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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Doric Nimrod Air One Limited | LSE:DNA | London | Ordinary Share | GG00B4MF3899 | ORD PRF SHS NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 60.00 | 59.00 | 61.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMDNA
RNS Number : 7578Q
Doric Nimrod Air One Limited
01 December 2016
DORIC NIMROD AIR ONE LIMITED (the "Company")
HALF-YEARLY FINANCIAL REPORT
The Board of the Company is pleased to announce its results for the period from 1 April 2016 to 30 September 2016.
To view the Company's Half-yearly Financial Report please follow the link below:
http://www.rns-pdf.londonstockexchange.com/rns/7578Q_-2016-12-1.pdf
In addition, to comply with DTR 4.2 please find below the full text of the half yearly report. The report is also available on the Company's website, http://www.dnairone.com
Enquiries:
For further information contact:
Administrative Enquiries:
JTC (Guernsey) Limited
Tel: +44 (0) 1481 702 400
SUMMARY INFORMATION
Hot Features
Premium
Admission to Trading Specialist Fund Segment of the London
Stock
Exchange's Main Market
----------------------------- ------------------------------------------
Ticker DNA
----------------------------- ------------------------------------------
Share Price 112.25 pence (as at 30 September 2016)
113.50 pence (as at 25 November 2016)
----------------------------- ------------------------------------------
Market Capitalisation GBP 47.65 million (as at 30 September
2016)
----------------------------- ------------------------------------------
Aircraft Registration Number A6-EDC
----------------------------- ------------------------------------------
Current/Future Anticipated Current dividends are 2.25p per quarter
Dividend per share (9p
per annum) and it is anticipated this
will continue until the aircraft lease
terminates in 2022.
----------------------------- ------------------------------------------
Dividend Payment Dates April, July, October, January
----------------------------- ------------------------------------------
Currency Sterling
----------------------------- ------------------------------------------
Launch Date/Price 13 December 2010 / 100p
----------------------------- ------------------------------------------
Incorporation and Domicile Guernsey
----------------------------- ------------------------------------------
Asset Manager Doric GmbH
----------------------------- ------------------------------------------
Corp & Shareholder Advisor Nimrod Capital LLP
----------------------------- ------------------------------------------
Administrator JTC (Guernsey) Limited
----------------------------- ------------------------------------------
Auditor Deloitte LLP
----------------------------- ------------------------------------------
Market Makers Shore Capital Limited
Winterflood Securities Limited Jefferies
International Limited Numis Securities
Limited
----------------------------- ------------------------------------------
SEDOL, ISIN B4MF389, GG00B4MF3899
----------------------------- ------------------------------------------
Year End 31 March
----------------------------- ------------------------------------------
Stocks & Shares ISA Eligible
----------------------------- ------------------------------------------
Website www.dnairone.com
----------------------------- ------------------------------------------
COMPANY OVERVIEW
Doric Nimrod Air One Limited (LSE Ticker: DNA) ("DNA" or the "Company") is a Guernsey company incorporated on 8 October 2010. Its 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 25 November 2016, the latest practicable date prior to publication of this report, the Shares are trading at 113.50 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") in December 2010 for USD 180m, 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") before the Directors may resolve to declare dividends.
Performance Overview
All payments by Emirates, have to date been made in accordance with the terms of the Lease.
During the period under review and in accordance with the Distribution Policy the Company declared two interim dividends of 2.25 pence per Share. One interim dividend of 2.25 pence per Share was declared after the reporting period. Further details of these dividend payments can be found on page 23.
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 in the Law).
Liquidation Resolution
Although the Company does not have a fixed life, the Articles require that the Directors convene a general meeting of the Company in June 2022, where an ordinary resolution will be put to the Shareholders that the Company proceed to an orderly wind-up at the end of the term of the Lease (the "Liquidation Resolution"). In the event that the Liquidation Resolution is not passed, the Directors will consider alternatives for the future of the Company and shall propose such alternatives at a general meeting of the Members, including re-leasing the Asset, or selling the Asset and reinvesting the capital received from the sale of the Asset in another aircraft or aircrafts.
CHAIRMAN'S STATEMENT
I am very pleased to present Shareholders with the Company's half-yearly financial report, covering the period from 1 April 2016 until 30 September 2016 ("the Period").
I am glad to report that during the Period the Company has performed as anticipated and has declared and paid quarterly dividends of 2.25p per share, as expected, representing 9p per share per year.
The Company owns one Airbus A380s, leased to Emirates. 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 leases.
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.
From January to August 2016 overall global air traffic passenger demand, measured in revenue passenger kilometres (RPKs), expanded by 5.4% compared to the same period in the year before and taking into consideration that 2016 is a leap year. Traffic is being shaped by a range of drivers, including fragile economic growth and lower airfares. And the International Air Transport Association (IATA) says that passenger traffic is set for another year of solid growth.
Emirates has also continued to perform well flying more passengers than ever before carrying 51.9 million people to 153 destinations in 80 countries on six continents during the last financial year 2015/16. About 32% of Emirates' passengers were carried by an A380. Passenger load factors remain high across the fleet. At the same time Emirates received 29 new aircraft to cope with its forecast increasing demand.
In economic reality, the Company has also performed well. Two interim dividends were declared in the half-year 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.
International Financial Reporting Standards require that transactions denominated in US Dollars (including, most importantly, the cost of the aircraft) are translated into Sterling 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.
The Asset Manager of the Company produces a factsheet on a quarterly basis which includes an analysis of the asset value of the Company. Due to the inaccuracies described above, the Board recommends that Shareholders consider the asset value disclosed in the quarterly factsheet as more indicative of the value of the Company's assets.
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.
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
On the invitation of the Directors of the Company, the following commentary has been provided by Doric GmbH as Asset Manager of the Company and is provided without any warranty as to its accuracy and without any liability incurred on the part of the Company, its Directors and officers and service providers. The commentary is not intended to constitute, and should not be construed as, investment advice. Potential investors in the Company should seek their own independent financial advice and may not rely on this communication in evaluating the merits of an investment in the Company. The commentary is provided as a source of information for shareholders of the Company but is not attributable to the Company.
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 August 2016, a total of 4,089 flight cycles were logged. Total flight hours were 34,446. This equates to an average flight duration of eight hours and 25 minutes.
The A380 owned by the Company visited Auckland, Brisbane, Frankfurt, Jeddah, New York JFK, Sydney, and Toronto during the first half of the 2016-17 financial year.
Maintenance Status
Emirates maintains its A380 aircraft fleet based on a maintenance programme according to which minor maintenance checks are performed every 1,500 flight hours, and more significant maintenance checks (C checks) at 24 month or 12,000 flight hour intervals, whichever occurs first. The last heavy maintenance check, the 6-year check, was completed in December 2014.
Emirates bears all costs (including for maintenance, repairs and insurance) relating to the aircraft during the lifetime of the Lease.
The records audited by the asset manager, Doric, in May were found to be in good order.
2. Market Overview
During the first seven months of 2016 passenger demand, measured in revenue passenger kilometres (RPKs), increased by 6.0% compared to the same period the year before. Adjusted for the extra day, as 2016 is a leap year, traffic grew by 5.5%. "Passenger demand has broadly grown in line with the average of the past 10 years but the industry faces some potential headwinds, including lingering impacts from the series of terrorist attacks and the fragile economic backdrop", said Alexandre de Juniac, IATA's (International Air Transport Association) Director General and CEO. But entering the peak travel months, July and August, RPK growth accelerated in July with the fastest pace in five months and, according to IATA, passenger traffic is set for another year of solid growth. In its latest forecast released in June, it expects an RPK growth of 6.2% in 2016.
At 79.9% passenger load factors have remained close to the historic high - in a narrow band around 80% since February - as airlines have slowed capacity growth in line with the moderation in demand growth. IATA estimates an average worldwide passenger load factor of 80.0% for the full year 2016.
A regional breakdown reveals that Middle East airlines, including Emirates, continued to outperform the overall market again this year. Between January and July RPKs increased by 10.9% compared to the previous period. Asia/Pacific-based operators ranked second with 8.7%, followed by Africa with 7.7%. Europe grew by 3.7%. Latin American and North American market participants each recorded 3.6% more RPKs.
Fuel is the single largest operating cost of airlines and has significant effects on the industry's profitability. According to its latest report released in June, IATA expects an average fuel price of USD 55.6 per barrel in 2016. This would be 17% lower compared to the previous year. It could drive the average share of fuel costs in operating expenses down to less than 20% for the first time since 2004. The industry-wide net profit could be further boosted to an estimated USD 39.4 billion. The net profit margin of 5.6% would be the highest for more than a decade. In 2015 the revised industry net profit reached USD 35.3 billion, compared to a revised net profit of USD 13.7 billion the year before. The profit development during this year will heavily depend on the oil price level. IATA has based its calculations on an average crude oil price of USD 45 per barrel. This includes a rising profile during the course of the year to just above USD 50 per barrel by the end of 2016.
(c) International Air Transport Association, 2016. Air Passenger Market Analysis July 2015 / Air Passenger Market Analysis July 2016 / Economic Performance of the Airline Industry, 2016 Mid-Year Report / Press Release No. 45: July Passenger Demand Shows Resilience. All Rights Reserved. Available on the IATA Economics page.
3. Lessee - Emirates Key Financials
In the financial year 2015/16 ending on 31 March 2016 Emirates made its highest profit ever with USD 1.9 billion - an increase of 56% compared to the previous period. The profit margin of 8.4% is the greatest since 2010/11. At the same time, the 28th consecutive year of profit provided a number of global and operational challenges to the company. The rise of the US dollar against currencies in most of Emirates' key markets only had a USD 1.1 billion impact on the airline's bottom line. As a result of this and fare adjustments following the reduction in fuel prices there was a 4% drop in revenue to USD 23.2 billion. During the financial year, the airline had to deal with weak consumer confidence in a slow global economic environment, terror threats and geopolitical instability in many regions it serves. Nevertheless, the company was able to maintain its strategy of a diversified revenue base which limited the carrier's exposure to single geographical regions.
The airline's operating costs were significantly influenced by the drop in oil prices with a 39% lower average fuel price compared to the previous period. As Emirates remained largely unhedged on jet fuel prices, this significantly paid off. Fuel costs remained the largest component in operating costs, but significantly decreased by 9 percentage points to 26%. Total operating costs decreased by 8% over the 2014/15 financial year.
As of 31 March 2016, the balance sheet total amounted to USD 32.5 billion, an increase of 7% compared to the beginning of the financial year. Total equity increased by 14.6% to USD
8.8 billion with an equity ratio of 27.2%. The current ratio stood at 0.82, meaning the airline
would be able to meet about four-fifths of its current liabilities by liquidating all its current assets. Significant items on the liabilities side of the balance sheet included current and non- current borrowings and lease liabilities in the amount of USD 13.7 billion. As of 31 March 2016, the carrier's cash balance was USD 5.4 billion, up by USD 846 million compared to the beginning of the financial year.
New destinations, larger aircraft deployment and increased frequencies to existing destinations boosted the transport capacities for passengers (measured in ASKs) by 12.8% compared to the previous financial year. Passenger demand (in RPKs) grew by 8.4%, resulting in a passenger load factor of 76.5%. The economy class seat factor stood at 79.2%. About 32% of the 51.9 million passengers carried in the 2015/16 financial year travelled aboard an A380. Premium and overall seat factors for Emirates' flagship aircraft outperformed the network.
During the financial year 2015/16 Emirates added eight new passenger destinations to its network and added services and capacity to another 34 cities on its existing route network across Africa, Asia, Europe, the Middle East and North America. The increasing number of A380 aircraft joining the fleet allowed the airline to introduce superjumbo services to a further four destinations during the course of the 2015 calendar year. At the same time A380 services to nine existing routes were increased. This means one out of every four destinations on the carrier's passenger network is served by an A380.
During the first six months of 2016 Emirates' aircraft travelled 432 million kilometres on over 96,000 flights.
In July Emirates was named the "World's Best Airline 2016" at the Skytrax World Airline Awards. The ranking is based on the largest airline passenger satisfaction survey in the industry, with a total of 19.2 million completed surveys covering 280 airlines. After 2001, 2002 and 2013 this is the fourth time the top accolade was awarded to Emirates in the 15- year history of this contest. Furthermore, the airline received the "World's Best Inflight Entertainment" award for a record 12th consecutive year, and the "Best Airline in the Middle East" award.
Source: Ascend, Emirates
4. Aircraft - A380
By mid-September 2016 Emirates operated a fleet of 83 A380s which currently serve 41 destinations from its Dubai hub: Amsterdam, Auckland, Bangkok, Barcelona, Beijing, Birmingham, Brisbane, Copenhagen, Dallas, Dusseldorf, Frankfurt, Hong Kong, Houston, Jeddah, Kuala Lumpur, Kuwait, London Gatwick, London Heathrow, Los Angeles, Madrid, Manchester, Mauritius, Melbourne, Milan, Mumbai, Munich, New York JFK, Paris, Perth, Prague, Rome, San Francisco, Seoul, Shanghai, Singapore, Sydney, Taipei, Toronto, Vienna, Washington, and Zurich. During the summer Emirates announced a number of expansions to its A380 operations. This includes a second daily A380 services to Los Angeles (since July 1) and Milan (from October 1) and a third daily A380 services to Munich (since June 20) and Manchester (from January 1, 2017). Furthermore, Guangzhou (China) is scheduled to become an A380 destination on October 1, 2016. Johannesburg (South Africa) will complement Emirates' global list of A380 destinations from February 1, 2017. Already
this year the operator will deploy the A380 on its non-stop service between Dubai and Auckland (New Zealand), which was introduced only a few months ago, currently flown by a Boeing 777-200LR and which is reported to be the longest sector served by a commercial carrier. Also from October 30, 2016 another New Zealand city, Christchurch, will be served by an A380, eliminating the current en-route stop in Bangkok.
By mid-September 2016 the global A380 fleet consisted of 195 commercially operated planes in service. The thirteen operators are Emirates (83), Singapore Airlines (19), Deutsche Lufthansa (14), Qantas (12), British Airways (12), Air France (10), Korean Airways
(10), Etihad Airways (8) Malaysia Airlines (6), Qatar Airways (6), Thai Airways (6), China Southern Airlines (5), and Asiana (4). The number of undelivered A380 orders stood at 126.
For a long time Emirates has been known as the strongest supporter of a re-engined A380 and prepared to order up to 200 of the so-called A380neo. Speaking in front of aviation professionals in June, Airbus' CEO Fabrice Bregier ruled out an A380neo in the near future. In May Emirates' President Tim Clark had indicated that Emirates might purchase up to 60 additional aircraft of the current version, if Airbus were not prepared to launch an A380neo. With regard to the airline's retirement plans for in-service A380s Clark said that extending leases beyond their current duration would be an option.
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 exercise their option to extend the lease on their first Airbus A380 delivered in 2007 at the current rental. 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. This statement comes only days after Malaysia Airlines' (MAS) reaffirmation to market its six A380s in the near future, as its new focus is more on Asian flights requiring lower capacity aircraft, like the 25 Boeing 737 MAX ordered back in July this year. CEO Peter Bellew said MAS is in talks with carriers in China and other Association of Southeast Asia Nations countries who might be interested in leasing or buying superjumbos. In his view there are a number of airlines in the region "keen to dip their toe in the water". Already in June last year MAS announced plans to remove a number of aircraft from its fleet, including two of its six A380 aircraft, as part of its restructuring plans.
Source: aero.de, Airbus, Ascend, Bloomberg, CAPA, Emirates
DIRECTORS
Charles Edmund Wilkinson - Chairman (Age 73)
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 Premier Energy and Water Trust PLC (a listed investment trust), and of Landore Resources Ltd, a Guernsey based mining exploration company. He is resident in Guernsey.
Norbert Bannon (Age 67)
Norbert Bannon is chairman of a large 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 67)
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 64)
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.
INTERIM 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, and the Notes to the financial statements contained on pages 17 to 33 and are incorporated here by reference.
There were no material related party transactions which took place in the Period, other than those disclosed at Note 20 of the Notes to the financial statements.
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Company are unchanged from those disclosed in the Company's annual financial report for the year ended 31 March 2016.
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 13 to 33. In addition, Note 17 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 financial statements.
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 Interim Management Report includes or incorporates by reference:
a. an indication of important events that have occurred during the Period, and their impact on the financial statements;
b. a description of the principal risks and uncertainties for the remaining six months of the financial year; and
c. confirmation that there were no related party transactions in the Period that have materially affected the financial position or the performance of the Company during that period.
Signed on behalf of the Board of Directors of the Company on 30 November 2016
Charles Wilkinson John Le Prevost Chairman Director
STATEMENT OF COMPREHENSIVE INCOME
For the period from 01 April 2016 to 30 September 2016
1 Apr 2016 1 Apr 2015
to to
Notes 30 Sep 2016 30 Sep 2015
GBP GBP
INCOME
A rent income 4 4,942,607 4,397,295
B rent income 4 2,260,370 2,260,370
Bank interest received - 1,531
------------------------ ----------------------
7,202,977 6,659,196
EXPENSES
Operating expenses 5 (298,891) (294,960)
Depreciation of Asset 9 (2,033,265) (1,894,767)
------------------------ ----------------------
(2,332,156) (2,189,727)
Net profit for the period before
finance costs and foreign exchange
(losses) / gains 4,870,821 4,469,469
------------------------ ----------------------
Finance costs 10 (1,483,899) (1,470,343)
Net profit for the period after finance
costs before foreign exchange (losses)
/ gains 3,386,922 2,999,126
Unrealised foreign exchange (loss)
/ gain (5,609,317) 1,153,653
------------------------ ----------------------
(Loss) / profit for the period (2,222,395) 4,152,779
------------------------ ----------------------
Other Comprehensive Income - -
------------------------ ----------------------
Total Comprehensive (Loss) / Income
for the period (2,222,395) 4,152,779
======================== ======================
Pence Pence
(Loss) / Earnings per Share for the
period - Basic and Diluted 8 (5.24) 9.78
In arriving at the results for the financial period, all amounts above relate to continuing operations.
The notes on pages 17 to 33 form an integral part of these financial statements.
STATEMENT OF FINANCIAL POSITION
As at 30 September 2016
30 Sep 2016 31 Mar 2016
Notes GBP GBP
NON-CURRENT ASSETS
Aircraft 9 92,229,628 94,262,893
CURRENT ASSETS
Cash and cash equivalents 4,382,997 4,213,957
Receivables 12 5,746 12,479
4,388,743 4,226,436
--------------------- -------------------
TOTAL ASSETS 96,618,371 98,489,329
--------------------- -------------------
CURRENT LIABILITIES
Borrowings 14 9,276,802 8,151,040
Deferred income 9,758,088 8,321,357
Payables - due within one year 13 53,620 56,032
19,088,510 16,528,429
NON-CURRENT LIABILITIES
Borrowings 14 40,154,558 40,452,952
40,154,558 40,452,952
--------------------- -------------------
TOTAL LIABILITIES 59,243,068 56,981,381
--------------------- -------------------
TOTAL NET ASSETS 37,375,303 41,507,948
--------------------- -------------------
EQUITY
Share capital 15 39,016,728 39,016,728
Retained earnings (1,641,425) 2,491,220
37,375,303 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 88.05 97.78
The financial statements were approved by the Board of Directors and authorised for issue on
30 November 2016 and are signed on its behalf by:
Charles Wilkinson John Le Prevost Director Director
The notes on pages 17 to 33 form an integral part of these financial statements.
STATEMENT OF CASH FLOWS
For the period from 01 April 2016 to 30
September 2016
1 Apr 2016 to 1 Apr 2015 to
30 Sep 2016 30 Sep 2015
GBP GBP
OPERATING ACTIVITIES
(Loss) / profit for the period (2,222,395) 4,152,779
Movement in deferred income 1,436,731 428,400
Interest received - (1,531)
Depreciation of Asset 2,033,265 1,894,767
Loan interest 1,453,539 1,422,734
Decrease in payables (2,412) (16,361)
Decrease in receivables 6,733 13,075
Amortisation of debt arrangement costs 30,360 47,609
Foreign exchange movement 5,609,317 (1,153,653)
--------------------- --------------------
NET CASH FROM OPERATING ACTIVITIES 8,345,138 6,787,819
--------------------- --------------------
INVESTING ACTIVITIES
Interest received - 1,531
--------------------- --------------------
NET CASH FROM INVESTING ACTIVITIES - 1,531
--------------------- --------------------
FINANCING ACTIVITIES
Dividends paid (1,910,250) (1,910,250)
Repayments of capital on borrowings (4,250,166) (3,516,336)
Repayments of interest on borrowings (1,406,110) (1,431,133)
--------------------- --------------------
NET CASH USED IN FINANCING ACTIVITIES (7,566,526) (6,857,719)
--------------------- --------------------
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 4,213,957 4,371,633
Increase / (decrease) in cash and cash
equivalents 778,612 (68,368)
Effects of foreign exchange rates (609,572) (55,498)
--------------------- --------------------
CASH AND CASH EQUIVALENTS AT OF
PERIOD 4,382,997 4,247,767
--------------------- --------------------
The notes on pages 17 to 33 form an integral part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
For the period from 01 April 2016 to 30 September 2016
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 Loss for the
period - (2,222,395) (2,222,395)
Dividends paid 7 - (1,910,250) (1,910,250)
------------------- ------------------ ----------------
Balance as at 30 September
2016 39,016,728 (1,641,425) 37,375,303
------------------- ------------------ ----------------
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 period - 4,152,779 4,152,779
Dividends paid 7 - (1,910,250) (1,910,250)
------------------- ------------------ ----------------
Balance as at 30 September
2015 39,016,728 4,285,957 43,302,685
------------------- ------------------ ----------------
The notes on pages 17 to 33 form an integral part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
For the period from 01 April 2016 to 30 September 2016
1 GENERAL INFORMATION
Doric Nimrod Air One Limited (the "Company") was incorporated in Guernsey on 8 October 2010 with registered number 52484. 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 SFS of the LSE. The Company delisted from Channel Islands Securities Exchange ("CISEA") on the 5 September 2014.
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.
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 the International Accounting Standard 34 Interim Financial Reporting as adopted by the European Union, and applicable Guernsey law. The financial statements have been prepared on a historical cost basis.
This report is to be read in conjunction with the annual report for the year ended 31 March 2016 which are prepared in accordance with the International Financial Reporting Standards adopted by the European Union and any public announcements made by the Company during the interim reporting period.
The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the adoption of new and amended standards as set out below:
Changes in accounting policies and disclosure
The following Standards or Interpretations have been adopted in the current period. 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 periods:
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.
IAS 34 Interim Financial Reporting - amendments resulting from September 2014 annual improvements 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.
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 accounting periods commencing on or after 1 January 2018 (EU endorsement is outstanding).
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 by the EU. The standard is effective for a period 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).
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 period 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) 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.
(i) 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.
(j) 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
GBP67.1 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.
(k) 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.
(l) Net Asset Value
In circumstances where the Directors, as advised by the Asset Manager, are of the opinion that the net asset value ("NAV") or NAV per Share, as calculated under prevailing accounting standards, is not appropriate or could give rise to a misleading calculation, the Directors, in consultation with the Administrator and the Asset Manager may determine, at their discretion, an alternative method for calculating the value of the Company and shares in the capital of the Company, which they consider more accurately reflects the value of the Company.
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 (j), 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. 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 period, the net profit for the period and closing shareholders' equity would have been decreased by approximately GBP0.87 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 (j), 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.
At the year end the Directors reviewed the carrying value of the Asset and concluded that there was no indication of an impairment.
4 RENTAL INCOME
1 Apr 2016 1 Apr 2015
to to
30 Sep 2016 30 Sep 2015
GBP GBP
A rent income 6,478,892 4,925,249
Revenue received but not yet earned (1,536,285) (527,954)
------------------ -----------------
4,942,607 4,397,295
B rent income 2,160,816 2,160,816
Revenue earned but not yet received 99,554 99,554
-------------------- -----------------
2,260,370 2,260,370
Total rental income 7,202,977 6,657,665
------------------ ---------------
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
1 Apr 2016 to 1 Apr 2015
30 Sep 2016 to
GBP 30 Sep 2015
Management fee 55,884 GBP
54,654
Asset management fee 145,115 141,929
Administration fees 30,426 30,626
Accountancy fees 5,345 5,345
Registrars fee 4,909 5,438
Audit fee 10,050 10,000
Directors' remuneration 34,000 34,000
Directors' and Officers'
insurance 4,020 4,031
Legal & professional
expenses 238 942
Annual fees 2,707 3,008
Sundry costs 4,369 3,162
Other operating expenses 1,828 1,825
---------------------------- ------------------------
298,891 294,960
---------------------------- ------------------------
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
01 Apr 2016 to
30 Sep 2016
GBP Pence per
share
First interim dividend 955,125 2.25
Second interim dividend 955,125 2.25
------------------- -------------------
1,910,250 4.50
------------------- -------------------
01 Apr 2015 to
30 Sep 2015
GBP Pence per
share
First interim dividend 955,125 2.25
Second interim dividend 955,125 2.25
------------------- -------------------
1,910,250 4.50
------------------- -------------------
8 (LOSS) / EARNINGS PER SHARE
(Loss) / Earnings per Share ('LPS' / 'EPS') is based on the net loss for the period attributable to Shareholders of GBP2,222,395 (30 Sep 2015: profit for the period of GBP4,152,779) and 42,450,000 Shares (30 Sep 2015: 42,450,000) being the weighted average number of Shares in issue during the period. There are no dilutive instruments and therefore basic and diluted (loss) / earnings per Share are identical.
9 PROPERTY, PLANT AND EQUIPMENT - AIRCRAFT
COST Aircraft
As at 1 Apr 2016 GBP
114,532,547
----------------
As at 30 Sep 2016 114,532,547
----------------
ACCUMULATED DEPRECIATION
As at 1 Apr 2016 20,269,654
Charge for the period 2,033,265
----------------
As at 30 Sep 2016 22,302,919
----------------
CARRYING AMOUNT
As at 31 Mar 2016 94,262,893
----------------
As at 30 Sep 2016 92,229,628
----------------
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
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
1 Apr 2016 1 Apr 2015
to to
30 Sep 2016 30 Sep 2015
GBP GBP
Amortisation of debt arrangement
costs 30,360 47,609
Loan interest 1,453,539 1,422,734
------------ -----------------
1,483,899 1,470,343
------------ -----------------
11 OPERATING LEASES
The amounts of minimum future lease receipts at the reporting date under non cancellable operating leases are detailed below:
30 September 2016 After 5
Next 12 1 to 5 years Total
months years
GBP GBP GBP GBP
Aircraft - A rental
payments 11,768,501 39,315,696 4,010,318 55,094,514
Aircraft - B rental
payments 4,321,632 18,425,592 5,460,696 28,207,920
------------ ------------ ------------------ --------------
16,090,133 57,741,288 9,471,014 83,302,434
------------ ------------ ------------------ --------------
31 March 2016 1 to 5 After 5
Next 12 years 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 November 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
30 Sep 2016 31 Mar 2016
GBP GBP
Prepayments 5,735 12,468
Sundry debtors 11 11
5,746 12,479
----------------------- --------------------
The above carrying value of receivables is equivalent to its fair value.
13 PAYABLES (amounts falling due within one year)
30 Sep 2016 31 Mar 2016
GBP GBP
Accrued administration
fees 5,943 6,005
Accrued audit fee 11,050 13,600
Accrued management fees 27,942 27,942
Other accrued expenses 8,685 8,485
53,620 56,032
--------------------- ------------------
The above carrying value of payables is equivalent to its fair value.
14 BORROWINGS
TOTAL TOTAL
30 Sep 2016 31 Mar 2016
GBP GBP
Bank loan 49,807,127 49,010,119
Transaction
costs (375,767) (406,127)
49,431,360 48,603,992
------------------- -----------------
Current portion 9,276,802 8,151,040
=================== =================
Non-current
portion 40,154,558 40,452,952
=================== =================
Notwithstanding the fact that GBP4 million capital has been repaid during the period, as per the Cash Flow Statement, the value of the borrowings has risen due to the 10% decline in the GBP/USD exchange rate from 31 March 2016 to 30 September 2016.
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 11,839,276 10,694,923
------------------- ----------------
Amount due for settlement after 12 months 45,447,145 46,401,805
------------------- ----------------
The loan was arranged with Westpac Banking Corporation ("Westpac") for USD 122,000,000, 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 period. 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 30 September
2016 & 31 March 2016 2 42,450,000
GBP
Ordinary Preference Shares
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 30 September 2016
& 31 March 2016 39,016,726
Subordinated Administrative Shares
Shares issued 6 December 2010 2
---------------------
Total Share Capital as at 30 September 2016
& 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 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.
17 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:
30 Sep 2016 31 Mar 2016
GBP GBP
Financial assets
Cash and cash equivalents 4,382,997 4,213,957
Receivables (excluding prepayments) 11 11
----------------------- --------------------
Financial assets at amortised cost 4,383,008 4,213,968
--------------------
Financial liabilities
Payables 53,620 56,032
Loans payable 49,431,360 48,603,992
----------------------- --------------------
Financial liabilities measured at amortised
cost 49,484,980 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 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.
(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:
30 Sep 2016 31 Mar 2016
GBP GBP
Bank loan (USD) - liabilities (49,807,127) (49,010,119)
Cash and cash equivalents (USD) -
assets 2,534,723 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 period 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.
USD impact
GBP
Profit or loss 9,454,481
Assets (506,945)
Liabilities 9,961,425
=================
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:
30 Sep 2016 31 Mar 2016
GBP GBP
Receivables (excluding prepayments) 11 11
Cash and cash equivalents 4,382,997 4,213,957
4,383,008 4,213,968
----------------------- --------------------
Surplus cash is held in accounts with Barclays and Westpac Banking Corporation, which have credit ratings given by Moody's of A2 (negative) and Aa2 (negative) respectively.
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 agreements 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.
30 Sep 2016 1-3 months 3-12 months 1-2 years 2-5 years over 5 years
GBP GBP GBP GBP GBP
Financial
liabilities
Payables -
due
within one
year 53,620 - - - -
Loans
payable 2,959,819 8,879,457 11,839,276 29,251,933 4,355,936
3,013,439 8,879,457 11,839,276 29,251,933 4,355,936
-------------- -------------------- ------------------- ------------------------ ----------------------
31 Mar 2016 1-3 months 3-12 months 1-2 years 2-5 years over 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:
30 September Variable Fixed Non-interest
2016 interest interest Bearing
GBP GBP GBP Total
GBP
Financial
assets
Receivables - - 5,746 5,746
Cash and cash
equivalents 4,382,997 - - 4,382,997
---------------------- --------------------- ------------------------------ -------------------
Total
financial
assets 4,382,997 - 5,746 4,388,743
---------------------- --------------------- ------------------------------ -------------------
Financial
liabilities
Payables - - 53,620 53,620
Loans payable - 49,431,360 - 49,431,360
---------------------- --------------------- ------------------------------ -------------------
Total financial
liabilities - 49,431,360 53,620 49,484,980
---------------------- --------------------- ------------------------------ -------------------
Total interest
sensitivity
gap 4,382,997 49,431,360
---------------------- ---------------------
31 March 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 - 48,603,992 - 48,603,992
---------------------- --------------------- ------------------------------ -------------------
Total financial
liabilities - 48,603,992 56,032 48,660,024
---------------------- --------------------- ------------------------------ -------------------
Total interest
sensitivity
gap 4,213,957 48,603,992
---------------------- ---------------------
If interest rates had been 50 basis points higher throughout the period and all other variables were held constant, the Company's profit for the period and net assets attributable to Shareholders as at 30 September 2016 would have been GBP10,957 (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 period and net assets attributable to Shareholders as at 30 September 2016 would have been GBP10,957 (31 March 2016: GBP21,070) lower due to an decrease in the amount of interest receivable on the bank balances.
18 ULTIMATE CONTROLLING PARTY
In the opinion of the Directors, the Company has no ultimate controlling party.
19 SUBSEQUENT EVENTS
On 12 October 2016, a further dividend of 2.25 pence per Ordinary Preference Share was declared and this was paid on 28 October 2016.
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 period, the Company incurred GBP55,884 (30 September 2015: GBP54,654) of expenses with Nimrod, of which GBP27,942 (31 March 2016: GBP27,942) was outstanding to this related party at 30 September 2016.
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 and 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 should 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 should receive 3 per cent. of the Realised Value of the Asset.
During the period, the Company incurred GBP140,079 (30 September 2015: GBP136,635) of expenses with Doric, of which GBPnil (31 March 2016: GBPnil) was outstanding to this related party at 30 September 2016.
John Le Prevost is a director of Anson Registrars Limited ("ARL"), the Company's registrar, transfer agent and paying agent. During the period GBP4,909 (30 September 2015: GBP5,438) of costs were incurred with ARL, of which GBP620 (31 March 2016: GBP570) was outstanding as at 30 September 2016.
ADVISERS AND CONTACT INFORMATION
KEY INFORMATION
Specialist Fund Segment of the
Exchange London Stock
Exchange's Main Market
Ticker DNA2
Listing Date 13 December 2010
Fiscal Year End 31 March
Base Currency GBP
ISIN GG00B4MF3899
SEDOL B4MF389
Guernsey - Registration number
Country of Incorporation 52484
MANAGEMENT AND ADMINISTRATION
Registered Office Company Secretary and Administrator
Doric Nimrod Air One Limited JTC (Guernsey) 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 & Co.
Nimrod Capital LLP KG
3 St Helen's Place Berliner Strasse 114
London 63065 Offenbach am Main
EC3A 6AB Germany
Solicitors to the Company (as Advocates to the Company (as
to English Law) 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
IR BRBDDBDGBGLB
(END) Dow Jones Newswires
December 01, 2016 12:24 ET (17:24 GMT)
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