenses
All expenses are accounted for on an accruals basis.
(e) Interest Income
Interest income is accounted for on an accruals basis.
(f) Foreign Currency Translation
The currency of the primary economic environment in which the
Company operates (the functional currency) is Great British Pounds
("GBP" or "GBP") which is also the presentation currency.
Transactions denominated in foreign currencies are translated
into GBP at the rate of exchange ruling at the date of the
transaction.
Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated into the functional
currency at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the
Statement of Comprehensive Income.
(g) Cash and Cash Equivalents
Cash at bank and short term deposits which are held to maturity
are carried at cost. Cash and cash equivalents are defined as call
deposits, short term deposits with a term of no more than 3 months
from the start of the deposit and highly liquid investments readily
convertible to known amounts of cash and subject to insignificant
risk of changes in value.
(h) Segmental Reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business, being acquiring, leasing and selling
of one Airbus A380-861 aircraft (the "Asset").
(i) Going Concern
After making enquiries, the Directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. The Directors
believe the Company is well placed to manage its business risks
successfully despite the current economic climate as the interest
on the Company's Loan has been fixed and the fixed rental income
under the operating lease means that the rents should be sufficient
to repay the Loan and provide surplus income to pay for the
Company's expenses and permit payment of dividends. Accordingly,
the Directors have adopted the going concern basis in preparing the
financial information. The Board is not aware of any material
uncertainty that may cast significant doubt upon the Company's
ability to continue as a going concern.
(j) Leasing and Rental Income
The lease relating to the Asset has been classified as an
operating lease as the terms of the lease do not transfer
substantially all the risks and rewards of ownership to the lessee.
The Asset is shown as a non-current asset in the Statement of
Financial Position. Further details of the lease are given in Note
11.
Rental income and advance lease payments from the operating
lease are recognised on a straight line basis over the term of the
lease. Initial direct costs incurred in negotiating and arranging
an operating lease are added to the carrying amount of the leased
asset and recognised in profit or loss on a straight-line basis
over the lease term.
(k) Property, Plant and Equipment - Aircraft
In line with IAS 16 Property Plant and Equipment, the Asset is
initially recorded at the fair value of the consideration paid. The
cost of the Asset is made up of the purchase price of the Asset
plus any costs directly attributable to bringing it into working
condition for its intended use. Costs incurred by the lessee in
maintaining, repairing or enhancing the Aircraft are not recognised
as they do not form part of the costs to the Company. Accumulated
depreciation and any recognised impairment loss are deducted from
cost to calculate the carrying amount of the Asset.
Depreciation is recognised so as to write off the cost of the
Asset less the estimated residual value of GBP80.4 million over the
estimated useful life of the Asset of 12 years, using the straight
line method. Residual values have been arrived at by taking into
account disposition fees. The depreciation method reflects the
pattern of benefit consumption. The residual value is reviewed
annually and is the amount the Company would receive currently if
the asset were already of the age and condition expected at the end
of its useful life. Useful life is also reviewed annually and, for
the purposes of the financial statements, represents the likely
period of the Company's ownership of the Asset. Depreciation starts
when the Asset is available for use.
At each Statement of Financial Position date, the Company
reviews the carrying amounts of the Asset to determine whether
there is any indication that the Asset has suffered any impairment
loss. If any such indication exists, the recoverable amount of the
Asset is estimated to determine the extent of the impairment loss
(if any).
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the Asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of the Asset is estimated to be less
than its carrying amount, the carrying amount of the Asset is
reduced to its recoverable amount. An impairment loss is recognised
immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying
amount of the Asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the Asset in prior years. A
reversal of an impairment loss is recognised immediately in profit
or loss.
(l) Financial Liabilities
Financial liabilities consist of payables and borrowings. The
classification of financial liabilities at initial recognition
depends on the purpose for which the financial liability was issued
and its characteristics. All financial liabilities are initially
measured at fair value, net of transaction costs. All financial
liabilities are recorded on the date on which the Company becomes
party to the contractual requirements of the financial liability.
Financial liabilities are subsequently measured at amortised cost
using the effective interest method, with interest expense
recognised on an effective yield basis.
The effective interest method is a method of calculating the
amortised cost of the financial liability and of allocating
interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash
payments through the expected life of the financial liability, or,
where appropriate, a shorter period, to the net carrying amount on
initial recognition.
The Company derecognises financial liabilities when, and only
when, the Company's obligations are discharged, cancelled or they
expire.
3 SIGNIFICANT JUDGEMENTS AND ESTIMATES
In the application of the Company's accounting policies, which
are described in Note 2, the Directors are required to make
judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
The following are the critical judgements and estimates that the
Directors have made in the process of applying the Company's
accounting policies and that have the most significant effect on
the amounts recognised in financial statements.
Residual Value and Useful Life of the Asset
As described in Note 2 (k), the Company depreciates the Asset on
a straight line basis over the estimated useful life of the Asset
and taking into consideration the estimated residual value. IAS 16
Property, Plant and Equipment requires residual value to be
determined as an estimate of the amount that the Company would
currently obtain from the disposal of the asset, after deducting
the estimated costs of disposal, if the Asset were of the age and
condition expected at the end of its useful life. However, there
are currently no aircraft of a similar type of sufficient age for
the Directors to make a direct market comparison in making this
estimation. After consulting with the Asset Manager, the Directors
have concluded that a forecast market value for the Aircraft at the
end of its useful life (including inflationary effects) best
approximates residual value. In estimating residual value, the
Directors have made reference to forecast market values for the
Aircraft obtained from 3 independent expert aircraft valuers and
determined that the residual value of the assets was USD 104
million at the year end (2016: USD 110 million, as determined per
the initial appraisal at inception). An adjustment has been made to
the residual value due to material foreign exchange movements.This
has been disclosed in Note 9.
The estimation of residual value remains subject to inherent
uncertainty. If the estimate of residual value had been decreased
by 20% with effect from the beginning of this year, the net profit
for the year and closing shareholders' equity would have been
decreased by approximately GBP2.4 million. An increase in residual
value by 20% would have been an equal but opposite effect. This
reflects the range of estimates of residual value that the
Directors believe would be reasonable at this time. The estimated
useful life of the Asset is based on the expected period for which
the Company will own and lease the Aircraft.
Operating Lease Commitments - Company as Lessor
The Company has entered into a lease on the Asset. The Company
has determined, based on an evaluation of the terms and conditions
of the arrangements, that it retains all the significant risks and
rewards of ownership of this asset and accounts for the contract as
an operating lease.
The Company has determined that the operating lease on the Asset
is for 12 years without an extension option.
Impairment
As described in Note 2 (k), impairment exists when the carrying
value of an asset or cash generating unit exceeds its recoverable
amount, which is the higher of its fair value less costs to sell
and its value in use. The Directors monitor the Asset for any
indications of impairment as required by IAS 16 Property, Plant and
Equipment and IAS 36 Intangible Assets.
The Company has determined that there is no indication of an
impairment loss for 1 April 2016 to 31 March 2017 year end. (None
for the 1 April 2015 to 31 March 2016 year end.)
3 RENTAL INCOME
Year ended Year ended
31 Mar
2017 31 Mar 2016
GBP GBP
A rent income 11,729,272 10,110,558
Revenue received but
not yet earned (1,319,461) (1,086,906)
------------ ---------------
10,409,811 9,023,652
B rent income 4,321,632 4,321,632
Revenue earned but not
yet received 186,756 199,108
----------- ---------------
4,508,388 4,520,740
Total rental income 14,918,199 13,544,392
----------- ---------------
Rental income is derived from the leasing of the Asset. Rent is
split into A rent, which is received in US Dollars ("USD" or "$")
and B rent, which is received in GBP. Rental income received in USD
is translated into the functional currency (GBP) at the date of the
transaction.
A and B rental income receivable will decrease / increase
respectively, 10 years from the start of the Lease. An adjustment
has been made to spread the actual total income receivable evenly
over the term of the Lease.
5 OPERATING EXPENSES
Year ended Year ended
31 Mar 2017 31 Mar 2016
GBP GBP
112,397 109,923
Corporate shareholder and adviser fee
Asset Management fee 291,870 285,472
Administration fees 60,604 61,230
Accountancy fees 10,690 10,690
Registrars fee 9,791 10,374
Audit fee 21,200 22,100
Directors' remuneration 68,000 68,000
Directors' and Officers' insurance 8,010 8,055
Legal & professional expenses 1,438 1,742
Annual fees 5,400 6,015
Other operating expenses 12,066 10,962
---------------------------- ------------------------
601,466 594,563
---------------------------- ------------------------
6 DIRECTORS' REMUNERATION
Under their terms of appointment, each Director is paid a fee of
GBP15,000 per annum by the Company, except for the Chairman, who
receives GBP20,000 per annum. The Chairman of the audit committee
also receives an extra GBP3,000 per annum.
7 DIVIDS IN RESPECT OF EQUITY SHARES
Dividends in respect of Year ended
Ordinary Shares 31 Mar 2017
Pence
GBP per
share
First interim dividend 955,125 2.25
Second interim dividend 955,125 2.25
Third interim dividend 955,125 2.25
Fourth interim dividend 955,125 2.25
------------------- -------------------
3,820,500 9.00
------------------- -------------------
Dividends in respect of Year ended
Ordinary Shares 31 Mar 2016
Pence
GBP per
share
First interim dividend 955,125 2.25
Second interim dividend 955,125 2.25
Third interim dividend 955,125 2.25
Fourth interim dividend 955,125 2.25
------------------- -------------------
3,820,500 9.00
------------------- -------------------
8 EARNINGS PER SHARE
Earnings per Share ("EPS") is based on the net profit for the
year attributable to Shareholders of GBP1,736,666 (31 March 2016:
GBP4,268,292) and 42,450,000 Shares (31 March 2016: 42,450,000)
being the weighted average number of Shares in issue during the
year.There are no dilutive instruments and therefore basic and
diluted Earnings per Share are identical.
9 PROPERTY, PLANT AND EQUIPMENT - AIRCRAFT
COST Aircraft
As at 1 Apr 2016 GBP
114,532,547
----------------
As at 31 Mar 2017 114,532,547
----------------
ACCUMULATED DEPRECIATION
As at 1 Apr 2016 20,269,654
----------------
Depreciation charge based on original
residual value 4,055,420
Adjustment due to FX movements and updated
residual values (1,979,722)
----------------
Net depreciation charge for the year 2,075,698
----------------
As at 31 Mar 2017 22,345,352
----------------
CARRYING AMOUNT
As at 31 Mar 2017 92,187,195
----------------
As at 31 Mar 2016 94,262,893
----------------
The cost in USD and the exchange rates at acquisition
for the Aircraft was as follows:
Cost in USD 178,549,805
GBP/USD exchange rate 1.5502
Following review of the Aircraft's projected residual value, as
is required by IFRS on an annual basis, using the valuers and
methodology set out in Note 3, whilst the underlying USD residual
value of the Aircraft has stayed at a similar level, the GBP value
converted at the year end GBP exchange rate has increased
significantly by GBP13,272,539. The Directors have adjusted the
residual value for this movement which has resulted in a
GBP1,979,722 decrease in the annual depreciation charge for the
current year.
The Company cannot sell the Asset during the term of the Lease
without terminating the Lease or Special Termination Events (as
defined by the Lease) occurring. If at the end of the Lease the
Company makes the choice to sell the Asset rather than leasing it
out again, Emirates will be given first refusal to purchase the
Asset at an independently appraised market value.
Under IAS 17 Leases the direct costs attributed in negotiating
and arranging the Lease have been added to the carrying amount of
the Asset and will be recognised as an expense over the lease
term.
10 FINANCE COSTS
Year ended Year ended
31 Mar 31 Mar
2017 2016
GBP GBP
Amortisation of debt arrangement
costs 60,554 (87,910)
Loan interest 2,850,600 2,821,099
----------- -------------------
2,911,154 2,733,189
----------- -------------------
11 OPERATING LEASES
The amounts of minimum future lease receipts at the reporting
date under non cancellable operating leases are detailed below:
31 Mar 2017 Next 1 to After
12 5 5 years Total
months years
GBP GBP GBP GBP
Aircraft - A rental
payments 12,164,199 36,628,190 2,072,583 50,864,972
Aircraft - B rental
payments 4,321,632 18,995,124 2,730,348 26,047,104
------------ ------------ -------------- --------------
16,485,831 55,623,314 4,802,931 76,912,076
------------ ------------ -------------- --------------
31 Mar 2016 Next 1 to After
12 5 years 5 years Total
months
GBP GBP GBP GBP
Aircraft- A rental
payments 10,631,008 39,019,682 5,434,036 55,084,726
Aircraft - B rental
payments 4,321,632 17,856,060 8,191,044 30,368,736
------------ ------------ -------------- --------------
14,952,640 56,875,742 13,625,080 85,453,462
------------ ------------ -------------- --------------
The operating lease is for an Airbus A380-861 aircraft. The term
of the lease is for 12 years ending December 2022 with reduced
rental payments in the last two years and no extension option.
At the end of the lease term the lessee has the right to
exercise an option to purchase the Asset if the Company chooses to
sell the Asset. If a purchase option event occurs the Company and
the lessee will be required to arrange for a current market value
appraisal of the Asset to be carried out by three independent
appraisers. The purchase price will be equal to the average
valuation of those three appraisals.
12 RECEIVABLES
31 Mar 31 Mar
2017 2016
GBP GBP
Prepayments 12,673 12,468
Sundry debtors 11 11
-------
12,684 12,479
------- --------------------
The above carrying value of receivables is equivalent to its
fair value.
13 PAYABLES (amounts falling due within one year)
31 Mar 31 Mar
2017 2016
GBP GBP
Accrued administration
fees 5,918 6,005
Accrued audit fee 13,700 13,600
Accrued corporate shareholder
and adviser fees 28,571 27,942
Other accrued expenses 9,217 8,485
-------
57,406 56,032
------- ------------------
The above carrying value of payables is equivalent to its fair
value.
14 BORROWINGS
31 Mar 31 Mar
2017 2016
GBP GBP
Bank loan 46,748,096 49,010,119
Transaction
costs (345,573) (406,127)
----------- -----------------
46,402,523 48,603,992
----------- -----------------
Current portion 9,856,765 8,151,040
----------- -----------------
Non-current
portion 36,545,758 40,452,952
----------- -----------------
Notwithstanding the fact that GBP9 million capital was repaid
during the year, as per the Cash Flow Statement, the value of the
borrowings has only decreased by GBP2 million to the 13% decline in
the GBP/USD exchange rate for the year ended 31 March 2017.
The amounts below detail the future contractual undiscounted
cashflows in respect of the Loan, including both the principal and
interest payments, and will not agree directly to the amounts
recognised in the Statement of Financial Position:
Amount due for settlement within
12 months 12,237,378 10,694,923
------------ ------------
Amount due for settlement after
12 months 40,856,639 46,401,805
------------ ------------
The loan was arranged with Westpac Banking Corporation
("Westpac") for USD 122,000,000.00, runs for 12 years until
December 2022, and has an effective interest rate of 5.4950%, which
is the same as the contractual fixed interest rate. The Loan is
secured on the Asset. No breaches or defaults occurred in the year.
Transaction costs of arranging the loan have been deducted from the
carrying amount of the Loan and will be amortised over its
life.
In the Directors' opinion, the above carrying value of the bank
loan is approximate to its fair value.
15 SHARE CAPITAL
The Share Capital of the Company is represented by an unlimited
number of shares of no par value being issued or reclassified by
the Company as Ordinary Preference Shares ("Shares") or
Subordinated Administrative Shares.
Issued Subordinated Ordinary
Administrative Preference
Shares Shares
Shares issued at incorporation - 1
Shares issued 11 October 2010 - 4,000,000
Shares issued 1 December 2010 - 1,000,000
Shares redeemed 1 December
2010 - (2,175,001)
Shares issued 6 December 2010 2 -
Shares issued in Placing - 39,625,000
--------------- ----------------------
Issued shares as at 31 March
2017 and as at 31 March 2016 2 42,450,000
--------------- ----------------------
GBP
Ordinary Share Capital
1,825,000 Shares issued prior to Placing
- Fair value 91,260
1,000,000 Shares issued prior to Placing
- Fair value 250,010
39,625,000 Shares issued in Placing 39,625,000
Share issue costs (949,544)
---------------------
Issued Share Capital as at 31 March
2017 & 31 March 2016 39,016,726
Subordinated Administrative Shares
Shares issued 6 December 2010 2
---------------------
Total Share Capital as at 31 March
2017 and as at 31 March 2016 39,016,728
---------------------
Members holding Ordinary Preference Shares are entitled to
receive and participate in any dividends out of income; other
distributions of the Company available for such purposes and
resolved to be distributed in respect of any accounting period; or
other income or right to participate therein. On a winding up,
members are entitled to the surplus assets remaining after payment
of all the creditors of the Company. Members have the right to
receive notice of and to attend, speak and vote at general meetings
of the Company.
The holders of Subordinated Administrative Shares are not
entitled to receive, and participate in, any dividends out of
income; other distributions of the Company available for such
purposes and resolved to be distributed in respect of any
accounting period; or other income or right to participate therein.
On a winding up, holders are entitled to a return of capital paid
up on them after the Ordinary Preference Shares have received a
return of their capital paid up but ahead of the return of all
additional capital to the holders of Ordinary Preference Shares.
Holders of Subordinated Administrative Shares shall not have the
right to receive notice of and shall have no right to attend, speak
and vote at general meetings of the Company, except for the
Liquidation Proposal Meeting (general meeting convened six months
before the end term of the Lease where the Liquidation Resolution
will be proposed) or if there are no Ordinary Preference Shares in
existence.
The Ordinary Preference Shares are not puttable instruments as
the holder does not have the right to put the Shares back to the
Company for cash or another financial instrument.
16 CASH AND CASH EQUIVALENTS
31 Mar 31 Mar
2017 2016
GBP GBP
Cash at bank 4,376,502 4,213,957
---------------- -----------------
Cash and cash equivalents are highly liquid, readily convertible
and are subject to insignificant risk of changes in value.
17 FINANCIAL INSTRUMENTS
The Company's main financial instruments comprise:
(a) Cash and cash equivalents that arise directly from the
Company's operations; and
(b) Loan secured on non-current asset.
18 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company's objective is to obtain income returns and a
capital return for its Shareholders by acquiring, leasing and then
selling a single aircraft.
The following table details the categories of financial assets
and liabilities held by the Company at the reporting date:
31 Mar 31 Mar
2017 2016
GBP GBP
Financial assets
Cash and cash equivalents 4,376,502 4,213,957
Receivables (excluding prepayments) 11 11
----------- --------------------
Financial assets at amortised
cost 4,376,513 4,213,968
----------- --------------------
Financial liabilities
Payables 57,406 56,032
Loans payable 46,402,523 48,603,992
----------- --------------------
Financial liabilities measured
at amortised cost 46,459,929 48,660,024
----------- --------------------
The main risks arising from the Company's financial instruments
are capital management risk, foreign currency risk, credit risk,
liquidity risk and interest rate risk. The Board regularly reviews
and agrees policies for managing each of these risks and these are
summarised below:
(a) Capital Management
The Company manages its capital to ensure that the Company will
be able to continue as a going concern while maximising the return
to Shareholders through the optimisation of the debt and equity
balance. The Company is not subject to any externally imposed
capital requirements.
The capital structure of the Company consists of debt, which
includes the borrowings disclosed in Note 14, cash and cash
equivalents disclosed in Note 16 and equity attributable to equity
holders, comprising issued capital and retained earnings.
The Company's Board of Directors reviews the capital structure
on a bi-annual basis.
Equity includes all capital and reserves of the Company that are
managed as capital.
No changes were made in the objectives, policies or processes
for managing capital during the years ended 31 March 2017 and
2016.
(b) Foreign Currency Risk
The Company's accounting policy under IFRS requires the use of a
GBP historic cost of the Asset and the value of the USD loan as
translated at the spot exchange rate on every statement of
financial position date. In addition, USD operating lease
receivables are not immediately recognised in the statement of
financial position and are accrued over the period of the Lease.
The Directors consider that this introduces artificial variance due
to the movement over time of foreign exchange rates. In actuality,
the USD operating lease receivables should offset the USD payables
on amortising loans. The foreign exchange exposure in relation to
the Loan is thus largely naturally hedged.
Lease rentals (as detailed in Notes 4 and 11) are received in
USD and GBP. Those lease rentals received in USD are used to pay
the loan repayments due, also in USD. Both USD lease rentals and
loan repayments are fixed and are for similar sums and similar
timings. The matching of lease rentals to settle loan repayments
therefore mitigates risks caused by foreign exchange
fluctuations.
The carrying amounts of the Company's foreign currency
denominated monetary assets and liabilities at the reporting date
are as follows:
31 Mar 31 Mar
2017 2016
GBP GBP
Bank loan (USD) - liabilities (46,748,096) (49,010,119)
Cash and cash equivalents (USD)
- assets 2,583,362 2,321,704
------------- ---------------
The following table details the Company's sensitivity to a 25
per cent (31 March 2016: 15 per cent) appreciation of GBP against
USD. 25 per cent (31 March 2016: 15 per cent) represents the
Directors' assessment of the reasonably possible change in foreign
exchange rates. The sensitivity analysis includes only outstanding
foreign currency denominated monetary items and adjusts their
translation at the year end for a 25 per cent (31 March 2016: 15
per cent) change in foreign currency rates. A positive number below
indicates an increase in profit and equity where GBP strengthens 25
per cent (31 March 2016: 15 per cent) against USD. For a 25 per
cent (31 March 2016: 15 per cent) weakening of GBP against USD,
there would be a comparable but opposite impact on the profit and
equity.
31 Mar 31 Mar
2017 2016
USD impact USD impact
GBP GBP
Profit or loss 8,832,947 6,089,793
Assets (516,672) (302,831)
Liabilities 9,349,619 6,392,624
----------------- -----------------
On the eventual sale of the Asset, the Company may be subject to
foreign currency risk if the sale was made in a currency other than
GBP. Transactions in similar assets are typically priced in
USD.
(c) Credit Risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Company.
The credit risk on cash transactions are mitigated by
transacting with counterparties that are regulated entities subject
to prudential supervision, or with high credit ratings assigned by
international credit rating agencies.
The Company's financial assets exposed to credit risk are as
follows:
31 Mar
2017 31 Mar 2016
GBP GBP
Receivables (excluding
prepayments) 11 11
Cash and cash equivalents 4,376,502 4,213,957
----------
4,376,513 4,213,968
---------- --------------------
Surplus cash is held in accounts with Barclays and Westpac
Banking Corporation, which have credit ratings given by Moody's of
A1 (negative) and Aa2 (negative) respectively. The banks are shown
as having a negative rating, as the ratings are currently under
review by Moody's, with the near term possibility of a
downgrade.
There is a contractual credit risk arising from the possibility
that the lessee may default on the lease payments. This risk is
mitigated, as under the terms of the lease agreement between the
lessee and the Company, any non-payment of the lease rentals
constitutes a Special Termination Event, under which the lease
terminates and the Company may either choose to sell the Asset or
lease it to another party.
At the inception of the Lease, the Company selected a lessee
with a strong balance sheet and financial outlook. The financial
strength of Emirates is regularly reviewed by the Board and the
Asset Manager.
(d) Liquidity Risk
Liquidity risk is the risk that the Company will encounter
difficulty in realising assets or otherwise raising funds to meet
financial commitments. The Company's main financial commitments are
its ongoing operating expenses and loan repayments to Westpac.
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which established an appropriate liquidity
management framework at the incorporation of the Company, through
the timings of lease rentals and loan repayments. The Company
manages liquidity risk by maintaining adequate reserves, banking
facilities and borrowing facilities, by monitoring forecast and
actual cash flows, and by matching profiles of financial assets and
liabilities.
The table below details the residual contractual maturities of
financial liabilities, including estimated interest payments.The
amounts below are contractual undiscounted cash flows, including
both principal and interest payments, and will not agree directly
to the amounts recognised in the statement of financial
position.
31 Mar 2017 3-12 Over
1-3 months months 1-2 years 2-5 years 5 years
GBP GBP GBP GBP GBP
Financial
liabilities
Payables
- due within
one year 57,406 - - - -
Loans
payable 3,059,344 9,178,033 12,237,378 25,917,818 2,701,444
-------------- -------------------- ------------------- ------------------------ ----------------------
3,116,750 9,178,033 12,237,378 25,917,818 2,701,444
-------------- -------------------- ------------------- ------------------------ ----------------------
31 Mar 2016 3-12 Over
1-3 months months 1-2 years 2-5 years 5 years
GBP GBP GBP GBP GBP
Financial
liabilities
Payables
- due within
one year 56,032 - - - -
Loans
payable 2,673,731 8,021,192 10,694,923 30,198,019 5,508,863
2,729,763 8,021,192 10,694,923 30,198,019 5,508,863
-------------- -------------------- ------------------- ------------------------ ----------------------
(e) Interest Rate Risk
Interest rate risk arises from the possibility that changes in
interest rates will affect future cash flows. It is the risk that
fluctuations in market interest rates will result in a reduction in
deposit interest earned on bank deposits held by the Company.
The Company mitigates interest rate risk by fixing the interest
rate on the Loan and the lease rentals.
The following table details the Company's exposure to interest
rate risks, by interest rate refinancing period:
31 Mar 2017 Variable Fixed Non-interest Total
interest interest Bearing
GBP GBP GBP GBP
Financial assets
Receivables - - 12,684 12,684
Cash and cash
equivalents 4,376,502 - - 4,376,502
----------------------- ----------------------- ----------------------------- ----------
Total financial
assets 4,376,502 - 12,684 4,389,186
----------------------- ----------------------- ----------------------------- ----------
Financial liabilities
Payables - - 57,406 57,406
Loans payable - 46,748,096 - 46,748,096
----------------------- ----------------------- ----------------------------- ----------
Total financial
liabilities - 46,748,096 57,406 46,805,502
----------------------- ----------------------- ----------------------------- ----------
Total interest
sensitivity gap 4,376,502 46,748,096
----------------------- -----------------------
31 Mar 2016 Variable Fixed Non-interest Total
interest interest Bearing
GBP GBP GBP GBP
Financial assets
Receivables - - 12,479 12,479
Cash and cash
equivalents 4,213,957 - - 4,213,957
--------------------- -------------------- ----------------------------- -----------------
Total financial
assets 4,213,957 - 12,479 4,226,436
--------------------- -------------------- ----------------------------- -----------------
Financial
liabilities
Payables - - 56,032 56,032
Loans payable - 49,010,119 - 49,010,119
--------------------- -------------------- ----------------------------- -----------------
Total financial
liabilities - 49,010,119 56,032 49,066,151
--------------------- -------------------- ----------------------------- -----------------
Total interest
sensitivity gap 4,213,957 49,010,119
--------------------- --------------------
If interest rates had been 50 basis points higher throughout the
year and all other variables were held constant, the Company's
profit for the year and net assets attributable to Shareholders as
at 31 March 2017 would have been GBP21,883 (31 March 2016:
GBP21,070) greater due to an increase in the amount of interest
receivable on the bank balances.
If interest rates had been 50 basis points lower and all other
variables were held constant, the Company's profit for the year and
net assets attributable to Shareholders as at 31 March 2017 would
have been GBP21,883 (31 March 2016: GBP21,070) lower due to an
decrease in the amount of interest receivable on the bank
balances.
19 ULTIMATE CONTROLLING PARTY
In the opinion of the Directors, the Company has no ultimate
controlling party.
20 RELATED PARTIES
Nimrod Capital LLP ("Nimrod") is the Company's Placing Agent and
Corporate and Shareholder Adviser. In consideration for Nimrod
acting as placing agent in the Share placing, the Company agreed to
pay Nimrod, on admission to trading of the Shares, a placing
commission equal to 0.43 per cent of the initial gross proceeds of
the placing. The Company pays to Nimrod for its services as
Corporate and Shareholder Adviser a fee of GBP100,000 per annum
(adjusted annually for inflation from 2012 onwards at 2.25 per
cent. per annum) payable quarterly in arrears.
During the year, the Company incurred GBP112,397 (31 March 2016:
GBP110,034) of expenses with Nimrod, of which GBP28,571 (31 March
2016: GBP27,942) was outstanding to this related party at 31 March
2017.
Doric GmbH ("Doric") is the Company's Asset Manager. The Company
pays Doric a management and advisory fee of GBP250,000 per annum
(adjusted annually for inflation from 2012 onwards, at 2.25 per
cent. per annum), payable quarterly in arrears. Doric will also
receive a fee for its sales and remarketing services upon
disposition of the Asset and subsequent winding up of the Company
("the Disposition Fee"). This will be payable by the Company out of
the proceeds of sale and will follow an incentivised structure.
Doric will not be entitled to the Disposition Fee (but for the
avoidance of doubt will be entitled to reimbursement for properly
incurred costs and expenses) if Shareholders do not recover 100
pence per share net of all costs, fees and expenses upon the
winding up of the Company. If Shareholders receive between 100
pence per Share and 150 pence per Share (inclusive) (in each case
net of all cost, fees and expense) upon the winding up of the
Company, Doric will be entitled to receive a Disposition Fee of 2
per cent. of the realised value of the Asset. If Shareholders
receive more than 150 pence per Share (net of all costs, fees and
expenses) Doric will be entitled to receive 3 per cent. of the
Realised Value of the Asset.
During the year, the Company incurred GBP292,481 (31 March 2016:
GBP274,806) of expenses with Doric, of which GBP242 (31 March 2016:
GBPnil) was outstanding to this related party at 31 March 2017.
John Le Prevost is a director of Anson Registrars Limited
("ARL"), the Company's registrar, transfer agent and paying agent.
During the year GBP9,791 (31 March 2016: GBP10,374) of costs were
incurred with ARL, of which GBP560 (31 March 2016: GBP570) was
outstanding as at 31 March 2017.
21 SUBSEQUENT EVENTS
On 11 April 2017, a further dividend of 2.25 pence per Ordinary
Preference Share was declared and this was paid on 28 April
2017.
(Incorporated in Guernsey with registered number 52484)
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting (the
"AGM") of the voting members of Doric Nimrod Air One Limited (the
"Company") will be held at Ground Floor, Dorey Court, Admiral Park,
St Peter Port, Guernsey GY1 2HT on Friday, 15 September 2017 at
10.30 a.m. to consider and, if thought fit, pass the below
resolutions.
Ordinary Business: to be proposed as Ordinary Resolutions:
1. To receive the Company's annual financial report for the year ended 31 March, 2017.
2. To re-appoint Deloitte LLP as auditor of the Company, to hold
office from the conclusion of the AGM until the conclusion of the
next annual general meeting to be held in 2018, and to authorise
the directors to determine the auditor's remuneration.
3. To re-elect as a director Mr Charles Wilkinson, who retires
in accordance with the provisions of the Company's Articles of
Incorporation and the UK Code of Corporate Governance and, being
eligible, offers himself for re-election.
4. To re-elect as a director Mr Norbert Bannon, who retires in
accordance with the provisions of the Company's Articles of
Incorporation and the UK Code of Corporate Governance and, being
eligible, offers himself for re-election.
5. To re-elect as a director Mr Geoffrey Hall, who retires in
accordance with the provisions of the Company's Articles of
Incorporation and the UK Code of Corporate Governance and, being
eligible, offers himself for re-election.
6. To re-elect as a director Mr John Le Prevost, who retires in
accordance with the provisions of the Company's Articles of
Incorporation and the UK Code of Corporate Governance and, being
eligible, offers himself for re-election.
BY ORDER OF THE BOARD
Registered Office:
JTC Fund Solutions (Guernsey) Limited
Secretary Ground Floor
Dorey Court
10 July, 2017 Admiral Park
St Peter Port
Guernsey
GY1 2HT
Notes:
1. A shareholder will only be entitled to attend and vote at the
AGM if they are registered as holders of Ordinary Preference Shares
of no par value ("Shares") as at the close of business on Thursday,
14 September, 2017 or, if the AGM is adjourned, as at the close of
business on the day before the adjourned AGM. This record time is
being set for the purpose of determining entitlements to attend and
vote at shareholder meetings.
2. A member entitled to attend and vote at the AGM is entitled
to appoint one or more proxies to vote instead of them. A proxy
need not be a member of the Company. Completion and return of a
form of proxy will not preclude members from attending or voting at
the AGM if they so wish.
3. More than one proxy may be appointed, provided that each
proxy is appointed to exercise the rights attached to different
Shares.
4. A vote withheld is not a vote in law and will not be counted
in the calculation of the proportion of the votes for and against
each resolution.
5. A form of proxy is enclosed for use at the AGM. The form of
proxy should be completed in accordance with the instructions set
out therein and sent, together with the power of attorney or other
authority, if any, under which it is signed, or a notarially
certified copy of such power or authority, so as to reach the
Company's agent, for this purpose being, Anson Registrars Limited,
P.O. Box 426, Anson House, Havilland Street, St Peter Port,
Guernsey GY1 3WX not less than 48 hours before the time for holding
the AGM.
6. If the AGM falls to be adjourned because it is not quorate,
it will be adjourned to the same time and place seven days later or
to such other day and/or time and/or place as the directors of the
Company may determine, whereupon those shareholders then present in
person, by their representative or by proxy, shall form the quorum.
In the event of any such adjournment the Company will announce the
adjournment via a regulatory information service but no other
notification will be sent directly to shareholders.
7. Where there are joint registered holders of any Shares, such
persons shall not have the right of voting individually in respect
of such Shares, but shall elect one of their number to represent
them and to vote whether in person or by proxy in their name. In
default of such election the person whose name stands first on the
register of shareholders shall alone be entitled to vote.
8. On a poll votes may be given either personally or by proxy
and a shareholder entitled to more than one vote need not use all
his votes or cast all the votes he uses in the same way.
9. Any corporation which is a shareholder may by resolution of
its board of directors or other governing body authorise such
person as it thinks fit to act as its representative at the AGM.
Any person so authorised shall be entitled to exercise on behalf of
the corporation which he represents the same powers (other than to
appoint a proxy) as that corporation could exercise if it were an
individual shareholder.
10. As at 5 July, 2017 (the latest practicable date prior to the
printing of this notice) the Company's issued share capital with
voting rights attached consisted of 42,450,000 Shares, each
carrying one vote per Share.
11. Copies of the following documents are available for
inspection at the registered office of the Company during usual
business hours on any weekday (weekends and public holidays
excluded) and will be available for inspection at the place of the
AGM for 15 minutes before and during the AGM itself:
(a) the Company's annual financial report for the year ended 31
March, 2017; and
(b) the Company's articles of incorporation.
EXPLANATORY NOTES TO THE NOTICE OF THE AGM
At the AGM there are six ordinary resolutions which shareholders
will be asked to consider and, if thought fit, approve. All
resolutions are to be proposed as ordinary resolutions. An ordinary
resolution requires more than 50 per cent. of the votes cast at the
AGM to be cast in favour of it for the resolution to be passed. An
explanation of each of these resolutions is given below.
ORDINARY RESOLUTIONS
Resolution 1: Annual Financial Report
For each financial year the directors are required to present a
directors' report, audited financial statements and an auditor's
report to shareholders at a general meeting. Shareholders are asked
to receive the Company's annual financial report for the financial
year ended 31 March, 2017. The Companies (Guernsey) Law 2008, as
amended requires that the annual financial report be laid before
the AGM.
Resolution 2: Re-appointment of Auditor
Following the previous annual general meeting of the Company the
appointment of the auditor was to continue until the conclusion of
the next annual general meeting to be held in 2017. Deloitte LLP
have indicated that they are willing to continue to act as the
Company's auditor for the next year. You are asked to approve their
re-appointment, to hold office until the conclusion of the next AGM
to be held in 2018, and to authorise the directors of the Company
to determine their remuneration.
Resolutions 3 to 6 (inclusive): Re-election of Directors
The Company's Articles of Incorporation require that any
director who held office at the two preceding annual general
meetings of the Company and did not retire from office shall retire
from office and shall be available for re-election at the same
meeting.
Having considered the performance and contribution made by each
of the directors, the Board believes that each of them continues to
perform effectively and with commitment to his role and, as such,
the Board recommends their re-election.
Brief biographical details of the directors can be found in the
Company's annual financial report. In order to enable the Company
to remain validly constituted, if no directors are re-elected, all
directors will remain in office until replacement directors are
appointed.
ADVISERS AND CONTACT INFORMATION
KEY INFORMATION
Specialist Fund Segment
Exchange of the London Stock
Exchange's Main Market
Ticker DNA1
Listing Date 13 December 2010
Fiscal Year End 31 March
Base Currency GBP
ISIN GG00B4MF3899
SEDOL B4MF389
Guernsey - Registration
Country of Incorporation number 52484
MANAGEMENT AND ADMINISTRATION
Registered Office Company Secretary and Administrator
JTC Fund Solutions (Guernsey)
Doric Nimrod Air One Limited Limited
Ground Floor Ground Floor
Dorey Court Dorey Court
Admiral Park Admiral Park
St Peter Port St Peter Port
Guernsey GY1 2HT Guernsey GY1 2HT
Asset Manager Liaison Agent
Doric GmbH Amedeo Services (UK) Limited
Berliner Strasse 114 29-30 Cornhill
63065 Offenbach am Main London, England
Germany EC3V 3NF
Placing and Corporate and
Shareholder
Advisory Agent Lease and Debt Arranger
Doric Asset Finance GmbH
Nimrod Capital LLP & Co. KG
3 St Helen's Place Berliner Strasse 114
London 63065 Offenbach am Main
EC3A 6AB Germany
Solicitors to the Company Advocates to the Company
(as to English Law) (as to Guernsey Law)
Herbert Smith LLP Carey Olsen
Exchange House Carey House
Primrose Street Les Banques
London EC2A 2EG St Peter Port
Guernsey GY1 4HP
Registrar Auditor
Anson Registrars Limited Deloitte LLP
PO Box 426 Regency Court
Anson House Glategny Esplanade
Havilland Street St Peter Port
St Peter Port Guernsey GY1 3HW
Guernsey GY1 3WX
This information is provided by RNS
The company news service from the London Stock Exchange
END
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