TIDMDNA
RNS Number : 5208O
Doric Nimrod Air One Limited
11 October 2012
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT
FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN, OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY
JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. THE INFORMATION
CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR
SALE IN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY
JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS
UNLAWFUL.
DORIC NIMROD AIR ONE LIMITED
Announcement of Asset Manager's Report
11 October 2012
Doric Nimrod Air One Limited (the "Company"), a
Guernsey-domiciled company, is pleased to present the quarterly
Fact Sheet in respect of the period from 1 July 2012 to 30
September 2012.
Doric GmbH, the Company's Asset Manager, has provided the
Company with this commentary on the Company's airplane and a copy
of their report is appended below for the benefit of
shareholders.
*****
On the invitation of the directors of the Company, the following
commentary has been provided by Doric Asset Finance &
Verwaltungs GmbHas 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.
QUARTERLY FACT SHEET
DORIC NIMROD AIR ONE LIMITED
LSE: DNA
CISX: DNA
The Company
Doric Nimrod Air One Limited ("the Company") is a Guernsey
domiciled company which listed on the Specialist Fund Market of the
London Stock Exchange and the Channel Islands Stock Exchange on
13(th) December 2010. The Company has purchased one Airbus A380-861
aircraft, manufacturer's serial number (MSN) 016, which it has
leased to Emirates Airlines, the national carrier owned by the
Investment Corporation of Dubai, based in Dubai, United Arab
Emirates.
Investment Strategy
The Company's investment objective is to obtain income returns
and a capital return for its Shareholders by acquiring, leasing and
then selling a single aircraft. The Company will receive income
from the lease and its directors intend to target a gross
distribution to shareholders of 2.25 pence per share per quarter
(9p per annum).
1. The Doric Nimrod Air One Airbus A380
The Airbus A380 with manufacturer's serial number (MSN) 016 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 2012, a total of
2,038 flight cycles were registered. Total flight hours were
16,760. This is equal to an average flight duration of
approximately eight hours.
Amongst its 184 aircraft in operation as of August 2012,
Emirates has a fleet of 23 A380s which currently serve 19
destinations worldwide: Amsterdam, Auckland, Bangkok, Beijing, Hong
Kong, Jeddah, Johannesburg, Kuala Lumpur, London Heathrow,
Manchester, Munich, New York JFK, Paris, Rome, Seoul, Shanghai,
Sydney, Toronto and Tokyo. In the last quarter of 2012 Emirates is
planning to launch A380 flights to Melbourne, Moscow, and
Singapore. The carrier is the largest A380 operator in the world
and has now carried more than 10 million passengers and has flown
more than 150 million kilometers since the double decker was
introduced to its fleet in August 2008. Emirates has an additional
67 of this model on firm order for delivery through 2017.
Recent visits of the A380 owned by the Company (MSN 016)
included Auckland, Jeddah, Tokyo, Manchester and Sydney during the
third quarter of 2012.
Company Facts (30(th) September 2012)
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Listing LSE and CISX
------------------------------ ---------------------------------
Ticker DNA
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Share Price 124.5p
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Aircraft Registration A6 - EDC
Number
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Market Capitalisation GPB 54 million
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Anticipated Dividend 2.25p per quarter (9p per annum)
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Anticipated Dividend Payment April, July, October, January
Dates
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Currency GBP
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Launch Date/Price 13(th) December 2010 / 100p
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Incorporation Guernsey
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Asset Manager Doric GmbH
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Corp & Shareholder Advisor Nimrod Capital LLP
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Administrator Anson Fund Managers Ltd
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Auditor Ernst and Young LLP
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Market Makers Shore Capital Ltd
Winterflood Securities Ltd
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SEDOL, ISIN B4MF389 , GG00B4MF3899
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Year End 31(st) March
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Stocks & Shares ISA Eligible
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Website www.dnairone.com
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Maintenance status
Emirates maintains its A380 aircraft fleet based on a
maintenance program according to which minor maintenance checks are
performed every 1,500 flight hours and more significant maintenance
checks (so called C checks) every 24 months or 12,000 flight hours,
whichever comes first. The next C check is expected to fall due in
the last quarter of 2012.
Emirates bears all costs (including maintenance, repair and
insurance) relating to the aircraft during the lifetime of the
lease.
Inspections
The next inspection of the aircraft by the asset manager is
scheduled during the aforementioned C check later in 2012.
Hairline Cracks
Since late 2011, hairline cracks have been discovered in a small
number of L-shaped metal brackets within the wing structure of some
A380s. There are about 2,000 brackets (known as rib-skin
attachments or wing rib feet) in each wing, which attach the wing's
upper and lower skins to ribs running throughout the wing. The
aircraft remain fully airworthy and pose no risk to flight safety
as affirmed by European Aviation Safety Agency (EASA) and
Airbus.
Since the occurrence of the issue, Airbus has traced the source
of the cracking in A380 wing structures to the choice of a less
flexible aluminum alloy used to make the wing brackets, stresses
involved during assembly when fitting portions of the wing together
plus thermal fatigue during flight at very low temperatures.
In February 2012, EASA issued an updated airworthiness directive
(AD) in relation to the wing rib feet cracks, which called for all
A380s in operation to be checked for cracks in the brackets that
attach to the wing's ribs before reaching 1,300 flights. The
aircraft owned by the Company (MSN 016) was inspected in March
2012. The cracks detected on this occasion were repaired. The
aircraft has since returned to normal commercial service.
In late June EASA issued a new AD pertaining to wing rib feet
cracks on the Airbus A380 aircraft, which specified repeat
inspections of A380 aircraft at defined intervals. This will allow
A380 aircraft to continue flying until a permanent fix for wing rib
feet cracking has been incorporated in the aircraft. The length of
the applicable inspection interval is determined by the location
within the wing where previous wing rib feet repairs have been made
and the type of repair that has been previously made. Depending on
this, an inspection interval of between 560 and 1,200 flight cycles
is required. After performing this repeat inspection, the follow-on
repeat inspections shall have an inspection interval of 560 flight
cycles.
Airbus has developed a permanent fix to wing rib feet cracking,
which is currently being certified by EASA. A retrofit modification
will be installed on in-service aircraft, while a production
modification will be applied for new aircraft. The retrofit is
expected to become available in late 2012/early 2013. A further AD
is anticipated which will instruct A380 operators to implement the
retrofit. At that time, the retrofit will be installed in existing
A380s. New aircraft with the production modification are expected
to be delivered beginning in early 2014. The permanent fix
developed by Airbus will preserve the full design service life of
the A380 aircraft.
Airbus has confirmed that it may take up to 8 weeks to
incorporate the permanent fix in the A380. Another option is for
the fix to be gradually accomplished during regularly scheduled
"heavy checks" when the aircraft is two, four, and six years of
age. To implement the repair gradually, some extra days would be
added to each two to three week "heavy check". Aircraft operators
are expected to choose between the various repair solutions
depending on their fleet planning and flight schedules.
All the repair works will be covered by the applicable
manufacturer's warranties. In the meantime airlines with A380s on
lease will continue to operate the aircraft and their lease rental
obligations will remain absolute and unconditional on these
events.
2. Market Overview
The International Air Transport Association (IATA) released its
latest industry outlook in June 2012 according to which global
industry profits are expected to reach USD 3.0 billion this year. A
temporary fall in oil prices, stronger than expected growth in
passenger traffic and a bottoming out of the freight market have
been driving some improvements in the profitability outlook.
However, this is offset by the continued European sovereign debt
crisis and uncertainties related to the economic growth
outlook.
IATA expects that 2012 will mark a second successive year of
declining airline profits. In 2010 the industry's profits peaked at
USD 15.8 billion, before dipping in 2011 to USD 7.9 billion net
profit. Although airlines face the common challenges of high fuel
prices and economic uncertainty, the regional picture is diverse.
Compared with the previous forecast in March 2012, North American
and Latin American carriers are expected to see improved prospects.
But the outlook for European, Asian-Pacific and Middle Eastern
carriers has been downgraded, with European losses expected to
reach USD 1.1 billion.
World GDP growth, a key driver of airline profitability, is
expected to be 2.1 % in 2012. That is slightly better than the
anticipated 2.0 % growth forecast in March. But this still
represents a slower growth environment compared to last year, and
one in which airlines will struggle to absorb cost increases.
Historically, the airline industry has fallen into losses (at a
global level) when world GDP growth drops below 2.0 %.
During the course of 2012, passenger demand, measured in revenue
passenger kilometers, continues to expand, but at a below-trend
rate. According to IATA, average annualized rate grew by
approximately 3 % since January 2012. Due to the recent
deterioration in business confidence in a number of major
economies, IATA expects a further slowdown of growth during the
next months. In its latest Global Market Forecast, published in
September 2012, Airbus predicts a compound average growth rate of
4.7 % for worldwide passenger traffic until 2031.
Source: IATA
3. Lessee - Emirates Key Financials and Outlook
The aircraft is leased to Emirates for an initial term of 12
years, with fixed lease rentals for the duration.
Emirates revenue reached a record high of USD 16.9 billion in
the 12 months ended 31st March 2012, an increase of 16 % from the
previous financial year. Passenger revenue climbed 18 %
year-on-year, to USD 13.3 billion due to the overall expansion of
passenger numbers as well as higher fares.
Geographically, East Asia and Australasia remains Emirates' most
important region in terms of revenue, accounting for almost 30 %,
just ahead of Europe. The carrier's revenue base is increasingly
diffused globally, particularly with the introduction of several
new routes into North and South America and the development of
African destinations.
Despite this strong revenue growth, the high cost of jet fuel
impacted Emirates' bottom line with the airline's profit dropping
to USD 409 million, representing a decrease of 72 % over last
year's record results. Fuel costs increased by 44.4 % compared to
the preceding year to USD 6.6 billion, representing about 40 % of
Emirates' total operating costs. Emirates Chairman and CEO, Sheikh
Ahmed bin Saeed Al Maktoum, stated that if fuel prices remained
where they were in the previous financial year, the net profit
"would have again soared to a new record high".
Emirates balance sheet total as per 31st March 2012 was USD 21
billion - an increase of 18 % from last year. Total equity
increased by more than 3 % to USD 5.85 billion with an equity ratio
of 28 %. The current ratio is 0.98; therefore the airline would be
able to meet its current liabilities by liquidating all of its
current assets. Significant items on the liabilities side of the
balance sheet are finance leases in the amount of USD 5.44 billion
and revenues received in advance from passenger and cargo sales
(USD 2.58 billion). These solid financial results not only
represent Emirates' 24th consecutive year of profit, but the
carrier was also able to strengthen its cash position by 11.6 % to
USD 4.2 billion.
For the current financial year 2012/13 36 new aircraft are
scheduled for delivery, including 12 Airbus A380, 20 Boeing
777-300ER and four freighters. This would be the highest number of
aircraft received in a single year of operation. With an increased
fleet, Emirates has already launched 12 new destinations in 2012
(Rio de Janeiro, Buenos Aires, Dublin, Lusaka, Harare, Dallas,
Seattle, Ho Chi Minh City, Barcelona, Lisbon, Erbil, Washington
DC). Adelaide, Algiers, Lyon, Phuket and Warsaw will join the
extensive network of Emirates over the course of the next few
months. Emirates is also responding to stronger passenger demand on
some existing routes. A second A380 service into Paris will start
in January 2013. All five daily flights into London Heathrow will
be served by A380s from the beginning of February 2013.
In the 2011/2012 financial year, the Emirates fleet, one of the
youngest in the industry, carried a record number of almost 34
million passengers at an 80 % passenger load factor to a network of
126 destinations in 74 countries. As of 31st August 2012 Emirates
has 184 aircraft in operation, with firm orders for another 226
aircraft, including 67 A380.
In July 2012 Emirates was awarded with 'World's Best Airline
Inflight Entertainment 2012' award for the eighth consecutive year.
Based on more than 18 million airline passenger votes from over 100
different nationalities, consultancy company SKYTRAX identified
industry-leading airlines in a number of categories. Emirates 'ice'
(which stands for information, communications and entertainment)
inflight entertainment system offers over 1,400 channels and is
being continuously enhanced. Emirates has also rolled out WiFi
internet connection on its entire A380 fleet.
On 6th September 2012 lessee Emirates and Qantas announced a
global aviation partnership that will see the Australian carrier
move its hub for European flights to Dubai from Singapore. The
10-year codeshare agreement is enhanced by integrated network
collaboration with coordinated pricing, sales and scheduling as
well as a benefits sharing model. Emirates will benefit from a
major feed for its European, African and Middle Eastern
destinations, while gaining access to Qantas' strong network in
Australia, which offers nearly 5,000 weekly flights to more than 50
destinations. Subject to regulatory approvals, the partnership
arrangements are planned to take effect in April 2013. Neither
airline will take equity in the other.
Both airlines will jointly offer 98 weekly flights between
Australia and Dubai. Four daily services from Sydney and Melbourne
to Dubai will be serviced by A380s. With Emirates flying the
largest fleet of A380s in the world with 23, combined with Qantas'
12 A380s for a total of 35, many onward flights to Europe including
London, Paris, Moscow, Amsterdam, Munich and Rome will also be
serviced by A380s. Qantas will make use of Dubai International's
Terminal 3 including the dedicated A380 facility, which will start
operations in early 2013 with 20 aircraft contact gates, all of
them capable of accommodating one A380.
Source: Emirates
4. Aircraft - A380
At the end of August 2012, the global A380 fleet consisted of 81
planes that were in service with eight operators: Emirates (23 A380
aircraft), Singapore Airlines (18), Qantas (12), Deutsche Lufthansa
(10), Air France (8), Korean Airways (5), China Southern Airlines
(3) and Malaysia Airlines (2).
Thai Airways received its first Airbus A380 at the end of
September with another three deliveries due in December. Two more
will follow in 2013. The Thai flag carrier plans on entering the
aircraft into service in October 2012 and will become the ninth
operator of A380s worldwide. Since the inaugural flight of the
first Airbus A380 in October 2007, the worldwide fleet with
currently eight operators has accumulated over 600,000 flight
hours, performing more than 72,000 revenue flights. Average
utilization across this total fleet is 13-plus flight hours per
day.
Sources: IATA, Boeing, Airbus
Contact Details
Company
Doric Nimrod Air One Limited
Anson Place, Mill Court,
La Charroterie, St Peter Port,
Guernsey GY1 1EJ
Tel: +44 (0) 1481 722260
Website: www.dnairone.com
Corporate & Shareholder Advisor
Nimrod Capital LLP
4 The London Fruit and Wool Exchange
Brushfield Street
London E1 6HB
Tel: +44 (0) 20 3355 6855
END OF ANNOUNCEMENT
E&OE - in transmission.
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